DGII
#Yes, that's a great question, <UNK>.
That's ---+ we are really trying to affect that curve.
We are trying to make that decline much softer than that 10%, 15%.
And I don't know, <UNK>, if you want to add some color, but we are really, <UNK>, trying to make sure we don't accept fate, if you will.
We alter that curve.
To be fair, the correct quarter's results, the most recent results, we haven't yet had the benefit of some of the innovation investments, those are coming here.
So, that was more a good hustle and good execution than it was, in particular, the result of a specific R&D investment.
Yes, I think that's fair, <UNK>.
Especially as you think about the business interruption we had that was 50 basis points of margin.
We obviously don't expect that to repeat.
And then I think if you think about the growth products having a more dominant part of the mix in Q4, that would be the right way to think about it.
You know, <UNK>, I would continue to model it at that $4.5 million to $5 million.
I think that's a safe assumption through Q4 and maybe Q1.
Yes, long-term, we think that services business can grow.
But the products business, we can see outsized gain, and it's a little bit more repeatable if we can use some of those services to help our product business.
We don't plan on doing that as a habit, but there was a great opportunity that we wanted to pursue in this particular example.
Yes, I think as we ---+ again, we'll be taking a closer look at 2016, but yes, I think if you model it with some mild degradation, that again is the right way to be thinking about it for 2016.
And I think your point is well-taken.
And in particular, the SKU streamlining process.
One of the benefits we will get is higher volumes on fewer SKUs.
And we do expect that to somewhat offset the mix of margins that you're describing.
We do think we'll get some scalability from that.
Yes, you know what's interesting, one of the ---+ I guess, one of the advantages, we do have these six key verticals.
And so, we have a relatively even distribution across the verticals.
It does change depending upon the product line.
An area of strength recently, the medical has been a good strong area for us.
An area of weakness, probably no surprise, has been some of our oil and gas customers and channels have been a little bit softer.
Thank you.
Yes.
Great question, <UNK>.
I think there's a couple things going on that I mentioned in my comments as well.
The first is for our internal sales group, having them more focused on a certain set of products really improves their competitive stance.
They know their competition better, they know their target customers better, they know how to price their products.
We are also ---+ what I didn't mention ---+ we are also really biasing them towards larger opportunities where we can, quite frankly, get the return on investment with that direct sales force.
Now complementing that direct sales effort, we are being as assertive in the channel.
We've broadened relationships with Digikey, with Mauser, with Arrow.
We are looking at others to broaden the relationship, to have the ---+ really the weight of their large marketing and distribution capabilities, and take advantage for them of a really nice broad portfolio that Digi offers.
That helps us, if you will, cover the points that our direct sales force really can't as economically reach.
And then it really complements our existing channels, which are more specialty-oriented, either geography or product lines.
They offer a lot of value-add on top of the products, so they are still a key element of our success.
But we are starting to see better win rates because of that, <UNK>.
Because they know of their domains, they know the products, they know who they are competing against, they're better able to paint their targets and bring them across the finish line.
So, <UNK>, I think with the restructuring Etherios with Etherios, we are looking at trying to return to those 30-plus-percent margins.
And so we obviously demonstrated something a little bit shy of that this quarter.
But as you think about modeling going forward, that mid-30% range is where you should be.
And especially revenues a little bit softer this quarter than previous quarters.
So you get closer to that $5 million quarterly run rate, the margins will come along with those.
So, on occasion, if we do see impacts on FX, we will, of course, correct on pricing.
I don't think we've got anything that we are currently considering from a pricing perspective.
I think, as we move into 2016 and think about the exchange rates, at least what we are kind of thinking about from a planning perspective, I don't know that we're going to see or really believe that there's going to be these large jumps continuing.
Great.
Thank you, Danielle.
In conclusion, our focus and discipline are driving improved results for our customers and our shareholders.
We have more work to do, and I am excited about the Digi team and our ability to deliver.
Digi is at the center of an exciting Internet of Things ecosystem as a leading provider of machine connectivity, products and services.
Thank you, everyone, for joining our call today.
