Joseph Griffith: Sure. I’m going to touch on a few different things on gross margin, but specifically on pricing each year. We look at the market and we have implemented price increasing here in 2024 to try to offset some of the inflationary impacts. But as we kind of look back on gross margin, we had some pressure on gross margin in the fourth quarter and in 2023 as a whole. A piece of that was an increase in spending to each scale within our operations and service functions. And that was really despite some higher revenues and the cost to deliver the revenue, service personnel, contract trainers, materials, they all increase. We also saw a temporary need and increase in our third-party contractors to train our customers on the MX908.
As we saw, the increased demand for the use of the device, we’re working to reduce the number of contract trainers we use going forward. I mentioned $0.6 million in non-cash stock-based compensation and tangible amortization as a driver, and that’ll — at least the non-cash stock count will increase a bit in 2024, so we get to our fourth year of being public. There are probably two other elements within our product gross margins about $0.5 million in higher materials and supplies on warranty obligations during 2023 and about $300,000 in higher provisions for excess and obsolete materials as our products progress and iterate through the years. Pricing is definitely helping [Multiple Speakers] we also have some headwinds across the board.
Jacob Johnson: Got it. Thanks for taking the questions.
Kevin Knopp: Welcome.
Operator: The next question is from Matt Larew at William Blair. Please go ahead.
Matthew Larew: Hi, good morning. Kevin, I wanted to ask you, you reference Terumo and Cellares, but you’ve had a partnership with Sertorius here for some time selling MAVEN. So just want to make a sense for how that has progressed perhaps as a way for us to gauge how these newer partnerships might progress as well.
Kevin Knopp: Yes, absolutely. We do very much enjoy our partnership with Sertorius. We do have a previous generation of the MAVEN product that’s for sale through that channel and that’s been a good relationship. We’re continuing to see that for glucose control and really kind of part of their system to allow a full offering to a customer, to a large farmer for biologics in particular. And need there is across from the small volume bench top bioreactors all the way up to pilot scale and beyond. So we’re very much engaged working with them and developing a successful partnership there. And as you know, we do have Sartorius Korea as part of our distribution channel for that defined unique territory where they’ve got a very, very strong footprint. In that case, they’re representing as a distribution partner for us our MAVEN, our MAVERICK, and our REBEL products.
Joseph Griffith: Yes, I just maybe add that on the Sartorius side, they’ve been a great OEM partner and kind of collaborator and a proof point for the technology. And we look for those not only on the desktop side, but across on the handheld side too, as far as different ways to get our product in the market. AVCAD is an example of that on the handheld side. And we’ll look for ways to enable that in the future. We have a really talented sales team across the board, especially on the government side, and we’ll look to utilize where we see technology to be able to plug it in and get more top line contribution.
Matthew Larew: Okay, And then, Kevin, you gave some data points in the prepared marks around bookings and leads generated in the second half versus the first half of the year. [indiscernible] comment you can give on what the composition of those leads are, both from a product perspective in terms of the influence of new products, but perhaps also from a customer perspective in the sense of existing manual customers either with REBEL or another product to or you’re now have an opportunity to build the desktop ecosystem versus perhaps new customers who were particularly attracted to one of the products that you launched last year?
Kevin Knopp: Yes, absolutely. I can give you some more color on that. Happy to. If you think first from the bookings and where we landed for Q4 shipments of the new desktop devices, MAVEN and MAVERICK were absolutely key drivers to that uptick that we spoke of there in the Q4 desktop bookings and took it to be the largest booking quarter we had since Q4 2021. MAVEN, of course, was really just launched in January of 2023, and Q4 did represent its best quarter since launch. That being said, we had some favorable timing there, right, because as Joe had mentioned previously in an answer that you really see as you launch a new product, you get some additional placements, you work through customer evaluations and then you see that revenue uptick and we saw some of that happening with our MAVEN and then we also had our MAVERICK, our first shipments of MAVERICK occur in Q4 to customers and partners, distributors there, those adoptions.
And then recurring revenue was also strong, we saw across the board, both in large pharma accounts that have been established users for say a REBEL product there as a big driver, but also in some newer customer adoptions there. So we had at least a couple of, call it, $50,000 to $100,000 consumable kit orders by large pharma customers, and that’s kind of in that 12 to 24 kits to be delivered throughout the year. So we do expect that as we’ve seen in past years, but we did like to see that again. And our installed base really just continues to build across the board there and gaining some visibility into service and desktop consumable sales here. But with the launch of MAVEN and MAVERICK, now with the REBEL analyzer device replacements are still our priority, but it is nice to see some of those consumables or service recurring elements contributing to our Q4 bookings.
