There’s upcoming trade shows in the fall in the industrial markets both in battery market and in the additive market. But that’s — those are the key drivers for us that give us the optimism for new design wins that our new products with current customers and new customers that give us that optimism.
Jim Ricchiuti : So, Scott, do you have customers in the EV battery manufacturing market that you’re adding other than the customers that you’re working with where you’ve had traction with the process monitoring solutions? I’m talking specifically about the lasers.
Scott Keeney : Correct. Yes, these are new customers. Some existing customers who are expanding and some new customers also. Again, that market is a rapidly growing one. It’s one that is evolving fairly rapidly. And we’ve always had good relationships, but we’re expanding those. And we’ve got good presence not only in the U.S., Europe, South Korea and China.
Jim Ricchiuti : So as you look out to 2024 you think that this part of the industrial business does it have the potential to be meaningful in your overall industrial revenue stream?
Scott Keeney : Well, I think from a revenue standpoint, I would highlight defense and probably additive on the incremental adds more. But in terms of the progress we’re making certainly we hope to provide more background there in battery welding also.
Jim Ricchiuti : Yes. Thanks a lot.
Scott Keeney : Thanks, Jim.
Operator: The next question comes from Greg Palm with Craig-Hallum Capital Group. Please go head.
Danny Eggerichs: Hi. This is Danny Eggerichs on for Greg today. Thanks for taking the question, guys. I think first maybe just digging into the Q3 guide a little bit more and some of the assumptions behind that. I guess, from a geographic perspective, what you’re seeing out there it seems like North America held up relatively well and maybe there was some weakness in Europe and then end markets. I appreciate the color on microfab. But are you expecting solid growth in A&D still and then maybe industrial falls somewhere in between there?
Joe Corso: Yes. Thanks, Danny. I think the way that I would characterize the guide is, we have a little bit more visibility obviously in the defense business. So we have a better perspective on what we can do in defense as we talked about in Q2. Part of that is really going to be sort of some of this project timing both from a labor and material perspective. And we continue to sort of see macroeconomic challenges in the third — sorry, macroeconomic weakness in both the industrial and micro markets. So it’s been really difficult to predict how the customers are — what their take rate is really going to be. And that’s globally. That’s both in China and the rest of the world. So I almost would categorize the third quarter a couple of million dollars either way as sort of hopefully kind of bumping along the bottom.
But as Scott said earlier right we’ve got what we think the right design wins in place with the right customers coupled with some defense wins that we do think that that is going to grow. But in the third quarter, it’s a lot of the same that we saw in the second quarter quite frankly.
Danny Eggerichs: Okay. Makes sense. And then maybe one on gross margin in Q2, just looking at kind of the sequential step-down off similar revenues to Q1 and it sounds like mix wasn’t necessarily a factor. Can you just go through what was kind of the drivers behind that sequential step-down?
