Tom White: Just one on WiFi, if I could. You’ve had, I think, some larger REIT’s trialing issues. I was just hoping you could share kind of your updated or latest thinking about kind of how you think the time frame between kind of a trial and presuming it goes well sort of full deployment might look like over the coming years? And then this dynamic where folks are kind of deferring some of the IoT implementations to wait for WiFi. Curious whether that’s a dynamic you can, I don’t know, sort of addressed over time. Like is there any way to sort of divorce those two things? Or it’s just given the fact that it’s kind of breaking ground and it’s a big construction project, that’s always going to be something to contend with as you roll out WiFi .
Lucas Haldeman: Tom. I think it’s something we could break apart, but we actually believe it’s the right way to do these implementations. So we actually are in agreement with our customers and sort of aligned to say, the right way to do this is to do it all at once. And I think the only downside to that is that it slows down the IoT deployments. But I think if you look across what we’re seeing in the marketplace that our land and expand we used to really lead with IoT, it’s almost morphing to where we’re leading with WiFi. It’s sort of becoming the new beachhead and that’s sort of the fundamental product that we’re leading with. And then we’re able to draft behind that IoT at access control at other products as you’re seeing from sort of the SaaS ARPU jump that we had, we’re successful at sort of cross-selling on those.
But really, we’ve talked about this now three quarters a row, like WiFi is definitely very important to where we’re going. And that’s why we announced the investment that we’re making in it. That’s why we’re — we remain excited about the back half of the year, as Daryl commented on. The only thing is that it’s slow to get going. And so I answer the first part of your question, most customers will run a pilot for 60 to 90 days before deciding on the next projects. Once those pilots are completed and we start rolling out, it’s a similar cadence to IoT, where it can take 3, 4, 5 years to go from sort of not having anything in your portfolio to having portfolio-wide deployment. So that’s sort of the timing. Does that answer the question, Tom?
Tom White: Yes. That was great. Appreciate it.
Operator: We’ll take our next question from Brett Knoblauch at Cantor Fitzgerald.
Brett Knoblauch: Maybe if you could just give me some idea of where the number of new units deployed your expected for this year. I know there’s some seasonality and some are getting pushed back. But as we think of the full year, I guess, what should we be expecting relative to what you did in 2023?
Daryl Stemm: Yes. Brett, we’re not giving any guidance on units deployed because of the divergence between revenue and units. We would invite you to please focus on revenue growth as opposed to unit growth. We grew revenue by 41% in 2023 relative to 2022 and our units deployed — new units deployed in the course of 2023 was lower than the new units deployed in 2022. But in spite of that, we were able to grow our revenue by 41% and we expect that divergence to continue and — which is why we’ve discontinued unit guidance.
Lucas Haldeman: I’d just add to that, Brett, that I think we’re still seeing strong demand for the IoT in that product, and we’re continuing to make traction with our partners on that. So I think we’re not giving a number, we’re not guiding to it, but I’m happy with the demand we’re seeing in the marketplace for those products.
Brett Knoblauch: And then just from the units shipped versus deployed, I guess, relationship. Should we expect maybe a similar performance in ’24 as you did in ’23 in terms of, I guess, the number of units shipped outpacing the number of units fully?
Daryl Stemm: Yes, I would expect to see that. As I mentioned earlier our expectation is that we should have at least 50,000 hub upgrades that we ship and deploy in 2024.
Brett Knoblauch: And then I guess on the recurring revenue duration, I think it was 2.6 years last or at the end of last year and a decline of 1.6. I guess any insight into why the big decline in that duration?
Lucas Haldeman: Well that’s actually — that’s something we’ve been working through. And then it goes, Brett, to making sure we’re not locking in pricing for too long. So that’s like an intentional metric that we’re trying to work into line to give ourselves the flexibility to not be locked in on SaaS and hardware pricing.
Brett Knoblauch: And then maybe just one quick follow-up on the NRR number, which thanks for giving that, I think it’s very helpful. I guess any sense to where that metric has been? And where do you see that going over the long term, given it is a new metric you guys are disclosing?
Daryl Stemm: No. We’ve just started to track that in the course of the last year, but it’s based on a cohort of — think of it as same-store metric, and it’s based on the number of units from December of 2022.
Lucas Haldeman: And I’d just add, I think our expectation is we’ll continue to see that grow, knowing sort of what we’re continuing to cross-sell and upsell and where we’re reselling additional products to existing customers, you’ll see that same-store number kind of grow.
Operator: We’ll take a follow-up from Soham Bhonsle at BTIG.
Soham Bhonsle: Just one quick one, just around this sort of gap between shipped and deployed. I just want to understand. So especially if you are having a decent chunk of upgrades this year, I think, Daryl, you said that it should produce a shipped unit, but not a deployed unit. Is that number — is that right? Because in my view, if it’s a new unit and then if you’re using a professional services person to actually deploy it, then that should come through that line as well. So if you could just clarify how that actually flows through the P&L that would be really helpful of the upgrade units, please.
