Tim Savageaux: Great. Can you – is it — at this point, can you say that you expect on a percentage basis faster growth in North America than international?
David Gray: I wouldn’t go that far because you’ve got kind of a rule of big numbers working against North America a little bit. But I think it should be closer.
Tim Savageaux: Got it. And Pete, you mentioned that as you look forward with a greater North America contribution. You would expect that to be accretive especially in private networks, you expect that to be accretive in gross margins. That’s sort of what we saw Q3 to Q4, both a pretty big volume increase and positive mix shift to North America. And yet we didn’t see much in the way of gross margins. You may have touched on it already, but if we can just kind of dig down on that is why we didn’t see more gross margin expansion given those 2 positive kind of mixed dry, well, one volume, one mix, I guess, two positive drivers.
David Gray: Yes. Well, the mix actually went against us in Q4 a little bit, right? I mean there was a regional mix component certainly with North America returning to root that did help us, but there was kind of a broader headwind within our overall product mix. And it could be for this business, it could be a little volatile, right, because we do have a large software component. If that fluctuates quarter-to-quarter, that can swing at 20, 30 basis points. So I think there wasn’t anything. The dynamics behind Q4 were positive. We expect that kind of level of improvement to continue. And yes, we’ll take it from there.
Tim Savageaux: Okay. So just lower software revenue, I guess, is that my takeaway there?
David Gray: Yes.
Tim Savageaux: Okay. Sounds good. And maybe last question for me. I don’t know if your terminology has changed, Pete. I think last quarter, you — with regard to the Huawei replacement pipeline, you talked about bookings, revenues and backlog and eventually, we got that all the foot. Here now you’re talking about funnel of $80 million, I think, versus our commentary on bookings of $50 million last quarter. I don’t know if those are two different things. Your backlog would suggest bookings of $58 million or whether the funnel has expanded and you’re just giving us a broader sense of the opportunity?
Peter Smith: The funnel has expanded. So we’re giving you a broader sense of the opportunity. Yes. So to be specific in last quarter, what we wanted to communicate was at the end of Q3 year-to-date revenue of 14.5%, and we have bookings of 36.1% and a funnel of 50.5%. And now we would say that bookings are about the same revenue went to 24% and the overall funnel is 82%. So we see the opportunity building there.
Tim Savageaux: Sorry, I was on mute. That’s good for me. Well, I guess one other factor I might have expected to — from a mix standpoint, where you’d see higher North America and yet not much impact in gross margins. I might have assumed that was maybe a lot of Verizon coming in at year-end at lower margins. But it sounds like that’s not the case.
Peter Smith: That’s actually a fair statement, Tim.
David Gray: It was a contributing factor, yes.
Peter Smith: Yes. And so I would say that your suspicion is true. And I’d also like to say that with the Wall Street research Tier 1 CapEx. Our biggest domestic Tier 1 customer was strong and continues to be strong.
Tim Savageaux: Got it. And I guess real last question for me. Strong enough to make it on the 10% list for the year or did you have anyone else getting to 10%?
Peter Smith: No. We have not — no 10% and for the quarter or for the year.
Tim Savageaux: Great. Thanks very much.
Operator: One moment for our next question. And our next question will come from the line of Dave Kang from B. Riley. Your line is open.
Dave Kang: Thank you. Good afternoon. First question is on the NEC acquisition. Just wondering if their trailing 12-month revenue change materially since they have a greater exposure to service providers compared to you?
Peter Smith: So no. So they’re not — they’re — their TTM data has not materially changed from the time that we put together our investment thesis.
Dave Kang: And also going forward, you don’t expect any material changes?
Peter Smith: No, we don’t. And recently, I visited their largest customer. Yes, I visited their largest customer, and they’re within 1% to 2% of what we modeled. So here, I’ll go further. The second biggest region, our leader was there today, and they’re within percentage points of the way we modeled it. So I would say the data we used in our investment thesis remains intact.
Dave Kang: Got it. And then on Bard, I guess, just try to find out what inning are we in? Some are saying just getting started. Some are actually saying things have plateaued out. So what do you see from your side?
Peter Smith: We expect significant growth from Bharti Airtel in fiscal year ’24, both top line contribution and when we took that business, we said that it was low margin, and we’ve been able to execute on our value engineering projects. So we expect that we’ll get some margin lift as that demand materializes. So we feel good about that.
Dave Kang: Got it. And then my last question is for David. What was CapEx for the quarter? And what do you think — what’s your projection for the year?
David Gray: Okay. So for the quarter, it was, I think, about $400,000. Just verify that cash flow. But — and then for FY’24, it’s going to be a little bit higher this year. We finished FY ’23 with CapEx of $5.3 million. We’ve got in our plan around 6% to 6.5% for this year as we do have some refreshment investments coming up, but nothing out of the ordinary.
Dave Kang: Got it. Thank you.
Operator: Thank you. And one moment for our next question. And our next question will actually be a follow-up from Scott Searle from ROTH Capital Markets. Your line is open.
