Brian Essex: And Matt, congratulations from me as well. Hopefully, Udi, we still get to engage with you on a regularly frequent basis. So nice to see that you’re sticking with the company, and we’ll remain engaged. I guess for me, I’d like to maybe see if we can like dig into ARR a little bit. It looks like you had some nice new logo adds. It’s almost like the new customer cadence didn’t flinch in this macro and then net new ARR or the ARR contribution from those new adds. It seems like you’re landing at a greater pace or at a greater amount for new logos. But I know you also mentioned some — I think, Udi, you mentioned some shorter duration incidents in with revenue. Maybe could you dig in there a little bit and offset where are you seeing the headwinds outside of shorter duration? And what do you attribute the larger, I guess, land rates with new logos, too?
Udi Mokady: So I’ll start, Josh, and maybe you want to what to step in. And thank you, Brian. I would say from the new logos, we see that half of them land with PAM and additional solutions. So the platform sale is working. So we see that contribution of the wider portfolio to a growing deal size in our landing spot. And of course, it’s a great for us as we work on the renewals and expansion in our ARR model. And again, that was something we’ve been proving throughout the years. Matt mentioned some of the bundling that we’ve done and that’s all contributing to a better land. And I think like I’ve mentioned in other calls, we have more landing points. And of course, PAM is still the majority. And back to the first question for the day, PAM being so critical, but we’re able to land with PAM plus additional solutions. And you asked about the duration. So Josh off to you.
Josh Siegel: Yes. So Brian, when we think about the duration, it actually doesn’t impact at all the ARR. The duration is we refer to as part of the headwind because it’s part of our self-hosted term-based license contracts. And as you know, as duration goes down, you would recognize less in the end period. So we saw duration come in during the fourth quarter on those term-based license contracts, which had some headwind on our recognized revenue for the fourth quarter, but it’s just a matter of when we’ll recognize it and we’ll just recognize more of it down the road upon renewals. So we think that certainly the shorter duration was kind of attributed to customers looking at their budgets and their intent for buying and deciding that they were going for 1 year instead of longer term.
But from our perspective, given our very high renewal rates, particularly on all of our products that we’re good with that because it’s not an impact on the business. It’s just purely creating more ratability.
Operator: Your next question is from the line of Adam Borg with Stifel. Please go ahead.
Adam Borg: And congrats to both Udi and Matt. Maybe for Josh, you’ve talked in the past about a single-digit growth rate from ARR coming from converting the existing maintenance base to subscription and SaaS. And I was just curious kind of was that true for all of fiscal ’22? And how should we think about the conversion mix in the context of fiscal ’23 guidance?
Josh Siegel: Yes, Adam. It actually was pretty consistent all through 2022. And if we look at it from an annual basis, it was exactly that kind of a single-digit percentage of the AR growth rate coming from conversions. And we’re really happy with that because it really shows, first of all that we’re getting a lot of new customers. And we’re also getting a lot of add-ons coming in off of their existing installed base. And it continues to provide a lot of engagement with our existing customers going forward. So yes, it remains around just the single digits.
Adam Borg: Great. Any expectations for that to change in fiscal ’23?
Josh Siegel: No, at this point, we don’t see signals for that. But clearly, we’re monitoring it. And I think — and our guide obviously contemplates our estimates for that.
Operator: Your next question is from the line of Roger Boyd with UBS Securities. Please go ahead.
Roger Boyd: Udi and Matt, I want to echo my congrats on your respective moves. and congrats on what overall looks like a very smooth transition. Maybe for Udi or for Matt, you’ve consistently talked about a SaaS heavy transition. And it looks like that was even more so the case in 4Q with SaaS growing nicely above 100%. Any high-level thoughts on the expectations of Privilege Cloud versus term-based license ’23? And specifically, what are you hearing from customers around demand for self-hosted versus SaaS and the feature there?
Matt Cohen: Yes, sure. This is Matt here. So I think that we continue to be really enthused by the momentum in Privilege Cloud. We see, obviously, most of our new logos that are choosing to land with PAM, they land with Privilege Cloud. It’s definitely the default option the customers get to value significantly quicker. They’re able to get to an expand motion for us in a faster rate, which is good for the lifetime value coming out of the customer. So we continue to see that kind of happen. There’s pockets where there’s holdouts certain geographies or regions around the world or maybe the access to the data center isn’t as normalized or some government accounts. But we definitely see Privilege Cloud as kind of the leading entity for us moving forward.
And mainly the self-based subscription — or sorry, on-prem subscription is generally to existing customers who are buying more seats who aren’t quite ready yet to lift and shift over to the SaaS environment. And I think that trend will continue to play out and accelerate over the next couple of years. At this point, to your last kind of point of your question, we are seeing not only full parity with our Privileged Cloud offering but we’re actually seeing differentiation in our Privilege Cloud offering, where the kind of integration of our Dynamic Privilege Access into the Privilege Cloud offering, the ability to be able to actually offer even better threat analytics that really starts to set the stage for, I think, that being the premium offering that we have out in the market.
Operator: Your next question is from the line of Tal Liani with Bank of America. Please go ahead.
Tal Liani: Udi, if you need a partner for your next fishing trip, you know who to call. I have two questions. The first one is pricing. You mentioned that there is a pricing increase in 2023. What’s the impact on your revenues on your ARR? How long does it take to translate the pricing increase to revenue growth and ARR? And the second question is — let’s do it one by one. That’s right.
Josh Siegel: Okay. So Tal, on that, it’s going to be really a small amount during 2023. Any price increase impacting ARR and revenue, especially because we have more and more being ratable. So it’s not a significant piece of the raise in the guide.
Tal Liani: Got it. The second question is to Matt. And Matt, every CEO brings new spirit and new kind of changes. What is your agenda? What do you see as your main focus areas for 2023 and beyond?
Matt Cohen: Yes, I appreciate the question. I think that when you look at what has worked so well for Udi and I is that we do share a similar view on the market, on the importance of culture and the importance of the teams that we’ve built here. And we’ve been so kind of intricately linked from a standpoint of coming up with the strategy that we have today. So I think what I promise to the team and to Udi really is a continuation of the great momentum that we have. We feel like we’ve never been in a better position in a better place. . And we have a special opportunity here in the market and a group of special people here at the company. And so I’m kind of excited to continue the spirit, as you said, of where we’ve been and to bring it forward for the years ahead.
Tal Liani: And are there any areas where you’re going to focus on more to try and even accelerate the growth? Or any things that you’re going to focus in — focus on especially to kind of try and bring either new revenues, new areas? Or is it going to be more of the same, basically?
