So, we are working as hard as ever on sourcing and developing potential acquisition targets, but I’d say again, we’re still I think pretty disciplined on making sure it’s the right opportunity. It’s got the right value proposition and Digi — it can help Digi succeed, but also improve our model. In particular, we look at companies that have a significant amount of annualized recurring revenue, they’re growing that — they are profitable and we have a right to partner with them.
Michael Walkley: Great. Thanks for taking my questions. I’ll pass the line.
Operator: Thank you. One moment for our next question. And our next question comes from Harsh Kumar from Piper Sandler. Your line is now open.
Harsh Kumar: Yeah, hey guys, solid guide all things considered, given the state of the economy and Ron, to that end, you maintained your full-year guide as Mike pointed out, if I look at your quarterly numbers you sort of started high about a year or so ago. And then you’re maintaining your guide, which suggests you’re expecting a pickup in the back half of the year. So, with that tune, can I safely assume that the inventory correction that everybody was worried about particularly you yourself in your business, is that correction coming to an end, and can we safely assume that we’re close to the bottom of it.
Ron Konezny: I think without a doubt, our annual guide assumes really sequential improvement in our performance over the fiscal year. I think it’s a combination of, I think, customers digesting and normalizing their demand and inventory levels. I think it’s also in part, Harsh, driven by our previous comments we made around our Opengear teammates that see — the strategy is coming back in the second half of our fiscal year. We see also, I think, some of the comments from our Solutions teammates that really are starting to now be in a much better position to grow. They’ve got some of the pruning that their customers they behind them. So I think that combination of things has us feeling confident about our annual guide.
Harsh Kumar: Great. And then I think you were making a push — Digi was making a push to incorporate software into hardware sales and I’ve seen a lot of other companies that make hardware do that at very profitable margins, I was just curious if you could give us an update on how that’s going, I certainly think that’s the right way for you guys to go but I’d be curious on how things are going.
Jamie Loch: Yeah, thanks. Thanks for the question. That is the number one priority for this company is to progress from being more product-oriented company to a solution-oriented company. We’re going to leverage our rich and long history in providing outstanding edge devices, but increasingly, we’re going to differentiate and satisfy our customers with software both quite frankly on the device, but also in the cloud and remote deployments. So those themes are going to be mega themes that are going to last and we’re seeing customers and quite frankly internally respond. I was at — a brief story, I was at CES this year and I had an opportunity to meet with one of our larger prospects, and for the first time in my nine-year career, they asked me what the software subscription program was for the product, which almost brought me to tears.
But I think what’s happening is the constant changes in security, regulation, technology, business opportunities, and challenges, it is no longer set it and forget it, you’d have to actively manage your remote IoT solution and the things that it is connected to, and I think the market is really coming and embracing that context and providers that can help them on that journey.
Harsh Kumar: Good stuff, guys. I’ll get back in the queue. Congratulations on maintaining full-year guidance and it seems like hitting the bottom.
Operator: Thank you. And one moment for our next question. And our next question comes from Anthony Stoss from Craig-Hallum. Your line is now open.
Anthony Stoss: Good morning, guys, nice execution. Ron, for you, I’m just curious if you’re seeing any pricing pressures above what you would normally expect in any of your business segments. I’m curious which is better, and which is worse. And then maybe for Jamie, can you give us a view, do you expect gross margins to be stable for the rest of the fiscal year?
Ron Konezny: Hey, Tony. Good morning. We’re not seeing really price pressures. I would say price increases have certainly moderated from COVID area where it’s really tough to get inventory, quite frankly, we see more conversations around terms and price. People are looking to have more discussions on MSAs and things like that, but price, I would say, gone are the days of necessarily rapid price increases, but honestly price decreases either.
Jamie Loch: Yeah, And Tony, I think on the gross margin side, we certainly think that the gross margins will be stable. In fact, I think we’re running on multi-quarters now of kind of that 10 basis point, 15 basis point, 20 basis point improvement sequentially. And I think we’ll continue to see gross margins stay out or even continue to click up by basis points here for the remainder of the year.
Ron Konezny: Yeah, and the dynamic there, Tony, is really ARR and we’ve been very prominent that ARR will go faster than our top line. We’d like to leave with ARR as the first metric because it’s so indicative of our journey to be a solutions provider, it has higher gross margins than our product gross margins. And it really — with good operational discipline leads to higher both gross and EBITDA margins. And so that’s been our mantra. We’re not going to be perfect, but that’s the trend. And I think to Jamie’s point we’ve exhibited that, especially in the recent quarters.
