Beth Gaspich: Yes, thank you for the question, Michael. Your comment was correct – I did say that during the course of this year and the tighter economy, we have seen some less usage on the CX side of the house in the SMB install base, and that next year with the economy looking brighter, we are seeing signs as well that we will expect to see more of that consumption going back to what we have seen as historical norms. Of course, we expect to see that further happening throughout the course of next year.
Michael Funk: Great, and then just on AI, a lot of discussion over time about how AI potentially shifts more of the TAM spending away from human agents and more towards solutions that companies like NICE provide. Do you have any early or kind of one-off data points or examples in how on deals that you’ve signed with AI, how that has maybe shifted from, say, 90% of spend on humans versus 10% for technology, where that’s come out on the back end of these deals?
Barak Eilam: Yes, thanks for that. You know, first of all, there is general–just to clear out something quite general, we don’t see right now, whether it’s good or bad, we don’t see a reduction in [indiscernible] agent industry right now, not to speak about the fact that with 20% penetration of cloud, even if there will be some reduction in number of agents, we still have a very, very long way to go in winning market share on the agents. What we see is that a lot of companies are dealing–it’s almost like avoiding adding more labor because the number of interactions, digital or not, are increasing exponentially and becoming more complicated, and that’s where they are trying to deploy AI in order to avoid the additional labor costs.
It’s also the reason why they take the journey usually of either starting or doing together both Copilot and Autopilot, understanding that there will always be a need to a certain extent of a human agent. Generally, I think that the opportunity that we have in AI is significantly higher in the very long run than the one that we have on just supporting agents. For 25 or more years, we’ve been as a company focusing 99% of our effort just on the time where the actual consumer speaks with an agent or interacts with an agent, to be more and more of our business go beyond that, which is a TAM expansion for us and we find ourselves taking over legacy vendors that used to be dealing with gen-1 automation. All of those together are actually giving us great confidence in our vision and our future and the ability to fight and win for a much bigger TAM.
Michael Funk: Great, thank you for that. I hope you and your employees are all well.
Barak Eilam: Appreciate that, thank you.
Operator: Our next question comes from Jim Fish from Piper Sandler. Please proceed.
Quinton : Hey guys, yes, this is Quinton on for Jim Fish. Thanks for taking our questions. Beth, maybe first for you, you’ve talked a couple of times already about some lower usage and the macro pressures impacting the SMB side this year, but maybe if we looked across the entire cloud base, can you talk about how net retention has trended in this quarter [indiscernible]?
Beth Gaspich: Thank you for the question. With respect to our expectations, and let me address the net retention, we saw quite healthy net retention during the quarter and as we look further into next year. We don’t expect to see an overnight change or shift from that usage, but we are seeing healthy signs there and we expect that to continue to evolve and return to more normal as we get further away from the tighter economy that we’ve been in during the course of this year.
Quinton: Makes sense. Then Barak, maybe for you, obviously the government sector has always been slow to adopt new technology, especially on the cloud side. You guys announced a fairly large win with a state government this quarter. Are you seeing AI and digital opportunities creating that inflection, where now they feel comfortable to move to the cloud, and how do you balance kind of you guys have the fed ramp, others don’t, so where do you see that opportunity in kind of land grabbing federal as we look at 2024? Thank you.
Barak Eilam: Yes, that’s actually quite an interesting question that you’ve asked. We had, all of our us had the same perception about government, and when we say government, everything from the federal government, state, municipalities, state and local, if you would like, and federal, and we had the exact same experience and perception with those are very slow to adopt. Going back to COVID, I think COVID changed–I don’t know if it’s forever but at least for the foreseeable future, changed two very significant things with respect to technology adoption by state and local. A, the early days of COVID showed government agencies that they can actually move fast. If we remember the early days of COVID, all of a sudden we got from different states they adopted new communication channels, they adopted a variety of technologies in a very fast way.
That approach [indiscernible] really changed their behavior, and we see that continuing well into 2023 and also in the dialog into 2024, which is very positive. The second thing that we like about government is still related, I believe, to kind of the leftovers of COVID – they are rich with budgets. Now there is no new wave of recession or budget constraint in the SLED markets, and of course we are enjoying that as well.
Operator: Our next question comes from Tim Horan from Oppenheimer & Company. Please proceed.
