And that’s for that same reason, there’s just so much of this market that’s unpenetrated and there’s demand in that large unpenetrated portion of the market. So we don’t see any impact there. I would say it’s — ARPA is not a major driver of our growth, unit counts are the main driver. And like you said, Scott, 5G will push things up a bit, going down market, deals like we have with Cirrus and others will pull it down a little bit, then ultimately GBB will push it up a it. So all these things are going to play out and that’s why we don’t project very large ARPA growth through the planning cycle.
Operator: Our next question comes from the line of Lance Vitanza of Cowen.
Lance Vitanza: Thanks very much for the information thus far. Barry, congratulations, it’s been a pleasure working with you. And Jessi, I look forward to working with you as well. I wanted to sort of focus on the long term targets. The revenue and free cash flow targets, since you’ve introduced these longer term targets have been consistent, fairly consistent, thankfully, but EBITDA margin target seems to be bouncing around a bit. And I think first it was 45% in 2025 and then I think it was approaching 50% by 2026, and now it’s down to 45% by 2027, I think. So just wondering if you can comment just at a high level on what’s going on there and should we expect this target in particular, could remain volatile? And then I have a follow-up as well.
Barry Rowan: I don’t really view bouncing between 45% and 50% as being extremely volatile — approaching 50, I should point out, as Jessi says. So yes, we did guide that, so 48, that was approaching 50. Maybe we’re just below 47, it’s 45% range. So we think those are all very healthy EBITDA margins to begin with. Second of all, I think there are two things over the course of the LTM that are impacting that. First is what I just mentioned around the average sales price on equipment. We have been introducing smaller form factors that go down market and those be priced at lower prices and they will be competitive because we want to penetration down there with AVANCE platform. So that’s a bit of a drag on equipment margin in the out years ago, so brought things down.
And then frankly, we — it’s very hard to predict exactly what’s going to happen in the competitive environment. We talked about it. Obviously, Starlink entered at the high end of the market, we don’t see a lot of progress there, but they have entered. And the way we thought about that is we may need to invest more in engineering in the out years. So we’ve beefed up our ED&D spend even though we don’t have main projects for some of that spend right now, but this was kind of a placeholder to manage expectations. So that’s the other .
Jessi Betjemann: And just to add to that though, we want to make sure that you understand that we are planning to have significant operating leverage, because of operating expenses as a percentage of revenue. We’re expecting that to decline approximately 15 points from 2023. And also, we really want to focus on the absolute EBITDA generation and not just on the margin. As you noted and we’ve been pointing out, we’ve been very consistent on anchoring around more than $200 million in free cash flow, a target that we set over two years ago. So when you look at that — and then also over the latter years of our planning period, the free cash flow conversion is approaching almost 90%.
Lance Vitanza: And that actually ties into my follow-up, which is just trying to get a better sense for what might be happening below the EBITDA line. Given that there has been a little bit of a reset on the EBITDA margin and yet the free cash flow has been holding in firm. So is that — I mean, I can’t imagine that it’s interest expense, but perhaps you’re seeing some advantage, some better performance in terms of cash taxes, CapEx or working capital?
