Yaki Faitelson: The win-win is that there is many customers that are using managed security service providers and at times get little value in terms of data breaches and they can be completely protected with us. So there are budgets for it. And the other thing in order to get the most from the MDDR, you need a good footprint of the platform as much as you have more licenses with us, if you will, more bundles, you get more value. And regarding our AI capabilities, we invested tremendous effort with Athena AI, not just for our customers, but also for our analysts. We are selling software. So we build robots and interfaces to make sure that our — the people that provide incident response and professional services can be much, much, much more productive and we learn very fast.
The system, they learn what they are doing repeatedly and really build the robots behind it. So we think that this offering has tremendous opportunity, tremendous attachment to budgets. It’s a driver to buy more bundles. It’s just the beginning, but we think that it’s something that is very unique and the first manage detection response that is data oriented.
Guy Melamed: And just to touch on that, as we go through the year and kind of the sample size becomes much more meaningful, we’ll be happy to provide more color about what we see in terms of the MDDR and the uplift that we see.
Chad Bennett: And then maybe just one quick follow-up. Just now that we’ve kind of been through a full year of the SaaS transition, and we have a decent amount of critical mass in that business in deal flow and whatnot. Maybe for Yaki, just in terms of — I know the 25% to 30% uplift on deals on conversion. But just are you seeing — is there any quantification of new data repositories or new use cases now that you are — you have seen a pretty good volume of SaaS deals that maybe outside of the Microsoft ecosystem you’re realizing more of these opportunities from a data repository use case standpoint? Is there two or three that are significant?
Yaki Faitelson: Yes. The three things that we are doing extremely well is making sure that only the right people can access the right data, the robotic remediation of access control without breaking any business processes, which is the holy grail of data protection. Threat detection and response, that is data oriented. And then obviously, a very accurate classification of data and to give it context, and then we are doing into every depositor. We have this amazing product for Salesforce, Salesforce and Box and Google that we are going now into the ISO. And you know with AWS, all the databases, all the RDS, S3 and in Azure, Azure Blob and we’re just moving very, very, very fast really to do everything we have done, with on-prem data with storage in these biggest NAS devices of the world and they unstructured and then went to application and semi-structure then e-mail and the SaaS applications and how this data repository is in AWS and Azure, and we will move very fast.
And everywhere we go, we bring these three use cases. But the other thing is also, as you have more data, you have more enrichment. Because if you look at most of the breaches, almost all of them, they always go from one, they’re coming in, they try to get credentials, they are becoming a user. And then they are moving from one data repository to the other. And we are really in the best position to make sure that organizations don’t have data breach, and we are doing it automatically. And now even in the places that they need to put some effort, we are taking it on ourselves. We just need to help us set it up and someone needs to answer the phone. This is the level of automation we are getting to. And any repository that we are going to protect this is the level of protection you will get.
Chad Bennett: Got it. Thank you much.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Jason Ader with William Blair. Please proceed with your question.
Jason Ader: Thank you. Good afternoon guys. Just wanted to ask in terms of the conversion process in practice, how does it work with your existing customers? Do you wait for the term expiration kind of a little bit ahead of that to try to convince people to switch over to the SaaS version, how much incentives do you provide for them? I know you have a 25% to 30% price uplift, that doesn’t seem like much of an incentive to me if I’m a customer. So what are some specific things that you’re doing as you think about 2024, especially second half where you talked about accelerating the kind of some of the activity with the existing customer base?
Guy Melamed: So Jason, I’d start by saying that, that 25%, 30% uplift is actually a significant incentive for our customers to convert because the total cost of ownership saves them money. So, yes, they pay more on our price list. But at the end of the day, they save on the hardware, and they save on the people. And they’re getting a much, much better product. And especially with the MDDR, it could save them even more in terms of the offering. So it’s definitely an incentive. As we look at our offering. And when we look at kind of the renewals, we really take the queue from our customers. Some customers want to wait until the renewal period, and then they would talk about the conversions. Sometimes, they don’t want to wait, they have a renewal that’s ahead of time, but they want SaaS and they want it now.
We work with our customers to make sure that they would be protected in the way that they feel most comfortable. I can tell you that getting a renewal on the on-prem subscription side is a pretty automatic process. You ask for the renewal, you get the PO. There’s not too much conversation going on. Obviously, you want to position in terms of the upsell, but just getting a pure renewal is pretty straightforward. Getting a conversion requires understanding what types of offering would make the most sense for them, kind of talking about the price uplift, but how it saves them money over the TCO in general. So there’s more of an effort there. It’s not happening automatically. But it’s a much better product, it’s providing better protection to our customers.
And the fact that we can convert them sets them up for additional upsell opportunity because they’d be protected on additional platforms. And they see the value, and they would want to purchase more. So it’s a win-win and it’s time very well spent from our perspective, and that’s why we’re so focused on that. Obviously, as you look at kind of the seasonality, we have, historically, way more renewals happening in the second part of the year. That’s why we talked about the Phase 2 and the conversions happening accelerating towards the second part of the year for obvious reasons. But we also see the conversions accelerating within the year. So every single year, we expect to have more conversions in dollar terms as this picks up. But I think as we sit here today and with our expectation of getting to $285 million of SaaS by the end of this year, we’re expecting customers to convert at a higher pace than we saw in 2023.
Jason Ader: Great. Thank you.
Guy Melamed: Thank you.
Operator: Thank you. Our next question comes from the line of Joe Gallo with Jefferies. Please proceed with your question.
Joseph Gallo: Hey guys, thanks for the question. You guys have launched many new products recently, Snowflake protection, you’ve upgraded protection for Salesforce as you bolster DA Cloud. Can you just talk qualitatively about the traction you’re seeing in DA Cloud? And then quantitatively, any metrics or size or growth profile? And then just how we should think about the mix as a percentage of ARR over time from DA Cloud? Thanks.
Guy Melamed: Joe, if you remember, for quite some time now, we’re looking at our SaaS offering as a whole, and we’re definitely seeing that in terms of the conversations with customers where they not only buy the SaaS offering on the platforms that we used to have on-prem, but they’re also talking about additional platforms that we have through the Polyrize acquisition and the offering there. So I think overall the adoption as we saw in Q4, was healthy. It’s definitely helping in terms of the conversations. Obviously, we think we can do much better and we’ve talked about the fact that it takes time to introduce new products until they kind of take off as we saw with the Office 365 and the automation engine. But we’re very happy with the progress so far and we believe that we can increase it in 2024.
Our reps are very much in line with this. They understand the benefits there. Our customers are asking about it and talking to us about it. So overall, we’re happy with the progress so far.
Joseph Gallo: Thanks.
Operator: Thank you. Our next question comes from the line of Shrenik Kothari with Baird. Please proceed with your question.
Shrenik Kothari: Yeah, thanks for taking my question. Congrats on the great execution. So, Yaki, you talked about the sales kick-off event earlier in the call and the level of energy during the event. So just one follow-up to the previous question about the second half ramp for Phase 2 regarding the Salesforce incentive specifically. Of course, so far, they are uplift from SaaS kind of naturally was the momentum due to higher commissions. And as of yet you had not implemented any additional monitoring incentives for selling SaaS. So can you elaborate on the conversion kind of go-to-market motion around adjusting this Salesforce incentive dynamics related time lines? And also how does these incentives kind of drive incremental OpEx, which you’re tying into your margin guidance, framework and assumptions for the first half and second half?
