Eyal Harari: Thank you, Arjun.
Operator: The next question is from Alex Henderson of Needham & Company. Please go ahead.
Alex Henderson: Thanks. Eyal, a little surprised that you are deciding to move on at such a young age. I understand that just hard to fathom, but congratulations on the decision. I was hoping if you could talk a little bit about the rate of growth produced — you’ve produced double-digit growth in each of the last two years. Is it reasonable to think that in 2024 that the alleged growth is containable on the top line? And you mentioned several times in the call, potentially accelerating it. Is it reasonable to think that the acceleration is going to happen here?
Eyal Harari: Thank you, Alex. Yes, as you saw our guidance for the year, we are looking to continue at minimum with double-digit growth. And if you look on the higher range of our guidance, this could be further accelerating compared to what we do today. Our business model with over 70% recurring revenue is supporting our long-term growth. And it’s all based on the execution on keeping the run rate and further evolve with our existing customers and winning new logos and enhancing our market share. I believe that 2024 is the year that we will start to see more in 5G SA, as I previously commented. And this is why we continue and increase our sales and marketing. So definitely, the plan is to — and the trajectory is to continue this double-digit growth over the multi-year.
And I’m personally optimistic that we can actually accelerate our growth, and it all depends on the pace of the operator adopting the 5G SA getting into live and our ability to execute well and win those new logos. From past experience and with 20 years in the telco, usually with any technology evolution, it takes a lot of time. But once the technology is mature — is maturing, then you start to see the adoption rate goes much higher. And the next 18 to 24 months is where we expect the 5G SA to really become more popular, and this is why I definitely believe there is a potential to accelerate the growth even further.
Alex Henderson: So given that backdrop of 10%-plus growth, you’re talking about a pretty significant acceleration in spending around sales and marketing, if I’m reading it correctly, a 20% to 30% increase in the number of teams. Is that — can you give us some sense of what do you think the sales and marketing line is likely to do under that scenario? I mean, we’re talking about compression in operating margins this year.
Eyal Harari: So we are in the process of shifting and moving resources from R&D to sales and marketing. That increase is incremental. So we will get some of the increase in the first part of the year and some of the increase will come only later in the year. And as an answer to Arjun, this will follow the development of the 5G SA. So I think this is the best vote of confidence in the business we see, and we will adapt it to the pace of new 5G SA RFPs that we see, new opportunities we want to cover. We want to make sure we don’t miss the market opportunity, and we believe the next, as I said, 18 to 24 months are going to be critical to win the market share, and we want to be ready with the teams. We are going to focus in — we’re already very strong in North America.
We are going to increase our presence in Europe. And in specific countries, we find with the best fit to our product lines where quality matters where we are looking for innovation, where we look for assurance solutions that will allow them to do the transformation like Japan as we work for many years with Rakuten. And this is why we are coming with this strategy.
Alex Henderson: I understand the strategy. I’m looking for some quantification of the strategy. Is it reasonable to think given the commentary around sales and marketing expansion that you’re going to compress the operating margins in 2024?
Eyal Harari: No, the operator margin will improve as we are looking to grow significantly in the revenue and the increase in the — the overall increase in the operation — and the operational cost will be lower than the increase in the revenue.
Alex Henderson: Okay. So if I’m talking about 20% to 30% increase in the number of teams, what does that translate in terms of the sales and marketing expansion? Is it — how do I — I mean, that’s clearly well ahead of your revenue growth. Even if I hold your R&D flat, it wouldn’t be enough to produce that type of investment growth. So what am I doing to offset it? Is there — are other elements of the sales and marketing costs coming down as a result of the mix shift within sales and marketing? How do I get 20% to 30% increase in the number of teams without increasing the cost by a similar amount?
Eyal Harari: As mentioned, we are going to be lowering our R&D expense to cover some of the growth in the sales and marketing. And overall, the sales and marketing is not the biggest expense for the company. So it’s not that we are going to increase the overall operation expense in 20%. And we are going to have only a moderate increase to the operating expense because of this shift. And the sales and marketing increase of teams will take gradually. So on the overall numbers over the year, we are going to have lower impact on the — as it’s not a full impact from January. Some of them will come in the second part of the year.
Alex Henderson: Okay. Thank you.
Operator: The next question is from Charles Elliott of IPI. Please go ahead.
Charles Elliott: Thank you. Eyal, first, thanks very much for all you did for the shareholders over the last few years and good luck. In terms of your future, are you going on to an equally active role? Or is it more like you take a sort of Chairman’s position and — or non-executive positions?
