Miguel Lopez: Well, I mentioned one of the programs on the on the last earnings call and don’t have a lot of updates this go around.
Tim Savageaux: I mean, for you or 20 — doing these compares.
Miguel Lopez: Yeah, no. Let me just be clear. The the U.S. Tier 1 decline, we can describe it in two ways relative to the full company revenue or relative to Cloud & Edge. In the Cloud & Edge, all other customers, excluding U.S. Tier 1, were up 4% year-over-year for the full year. At the corporate level, it was 8% given the increase in IP Optical, obviously.
Tim Savageaux: Okay. And then the rest of the question was, if you’re guiding flat, it looks — doesn’t look like you’re — it looks like you’re factoring in further declines in U.S. Tier 1s. My number is — that seemed terribly consistent with easy compare on the relatively positive second half commentary.
Miguel Lopez: Yeah. We’re being cautious still on what the outlook is and when the incremental spend starts to come back. We are growing clearly in enterprise. We’re growing in Federal. We’re being cautious about what the service provider market looks like. Obviously, we’ve seen growth internationally in that segment. So, we’ll see what we look like over the next few months here and we get a better visibility into the second half of the year.
Tim Savageaux: Okay. Just to beat this completely to death and I should have started right here. So, you expect you’ll be north or south of that 4% growth rate ex-Tier 1s in Cloud & Edge in ’24.
Miguel Lopez: It’s probably a similar number, I think, Tim. The momentum internationally, the programs. In fact, as we book some of these deals, the revenue gets recognized over a period of time. So, we’ve got a good start on that. And so I think I think enterprise, international, Federal, they all they all grow this year relative to 2023.
Tim Savageaux: Okay. Great. Just one and a half more here.
Miguel Lopez: Yeah.
Tim Savageaux: You’ve got IP Optical growth decelerating yet a couple of big wins you just announced. What sort of contribution material? And it doesn’t sound like — sounds like India is a bit of a tough compare, but not horribly. So what sort of a contribution do you have factored in from your big utility and your big telco when you’ve announced here the last couple of quarters in ’24?
Miguel Lopez: They’re not dramatic tens and tens of millions of contributions. Each one of these contributes probably single digit millions this year to the to the revenue line, Tim. And so we need to keep adding those types of customers that will help us continue to grow. As I mentioned, we think the product piece of IP Optical grows at 10% or more this year. There’ll be a piece of that. Of course, there’ll be some regions that don’t grow. So you’ve got to make that up in other areas. So, that’s our best view at this point.
Tim Savageaux: Okay. So combined, it looks like there are a significant chunk more than a third of your growth. Plus, you expect India to grow. I’m just trying to get down to what you’re telling us about the rest of the world here. Last question for me. If indeed IP Optical can breakeven, looks like you’re actually forecasting a pretty significant or at least modest margin decline for Cloud & Edge in next year. It seemed like the anecdotal commentary there was flat. So, I just want to try and reconcile those two.
Miguel Lopez: Yeah. So, I know our best view right now is the margin percent — gross margin percentage for Cloud & Edge is pretty consistent. It doesn’t move around dramatically. It will move 100 basis points here or there, depending on some amount of hardware that we ship. But a lot of it’s software, a lot of it’s services. So, we don’t think there’s a dramatic change. If there is, it’s in the 100 basis point or so range. I think, Tim, not much more significant than that.
Tim Savageaux: Got it. Thanks.
Miguel Lopez: Thank you, Tim.
Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Bruce McClelland for closing comments.
End of Q&A:
Bruce McClelland: Yeah. Thank you. And thanks for everyone being on the call and your interest in Ribbon Communications. We look forward to speaking with many of you at our upcoming investor conferences. We’ve got the large Mobile World Congress coming up in Barcelona in a few weeks. And we’ll see some of you there and the Optical OFC Conference in San Diego towards the end of March. So with that, thank you, operator. And that concludes our call.
Operator: Thank you. You may disconnect your lines at this time. Thank you for your participation.
