Melanie Solomon - Investor Relations David Flynn - President and Chief Executive Officer John Ritchie - Chief Financial Officer and Chief Operating Officer.

Balaji Krishnamurthy - Goldman Sachs Orin Hirschman - AIGH Investment Partners Dan Bartus - Bank of America/Merrill Lynch.

Good day and welcome to the Aerohive Networks’ Second Quarter 2017 Financial Results. Today’s conference is being recorded. At this time, I would like to turn the conference over to Melanie Solomon, Investor Relations. Please go ahead..

Thank you, Camille. Welcome to Aerohive Networks’ second quarter 2017 financial results conference call. After the market closed today, Aerohive issued a press release through Business Wire. The release is also available on our website at, aerohive.com.

This call is being webcast live on the Investor Relations section of the Aerohive website and will be available for 30 days. Today’s call is being hosted by David Flynn, President and Chief Executive Officer and John Ritchie, Chief Financial Officer and Chief Operating Officer.

During the course of today’s call, management will make forward-looking statements including statements regarding our projections, operating results, expectations for future revenue growth, operating profitability and operating margins, plans for future investments, product development, deployment, adoption of performance and expectations of customer buying patterns and the growth of the market for our products and business, generally.

These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control and the actual outcomes and results may differ materially from those contemplated by these forward-looking statements.

As a result of these uncertainties, risks and changes in circumstances that could affect our financial and operating results, including risks and uncertainties included under the caption, Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, in a recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

Aerohive’s SEC filings are available on the Investor Relations section of our website at ir.aerohive.com and on the SEC’s website at sec.gov.

All forward-looking statements in this presentation and the referenced press release are based on information available to us as of the date hereof and we disclaim any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made except as required by law.

Today, we will be discussing both GAAP and non-GAAP financial measures. The non-GAAP financial measures have been adjusted to exclude certain charges and are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

For a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures and a discussion of why we present non-GAAP financial measures. Please see today’s press release available on our website. I will now turn the call over to Dave Flynn, President and CEO of Aerohive..

Thank you, Melanie. Thank you all for joining us today. We are pleased to report that we met our revenue guidance, exceeded our gross margin guidance and achieved non-GAAP profitability delivering EPS at the high end of our guidance range.

We also delivered strong growth in our deferred revenue line due to moving the rest of our product line to the Connect to Select model that we introduced of our entry level APs in Q1. As planned, under this model, our business takes on more SaaS-like characteristics decreasing in-period revenue, while increasing our deferred revenue balances.

John will talk more about the financial impact of this new model. We made major progress on the product front in Q2.

We expanded our new product and pricing model to our entire product line with the aggressively priced Connect offering for conductivity oriented environments and the Select offering which allows us to better monetize the value of our feature-rich subscription services.

We received a positive response to the launch of the Connect to Select offering on our entry level APs in Q1. That has provided disruptive entry pricing and a seamless software upgrade to full-featured Select offering.

We have seen almost no cannibalization and Connect gives us access to incremental markets like hotspot, hospitality and other mid-market environments, while improving our ability to recruit channels. Our confidence in this new model prompted us to extend the offering to our entire product line at the end of May.

Our Connect to Select strategy gives our channel partners a more comprehensive portfolio and was instrumental in enabling us to recruit over 600 new resellers in the first half of the year. We are excited about this progress, but have found it is taking more time and effort than expected to recruit and fully activate this volume of new partners.

This effort has been a short-term distraction particularly within our sales organization, but we believe over the long-term it will drive increased revenue and sales efficiency. The other major product highlight is the progress we have made in maturing the HiveManager NG platform.

I could not be more pleased with the quality of execution our engineering team has demonstrated this year under new leadership. Every month, the release has been on-time, feature-rich and high quality.

The product is now meeting the needs of extremely demanding customers, including a $6 billion global real estate company to successfully deploying the network with NG in spite of their extremely complex multi-organization authentication infrastructure.

We also significantly improved our private cloud and on-premise NG solutions, including a new private cloud offering that can be deployed in minutes in a service provider or enterprise as private cloud and that can elastically scale to support over a million devices and 10 million clients. These offerings are cloud platform agnostic.

They will be deployed on AWS, Azure, GCE and VMware and are making NG a compelling platform for customers or geographies that are reluctant to embrace the public cloud. This offering also enables us to efficiently deploy our public cloud service in more countries to address regional concerns with data sovereignty.

