I think our kind of Latin American business was naturally in a place of uncertainty. And since we’ve now been able to settle the future of that business and we’re going to have businesses of scale, with the mix combination, then we’re starting to see pipeline grow again. And from an Israel perspective, despite the fact that we naturally in the short-term have some headwinds, the development of pipeline, particularly in the B2B space is still remains strong for the medium-term. So I think if you look overall, we’re getting traction there. We’re getting the proof point in terms of the new strategy. Unities really coming out of top in terms of being able to get incremental opportunities for revenue. And then if you take the mix combination, then in terms of the solutions that mix have that we don’t have, particularly the strong in-cab logistics stuff that we’re not so hot on.
And then vice versa, in terms of the industrial solutions that will be available to all mixed territories, we can definitely see the path to the incremental growth rates that we’re alluding to.
Mike Walkley: Great and congrats on all the accomplished to-date, and I’ll pass the line.
Steve Towe: Thanks Mike.
Operator: Thank you. The next question is coming from Jaeson Schmidt from Lake Street. Jaeson, your line is live. Please go ahead.
Jaeson Schmidt: Hey, guys. Thanks for taking my questions. Just given the macro backdrop, curious what you’re seeing from a pricing standpoint. If you’ve seen it get a lot more competitive? I know the telematics space is always fairly competitive. But have you seen any significant changes just given the current macro?
Steve Towe: I think we’re seeing some competitor desperation is how I would describe it. So business is trying to be on at very low rates. We’re not going there. I mean you’ve seen from our strategy over the last year for us. We would rather take more selective over revenue in terms of maintaining and growing profitability. And I think we’re selling far more value. So particularly in the North American market, we have hired a very good set of enterprise software sales folks, who concentrate very much on the value proposition across the C-suite. And that’s allowing us to hold pricing. So, no doubt, the pressure is out there. But again, we very — have very strong conviction in terms of the growth of EBITDA and the growth of revenue alongside it based on the quality of pipeline that we’re delivering, and we think there’s more than enough out there for us to be comfortable.
Jaeson Schmidt: Okay. That’s really helpful. And then just as a follow-up, are you seeing any meaningful headwinds from the supply chain?
Steve Towe: In terms of component supply for our sales?
Jaeson Schmidt: Correct.
Steve Towe: No. We’ve done an awful lot of work in terms of dual and triple sourcing capabilities. Again, a big share to our Israeli supply chain distribution team, in terms of how they go about sourcing and making sure that we’ve got enough inventory to fulfill. So very confident again that as long as our sales team can deliver, then we’ll be able to supply effectively in the coming quarters.
Jaeson Schmidt: All right. Perfect. Thanks a lot guys.
Operator: Thank you. Your next question is coming from Gary Prestopino from Barrington Research. Gary, your line is live. Please go ahead.
Gary Prestopino: Thanks. Good morning Steve and David. A couple of questions. First of all, David, you called out a couple of one-time expenses related to the gross profit on services. And I couldn’t write them down. Could you just go through that again, please?
David Wilson: Yes, absolutely. So, there’s two that offset each other. One is a $400,000 pickup in terms of just import duty from prior period, sort of a rebate there that benefited the product margin side of things. We’ve also been very active in terms of just working the infrastructure side of things as we transform things. There was a catch-up billing that came through to the tune of $400,000 that sort of offset the benefit from the duty standpoint. So, again, from a total gross margin standpoint, this thing is neutral, but that was the pickup that sort of hindered service margins in the quarter.
Gary Prestopino: While you’re saying one thing is for product, one thing for service. I’m trying to understand what you — you said that there was there was something that impacted the services margin because it was down year-over-year. So, that’s what I’m trying to get at. Was that a one-time issue? Or is that something that’s going to be ongoing?
David Wilson: There’s two issues. So, one is a one-time issue, which is this $400,000 out-of-period infrastructure cost that impacted margins. The other thing that has happened and is more prominent this quarter is an increase — a significant step up in terms of the amount of depreciation we’re taking on the Unity platform. So that was about a $300,000 hit. That will be something that will obviously continue on a go-forward basis. The only thing I’d add there is the amount of operating leverage on Unity is massive just because that’s essentially a fixed cost versus the revenue growth that we’ll be enjoying on the back of that investment. So there is a pickup in terms of non-cash costs that have impacted gross margin this quarter and it will be an impact next quarter to.
Gary Prestopino: Okay. And then is it safe to assume that most of the impact on the currency dealt with Isrealian shekel?
David Wilson: Yes.
Gary Prestopino: Okay. And then, David, could you — I’m sorry, Steve, could you maybe talk about the Unity platform? How much is that helping to drive new logos as well as where are you with trying to get the — your base business, your base customer base to accept or adopt the Unity platform. I assume it’s very early stages at this point.
Steve Towe: Yes. So it’s significantly helping us in the race to win new business. Unity is a consolidation platform. So a lot of our customers have multiple providers because this is a fragmented market. So to be able to see their data and harmonize it in one single place is so protractive to them. They also have too much data, too many operating systems and they are looking for someone to help them simplify that to integrate those data sources into the different ways that people want to consume it, which is fairly unique in this market. So that simplification that ease of use, that ability for us to really kind of take people on a digital transformation journey also is helping us to win new business. Plus then the value-added modules with better, more predictive AI insights on top and making the business benefit case a lot smarter for customers.
So that’s all in terms of the reasons why we are winning more new logos and why people are now seeing this as a differentiated solution, that’s number one. And then number two, in terms of people adopting Unity. So the way that we put Unity together is everyone sees their existing functionality that they previously saw in the heritage platforms on Unity today. So in fact, the customers are on Unity. What they then have the ability to do is take on top of that the value-added services of more device and data ingestion, more integration and the value-added modules that are kind of premium modules on top of the feature functions that they have today. So it’s a very easy path. We are fairly early still in kind of the upsell process of that. So we have put together an inside sales team that is now just going out and kind of really kind of having those good conversations.
