Matt Meeker: Yes. In terms of the investment and the team, there’s a very good narrowly focused type team on it, that’s doing a fantastic job. So we’ve got the right group of people around it and they’re expanding it nicely. So we don’t need — I’ll say, we don’t need big G&A investments in it to make it go faster, that’s happening all on its own. The question about marketing is a good one, because as I said, most of this momentum has been driven off of cross-selling into the toy customer base and there’s a whole lot more we can still do there and we’ll do there. But to your point, we should be starting to spend some external marketing dollars to acquire direct food customers, but even more so now that we have this internal engine running where we can take a toy customer and more effectively turn them into a food or dental customer, we should be increasing our cost of acquisition on that side as well.
So the marketing spend will start to move up to reflect that higher LTV and the strength that we’re seeing in the cross-selling.
Maria Ripps: Got it. That’s very helpful. Thank you, Matt.
Matt Meeker: Thanks, Maria.
Operator: Thank you for your question. The next question is from the line of Cory Grady with Jefferies. Your line is now open.
Cory Grady: Hey, thanks for taking my questions. I want to follow-up on cash generation, so you made a lot of progress on converting inventories this quarter and it sounds like there’s still more room there? And if you can talk about how much more room is there left, so how much more inventories are there left to work down? And what you’re targeting is kind of like a normal level?
Zahir Ibrahim: Hi, Cory. How are you doing? This is Zahir. In terms of just maybe a better context around supply chain, so we have a sizable amount of lead time in supply chain from ordering products to it landing in our warehouse and ultimately flowing through to customers. So typically that’s anywhere between eight to 10 months. So that’s really important context as you think about how much reduction or how much you can influence inventory change in the near-term. So as we think about what happened in Q3, that $15 million reduction was as a result of us making decisions back in March, April. From a purchases perspective where we decided we wanted to take a step change reduction in our inventory. And so you’re seeing that now flow through in our December financials.
And as I said, it was a sizable reduction, and what it does is it rebases us back down from the 160 level and now around 145 as we enter 2024 and calendar 2024 that is. And so we use that as our new baseline as we plan for future reductions. I’d say in the near-term, inventory is going to move up or down depending on consumer demand relative to purchases that we place with suppliers some months ago. But looking forward for fiscal 2024, I’d expect inventory levels to come down by a similar, sort of, amount that we saw in Q3 with a greater impact likely in the second half of 2024, due to the supply chain lead times. Does that help?
Corey Grady: Got it. Yes, that’s really helpful. Thank you. And then just on profitability, so kind of following up on cash generation. So you reported a pretty solid gross margin expansion this quarter and then obviously the 12% workforce reduction, and you can talk about any updates on timing on getting to adjusted EBITDA profitability? And what the remaining steps are to get there? Thanks.
