Gary Smith: Well, I think you answered the question on that, Paul. I think you’re absolutely right. We’re a much different company. We’ve got much greater scale. And I think the complementary nature within the switching and routing technology that we have is €“ the context of it is very different because we can wrap all that stuff around. And the customer relationships that we have. We’re now the largest player by quite a large way in the space that we’re in. And those relationships have been developed and matured. And we think now that with bringing on Benu and Tibit, it really provides an excellent complement to the portfolio that we’ve already got.
Jim Moylan: And to be clear, Paul, it’s approaching 20 years, so
Paul Silverstein: Thanks.
Gary Smith: Katherine, we are ready for the next question.
Operator: Our next question comes from Samik Chatterjee with JPMorgan. Your line is open.
Samik Chatterjee: Great. Thanks for taking my question. I had a couple, and maybe if I can start with the gross margin outlook here. Jim, the gross margin outlook that you’re providing, I don’t know if you can walk us through a bit more of the puts and takes because it does sound like with the revenue, out sized revenue growth you’re expecting, you should have a bit more leverage to the gross margin, particularly with most of the sort of new product shipping at that time. But maybe help me understand sort of any pressures, and also sounds like your sort of pressures from a supply logistics perspective are going down. So we would have expected a higher number. Maybe walk me through the puts and takes, and I have a follow-up. Thank you.
Jim Moylan: Yes. The big driver of our gross margin is mix of products, and we do have sort of a continuum of margins. Typically, the early parts of projects we’re laying down line systems or we do that at lower gross margin. When we fill those line systems with capacity, we’re putting in cards or modems, which are higher margins. That’s just the way the business works. It helps our customers get through the early less than fully loaded conditions in their network. So that’s the way it works. This year or in 2023, our expectation is that our mix will shift pretty significantly toward line systems. That’s why we made the comment that we’re talking about starting to ship on some of our new wins that we’ve had over the past year.
So that’s what’s going on in our gross margin, and we will see how it comes out, but that’s our expectation. We do think that the exception costs will ease in terms of the percentage margin effects. But they are still going to be there, and that’s going to impact gross margin. What we’ve said is that, that probably cost us 400 basis points or something like that last year. And it’s going to cost us something like that, although maybe a little less in €˜23. And finally, I’ll make the point that we are totally outsourced in terms of our manufacturer. And so our cost per unit is mostly variable. We don’t have a lot of fixed cost in our gross margin. We do have some, and that helps when we get our volumes. But the biggest part of our cost structure is variable and varies per volume.
Samik Chatterjee: Got it. And for my follow-up, if I can sort of ask you about what’s sort of embedded in terms of supply improvement in your fiscal €˜23 revenue guide? Because when we look at sort of €“ even the average of 3Q and 4Q, you’re above $900 million run rate, and you’re expecting that to go north of $1 billion. Is that generally as you talked about more predictability from your suppliers, and the upside there could be being able to buy more from the open market? I’m just trying to understand what’s embedded in the guide for supply? And what sort of downside or upside to that number can come from? Thank you.
