Adam Thalhimer: Thanks, guys.
Operator: Our next question is from Meta Marshall with Morgan Stanley. Your line is now open.
Meta Marshall: Great, thanks. Maybe first question for me, you guys have talked about a lot of new kind of extension areas that you’re seeing traction, and particularly on the AI side. With the flat OpEx that you’ve noted, just wanted to get a sense of how you’re making sure of kind of touch base with some other new customers that might be entering into this space or how you’re finding better leverage through channels. And then as a second question, just as a reminder on the Communications Group, can you just kind of lay out what you would consider as kind of rough percentages of kind of maintenance standard, so 4G you’re kind of existing 5G versus kind of the next-Gen portfolio. Thanks.
Satish Dhanasekaran: Yes. I would say we’re preserving our R&D investments, so we can outperform the market — continue to outperform the market as it rebounds in the medium-term to long-term, which we fully expect it to. With regard to AI, a lot of our customers are launching AI projects in their own way, whether it’s in silicon or in the networking side. And so, there is a considerable channel leverage there for AI. Clearly, the move to 800-gig ethernet that I referenced with higher interface capacity, higher bandwidth, lower power per bit, all of this are plays to our strength and our leadership there is helping us pick up some orders and set ourselves up as this business scales that we expect it to. With regard to the comms segment, and commercial communications, three dynamics, right?
I would say deployments are continuing to scale. Second, globally and as that scales the business there grows. Second one, it’s really the standards progression, I would think of Release 17 new use cases are driving customer need. And then the research activities around the world around, I call it beyond 5G because it’s too easy to — too early to call it 6G yet because there’s the standard. But beyond 5G that exploration is proliferating and I think it fits our strategy to address the R&D customer.
Meta Marshall: Great. Thanks.
Operator: Our next question is from Mark Delaney with Goldman Sachs. Your line is now open.
Mark Delaney: Yes. Thank you for taking the questions. Follow-up question as it relates to 800-G ethernet and some of the AI activity you’re seeing. You mentioned some orders already on that front, but you described it is still in the relatively early phases. Do you have a sense of when 800-G orders related to AI or are there reasons 800-G may become more meaningful?
Satish Dhanasekaran: Yes. I think it’s hard to put a timing there, but we’ve seen this sort of overlapping waves of technology really be the basis of our strategy, Mark. And having that exposure to both wireless and wireline is a core strength for the company and we’re seeing that play out, even today, the diversity of applications that we pursue. I would say that the 800-gig ethernet abilities — ability to be first-to-market have that capability is definitely helping us now win some early engagements which should set us up well as that industry scales. As the hyperscalers are coming out of the economic situation in their business and as they’re starting to upgrade, they are looking at 800-gig ethernet for some of those technical reasons I just mentioned.
Mark Delaney: That’s helpful, Satish. Thank you. And then on the ESI acquisition you made some comments already that were helpful, including the gross margin accretion. I apologize if I missed this. But can you talk a little bit more in terms of what it may mean in terms of EPS contribution when it’s integrated and how is that progressing over time? Thank you.
Neil Dougherty: Yes. Obviously, this is Neil. We do expect that there’s some complexities of doing a public deal in France, it takes a little bit longer than typical to get the deal fully closed, and for us to then, therefore, begin to start realizing the G&A synergies that we typically rely heavily on to drive EPS. But I think first and foremost, this is a business that we feel like we can grow pretty aggressively with obviously strong software-like margins, we can via the significant breadth and reach of our sales force to get them access to new market participants and then heavily leverage our G&A, our highly offshored low-cost G&A infrastructure to drive significant margin expansion for the business and ultimately drive EPS growth.
Mark Delaney: Got it. Thank you.
Neil Dougherty: Thank you.
Operator: Our next question is from Rob Mason with Baird. Your line is now open.
Rob Mason: Yes, good evening. I wanted to go back to the conversation around these more strategic longer-dated orders. I’m not sure that I still fully understand what the ship schedule or revenue recognition timing would look like on those. And I’m just curious, as well as those have been booked into orders. Have you widened or changed the order booking policy around kind of shippable in next six months around those timing?
Satish Dhanasekaran: Yes. I would say — yes. Thank you. I would say, again, this is a very small part of our business historically, so we’ve never had to speak about it. As a function of the lower order levels today, the presentation appears higher. But I’d — so no change to our order acceptance policy, other than these are complex systems which requires a start work today by inventory and staff people to deliver to our customers. So they are on the books for the right reasons. They’re high-quality deals that we feel good about.
