And then lastly, we have our new business win seasonality that we go through every year, late this calendar year, early next calendar year is usually around the time that we’ll see the results from the government buying season. So, any additional new business wins that come in late this year, early next year will benefit 2025 as well. So, those are some of the high-level headwinds and tailwinds.
John Wood: And I think Mark said this, but I just want to mention again that these are pre-existing programs that would be rolling over to us from an incumbent.
Operator: Thank you. One moment for our next question, please. And our next question comes from the line of Nehal Chokshi with Northland Capital Markets. Your line is now open.
Nehal Chase : Yes. Thank you and congrats on the $100 million ACV in tier that will roll out throughout the end of 2024 and into 2025, that’s awesome. What about the rest of that $3.5 billion pipeline? Has that further grown? And what’s the progression on the rest of that pipeline and confidence level on that rest of that pipeline?
John Wood : So Nehal, the pipeline continues to grow. Think it’s going to be an ongoing flywheel, if you will. And we really only go after business that we think we have a very good chance of winning. So I’m confident that the pipeline is going to be something that it’s going to yield results for the company. Mark, do you have anything you want to say?
Mark Griffin : No.
John Wood : Okay, good. Okay. But it continues to grow, Nehal, just to answer your question.
Operator: Thank you. [Operator Instructions] And this will — one moment for our next question. I have a follow-up from the line of Alex Henderson with Needham. Your line is now open.
Alex Henderson : Yes. So just to paraphrase what I think you said on the margin. So we should be using the same gross margin in 2024 as we saw in 2023. And that sounds like if these programs are kicking in, in the back half that the gross margin is pretty much the same as we go into 2025 as well, so kind of steady gross margin trajectory. Is that a fair statement? And the second piece of this is, is there any of these contracts that are actually coming from existing business, in other words, offsetting something that you’d already had in your revenue stream?
Mark Bendza : So Alex, yes, overall cash gross margins in 2024, we expect to be approximately comparable to 2023, and I’ll let John answer the other part.
John Wood : Yes. These contracts from the Telos point of view would be considered to be incremental revenue.
Alex Henderson : All incremental. Okay.
John Wood : Yes.
Alex Henderson : Since this is a secondary question, and there probably isn’t a whole lot of people in the pipeline behind it. I don’t want to miss the opportunity. Can you talk a little bit about the split of the business between the segments as it kicks in, is it all in one segment or split between the two segments?
John Wood : So all of the business, all of the large contract awards that we’ve announced today, those are all Security Solutions business. And probably somewhere around 80% of the pipeline is in the Security Solutions area. So we would see more of a movement towards Security Solutions over time.
Operator: Thank you. And this will conclude today’s Q&A session. I will now turn the call back over to Mr. John Wood for closing remarks.
John Wood : Well, first of all, I just want to thank our shareholders for your ongoing support. I’m very proud of my team’s ability to manage through a challenging ’23 and deliver better-than-expected results across the board. These results demonstrate our focus on execution and there are a testament to our team’s unwavering commitment to delivering for our customers and our shareholders. We’re also absolutely thrilled with the progress we’ve made on new business capture in recent months. These outcomes have the potential to significantly and positively impact our financial performance with the addition of high-quality, predictable revenues to the Telos portfolio, beginning later this year and into 2025. And really, we’re just getting started.
I’m very excited about the future outlook for the company with robust and recession-resistant markets, well-funded customers and really a decades-long track record of serving the world’s most security-conscious organizations, Telos is a strong foundation for the future. So I just want to say, thank you.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
