We are accelerating some investments in some of the software capabilities. I mentioned that today. So, it was a combination of those things in terms of controllable OpEx and some headcount related that it was just essentially an optimization of our — of matching our infrastructure costs to our business model. And then secondarily, Chris, I’d say that it’s clear, given the market volatility in our sector. And amazing to me — honestly, that with everything we’ve delivered in only our first two years and with the revenue growth we’ve done and positive unit economics and making the adjustments we just made, it’s amazing to me where our stock continues to trade. So, it is clear, investors have spoken on the desire to see accelerated road map to cash flow positive.
So, with that also as a backdrop, we wanted to take actions in Q4 to enter 2024 at a lower cash OpEx rate to enable us to essentially accelerate that timeframe into cash flow positive. And we’re going to be sharing much more on that and by region and some new products and things and providing color on some of the announcements we made today on May 8th.
Chris Ellinghaus: Okay. Thanks. That helps. I assume that you’ll sort of give us some kind of regional overview of where development stands in say, domestically or on gravity storage projects in general at the Investor Day. Is that sort of where you’re headed along with some detailed guidance?
Robert Piconi: Yes, correct. Both of those and some other things, too. We have some new product announcements to make tied to some new customer announcements. So, we’ll — but yes, correct, absolutely those two.
Chris Ellinghaus: And if I can give a little sub follow-up on that. Will you have at the Investor Day, the ability to give us a little more color on this Washington state customer?
Robert Piconi: Yes, we’re planning to — on that. It’s a — we’re really excited about it because of the nature of the application of the gravity technology, and that’s tied to, Chris, one of the new product announcements that we’re going to be making. So, we will be adding more color. One thing to share on these. Some customers as they’re — as we’re developing projects with them, okay, they have to go acquire land. So, it’s — we’re — they’re very sensitive about sharing and naming themselves until they’ve acquired it so as not to drive up pricing on that land. And any time you speak about gravity, you aren’t talking about 10 acres, okay? You’re talking about large plots of land and things. So, because of that, we — our customers will require we hold confidential their name until such time as they’ve acquired the land. Does that make sense to you?
Chris Ellinghaus: Yes, sure. Absolutely. I’m going to dig into that one myself, but I’m looking forward to the Investor Day. Thanks for the details.
Robert Piconi: Thank you, Chris. Appreciate it.
Operator: Our next question comes from the line of Noel Parks with Tuohy Brothers. Please proceed.
Noel Parks: Hi. I just had a couple quick ones. One of them is, with the storage market, it does seem that the last year in particular, we’ve seen like a greater investor awareness specifically, of the role of intermittent power sources, solar wind, or the destabilizing effect on the grid. And I just wonder, as a driver of business to you, has that sort of ascended in importance? Is it about the same?
Robert Piconi: Yes, I’d say that continues to be — I mean, it continues to widen what we’re seeing in terms of what used to be a massive one to two-hour market that shifted to a two to four-hour market. So, the longer duration, meaning it was more intermittencies there. And quite frankly, the severity of the weather patterns are driving some of that. So, we’re — that’s going to continue over time. I would say, as you know, we’ve seen a tremendous drop in lithium-ion prices. And even then, therefore, the ability for lithium-ion to be utilized, definitely at four hours, and depending on where pricing goes or any other new technologies that come, I think there’ll be additional flexibility there. But definitely, this aspect of addressing intermittency as more renewables come on the grid and thus the need for storage.
We haven’t seen any slowdown necessarily there. We are continuing to see, I think, a strong market in shorter duration tech, combined with very interestingly, needs that are in this eight to 12-hour range for some specific applications. And as you know, we can serve those things pretty broadly.
Noel Parks: Great. Thanks. And last month, when you disclosed the South African license deal, I believe it was $20 million over 10 years. It was helpful to see that modification. Could you just take a stab at maybe how many similar deals like that you can envision over the next year or two? Are we talking about a handful, dozens, many dozens?
Robert Piconi: Yes. No, it’s not dozens, it’s sub-10 because if you think about where do we do those types of deals, we’re going to do them in places where we can find very credible, reliable large partners, ideally in markets that are experiencing growth, meaning where there is a defined market need. So, look at South Africa, I think the things are fairly well. [Indiscernible] there about what they call load shedding, which in California, we sort of call rolling blackouts. And so there is an absolute need for the storage there and in places where we prefer not to go set up shop. I mean we’re more of a technology provider, I’d say, overall, although we have the ability to asset manage as we’re doing now in Calistoga. So, I’d say that there would be definitely something if you look at over the next few years.
There’s other locations that can be interesting for that model. And in particular, I’d say, for gravity, where you’re a — if you think about it, that is all a local construction project, can be done mostly locally. Some places don’t have the power electronics or they aren’t making the big multi-megawatt motors. So, those may have to come in. But otherwise, because of the nature of — it’s a building and a construction project, it lends itself to these types of business models. And I think it’s — from an investor perspective, it’s interesting because there’s typically licenses that are paid upfront or in some cases, they’re paid in cash over time and then there’s the royalties tied to volume. And I know it can be frustrating when you’re new and you just do them and the timing of those royalties, understanding when are they going to come as systems get built and turned over.
