Q – Joe Osha: Okay. And that’s Q4, but I guess just kind of more going forward, right? I mean you do have this business, you’ve made — kudos to you for the progress, but just in general, right, I mean, this business ties up an awful lot of working capital relative to its scale. How should we think about it going forward? How are you going to try and manage these numbers over time?
Bill Bush: I think there’s going to be a combination of effects. One, I think, is going to be the modular ESS is going to drive down working capital usage. So, you’ll see less inventory, less receivables and the same amount of cash. Second, I think you’ll see us having less inventory on the balance sheet just generally for other non-modular deals because we’re shifting the way that we’re purchasing equipment. I think in the past — even the latest like six, nine months ago, we were longer on equipment than we are today. Right now the market is much more, say, turning to a more spot type by to be able to take advantage of favorable pricing and terms. So, I think inventory is going to continue to decline as a part — the overall part of the balance sheet and I think receivables will as well.
So, I think all of that as we capture more receivables and turn that into cash, we should be in pretty good shape. I mean I think we had a pretty good collections quarter. In general, I mean, we were well over $100 million in collections for the quarter and while driving down inventory and accounts payable. So, I think from the standpoint of — that’s what I’m saying is like I think the balance sheet in general over the next a bunch of quarters, it’s going to improve and end up with more cash on it.
Q – Joe Osha: Okay. Thank you. And then shifting gears, just looking at your software and recurring revenues, really two questions. If I look at that storage software number, $8.1 million, it’s up around 33% from the same number last year. Your storage AUM, as you reported, has more than doubled. So, the optimist in me wants to believe that this implies that there is some kind of significant hockey stick embedded in the software number as these projects are commissioned. Is that a fair way to think about it?
Prakesh Patel: I think there’s two factors — this is Prakesh, Joe. I think there’s two factors impacting that. Definitely, last quarter, we had extraordinary performance on the market — in the prior quarter, we had extraordinary performance on the market participation side and not as much in Q3. And then separately, our average deal size has been vectoring much higher. So, to your point, we do expect to add these larger systems come online, you’re going to see larger step changes in the software ARR hit the income statement. So, that definitely is a trend.
Q – Joe Osha: So I’ll hand it off to the next caller. Thank you.
Operator: The next question comes from Andrew Percoco with Morgan Stanley. Please go ahead.
Andrew Percoco: Thanks so much for taking the question here. I just wanted to follow-up on just what you’re seeing on the hardware side of the business in terms of price and availability of supply. I know it’s a pass through for your business, but can you just discuss how it’s impacting customer project economics in light of the rising cost of capital environment and therefore demand for your services? Thanks.
John Carrington: Sure. And it’s been a pretty dramatic change. I mean, as you look at the, you know, say batteries just in general, And I think this also falls down to part of the solar business also. But availability prices are down and we expect that to continue, which is in part why, we’re referencing, that we’re, we feel like, we’re going to be shorter on inventory than we have in a faster place of purchase orders. Because, at this point in time, finding why long dated supply agreements is going to be a tough ask I think. So for us, that’s what we’re seeing in the marketplace today, But the market has shifted dramatically in the last year. So I think it’s something that we’ve got to be pretty watchful of over the incoming time period. You are seeing a lot of new supply coming into the market right now, which is really driving. And not just in the US, but also in China. So you have the likelihood of declining prices.
Prakesh Patel: Hey, Andrew, this is Prakash. One other thing I’d add is just the equivalent price decline we’re seeing available from OEMs alone is offsetting the impact of higher interest rates in project economics. So it’s a really positive environment with not only that trend, but the fact that, as John highlighted, power purchase agreement pricing has continued to be very robust. So overall, we’re seeing much better project economics and significant demand.
Andrew Percoco: Got it, That’s a super helpful data point. And maybe just to follow-up on the prior question on just software services growth. What do we need to see or what needs to happen within your business to get closer towards that 75% year-over-year growth rate target. I think you’ve been lagging behind that so far this year. What needs to happen practically within the business and maybe in what time frames you expect that to happen? Thanks.
Prakesh Patel: This is Prakash. I’d say a big part of it is getting the systems interconnected and permitted, and we talked about how the broader market has seen challenges. We’ve moved up the size scale. These projects have been more complex, larger projects generally. There is some light at the end of the tunnel with some recent actions on the federal side at the FERC level as well as at the state level. So we’re hopeful these things start to normalize, let’s say in the second half of 2024 and beyond. The other piece is, as we announced today, engagements with large asset owners or developers on a programmatic way to drive services revenue. What’s really compelling about that is that’s not tied to project timelines or actually It’s not tied to interconnection timelines, right?
Because we can earn service revenue even earlier in the project life cycle where we’re helping them develop project performance or system design, things of that sort. So it should smooth some of the seasonality. And as John mentioned, we’re engaged with multiple of these parties and looking to continue the momentum we’re seeing in that space.