Having addressed the maturity gaps with Jeff with NG, I am pleased that we are now pivoting the engineering team to drive more innovation on the platform and working on new business opportunities such as SD-WAN.

We are transforming our branch router offering into a compelling MG-managed SD-WAN offering enabling us to provide a unified software defined branch office solution. I am looking forward to the delivery of SD-WAN early next year as well as a roadmap of compelling MG features coming on a monthly basis.

We are carrying this innovation energy through 802.11ax product line, where we are still making good progress and are excited about the potential of the technology to deliver high-efficiency Wi-Fi that will drive an upgrade cycle starting in 2018. In support of our diversification efforts, I want to highlight a couple of enterprise wins.

We had a major win in Korea, where one of the largest electronic companies in the world selected our top of the line dual 5-gigaheertz AP550 after an extensive shootout against Cisco and Aruba. Additionally, a 70,000 employee global consulting firm deployed our technology into their India operations as part of a global rollout.

Finally, in Q3, we are launching a new initiative to attack the hospitality and multi-dwelling unit market for a comprehensive offering including an innovative new wall plate AP scheduled to ship within a month and software solutions that are purpose built for the managed service providers that serve this market.

On the partnership front, Dell continues to be material with many enterprise health and education wins during Q2. We are actively working on deepening our relationship with Dell and are excited about the future of the partnership.

In closing, I am pleased we achieved our profitability goal and I am encouraged with our progress on MG and channel recruitment. However, I am disappointed it is taking longer than expected to translate this progress into the revenue growth required to offset the expected Q3 weakness in education.

I will now turn it over to John to talk in more detail about our financials..

Thanks, Dave. Good afternoon, everybody and thank you for joining us here today. Before I go through the quarter in detail, I’d like to highlight some financial and operational milestones Aerohive achieved in the second quarter. We met our goal in Q2 of achieving non-GAAP operating profitability and positive non-GAAP EPS.

Q2 also marked the eighth consecutive quarter of gross margin improvements in our subscription and support business increasing significantly on a sequential and on a year-over-year basis.

In addition, we met our goal of achieving more than 10 million in subscription and support revenue in the second quarter, while significantly building our deferred revenues which now sit at record levels. We were meaningfully cash generative in the second quarter and also cash generative on a year-to-date basis.

During the balance of my prepared remarks, I will cover our GAAP and non-GAAP P&L, our balance sheet for the second quarter and provide some related commentary in our business. Lastly, I will close by reviewing our financial guidance for the third quarter of 2017. Now, moving on to revenue, revenue came in at $42.3 million for the second quarter.

This was up 16% sequentially and down 11% on a year-over-year basis. We are pleased that Q2 revenue came in line with our prior guidance. Q2’s significant sequential improvement was even more impressive when combined with a meaningful growth we saw in deferred revenue related to our Connect to Select strategy.

I will talk more about this during the balance of my – during the – talked about this in more detail during the balance sheet review. Product revenue was $32 million, up 19% sequentially. Subscription and support contributed a healthy $10.3 million in the quarter.

Q2 was a record for subscription and support revenue coming in at 24% of total revenue, growing 27% compared to the same quarter a year ago and increasing 8% on a sequential basis. This quarter’s results highlight the progress we are making with our recurring revenue streams as our business takes on more SaaS like characteristics.

Our subscription and support revenue line was a key contributor in our goal of achieving non-GAAP profitability in the second quarter. Moving on to revenue on a geographic basis Americas revenues were $29.1 million or 69% of total revenues.

Americas revenues were up $5.2 million or 22% on a sequential basis and up $0.05 million or 2% on the year-over-year basis. Overall, we are pleased that Americas grew both sequentially and on a year-over-year basis. Moving on to EMEA, revenue for Q2 came in at $10.4 million or 25% of total revenue.

EMEA revenue increased $600,000 or 6% on a sequential basis, but was down $1.7 million or 14% on a year-over-year basis. Despite the anticipated sequential improvement in Q2, Europe continued to be impacted by the same product transition issues, the challenges we saw in Americas late last year.

Q2 revenue in the Asia-Pac region was $2.8 million or 6% of total revenues, up 6% on a sequential basis. As a reminder Q2 of last year was the peak of our shipments related to the previously discussed large Asian retail deal. As we have mentioned before we expect results from this region to continue to be lumpy given the relatively small revenue base.

