Jamie Loch: Yes. Thanks, Mike. I think on the inventory side, I do think that as the supply chain normalizes, the two elements of the inventory balances components will definitely start easing their way down as those components are converted into finished goods. Finished goods, that inventory balance is up — it’s up a tick. And if you look over historical numbers, I think Digi kind of normalizes in that kind of pinpoint around 3x turn on finished goods. So I think there’s a period of time there. And I don’t think it’s — you’re not going to see inventory just kind of drop off a cliff. I think it will be over a period of time. But to your point, that’s really going to have a good impact on our operating cash, and that’s going to enable probably a more aggressive posture on debt paydowns as that inventory balance comes down.
So it will come down, but I don’t think it will fall off a cliff. In terms of seasonality, undoubtedly, our first fiscal quarter does have at least some element of seasonality to it for issues that you pointed to. It’s typically year-end for a lot of our partners. They will traditionally work on lowering their inventory balances. They — you will have certain customers that are maybe a little bit more budget dependent, and they may be coming up at the end of their budgets. You do have some different cycles. So that Q1 traditionally has a ticket seasonality. I won’t say it’s, again, similar to the inventory story. It’s not off a cliff, but there is probably a little bit of a tick to it in the first quarter, and then it just kind of gradually works its way through for the rest of the fiscal year.
Ron Konezny: The ARR, which is approaching 1/4 of our total revenue, definitely is a buffer against that seasonality. So it’s less so, Mike, than years gone by, but still a little bit element of that in there as well.
Mike Walkley: Okay. That’s helpful. And one last one, I guess, Ron, I’ll pass the line. Just you had some comments in the shareholder letter just about M&A. Can you talk about maybe valuations in this environment? And given your three $100 million and the cash flow that you’re generating, what is kind of the appetite for M&A right now for Digi given strong track record so far, consolidating the IoT industry?
Ron Konezny: Yes. It’s another good question. We remain assertive in our posture on acquisitions. As you know, we’ve been really wanting to focus on fewer larger opportunities, those opportunities that have significant ARR to continue our solution strategy and build up that muscle as a part of our overall financial picture. I’d say that deal flow is increasing compared to, say, the first half of the year as well as there’s a bit of a dichotomy, I think, and expectations on valuation. Those properties that are stronger are, I think, either waiting until better times or insisting on maybe more robust treatment. And that — but there’s also a lot of things where the investors have maybe gone tired or had some fatigue there and are looking to refresh their portfolio.
We’re probably not going to be as active in the latter. We’re probably more active in the former there. But in the meantime, as Jamie mentioned, we want to realize this inventory cash dividends, pay down our debt, certainly more aggressively than we’ve done in FY ’23 to date. And prepare us for that opportunity that we don’t always, of course, control the timing of. But the more quickly, we’re available, the more capacity we have, the better position we’re going to be to compete.
Operator: Our next question comes from the line of Harsh Kumar of Piper Sandler.
