Joshua Siegel: And Ittai, as it relates again to the maintenance. So absolutely, we believe 2024 will be a larger number than what we’ve seen in reduction in 2023. But we think it’s not going to be like a huge step down. And we are seeing that because conversion still today are only as we talked about earlier in the prepared remarks, there’s still only a single-digit percentage of our ARR growth. We also have, obviously, a good view on our pipeline for where conversions are going and certainly in the next — for the next 2 to 3 quarters. And we feel that, yes, we are going to have more conversions, and we have less perpetual. So that’s why it’s going to increase over 2023. But the good news about CyberArk, and you’ve been following us for a long time is that we actually are not a large deal dependent type company.
We do a lot of — we have a lot of large transactions, but we are very diversified across the world, across verticals, across deal sizes and so we don’t see necessarily the floor dropping off on maintenance. And by the way, to the extent that it’s as a result of moving to SaaS, it’s actually still good for the business. So SaaS dollars and SaaS deployments would be excellent for the business even as it moves more and more in that direction. So I think overall, we’ll come back in February with maybe a tighter view on where we see 2024. But at this point, we are kind of seeing it along the lines of what we’ve seen in 2023 with a site with a continued increase on an annual basis for 2024.
Matt Cohen: And just one add for me on top of what Josh said, which was strong and accurate was is this idea of what are we actually going to do with this base of maintenance paying customers. And Josh mentioned it, which is when we convert them, great, we get this really nice uplift, 3x uplift and they’re expanding their footprint and they’re buying more stuff. So I don’t really want to force them through a forced migration if they’re not ready because I don’t want to really miss out on that uplift. But a second really important point is it those customers who are still sitting on perpetual assets for their PAM solution are buying our newer solutions in a SaaS motion. So it’s not stopping those customers from expanding their footprint with CyberArk with SaaS solutions, probably if that wasn’t the case, we pushed them a little bit harder.
But since the cross-sell and upsell can still happen into that base with our greatest SaaS products, I’m happy to leave them there until they’re ready to move.
Operator: Your next question comes from the line of Brian Essex of Morgan — JPMorgan. Your line is open.
Brian Essex: Hi. Good morning and thanks for taking the question and I would also like to echo my support for your friends and colleagues in Israel. It’s great to see the strong net new ARR growth as well as a large deal momentum. But maybe to follow-up on the question that was just asked. Could you touch a bit on a mix of term in SaaS, in subscription ARR. And then strategically, as we track your progress towards your calendar ’27 goals, are you seeing traction in opportunity down market as SaaS continues to gain traction on your platform? Or is SaaS going to be — continue to be more of a, I guess, larger enterprise opportunity with the ability to drive easier and more cost-effective adoption?
Matt Cohen: Yes. Thanks, Brian, and thanks for the support. I think when we think about the SaaS term-based license or subscription mix, it continues to be about two-thirds, one-third, and that’s kind of held up throughout the transition. So I don’t think we see a major shift in that at the moment. Obviously, as more and more of the pure new product sell, the SaaS number will tick-up, but it’s two-thirds, one-third is good for modeling purposes. In terms of our ability to go down market, it’s very clear when we go down market, that is a SaaS sell. In fact, the SaaS mix there would be well over 80% on SaaS offering actually probably looking a little higher than that when we are selling down market. So we lead with SaaS, customers only want SaaS when we are going down into what we call our corporate market, which is customers that are about $500 million to $1.5 billion in annual revenue.
That’s our down market and for that market, they’re adopting SaaS solutions. And we love it because it’s a quick adoption and then a quick ability to be able to expand them over time.
Operator: Your next question comes from the line of John Difucci of Guggenheim. Your line is open.
John Difucci: I’m sorry. Thank you. This is John Difucci for Ray McDonough. Josh, I don’t normally try to repeat what everyone else is saying, but it’s important to just express our thoughts and prayers with your employees and the people of Israel. Guys, you continue to put up impressive top line momentum in an environment when, frankly, most aren’t even in the Security segment. And we really appreciate the bottom line discipline. But I have a question sort of following up Ittai’s question on go-to-market. And it’s something you might not have much control over. Are there any general trends worth noting for the second half of this year? For instance, we’re generally hearing about exhausted security budgets coming into the end of ’23.
It’s very good reason because people have spent a lot on security throughout ’23. I guess are you hearing this at all? And if so, are you seeing any deals that might be getting pushed out into ’24 at the end of the year? Or is budget getting pulled into ’23 from ’24 to satisfy current security needs? Thanks.
Matt Cohen: Thanks. And, again, thanks for the support. We really do appreciate it. So listen, I think when we look at our go-to-market environment, we continue to see actually strengthening. And we’ve talked about a strong environment for us to be able to execute — our ability to execute throughout the whole year. And you heard me mention that in Q3, we saw it become even better for us. I think we talk about it in two lights. One is better for us in terms of the customers are more willing to spend their budgets and better for us in terms of the team is executing even more efficiently, more effectively within — with our customers. I would actually say we see a little bit of the opposite of what you’re describing. We see budgets kind of firming up.
We have good line of sight to those budgets, which goes into how we look at the year and frankly, how we think about next year. We also see deal sizes increasing, not going down. We saw close rates going up, not even staying flat, but going up. So our overall productivity goes up. We saw again another quarter of amazing pipeline build. A lot of that pipeline will come to realization in 2024, might not be in Q4 here. But — so I think when we look at the environment, we talk to stressed out, CISOs so stressed is the right word. But we see the fact that what we are working with them around is not a budget optional decision. It’s where you want to spend money if you have any money at all. And I think that is what’s driving our success, and it drives our outlook going forward.
and it drives our confidence in the overall market that we are playing in, in the identity security market itself.
Operator: Your next question comes from the line of Fatima Boolani of Citi. Your line is open.
Fatima Boolani: Hey, good morning. Thank you for taking my questions and sending my well wishes to you and the entire CyberArk family. Either for Matt or Josh, feel free to jump on this one. I wanted to get a sense of sales cycle trends within the new logo and expansion activity that you’re very strongly executing on. And really, the spirit of the question is you’ve got a much more expanded portfolio. So how are you managing the extension of sales cycles that typically come with the sale of a broader portfolio.
