Assaf Zipori: It is going to help. But we’re very pleased with the gross margin expansion that you’ve seen in Q4. And during 2024, we should be within the range of 48% to 50% as we ramp up the FX20 steel. And we also introduced the FX10 that we need to ramp up. So longer-term, we are targeting gross margins to be within the mid-50s, but it will take us time to get there. 2024, we’re still under the ramp up of the FX10 and FX20, and that’s why we’ve given this guidance of 48% to 50%.
Tyler Hutin: All right, sounds good. I’ll leave it there and congrats on the quarter and talk to you soon.
Assaf Zipori: Thank you.
Shai Terem: Thank you.
Operator: Our next question is from Jacob Stephan with Lake Street Capital Markets. Please proceed with your question.
Jacob Stephan: Hey guys. Thanks for taking the questions. And Assaf, congrats on the official announcement. Maybe just to start out, could you talk a little bit about the FX10? Just where are you seeing the strength vertical-wise? Maybe we’ll just start there.
Shai Terem: Yeah, I would try this one. So look, you probably know, but our core solution around Mark Two and X7 is solid solution and around advanced composite used in the factory floor to build jigs, fixtures, tools into MRO to reduce costs, move into digital inventory, and been used more and more into end use parts with machine builders. Now, a lot of our customers need higher productivity and they need bigger parts on this advanced composite. And this is where the FX10 goes into the picture. It’s like an X7 on steroids, with a lot of automation, a lot of functionality, and with time, even more versatile on the material side. So this is the big advantage of that solution. We see great demand, great demand since the launch in Formnext in November, and we’re going to work diligently to fulfill this demand.
And also the price point of this solution is very, very attractive and the value that it gets to the customer is very high. So I think even in a tough CapEx environment, it will be an attractive solution that we believe will be able to increase materially the growth of our total revenue with that solution.
Jacob Stephan: Okay, got it. And maybe just to touch on. Obviously, subscription services growth was strong year-over-year, but maybe kind of what’s driving the strength? Is that further adoption by a customer like Automation Alley or maybe could you just kind of talk about what the – where the strength lies in growing subscriptions?
Shai Terem: Sure. So I think there are two drivers. The first one, if you remember, I think a couple of years ago we transitioned our solution to subscription-based solution that is given higher value to our customers and for multiple years. And we start to see the effect of this, because more and more of our customers are choosing to go into real partnership with us into multiple years, and with that, they are choosing to subscribe to the full solution. The second, as we’re going deeper and deeper into the manufacturing floor, our customers require this level of service, this level of SLA, and they really need the software differentiation that we have if it’s around the enterprise solution, if it’s around the simulation, et cetera. And this is where we see significant increase in the adoption. And these are sometimes multiyear contracts which increase in our recurring revenue, which is also very important to our path to achieve profitability.
Jacob Stephan: Understood. I’ll leave it there. Good luck, guys.
Shai Terem: Thank you so much.
Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to Shai Terem for closing comments.
Shai Terem: Thank you very much, everyone for joining us to the fourth quarter call and we’ll see you in the next one. Thank you.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
