Matthew Desch: So the fundamental trend is it’s just a function of mixed. So our personal communications subscribers, which is in IoT, are growing faster than the rest of the base. And so they have a lower ARPU in the $4 range, whereas the rest of the base is higher. And as those grow faster, it’s going to naturally cause the overall ARPU to reduce over time. Increases in this quarter probably relate to seasonality. Summer months, our usage tends to be higher. So you have the fundamental trend of we expect personal communications to continue to grow faster than the rest of the IoT base. And so you have that factor, which would be dilutive to the ARPU. Countering that is we have new functionality that’s being rolled out within IoT with higher data speeds.
Think of the ability to push pictures through a personal communications device. That will be accretive to the ARPU. And so what you have is these two kind of fundamental trends will fight each other and we’ll see where ARPU settles out in IoT over time.
Edison Yu: Understood. And then just a second question on the ENS side. There’s a nice, I think, sequential move as well. Is that all driven by the SDA? And is this a good level to use going forward?
Matthew Desch: Yes, you’re talking engineering support revenue. Yes, primarily the biggest driver there is SDA. That’s a really large contract that we’re ramping up towards in terms of delivering equipment and software and support with our partner. General dynamics for this first tranche of the Space Development Agency’s new network that we expect to continue for many years to come and expand into kind of further work as well. So I think you’re going to see that continue to grow. But some of the core R&D work we do with the government is also growing around that as well as we kind of are embedded in more programs that the government has. And so overall, I think that’s kind of a longer term trend.
Edison Yu: Thank you.
Matthew Desch: Thanks.
Operator: And our next question comes from Greg Mesniaeff from Westpark Capital. Please go ahead with your question.
Greg Mesniaeff: Yes, thank you for taking my question. I’d like to drill down just a little bit more into the increase in SG&A in the third quarter. You said it was up 4% and you got it to like a 20% increase going forward. What’s driving that? What are the key drivers of the SG&A increase?
Matthew Desch: Right. So if you look at our results, the first quarter was actually up 48%. And we said at the time we grew our headcount last year and we also incurred additional stock-based comp expenses in 2022 and that they increased throughout 2022 such that the comparable quarters reflect kind of the increased kind of run rate through 2022. So we knew that the comps in the third and the fourth quarter would be — would show a lot lower rate of growth. And that’s exactly what you’re saying. So whereas we grew 48% in the first quarter, we only grew by 4% in the third. And we reiterated that we expect SG&A to be up 20% on the full year. And again, the drivers were headcount increases in 2022 that occurred sequentially through the year as well as higher stock-based comp.
Greg Mesniaeff: Thank you for that clarification. Do you expect headcount to continue to trend up?
Matthew Desch: Well, certainly a lot of our direct charge headcount is growing. That’s probably the fastest part that is charged to the government and for which we get profit for. So our total workforce is growing, but it’s mostly in the direct charge areas at this time.
Greg Mesniaeff: Thank you.
