Toshiya Hari: Got it. That’s very fair, and helpful. As my follow-up on gross margins, Cary, you talked about Q4 being up sequentially. I was hoping you can kind of walk through the puts and takes, not only for Q4, but also over the next couple of quarters, if you can kind of touch on, your expectations for foundry costs or wafer costs, your pricing profile going forward. And you talked about M800 coming in, starting next year, but how can that help your gross margin profile, say over the next couple of quarters? Thank you.
Cary Baker: Yes, I got this. Yes. So as I look to — start with Q4, I think gross margins may increase. We had — if you think back to my guidance on Q3 gross margin, a signal that we’d be impacted by two things. First, we have lower revenue scale against fixed cost in our operating cost structure. And then we had a softer mix of product, particularly reader IC. As I look into the Q4, I think our product mix normalizes. So we get some of that back, but we’re still subscale at a guide midpoint of $67 million. So that’s the dynamic. We’ll see a little bit of lift, but I don’t anticipate us getting back to the 53%, that is our targeted level right now. As I look into 2024, I expect the mix to continue to be normal. I expect, eventually revenue to start growing again as the retail market recovers.
And as we grow, back into the revenue level that we were in the first half of this year, I would expect to get the full realization of scale in our gross margin. And that takes us back to that 53% targeted range. Now on top of that, as the M800 layers in, I expect gross margin to further improve. We’re at the very early days of the M800 ramp. Most of our partners are still in the certification or qualification process. So we’re not really shipping M800s at this point. As they make the way through that qualification process, we’ll start shipping in and then the demand will start ramping. I will keep you up-to-date on our progress on that ramp.
Chris Diorio: Yes. And when Cary says we’re not really shipping, M800s yet, it really is relative to the overall opportunity in front of us from M800, which is quite large. The ramp has started. And we have smaller opportunities out there going now. But, our direct partner are waiting for certifications and approvals. When they’re all in the approval cycle right now and for the most part in the approval cycle right now, and as those approvals start coming through, we expect the ramp to accelerate.
Toshiya Hari: Thank you so much.
Chris Diorio: Thank you.
Cary Baker: Thanks, Toshiya.
Operator: The next question comes from Jim Ricchiuti – Needham and Company. Please go ahead.
Jim Ricchiuti: Thank you. Earlier in your script, you talked about steps you’re taking to improve demand forecasting and inventory management. I was just wondering if you could elaborate on that.
Chris Diorio: I will start with the demand forecasting, and I’ll probably let Cary layer in as well. On the demand forecasting side, the market turned earlier this year, It wasn’t just we who were — who didn’t anticipate the magnitude of the decline, it was our direct. When I was at this, the conference just last week, I had many of our partners and their partners and service peers basically said they didn’t see it come. And I’m feeling personally, we should have seen it coming. We should have seen it coming at least better than we did. And it’s a learning experience for us. We were significantly relying on our industry’s view. What I want to do now is rely Both on our industry’s view and a lot more on the macro view, leveraging what our enterprise end users are seeing directly, trends in the overall market, trends in the retail market, trends in the supply chain, logistics market, and taking into account at a higher level.
What the macro is doing and use that to kind of set a basis for ourselves. So be more forward looking in terms of what we’re doing from a larger macro perspective. I’m not saying we did anything wrong in the past. We did everything we could do in terms of engaging with our partners. And working with them and understanding what they expected their demand to be. But I want to layer on top of that. Overall, understanding of the broad market because quite frankly, that’s what we’re selling into right now. We are selling into their retail macro. Cary, you want to make a choice on inventory management?
Cary Baker: Yeah, Jim. This is Cary. So on the end of the channel inventory side, we’re doing multiple things. We’re increasing the frequency of our channel inventory reporting, so we can stay closer to, call it sudden swings in the channel inventories, which will help inform demand planning as well. We’re also going, reaching further into our distribution model, if you will, to talk to customers and partners beyond our in partners, our direct partners to understand how their demand is trending, how their inventory levels are, all in an effort to better inform you know, how we and our partners run the level of inventory in the channel.
Jim Ricchiuti: Got it. My follow-up question, Chris, Amazon recently talked about their use of RFID. For this, this, just walkout technology solution. Can you comment at all if you’re working with them? And if you can’t talk specifically about it. I’d be curious just to get your perspective on their comments about this or about the application.
Chris Diorio: So, Jim, to the first part of the question, I obviously can’t say anything about any particular opportunity that has been identified publicly as associated with us or not associated with us. In terms of the broader opportunity, I have always firmly believed that just walkout solution or whatever you want to call it in different opportunities, will include both a combination of RAIN RFID and vision it just makes logical sense. If you use RAIN RFID, you can tag individual items, for example, for a meat product or something like that. You know, exactly what the items cost is because, the items cost is attached to the tag. The vision system can just tell you what the item is, not its weight. For, loss prevention opportunities, we can identify the item being stolen, but can’t tell you anything about the first stealing it, a vision system can tell you the fact the person’s stealing it, but not much typically about the item.
So I see going forward, the opportunity to blend the two technologies together to provide an overall just walkout opportunity, which will include loss prevention as we’re driving into. So without speaking about any one company’s particular comments, I will say again that I have several meetings, last week, around this overall opportunity to speed consumer checkout and quite frankly, to delight consumers in their shopping experience. And those conversations all rely on the same thing. It’s a combination of RAIN RFID and vision systems and self checkout to drive an overall positive customer experience.
Jim Ricchiuti: Got it. Thank you.
Chris Diorio: Thank you, Jim.
Operator: The next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
T. Michael Walkley: Great. Thanks. It’s good to hear some of the green shoot comments. But, Chris, I’m going to switch gears a little bit. Just you mentioned the updates with NXP. Can you help us maybe frame the opportunity there? You talked about a potential monetary award. Is this something maybe you think you could reach a royalty type agreement with them over time? And I know you’re trying to go back after the injunction and, maybe you could share with us how your customers feel about the potential of an junction with NXP. If you’re able to meet demand, you shouldn’t have junction happen down the road?
