Operator: Our next question comes from the line of Joseph Osha with Guggenheim. Please go ahead.
Joseph Osha: Hi there. Thank you. Understanding that you might not be able to comment in detail, I’m wondering if your review of the business might include looking at some of the segments that you’re in, you are perhaps emphasizing more and perhaps maybe reducing focus on some other business segments. Is that one possible outcome of the work you’re doing?
Rick Wilmer: Good question. Thank you for that. My assessment at the moment is that our current go-to-market and product strategy is solid. I’ll give credit to our CEO — prior CEO, Pascal Romano. He did a great job, was a visionary in this industry. And I’m lucky to have adopted such a well thought -out, insightful product and go-to-market strategy. We’ll obviously fine-tune as market conditions change and demand shifts between vertical markets, but largely we’re going to be focused on executing that strategy that exists.
Joseph Osha: Okay. And then, one for Mansi, just listening to what you guys have talked about today in terms of some modest revenue growth and getting to EBITDA break even. Some simple math suggests that either, (a), you’ve got a heck of a gross margin expansion built in there, or, (b), that you’re going to take a pretty substantial bide out of OpEx even from the current run rate. Am I correct in assuming that one of those levers has to move a lot in order to get to this EBITDA break-even target you’re talking about?
Mansi Khetani: Joe, all I can say at this point is stay tuned. We will be ready to provide more details at our next call. Sorry, I can’t provide additional details right now.
Joseph Osha: I understand. Thank you.
Operator: Our next question comes from the line of Cameron Lochridge with the Bank of America. Please go ahead.
Cameron Lochridge: Hey, team, thank you guys for taking my question here. So, I just kind of wanted to go back and just talk about some of these larger macro topics that are kind of delaying orders for you guys. Commercial fleet deliveries, you mentioned commercial demand, some of these auto labor disputes. I guess really my question is, what kind of line of sight do you guys have into some of these issues that are admittedly out of your hands, resolving themselves. And really, the question ties back to I hear you guys suggesting modest revenue growth next year. So, just trying to get a sense to kind of what’s informing that. If you could just give us some color there, it would be helpful.
Rick Wilmer: Cameron, we’re always working to get better line of sight onto all those factors. I think in the fleet side, it’s easier to get line of sight on fleet vehicle delivery. But in the past, commitments have changed as people realized how hard it is to build electric vehicles, at least in the early days. So, we keep a very close eye on how any of those delivery commitments of vehicles change. On the commercial side, I would say that’s more, it’s a little bit more difficult to understand. I think what we’re facing there is an uncertain economic future in the face of high interest rates with many believing we could have a nice soft landing and others believing a recession is coming. And I think that the CFOs in the commercial space view charging as something that is not mandatory.
And they are being conservative with their cash and waiting for some of this economic uncertainty to clear up before they start to succumb to the increased utilization pressure we’re seeing on ports that’s clearly happening out there.
Cameron Lochridge: Got it. Thank you. And then, just in terms of the — what’s kind of given you guys the line of sight into modest revenue growth, just any comment there, next year?
Mansi Khetani: Yes, I can take that. Yes, so like I said before, we’re using conservative estimates based on large programs that either we’ve already won, or we have line of sight into. For the latter part of next year, this includes programs with the auto OEMs and fast charge segments. We’ll continue to the video on the USPS contract, as I mentioned, there are some large auto and transit contracts that we’ve won, and we’ve already started executing on. So, those are the things that whatever it is already funded, and we have visibility into, that’s what I’m taking into my model right now, being extremely cautious on the transaction workplace side of things, because we’ll have to see how the macro plays out.
Cameron Lochridge: Perfect. Thank you guys very much.
Operator: Our next question comes from the line of Chris Pierce with Needham & Company. Please go ahead.
Chris Pierce: Hey, I was wondering if you could comment on competition within Level 2 charging and with Tesla kind of coming down towards Level 2 and then Level 3 seems to get a lot of the airplay within the industry. Is it potentially that — your potential, your customers are holding off on Level 2 and preferencing Level 3 and that’s kind of putting you at a disadvantage or is that kind of not the right way to think about it, just the competition in Level 2 and the interplay between Level 2 and Level 3?
Rick Wilmer: So I don’t think there’s a trade-off between the two. I think Level 2 and Level 3 fit into a customer situation depending on their use case and the needs that they have. So, I don’t think there’s one stealing from the other. Level 2 in home, we obviously saw a record quarter as we reported. When it comes to workplace, this is what we alluded to earlier where in commercial in general, not just workplace, I think we’re seeing this viewed as a discretionary purchase. And the CFOs of the world are being cautious with discretionary purchasing. But we also see pressure building with the increased utilization as we mentioned earlier.
Chris Pierce: Okay. And then, if I understand you correctly, on the last two quarters, you’ve taken inventory charges. But without speaking to revenue, margins in the fourth quarter and beyond should kind of revert back to where they were in the last fiscal year. Like, what’s the right way to think about, or will there be a little bit of a hangover until you run through inventory? Just want to make sure kind of some guidance on modeling margins maybe.
Mansi Khetani: Yes. Yes, so again, we are not giving guidance to Q4 growth margin, but I can tell you what I’m thinking right now. I think Q4 margins come back in line to the normalized Q3 margins. Obviously, it may be slightly up or down depending on where the final mix lands. And then, next year, I think we will start seeing an improvement from Q4 based on the Asia manufacturing strategy, the fact that this impairment has already been taken. So, all of our costs are extremely clean now. So, we should see fewer material variances. So, all those things should have margins improve next year.
