Rudy Kessinger: Okay. Got it. That’s fair. And then I hear you on the conversion, seeing fewer conversions, I guess, just if we look at your term license subscription business, if you strip out conversions, as we start to tweak our models for next fiscal year, I know we got a couple of quarters ago for this year. But ex-conversions, subscription license, a single-digit growth business going forward? Is that a low double-digit growth business going forward? What should we be expecting there just over the near to immediate term?
Gary Merrill: Yes. So we’re not giving obviously the longer-term guidance. But even if I talk a little bit about what we saw in Q2, what we saw in Q2, you can kind of interpolate that our term license offer grew double-digits, right? So within subscription, our term software license grew double-digits, and that’s with are conversion down substantially year-over-year. If you look at the guidance that I gave for fiscal Q3, the quarter that we’re currently in, it’s a very similar trend, where we’re guiding to roughly double-digit within there will be double-digit term software growth year-over-year with same situation, conversions down year-over-year. So we’re driving that growth and we’re doing that regardless of the conversions. The conversions are a little variable in there, which is fine. I think they’ll stabilize over time. We’re just kind of giving scenarios based on currently what we see and where we see customers kind of in that journey.
Sanjay Mirchandani: There’s definitely — there’s definitely customers are in that hybrid cloud journey, where they’ve got to make some tough calls, rearchitect, rebuild, shift, migrate, mission-critical workloads, not just independently but stacks into the cloud. And that’s hard. And as — and part of what we’re going to talk about next week is how we’re going to help customers do that. So when you look at the complexity of that, it’s – you have to look at it and say, if I was the customer, how would I think about it? I’d say, okay, I got to get to the other side before I make a shift on something. So if you see — if you look at the term, when you look at the license model or you look at going from software to SaaS, these are important decisions in the journey with the hybrid cloud.
After that security and cyber risk, so there’s a lot of factors, and we are very well positioned to – to help customers through that, and we are, which is why we see the momentum in our security capabilities and customers using that, adding up 500 new customers on the software, subscription and SaaS platform. So I wouldn’t read into it too much, I would say it’s — they’re in the crosshairs of sort of getting from one side to the other in critical mass, and that’s what you’re kind of seeing there
Rudy Kessinger: That’s helpful. Thanks for taking my questions and congrats on the good SaaS figures in the quarter.
Sanjay Mirchandani: Thank you
Gary Merrill: Thanks, Rudy.
Operator: [Operator Instructions] Your next question comes from the line of Eric Martinuzzi from Lake Street Capital Markets. Please go ahead.
Eric Martinuzzi: Yes. The perpetual license for the year, I think in past quarters, you’ve talked about expectation for $40 million to $50 million for fiscal 2024. Given you’re at about $27 million here at the midpoint, are you still thinking in that $40 million to $50 million range?
Gary Merrill: Yes. Eric, it’s Gary. That’s correct. The trend we’ve seen in the first half of the fiscal year, I think our trend for the second half will be at — will be at similar. We’ll be at similar paces, maybe slightly less as the motion is fully now dedicated to drive the term subscription and SaaS business, we still have some vertical that are out there that still buy perpetual, but those verticals become limited every single day. So the range of 40% to 50% is still there.
Eric Martinuzzi: Okay. But given the $27 million in the front half that would mean 23% would be the metric you would expect?
Gary Merrill: Yes, it would be the high end of the range. Yes, we’ll be the high end of the range. Yes.
Eric Martinuzzi: All right. And then it looked like outperformance international, international revenue, I think, was up 12% in the quarter. Just curious to know if you expect that — is that just kind of a revert to the mean, or are we expecting that to outperform for the remainder of the year?
Gary Merrill: Yes. Eric, I’ll take that. It’s Gary again. So, very pleased with both of our regions. Our Americas business in total was up about 4%, and our international business was up, as you said, 12%. So both businesses returning to growth, which is that acceleration of total revenue growth of about 7% year-over-year, which we’re pleased with. Our EMEA business is driving some growth. We’re now seeing some really good acceleration on as well the subscription adoption. The Americas was more mature first and now the international business is driving with some of that really strong subscription adoption. The deal sizes in international are a little bit smaller relative to the Americas. So some of the lumpiness you can get on the Americas on the mega deals and some of the term — the term length topics we’ve talked about is less prevalent international. So we’re able to drive the really strong velocity business in the international markets.
Eric Martinuzzi: Got it. Thanks for taking my questions.
Gary Merrill: Thanks, Eric.
Operator: Your next question comes from the line of Jason Ader from William Blair. Please go ahead.
Jason Ader: Yeah. Thank you. Good morning, everyone. Just wanted to ask you first on the outlook for customer support revenue. As more of that mix comes from term do you expect the year-over-year decline to start to subside? You’re down 9% in customer more in fiscal 2023 this year is going to be something I guess, slightly lower than that. But do you expect as we move forward into 2025 and 2026, so we should see that continue to — the declines continue to subside.
Gary Merrill: Yeah. Jason, it’s Gary. I’ll take this question as well. So you’ve already started to see that even if you look at fiscal Q2 actual, it’s one of the smallest declines we’ve had in quite some time. And the key driver to that is now a higher percentage of that customer support revenue is being driven by term. This year, we’re on a pace where we’ll get that amount of customer support related to term software license is probably to be somewhere 45%-ish to 50% roughly. And as we enter into next fiscal year, it should be the crossover year — crossover year, meaning that as next fiscal year, the majority of customer support revenue will be derived from the term-related software contracts. That natural motion will then start to flat line the impact.
And then what that does, it will start to alleviate some of the headwinds that had on the total revenue growth. A big piece of our total revenue growth becomes the impact of the customer support. And as we get into next fiscal year and the fiscal year after that, that will start to moderate. And you would expect the impact year-over-year or the decline to be significantly less than we’ve seen in prior years, including this year.
Jason Ader: Got you. So the only, let’s call it, the only sort of more significant headwind will be perpetual license line. Do you have any — like you talked about 40% to 50% sort of towards the high end of that range this year in perpetual license revenue? As we move forward into ’25 and ’26 with pinning you down on specific guidance, do you think that will sort of continue to trail off sort of modestly, or do you think it will actually be more of a sharp falloff?
