Steve Jones: Keith, this is Steve. Yes, we did see a lot of inventory availability late in the quarter, which was good. We also have higher elevated inventories because of all the price actions. So that kind of elevates it even further due to that dynamic that’s in there. But we did see late availability improve. And we think with the continued improvement, we’ll be able to work that inventory levels down as lead times come in.
Keith Housum: And we say the pricing action, that’s just the fact that the value — for the equal amount of volume, does the average prices increase over the past year is naturally going to be higher?
Steve Jones: Yes. We’ve had broad-based price increases across our supply chain. And so that just elevates your inventory level.
Keith Housum: Okay. I appreciate. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jake Norrison from Raymond James.
Jake Norrison: Hey. This is Jake on for Adam. I was just hoping to get a little more color on your sort of capital allocation strategy for the rest of the year. Has anything changed from your perspective given your strength in the macro environment, are you looking to accelerate or decelerate any investments? Just an overview on capital allocation. Thanks.
Steve Jones: Jake, thanks. This is Steve, again. Let me just talk a little bit about our capital allocation priorities. No, they haven’t changed. We’re still looking our first priority is growth in our business and we also want to protect our balance sheet. So we’re always watching our targeted net leverage ratio. And then, our third priority would then be to do share repurchases under $100 million share repurchase authorization.
Jake Norrison: Perfect. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Mike Latimore from Northland Capital Markets.
Mike Latimore: Thanks. Good morning. Thanks for the UCaaS and CCaaS growth rates. For comparison purposes, you happen to have them for the third quarter as well?
Steve Jones: I’m sorry, Mike, were you asked it if we had a projected growth rate.
Mike Latimore: I’m sorry, for the September quarter just for comparison.
Steve Jones: We’re looking at our data bank named Mary Gentry.
Mike Latimore: Very good. I can ask another one in the meantime. So in those categories of UCaaS and CCaaS, was the demand relatively as expected or consistent throughout the quarter? Or did you see some changes in the December month.
John Eldh: Hey, Mike. It’s John. Thanks for your question. And I would characterize it as steady all throughout the quarter, but of course, being calendar and fiscal year-end for so many companies, we definitely saw a bit of a spike in the December quarter. We also saw a move from kind of a move, if you will, to more enterprise deals and larger deals as the environment moves from where we were at the beginning of the pandemic where people were racing to get tactical solutions deployed. We now see that we’ve moved into a more strategic kind of enterprise project environment where people are kind of architecting and building for the long-term, and we see that in our results.
Mary Gentry: And Mike, it’s Mary. I have the Q1 growth rates. The UCaaS it was 20% and CCaaS was 60% and that’s for Q1.
Mike Latimore: Six-zero. Okay.
Mary Gentry: Yes, six-zero.
Mike Latimore: Okay. Great. And then, just last, how are you thinking about these categories and sort of, I guess, it’s the second half of your fiscal year, first half of calendar year. Do you expect kind of similar growth trends here? Or is there anything kind of showing up in the pipeline that would suggest a change in growth rates?
John Eldh: Mike, as we look to the second half, we think it’s kind of a consistent course and speed as we’ve seen in the first half.
Mike Latimore: Okay. Great. Thanks very much.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Arthur Winston from Pilot Advisors.
Arthur Winston: Hi. I was wondering if you could give an estimate or a guess of what the cost increases or unit cost increases for your inventory. And as a follow-on to that, was that somewhat unanticipated so you had contracts in the cost of the inventories went up, so that really impacted your profit margins negatively?
Steve Jones: This is Steve again. So from a price action perspective, they’re really all over the board with our different suppliers. We have a very wide range. And I would say they go from 5% to 10% and some of them have been multiple price actions throughout the year, even starting in last year. As we sell that inventory through it really just is part of our cost of goods sold, and we pass that on to our customers. That’s our business model is to be able to pass those price actions on to our customers. If we have inventory, we’re able to keep some of that as we’ve leveraged our balance sheet to be able to do that. And that’s kind of our reward for having that extra inventory.
Arthur Winston: So that these increases in costs are not a major impact on the profit margins, the way you describe it?
Steve Jones: No, they’re not. They will be temporarily as we have that inventory, and we’re able to sell through that inventory. So we get a little bit of a pickup really kind of an arbitrage pickup of the inventory levels that we have. But longer term, they normalize out.
Arthur Winston: Okay. My last question is, in your beginning speech, you mentioned macro uncertainties impacting your guidance. But it doesn’t — can you explain what these macro uncertainties are? Because it doesn’t sound like from your answers to these questions, there are a lot of uncertainties going forward.
