Marc Silk: Thanks for taking my questions. You mentioned some SECaaS deals that were signed at the end of the year and into this year. So are those recent deals part of the new strategy or as far as what you’ve been talking about?
Erez Antebi: I would say that one of them is, one of them has been in the pipeline for a very long time. So I can’t attribute a new strategy to it. It’s just finally closed.
Marc Silk: So one on the pipeline. Are you going to basically say, is it just going to be like the old thing or is it going to be like this is, we need a commitment to go-to-market? That’s kind of my point.
Erez Antebi: No, we — I think we have under — even though we don’t — in this case, we don’t have a contractual commitments on the go-to-market, but I think we have a very good understanding how the go-to-market is going happen. We spend a lot of time on negotiating that and getting that down to a very good understanding that we’re satisfied with.
Marc Silk: Okay. So I’m trying to figure out how you get the profitability in 2024. And I know you mentioned continued cost-cutting your — you talked about SECaaS expectations, but I think the investors who are on the sidelines and myself as well need more concrete maybe points in 2023. So my question is what should we be looking for this year deal signed in 2023 that relate to revenue in 2024 as far as the DPI and the SECaaS?
Erez Antebi: Look, I think what we should be looking for in 2023 is we should be looking for a especially in terms of SECaaS, one is a new deal signed, but more importantly, new launches of deals that we have already signed or about to sign. And it will start showing some revenue in 2023, but should show significant revenue in 2024. So I think that’s the main one I would look for. Of course, we’d look for DPI deals and to see — and we’d measure whether or not we’re able to increase our backlog by the end of the year or not. Ziv, you want to add to that?
Ziv Leitman: No, just let’s generally speaking, we will have three sources to get to profitability. As we said, one is expense control, the other one is SECaaS, and the third one from the CapEx deal, we can expect maybe an increase of a few percentages. And hopefully, we’ll be able to bring more business in 2023, and not necessarily all of it’ll be recognized in 2023. So these are the sources for our plan to be profitable in 2024.
Marc Silk: Okay. So on the traffic management, which is going to be flat or down 5% or 10%, a lot of it is set to do with delays, et cetera. So it sounds like your biggest opportunity is in 5G or replacing incumbent, I know it’s hard to say now, but are you expecting more acceleration in 2024 in that area?
Erez Antebi: I think you are right that it’s hard to say now. I would hope — I don’t — I can’t even say expect, I’m at this point I’m hoping that that 5G standalone networks start getting deployed at a much larger scale than they have so far. These networks have been talked about and these new core networks for 5G have been delayed and delayed in many places. When they start — when they finally start being deployed, I think it will generate a significant new opportunities for DPI. Now, will that happen in 2024? I’m hopeful that it’ll, but I have — I — at this point, I cannot say that, that I know or estimate even that it will, I’m hoping it will.
Marc Silk: All right. So a general question. So would you say there’s more potential in DPI now than that might have been four or five years ago mostly because of the 5G opportunity?
Erez Antebi: Yes. I would say not yet. The 5G opportunity is still not materialized. I think the once it will materialize, it will create a — it should create a growth in the market and opportunity. Yes. And at some point it will materialize. I don’t know the timing of it.
Marc Silk: Okay. Because the point I’m getting to, it’s frustrating when your competitors got bought out several years ago at almost 3x revenue, which just that division alone gets you stock price above seven. But a piece of the parts sees that maybe people don’t believe you’re going to get profitability. But let’s hope you can do it and good luck.
Erez Antebi: Thank you.
Operator: The next question is from Rory Wallace of Outerbridge. Please go ahead.
Rory Wallace: Hi Erez and Ziv, and sort of a tale of two divergent businesses here on this call, I’m wondering if we start with the DPI business first. You made comments that you don’t think that this market is in contraction and that you’re not losing market share, but the business was about $140 million two years ago, and it’s going to be around $100 million based on the guidance you put out this year. So I wonder if you can just sort of help us think through what could be going on. I think you’ve provided some decent explanation already, but just to give us comfort that the reason this declines happening isn’t because there’s some sort of really secular issue with the DPI space.
Ziv Leitman: So when you compare the number to two years ago, so there are few reasons why now the revenue is lower. The first one is that two years ago, we had revenue from 5G network, and this was explained by Erez in previous conference call, this product is relevant for 5G network and I mean the 5G core network. And since you don’t have so many of them, we said that only in the future we will see more opportunity. So this is number one. The second reason that two years ago we had relatively large CapEx deal from security, which is not part of our strategy since we would like all the security deals to be in a SECaaS business model. But two years ago, we had few deals of capital. So this is the second reason. The third reason is the currency fluctuation, which the Euro, some other currencies were stronger two years ago than the current rate.
As we said, because of the war in Europe, there are few millions of dollars of deals that were hopefully just postpone and not compare and the delay that I was thinking about.
Rory Wallace: Okay. And —
Ziv Leitman: And in addition what Erez discussed before, the enterprise business that now the revenues are lower than 2021.
Rory Wallace: Yes. Sure. And on that —
Ziv Leitman: Like they are — altogether they are like seven reason of the revenue reduction, it’s not just one reason.
Rory Wallace: Got it. And with the enterprise business, I think that’s been running around $5 million or $6 million a quarter. Are you expecting that to be dramatically lower this year? I know you said the Broadcom impact has peaked, but I’m trying to understand that especially this $20 million guidance for Q1, because if I take the maintenance run rate that you have which is around $10 million a quarter, and then kind of layer in some enterprise SECaaS, it looks like the CSP the sort of lumpy CSP deal business is being guided to basically zero for Q1. And I want to understand if a) my methodology is correct and b) is that reflective of you trying to provide us an outlook that that is going to be appropriate and conservative? Or is this really that that there’s no CSP business that’s going to shift this quarter?
Ziv Leitman: Basically your logic is correct, which means the CSP business, which is expected for Q1 is relatively low.
Rory Wallace: Got it. And your backlog in bookings were flat for the year, I think roughly unchanged maybe plus or minus 1% or 2%.
Ziv Leitman: Yes. Book-to-bill was around 1%.
Rory Wallace: The book-to-bill was 1%, but Q1 revenues being guided down 33%. So I’m just trying to understand a little bit better sort of what — because there was a call back in Q3 where there was a preliminary outlook that was given for 10% growth give or take. And obviously the DPI business is now being guided down 10%, which is impacting the outlook. I just want to understand, did something change dramatically in the last 90 days for maybe are you — anything you can add to kind of give us more color?
Erez Antebi: Go ahead, Ziv.