In addition to this, we also mentioned before please note that our international business is a material portion of our revenues and it’s important to remember that we bill all locations in USD, so we may see pricing pressure during extended periods in which the U.S. dollar is strong. Now, I will turn to our non-GAAP margins and expenses.

Q2 non-GAAP overall margins came in at 68.2%, essentially even when compared with the 68.3% in the same period a year ago and even with the 68.2% record we recorded in the first quarter.

Non-GAAP product gross margin for the quarter came in at 67%, down as expected when compared with the same period a year ago and down also as expected from the 67.9% we recorded in the first quarter.

Non-GAAP subscription support gross margins came in at 71.8% in the second quarter, up 580 basis points compared with the 66% in the same quarter a year ago and up 260 basis points when compared with the 69.2% in the first quarter.

Our overall gross margins came in ahead of our expectations with the improvement in non-GAAP subscription support margins offsetting the planned decline in non-GAAP product gross margins.

As we discussed in last quarter’s call, the expected decline in non-GAAP product gross margins was related to our Connect to Select product offerings, while we continue – while we expect a continued rise in our non-GAAP software and subscription revenues driven by higher revenue levels over a relatively fixed costs basis.

Non-GAAP operating expenses were $28 million in the quarter, down $5.5 million or 16% when compared with $33.5 million in the same quarter a year ago and down $700,000 or 3% from the $28.7 million recorded in the first quarter.

The year-over-year reduction in non-GAAP operating expenses is related to the previously discussed cost reduction actions taken earlier in the year. Moving now to functional spend, non-GAAP R&D was $8.2 million or 19% of revenue compared with $9.2 million or 19% of revenue in the same period a year ago.

And this compares with $8 million or – $8 million or 22% of revenue in the first quarter. Non-GAAP sales and marketing came in at $15.9 million or 38% of revenue in Q2 even with the $15.9 million or 44% of revenue in Q1. On a year-over-year basis non-GAAP sales and marketing spend was down from $19.3 million or 40% of revenue.

The decline in non-GAAP sales and marketing expenses was partly related to lower headcount costs and lower discretionary spend. Lastly moving onto G&A, G&A expenses came in at $3.9 million or 9% of revenue in Q2 compared to $5.1 million or 11% of revenue in the same period a year ago.

This compares to $4.8 million or 13% of revenue in the first quarter. Non-GAAP G&A expenses declined almost 20% on a sequential basis and 23% on a year-over-year basis. The decline in non-GAAP G&A spend is primarily attributable to lower legal costs.

Overall, non-GAAP operating margins came in at a positive 2.1%, a 420 basis point improvement when compared to the negative 2.1% in the same period a year ago and a 1,290 basis point improvement when compared to the negative 10.8% in the first quarter.

Our non-GAAP operating income was $900,000 or $1.9 million improvement when compared to the non-GAAP operating loss of $1 million in the same period a year ago and a $4.8 million improvement when compared to the Q1 non-GAAP operating loss of $3.9 million.

We reported non-GAAP net income of $600,000 in the second quarter compared to a net loss – non-GAAP loss of $1 million in the same quarter a year ago and a non-GAAP loss of $4.1 million in the first quarter.

This translates to a non-GAAP net profit of $0.01 per share compared to a non-GAAP net loss of $0.02 in the same period a year ago and a non-GAAP net loss of $0.08 in the prior quarter. The non-GAAP net profit per share for Q2 is based on 54.4 million weighted average common shares outstanding.

On a GAAP basis in Q2 the net loss was $0.07 per share compared with the net loss of $0.15 per share a year ago and a net loss of $0.17 per share in the prior quarter. Our Q2 GAAP net loss includes stock based compensation charges of $4.4 million.

Now moving on to the balance sheet, cash and short-term investments as of the end of June totaled $80.2 million, a sequential increase of $5.4 million making us cash positive for Q2 and on a year-to-date basis.

The growth in cash is net of approximately $1 million that we used in Q2 for our repurchase of approximately 210,000 shares of our Aerohive stock as part of our previously announced repurchase program. Moving onto inventory, those levels increased $3.3 million to $15 million at the end of the quarter compared with $11.7 million at the end of Q1.

