Brian Kinstlinger: Okay. Last question I have maybe for Will, on the fourth quarter results, the gross margin percentage on hardware and services seem to have abnormalities to the past services, much higher than usual, hardware much — a little bit lower than usual. I think that’s what I remember. Can you help us understand those dynamics? And then you’ve talked about the change in media sales to maybe, so help us understand what reasonable assumptions are going forward for the gross margins of these two lines of revenue?
Will Logan: Yeah, great question, Brian. I think that the best proxy is to use the full-year figures. In the fourth quarter, we had some cleanup in gross-to-net accounting, particularly with media that removed some COGS and brought in some revenue, which gave you a little distortion there on the services line. On the hardware line, we do have a couple of newer ad tech or ad base network customers that did some very large purchasing with some additional budget here in the November-December timeframe. Those were, in some instances, some very expensive displays. The top end displays in the market tend to have a slightly tighter margin, but that’s not the normal profile moving forward, I would model off of the year-to-date figures.
Brian Kinstlinger: It’s typically, you’ve been in mid-60s and low-20s, something like that. Is that right? I have to go back —
Will Logan: Yeah, I think that low-20s for hardware and 60 — low-60s on the services is a good proxy. We’ll continue to update and re-evaluate that based on mix and the SaaS growth.
Operator: The next question comes from Howard Halpern with Taglich Brothers.
Howard Halpern: Doing well. How — we just really started the channel partner program and you already have 100 licenses. What is the feedback you’re getting from them and how excited are you there? It seems to be ramping fairly quickly with a higher margin SaaS revenue.
Richard Mills: I mean, we’re excited about the feedback is they love what we’re doing, they love our software package. Yes, really, all the success of the channel program is all built upon two things. Number one, the actual software platform, and that’s getting rave reviews and the guy that’s running the channel. And we think we’ve got the best channel guy in the business, Dave Petricig joined us, and we’re just excited to have him. He’s doing a great job. He’s here for about eight months or so, finally launched the channel program and we expect it to grow fast.
Howard Halpern: Okay. And in terms of the cost structure, operating expenses, do you basically have that in place and now that with the bowling contract and other contracts, it’s just basically a layering and leveraging going forward.
Will Logan: Yes, Howard. I mean, if you look back, we’ve probably added 40 or 50 over the last 12 to 18 months in the company to really build the baseline and the infrastructure of this business to take it to the next level. We are where we need to be and the top line is catching up quickly. So we’ve been carrying that cost since the second half of 2023. We feel like we’ve got the team in place and the infrastructure that we require to move forward throughout 2024 with limited change.
Howard Halpern: Okay. And just one last one on different opportunities out there. What do you view as some of the newer opportunities? Is it in convenience stores or — and even in like deli departments in supermarkets? Can you describe what the various opportunities out I guess are potentially in your pipeline?
Will Logan: Sure. QSR remains hot, particularly on the digital drive-thru. We see continued acceleration of inflow of capital into supporting digital out-of-home or advertising networks. A lot of folks transitioning to point-of-purchase funding right away from mobile ads or other television and other products into that point, which is resulting in networks like Starlite Media and BCTV being built out, we see continued shift in that direction and strong demand for years to come. Supermarkets is absolutely in play, Howard. Several of them are trying to figure out whole store ecosystems with both potentially outside the building digital advertising, inside the building digital menu boards, wayfinding, price shelf stickers, still early stages on that because there are a lot of moving pieces, but I see that being an area of focus over the next 24 months.
Beyond that, retailers are also trying to figure out incremental digital engagement, but that one’s probably fourth on the list of those that I named.
Operator: The next question comes from Kris Tuttle with Caterpillar Capital
Kris Tuttle: Hey, thanks for taking my questions and congratulations on like some good old-fashioned global execution down there. I wanted to just ask a couple of, I think you’ve announced that I’d love to learn a little bit more about one of them is IceBox Media, and I was reading through that one again yesterday and I was trying to figure out, is that more of a software arrangement? Is there incremental hardware, a lot more incremental hardware involved? Just wondered if you could give me some of the moving parts on that once, so I understand it better.
Will Logan: Sure. That’s actually a digital display. But think of it as about it’s about 8 to 12 inches tall and about 3 feet wide with a small mounting fixture that goes on top of those IceBoxes outside of convenience locations there. It is a digital advertising network. So there are a lot of posters in those locations now. There’s funding from private equity that has come in and said, We’re going to build out a digital ad network right there at the IceBox. We’re the hardware provider, although it’s a limited amount of hardware, Kris, on that since it’s one kind of small screen and then the software provider behind that. So ultimately, a software play for us in the grand scheme. That is in a test of about 85 locations that started rolling out here in the last two months running to speed. They’d love to do 5,000, and we’d love to help them with it. So we’re waiting to see results on how that goes as deployed.
