Adam Tindle: Got it. Okay. Makes sense. And then absent that, obviously Greg, as you mentioned, the rest of the business is running in incredibly well. Notably, the PSI segment over 50% operating income growth on 12% revenue growth and I’m looking at a first half margin near 20%, which is I think maybe even unprecedented for that segment in total for the first half. So I guess a question on that would be how do you see the margin trajectory of that piece of the business? I know it’s been through a lot whether it was COVID and pandemic and all that. I wonder if you’re coming out the other side with maybe a structurally improved margin profile and how you’re thinking about the trajectory of that piece of business. Thanks.
Greg Brown: First of all, I’d say that, and again, I compliment the team, Jason, Jack, on the improved gross margins, both on cost of goods as well as – as you know, we’ve taken a series of pricing actions starting last year and coming into this year. We view those pricing actions as sticky, not transient. So the margin profiles better. In terms of growth of LMR and the technology, we’ve guided for the full year mid-single-digits, we still expect that to be appropriate full year guidance. We’re coming off some monster comps in the first half of this year. And by the way, the Airwave accounting treatment of the $80 million reduction or deferral in revenue is in the back half of this year, that would be reflected in the LMR technology.
Having said that, I’m super proud of the gross margin expansion and operating margin expansion and while obviously we’re sitting in August, so it’s too early to talk about 2024, but it would be my and our expectations to grow operating margins in 2024 as well.
Jason Winkler: So it’s important to note also in terms of the first half performance, and you’re right, we had significant margin expansion in products. That’s off of last year’s first half, which included our highest broker costs as well as last year’s first half didn’t include our own pricing increases. So effective July 1 of last year in our second half, you saw significant on good growth, significant margin step up in the second half. That’s continued through the first half of this year. And as we look to growth in our second half this year, we’ll still have margin increases over those records from last year. And really that’s a function of when we implemented the price increases and when the PPV or higher broker costs have come out of our product set.
Adam Tindle: Got it. Thank you.
Greg Brown: Thanks, Adam.
Operator: And we’ll move next to Ben Bollin from Cleveland Research. Your line is open.
Ben Bollin: Thanks. I appreciate you guys taking the question. Greg, I was hoping you could – you made the comment about the overall funding environment being so healthy. And I’m not trying to get you to guide into 2024, but I’m interested how you think about just public sector funding overall, the sources of income to public sector and how you think that’s evolving as you look out over into 2024 and beyond.
Greg Brown: Well, I like number one to your point, Ben, thanks for the question. The underlying demand drivers of the business are strong absent funding. Then you get the funding and I talked about the, as best we can tell, the percentage orders in terms of order volume attributed to ARPA is 5% or less. The other thing I like is the multi-year nature of state and local funding, which is $350 billion in the Inflation Reduction Act and $170 billion of education, which is an absolutely prioritized vertical for us and what Jack Molloy and his team are doing. So we’re not going to guide on 2024, but the fact that we had the print we had and record Q2 orders and record Q2 ending backlog and improved 12-month duration of backlog.
And the other thing Molloy and I track is pipeline, right? So what’s the pipeline and funnel? What’s the stuff coming in at the top? How are we doing on order conversion and velocity? And when Jack and I look at that, that’s favorable as well. And in terms of the health of the overall state and local budgets, they remain strong too.
Jack Molloy: Thank you, Greg. And I think what I would say there is when we think about top of the pipeline being quoting, bottom of the pipeline being orders, and then the most important metric is the velocity between those two. The our velocity remains consistent. In fact, it’s improved and we’ve seen a growing number of quoting. So I think that portends well to 2024. The other thing that I think is lost in a lot of people when we think about government funding, we’ve talked about ARPA. But when you think about personal income tax, corporate income tax and sales tax, those three funding streams have all been the beneficiary for government from inflation. So inflation for them means they get more tax receipts in. And their costs haven’t necessarily gone in parallel. And I think a lot of people don’t necessarily understand that, but I just wanted to mention that. So all things in, I think the funding environment and government remains very strong.
