Ron Konezny: Yes, it’s a good question. Most of our solutions business is really focused on the North American theater and Europe presents a wonderful opportunity. We’ve had the good fortune of not having a lack of market to go after North America to hit our growth expectations. And as you know, when you get into Europe, it quickly evolves into Germany, France, Spain, the U.K., because although it’s the EU, a lot of them have local regulations, local cultures, local language and other things. So we’re careful when we think about Europe to be more country-specific than just the entire theater. But that certainly represents a future opportunity for us. And I think when the time is right, we’re going to probably be dragged into there by our customers rather than, say, establishing base camp and opening up a storefront.
Operator: The next question comes from the line of Scott Searle of ROTH MKM.
Scott Searle: Ron, maybe to dive in on some of the end markets, particularly around the routers and cellular gateways and open gear without a band. I’m wondering if you could give us kind of an update on where you’re seeing demand, how the channel inventory is looking particularly on the gateway front as we look into the back half of the calendar year?
Ron Konezny: Scott, we were pleased to really see strong results across our product line. So that was — if you look at our portfolio, that’s really good to see. Each of our product lines has a little different focus area in terms of the verticals that they’re exposed to. And that is, I think, a real benefit for Digi in that we’re not, say, overweighted in one vertical where you can have maybe higher gyrations of performance. So for example, if you look at our Opengear console server product line, they’re getting quite frankly, more opportunities on the edge than the data center where that was really flipped if you look to, say, three years ago, the data centers real driving the growth. So the extension of that IT remote presence has extended into storefronts, retails, offices, banks, insurance companies.
So that’s really good to see. If you look at our OEM solutions business, continued strength in Medical devices, continued strength in renewals, solar, EV charging, in our cellular router product line, we’re seeing a — thankfully, renewed strength in smart city and public transit, which, as you know, during COVID was essentially shut down. In addition to utility segments, which are looking at, well, public and private networks to upgrade the monitoring of their grids to ensure uptime and performance. So we were pleased to see both the performance, but also the distribution of that performance across verticals.
Scott Searle: Very helpful. If I could follow up on it. Are there any pockets of inventory that you’re seeing by vertical run that are concerns at the current time?
Ron Konezny: No, not really. We — our channel partners, they’re typically going to be multi-vertical and not overweighted to one. So we don’t have any particular concentration by vertical.
Scott Searle: Got you. And if I could, just one last one. Looking at the traditional gateway business, we’ve been talking about the potential to convert that into more of a recurrent revenue stream model off the Ventus model. How are those channels receiving that message? How is that progressing? And what are the high-level thoughts there as we look out into fiscal ’24?
Ron Konezny: Yes, it’s a really good question, Scott. As I think the audience knows the cellular router group, well, obviously actively working with end users, works very closely with the MNOs as well as channel partners. That’s a critical part of their cadence. Whereas on the managed solutions side, there may be a partner involved, but you tend to be directly working with that end user much more so than going through a channel. And so it’s going to be an evolution, not a revolution as we introduce that model into the channel and start educating them, it’s not as intuitive for them. But we think we can be successful. It will take some time because it’s a pretty different thing that they’ve been doing to date. And a lot of the work we’re doing on take rates really for software really applies to the managed network service offering as well.