The increase in inventory was partly related to a regulatory requirement for new SKUs for the European market. We expect this bump in inventory to be temporary in nature and trend down over the next several quarters. Accounts receivable increased to $22.9 million as of June 30 compared to $21.6 million at the end of the first quarter.

DSO decreased significantly from 54 days to 49 days. The modest increase in the overall AR balances is related to higher revenue levels, partially offset by improved shipment linearity within the quarter. Our deferred revenue balances now stand at $67.9 million, an all-time high compared to $64.9 million in the previous quarter.

Given that our Connect to Select strategy results in business take – the business taking on more SaaS like characteristics. Going forward, we expect more of our revenues to be deferred. This shift to deferred revenue will of course impact our top line. We estimate in Q2, the impact of the top line was approximately $1.2 million.

Our revenue guidance going forward will take this into consideration and for Q3 we are anticipating an impact of approximately $2.5 million. Now moving on to the guidance for Q3, we currently anticipate revenue in the range of $37.5 million to $40 million.

This accounts for a full quarter of Connect to Select product strategy across our entire portfolio and also reflects the challenges Dave mentioned in his prepared remarks.

On a non-GAAP basis, we expect gross margins to be in the range of 66% to 67%, driven by the impacts of our new Connect to Select product offering, partially offset by strong margins from the subscription software business. On a non-GAAP basis, we expect operating margins to be between negative 3% and 8%.

We expect other income and expense including tax expense to be approximately $200,000 in the quarter. Lastly, we expect a non-GAAP loss per share in Q3 to be between $0.03 and $0.06 based on the estimate with share count of approximately $54 million.

On a GAAP basis, we expect the Q3 net loss to be between $0.13 and $0.16 per share based on a similar share count. As you may have already seen this, but we did recently announce the expansion of our share repurchase program which will now continue through June 30 of 2018. With that I will turn the call back over to Dave for some additional remarks..

Thank you, John. While I am disappointed in our Q3 guidance, I am encouraged by the significant progress on our product portfolio and general improvement. I want to let you know we are now focused on capitalizing on the improvements in HiveManager NG and our Connect to Select product strategy.

And with these foundations in place plus the activation of over 600 newly recruited VARs, we will be in a better position to regain momentum in the coming quarters. I would like to close by thanking our customers and employees for their continued loyalty and dedication. And I will now take your questions.

Operator?.

[Operator Instructions] And our first question is from Doug Clark with Goldman Sachs..

Hi, this is Balaji on behalf of Doug.

Maybe I will follow-up on that last thought you had there, do you have any level of visibility into when you expect these VARs and the channel ramp do happen, how far out is that, is it a one quarter event for you or longer than that from here?.

Yes.

We expect to see kind of a continuous improvement although to be honest with you, we have expected to see a little bit more lift from that in Q3 based on the good progress we made in Q2, as we previously commented, education is light in Q3 and we expected the product progress in NG and the VAR recruitment to have kicked in and allowed us to deliver year-over-year growth in the quarter.

But it is a continuous progress and I think it will get better every quarter. And we will – see we are not projecting growth in Q3, but we are driving to deliver growth, turn this into growth as quickly as possible..

Got it. Thanks.

And then just to follow-up on E-Rate, any metrics you can provide there first of all and then I wanted to follow-up on a comment you made on the last earnings call, where you highlighted the letter from the FCC to USAC and that they needed to fix issues, they had a deadline of in the quarter, so any updates on that front, what are you hearing? Thanks..

Yes. So I think last earnings call, we had commented that E-Rate program continued to be administratively troubled and had – it was leading people to less demand for E-Rate funds because people are getting flipside [ph] up at the program.

I think the final results for the year, industry wide results kind of indicate that as we had mentioned E-Rate is a trouble program. The demand for Wi-Fi for the year was down about 30% year-over-year. Obviously, many people are looking to fund with other vehicles because of the execution issues USAC has had with the E-Rate.

But that is how the 2017 program ended up. The letter that was sent to the Chair of the USAC did result in the Chair’s resignation. And so there is a new Chair in place and they are working to improve things, but I think it’s too early to say if it’s going to be a materially improve – material improvement this year or not.

We are clearly focused on building other parts of the business and reducing the dependence on the E-Rate, that’s a very high priority for us as a company and one of the foundational elements of our efforts on Connect to Select, our attack on the hospitality vertical market and the maturity of NG the new SDWAN initiative all of which are new things driving to reduce the dependence on education going forward..

