Prakesh Patel: Yes. So a couple of points in there. So first, I would reference you back to the investor presentation that we had in September. There’s a pretty detailed slide on the various types of projects and the timing that it takes to get them through all the way into interconnection operations. So, just to point that out to you. I think that’s available on our website. And to the extent you have any questions about that, we can pick those up later. So that’s the first part. I think the second is that to your point, we are seeing growth in the software and services, line item and CAR does not include cars software. That’s just really a software line item. It does not include items that would be non-recurring. So imagine that to be, like I mentioned, software and service contracts that are long term, that generally have solar style adjustments associated with them that would typically lasts anywhere on the solar side, say, three to five years, storage side, 10 to 20 years
Sean Milligan: Okay. I guess I’m just kind of looking at the numbers this quarter, it sort of implies that the storage business is from a software side is like $4 million to $5 million annualized. So most of the software revenues coming from the solar side right now. Again, just trying to kind of understand a little bit better, like when you start to turn on more storage and we start to see more Athena revenue come through the line item –there was a little bit — I thought there was a little bit of a step change in the first half of this year, but I guess that was more market participation than true underlying recurring revs.
John Carrington: Yes. I mean, I think, as you mentioned, I mean, we are seeing more solar revenue — software revenue today. But I think the — and I think as we’ve mentioned, the reason why there is not more storage is really is in relation of how long it’s been taking to get these storage products interconnected. So the car aspect is really what’s going to happen in the future at any point in time, it’s always transitioning from contracted into, say, a straight ARR metric. And we’ve just seen this year in particular — and I think I would point out spots like New York and Texas, we really just had a really hard time getting those projects across the way. As a result, either, in some cases, interconnection, in some cases, there supply chain issues that have slowed down those individual projects. As I mentioned, good news is those projects have not gone away and that car is going to turn into a GAAP revenue item.
Sean Milligan: Okay. That’s helpful. Thanks.
Operator: The next question comes from Justin Clare with ROTH MKM. Please go ahead.
Justin Clare: Hey, guys. Thanks for taking the questions here. So first off, I just wanted to ask about the expected time line for delivering the first modular ESS solution or a software-only sale. So in Q3, was there any revenue associated with the modular ESS or software-only sales? And just trying to get a feel for how that scales up looking forward for here. So thank you.
John Carrington: Yes. So I think — and thanks for the question. We should start seeing modular ESS system, depending on, again, and I hate to kind of harp on the point, but as interconnections can get dragged out, we do expect to see the first modular systems be installed in the first half of next year 2024. We, of course, have been doing software only now for quite some time. The first system actually dates back to 2018, even when we did the portfolio down in Southern California, and we just apply software into that. So those are longer-term efforts that have been continuing for quite some time.
Justin Clare: Got it. Okay. All right. And then so shifting gears, just on the SB Energy agreement, I was wondering if you could share a little bit more detail on how that structure. Is this something where you have kind of the right of first refusal to supply the 10 gigawatt hours of projects there? Just wondering how that agreement moves through into contracts and flowing through into your bookings there.
John Carrington: Yeah. This is John. Look, I don’t want to go too far into the specifics on the contract, but suffice to say that we will be working very closely on every storage platform and project that they have. And I think what’s really exciting is, we’ll be able to integrate Athena into the digital platform as well. So, more to follow, we’ll certainly keep everybody updated on that. But it’s like I said earlier, a massive and growing pipeline. And as I also stated earlier, I really am excited about the fact that we view this as a model or a template to carry on to other large bulk power developers to further drive our services and of our strategy.
Justin Clare: Okay. Great. Thank you.
Operator: [Operator Instructions] The next question comes from Abhi Sinha with Northland Capital. Please go ahead.
Abhi Sinha: Yeah. Hi. Thanks for squeezing me in. Just want to learn on STEM energys. I know it’s a multiyear project. And I just wanted to see when exactly do you start getting the revenues and maybe some time is it on 2024 event from 2025 event? And second, how do you — if you can elaborate like, how do you guys compare the economics of these projects versus the smaller ones that you guys have announced? Like when I’m comparing these two projects like this one or something smaller. I mean trying to understand, if you are — how profitable these big ones than just smaller ones projects.
John Carrington: Hi. This is John. On the first part of your question, we’re working through the project specifically, and I hate to keep talking on interconnection. But it’s going to be predicated on that. There’s a chance in 2024, possibly 2025 it moves around it. So it’s hard for us to say right now when the first project is going to be operational and interconnected more importantly, but we’ll obviously cover up to speed. And it was hard to understand the second part. I think it was around the economics?
Abhi Sinha: Yeah. Right. I’m just trying to understand the project economics for this kind of big-sized projects. Trying to see how profitable are these versus the smaller projects that you can get like much smaller that you get hold of?
Prakesh Patel: Hi. This is Prakesh. Yeah, generally, this engagement should deliver higher-margin projects than when we’re selling hardware into a particular customer, right? This is purely a software and services engagement. So the services and we delivered any time in the project Life Cycle that those are around 30% to 50% gross margin, and the software is 80% GM.
Abhi Sinha: All right. So that’s one. So that economy does not change even if such a big project comes in there. I mean, you still maintain that kind of profit margin.
Prakesh Patel: That’s right. Yes. These are just leveraging our capabilities. It’s not discounted or anything of that sort.
Abhi Sinha: Got it. Thank you.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to John Carrington, for any closing remarks.
John Carrington: Yes. Thanks. I want to thank everyone for joining third quarter earnings call. And we certainly look forward to speaking with you during our fourth quarter earnings call, which will take place in February.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating. And have a pleasant day.
