Matt Moynahan: Sure. So I’ll just walk through a high level math. And Jorge, please feel free to dive in. So on total expenses that came through, about half of them came from the digital agreements side of the house, 30% of them came from security and 20% from G&A. And we can let Jorge walk through some of the details on that. But let me just give you the high level narrative. On the digital agreement side of the house, obviously we committed since day one to profitable growth. Digital agreements was always going to be that primary growth engine, given the size of the e-signature market. And security, obviously, we’re going to consistently run for cash flow. On the DA side of things in addition to the macroeconomic, it was clear for us that the operating leverage that we thought may be there from cross selling into our installed base, essentially turned into a completely new sale.
Okay, given the distance between the buying centers and the influencers on the security side of the house versus selling through side of the house. And so we rebalanced our sales capacity, not just in the direct sellers but also with the sales development reps and the sales engineering community attached to those sellers to really make sure that we focus really on not so much the 1,000, which we spoke about before, which was 1,000 top install base customers, but really as we created this new digital agreements division on the top 500 installed base customers for digital agreements, which have really been driving our growth. So the increased focus on the installed base of the digital agreements community, coupled with our execution, I would say have a more focused go to market, which focused on Tier 1 common law countries really provided us the opportunity to reduce the size of the sales force and the marketing spend associated with those other countries where we weren’t seeing material growth, and really having a more focused effort, making sure that North America and Canada, which are the Commonwealth countries where there’s exceptional product market fit, get the lion’s share of our attention.
And we’ll continue to sell the product globally. But the way we’re serving that market is slightly different. Then we’ll continue to evolve as we get a more cost effective approach with the self-serve Try and Buy model coming in Q2 of next year. So I would just say it was rebalancing and be focusing on the DA business to ensure that we get that beachhead of growth in common law countries that allow us to do some of the sales capacity across the executive sales, engineering and STR communities inside of OneSpan.
Jorge Martell: And Anja, just to add into your first question. So in terms of the split, S&M or sales and marketing was about close to 40%, then R&D about 27%, and then GNA about 15%. And then there’s vendors that go across these three sections. That’s about 20% of the savings. And as Matt said, digital agreements, it’s about 50% of the total savings combined.
Anja Soderstrom: Okay. Thank you. And also I think you alluded to it in your remarks, Jorge, but for the fourth quarter, you’re implying with a full year guidance on the adjusted EBITDA that that will be lower. Is that because of the one-time items in the third quarter or –?
Jorge Martell: Yes. Thanks for the question, Anja. So I think there’s two or three dynamics that I think it’s important to explain. One is the visibility that we have into particularly the hardware margins, which is very depending on the customer mix, as I mentioned. So this quarter, we benefited from that, particularly because a larger portion of the orders went to APAC, which have a higher margin. In Q4, we have the stability. That mix is going to shift. And so that’s going to have an unfavorable impact on the hardware margins. The second component is the increased amortization of cap software. As I mentioned, that is going to impact our DA. Also security, but to a larger extent is going to be DA. And so the mix of revenue does impact profitability. And so I think you’re going to continue to see these restructuring taking hold, taking place and OpEx coming down, but these other dynamics on the profitability side will impact that number in Q4.
Anja Soderstrom: Okay. Thank you. And then one last on capital allocation and the Dutch auction tender offer. What made you decide for that? And what are some other options? And you acquired ProvenDB. Is that acquisition in the pipeline or how are you thinking about that?
Matt Moynahan: So we do continue to look at tuck-in acquisitions for sure. We’re hard at work at that and are committed to our overall strategy. We do believe it’s prudent, particularly with this pivot to the new operating model, Anja, that we have the flexibility given that we have proven since day one our ability to control costs. And that’s the one thing we’ve been very, very consistent in. We’ve simply changed the capital allocation model from investing more materially in sales and marketing to having that cash on the balance sheet in addition to the operating model pivot that we feel comfortable going and returning 20 million-ish, if you will, to this Dutch tender offer. That is not we’re not continuously looking for tuck-in acquisitions. In fact, this environment is quite favorable for those. But obviously, you want that fit to be truly strategic, like the ProvenDB acquisition was and we’re going to hold out until that becomes the case.
Anja Soderstrom: Okay. Thank you. That was all from me.
Matt Moynahan: Thank you, Anja.
Jorge Martell: Thank you.
Operator: Thank you. And I would now like to turn the conference back to Matt for closing remarks.
Matt Moynahan: Thank you everyone for joining. I really appreciate your time today and attention. I look forward to sharing progress with you next quarter. And thank you all and have a nice day and a big thank you to the OneSpan team as well for all the hard work over the past quarter. Thank you everyone.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