Great. Thanks..

Our next question comes from [indiscernible] with Dougherty..

Hi, thanks for taking my question. This is [indiscernible] on behalf of Catharine Trebnick.

I know that you had touched on it briefly, but I was just wondering if you could provide a little more color on educational vertical this quarter and how it performed?.

Yes. Q2 is historically a seasonally strong education quarter and similar to last year overall education business was in the low to mid-40s as a percentage of the business, had some benefit from delayed E-Rate spending from last year, but it was largely in line with historical Q2 patterns..

Alright. Thank you.

And just to kind of follow-up on that how would you say that the non-educational verticals performed and did you see any traction with those?.

I think as I said Q2 tends to have a slightly higher education rates than other quarters, but we are pleased with the progress in the other verticals that came in as expected.

Fairly usual, kind of consistent balance with them healthcare, retail, enterprise, all making up a substantial portion of the business, education normal quarter in total on a little bit below 40% and Q2 normally spikes a little bit above it, so consistent pattern..

Alright. Thank you..

[Operator Instructions] Our next question comes from Orin Hirschman with AIGH Investment Partners..

Hi. AIGH.

How are you?.

Hi, good, how are you?.

Good. Thanks.

Can you just go through a little more on the enterprise side, you mentioned some big win against competitive they go off, can you just give some more color there if you are beginning to see a better win percentage, what’s going to make a difference on that business going forward because they are – it is obviously meaningful in terms of the deals?.

Yes. I mean I think as you said in the past usually our challenge with the enterprise projects is getting into the opportunity, getting about that and that’s one of the things we are increasingly developing our VAR channel to help get us into more of these opportunities, get more leverage in the go to market model.

I think in terms of once we get into these engagements, I think the win rates are fairly consistent. We have I think we have mentioned previously we had seen some elongated sales cycles as we have transitioned to the NG product. I think that affected some projects in the prior quarters.

We are seeing the NG product do better and better and it’s in those estimate valuations and are encouraged by that progress and think it will continue with the strong roadmap of monthly releases making that product more competitive.

And maybe some of the projects that we have mentioned the innovative the dual 5 gigahertz radio design we had done that’s been a compelling factor in many projects. And it continues to be the best dual 5 gigahertz design in the industry and the maturation of the cloud platform also continues to help improve our position..

[Technical Difficulty].

Well, I think at the highest level Dell, we continue to make progress see we have expansion with them.

They were material this quarter and Dell – and from a vertical perspective I think Dell’s verticals lined up very well with ours, Dave would you concur with that?.

Yes. We have see they tend to fare a bit better access into some larger enterprise and lot better access, they have much more sales coverage, they help with some of those projects. But we also – they do a fair amount of education and mid-market business to, so the overall composition is not materially different than the core business that we have..

Another indicator we have we can share with you that that relationship is getting better is we are constantly working with Dell in a very cooperative way to ease transaction flow, to kind of make transaction close smoother and more efficient between the organizations and clearly both Aerohive and Dell are investing in that, so we have great hopes for that as we move forward..

And on the last two questions, one is following-up on the prior question and maybe just to highlight seasonality in education in Q4 versus Q3 and combine that with expectations with some level of progress on the strategy overall enterprise and other?.

I will take a shot of that and Dave jump in, but we would like to think that we would see improvement heading into Q4.

I think we – one of the reasons that we highlighted the 600 channels, 600 channel partners that we added was to give some sort of tangible material evidence that if we are successful in activating these channels, we should get back to the revenue growth.

Now I want to be carefully we don’t give Q4 guidance, but all the indications are that is if we execute, we take advantage of the improvements you see in NG.

We take advantage of our relationship with Dell and we take advantages of the Connect to Select strategy as it relates to bringing these new channels online we should see improvement in the fourth quarter..

On that same note, is there something that went better in Q2 than you expected versus Q3, I am trying to put it out obviously before it makes a little bit of a difference, but…?.

Yes. I think in terms of the sequential compare – clearly the change in deferred the whole quarter impact on deferred is a meaningful part of it.

And then the other part is – it is as we had anticipated a bad E-Rate year for 2017 that is more reflected in Q3 and Q4 that you look at Q3 we would anticipate that to be down versus Q2 for education, because Q2 benefited from some of the leftover 2016 education business.

