Gary Smith: Thank you, Meta. Jim, why don’t you take the first part of that, the gross margin question?
James Moylan: Well, thanks, Gary. As we’ve always said, Meta, the most important element of our gross margin historically and for the future is mix. And we have won a lot of deployments and new projects with customers all over the world, including the web scalers, which calls for our new reconfigurable line system. We expect that this year, we will deliver a much higher proportion of what we call RLS, Reconfigurable Line System to a bunch of customers and those deployments will have a dilutive effect on our gross margin. It hasn’t happened to a great extent so far, but it will happen. And so we think it’s going to impact our gross margin to the downside over the next couple of quarters. On the other side, we do think that exception costs, which we said last year cost us probably 300 basis points or 400 basis points to our gross margin will begin to come down.
And these are the costs that we pay to brokers, for components on the broker market as well as higher logistics costs. So it’s the combination of a mix shift and these exception costs, which is influencing our margin right now. We did say in Q1, we had a higher percentage of modems, which are higher than average gross margin. We do think that, that percentage of modems will come down a bit as we go through the year and start to deliver RLS. Now for the future, we think that all of these things will tend to average themselves out and we do think over the next few years, we’ll get back to the mid-40s gross margin that we enjoyed back pre-COVID. Gary on AI?
Scott McFeely: Yes, Meta, on your AI question, you’re right, the community of interest right now is largely in the back end of the data center. But as you look at sort of those data center architecture is becoming more distributed due to the requirement of having to get more and more power to service the applications and you look at the traffic that AI is going to generate, that’s going to have a bleeder effect on the WAN side traffic which is a good thing for those of us that are in the bandwidth business. And it will be both in the web-scale direct networks as well as the service providers that service those web-scales. The second thing I’d say, there’s a lot of interesting dynamics going on in the architectures as people look forward into the future of this AI world inside the data center.
And those architectures are starting to yield conversations around where does the coherent technology play. Those architectures of the future and you would have saw on our WaveLogic 6 announcement, starting to talk about industry has kind of phrased coherent light and the capability being in that generation of technology for us to take advantage and participate in those architectures. So that’s a new-new space for us. So not necessarily in a timeline of our of our three-year revenue guidance. But just beyond that horizon, we start to see those opportunities.
Operator: The next question comes from David Vogt from UBS.