So, you have a lower starting point with education and it’s up to us to we are delivering growth – we are focused on growing the other components of the business to offset that..

Q4 traditionally is lower than Q3 on the education are similar?.

It has – it’s varied depending on how the execution of the E-Rate program. Typically, it is flattish or there is different years it’s balanced around a little bit. I think last year it was a little bit stronger in Q4 than Q3, but only marginally..

Well, take the next question please..

Our next question is from Tal Liani with Bank of America/Merrill Lynch..

Yes, hey, guys. This is Dan Bartus on behalf of Tal. Just a couple of questions from my end. First is I want to dig into this strategy a little bit more for Connect to Select, it sounds like you are doing it across all products now.

So, if you are taking your entire product line and giving it away for potentially a fraction or a discounted price upfront, can you walk me through how do we don’t see more pressure on gross margins if this is increasingly successful over the next few quarters?.

Well, this is John speaking. We are – the guidance – if you look at our guidance on gross margins, we will be stepping that guidance down. We stepped it down over the past several quarters.

I think what we are seeing and what we are seeing some upward supplies and some more benefit coming out of the subscription and software business which is offsetting the decline that we are seeing in the hardware. On a year-over-year basis, we are up almost 6 full percentage points in terms of the margins on our software subscription business..

Okay..

Important thing is that we mentioned that we lost the strategy, the concern was there is going to be cannibalization in your existing customers.

We are going to all opt for the Connect offering and not pay Select, because we kind of at a lower hardware price with the lighter weight free cloud subscription that we raised the prices of the feature-rich Select software.

What we have seen is that people are – the customers are overwhelmingly, the existing customers are staying with the Select offering and they are paying that and so you are just seeing a shift from short-term immediate product revenue to deferred revenue, which is a good thing over time that takes on more of a SaaS like characteristic.

To the extent, we get incremental – it could be a bunch of incremental business that happens with the Connect as we activate the channels and drive that more aggressively.

That business will be at a lower gross margin, but we expect it to be highly efficient business with a leverage channel model that we believe over time will lead to higher operating profit even if it is a slightly lower gross margin for those transactions..

Okay, yes, that’s helpful and makes sense.

So clearly little bit of pressure on the product margin line and I mean that does lead into my next question was on the services gross margins really impressive year-over-year growth, but where does that go from here if Connect really takes off, because the way I am thinking about it is you give them a scaled down software version, so you are charging them less, but then you have kind of the same infrastructure and headcount related to that services.

So I am just trying to think about what do you need to add incrementally on the services side and could we see any actual pressure on the gross margin for the services side as well?.

Well, so keep in mind that the services side and the support side for Connect are relatively light. The customers do have the opportunity of kind of upgrading their service, which would be a margin opportunity for us. But the pressure – the margins are sustainable.

I don’t see the mix skewing towards Connect I don’t think would have a meaningful – would put meaningful pressure on those margins..

Yes, obviously we are taking advantage of the scale economies you get from a cloud platform that we can actually with the infrastructure we have and the elastic cloud platform that NG was built to be, we can add devices very efficiently and get this good economics as we scale it.

So, the incremental cost at additional device on to that cloud platform is relatively low and we don’t expect it to have any material impact on the SaaS subscription margins..

Okay, great, yes and that’s helpful as well. And then last one for me, I will see the floor.

Just quickly, sorry if I missed it, but how is the partnership with Juniper going as well, is there any update there and is there an opportunity for you guys to really beef up that partnership making more like Dell a longer term?.

Yes. So, I think we continue the – we have had a collaborative, meet in the channel partnership with Juniper, which is we have common enemy of Cisco and HP and we have some aligned channels and we leveraged that for those relationships. At this point, I don’t see it evolving to Dell is much closer to an OEM deal.

The OEM is software, they resell the hardware and their people get paid for selling to Aerohive. We don’t anticipate that Juniper would go to that model. We anticipate it to continue to be a meet in the channel partnership..

Okay. Thanks, guys..

Thank you..

And that does conclude our question-and-answer session. I would like to turn the call back over to David Flynn for closing remarks..

Alright. Thank you all for joining us today. We will be at the upcoming Oppenheimer and Davidson conferences in August. Hope to see many of you there. Thank you..

Once again, that does conclude today’s call we appreciate your participation..