We see some customers that have more pause and we see customers that actually have, I would say, even accelerate their technology purchase. The way we think about guidance for next year is obviously like we always did, we take what we see now, and that’s reflected in our guidance. So we’re not trying to project a change, whether it’s to the better or the worse, but we think this is a pretty good environment for us with our ability to protect earnings with our increasing gross margins and cost management.
Shaul Eyal: Understood. Thank you so much. And Best of luck to Doug.
Operator: Thank you. And our next question will come from the line of Ryan MacDonald from Needham. Your line is open.
Ryan MacDonald: Hi, thanks for my questions and congrats to Doug on a great career and best of luck in the future. Dan, maybe to start, I just wanted to clarify, I think one of the assumptions you talked about for next year’s outlook, did you say that SaaS bookings that you’re expecting 15% growth next year? Can you clarify that? And if so, can you talk about maybe some of the components of what you’re seeing within the SaaS business that would sort of warrant such a slowdown from the growth rates this year? Is it a tough comp? Or are you starting to see some slowing in the SaaS side of the business as well? I just have some clarification there.
Dan Bodner: Yes. So let’s look at all the stat metrics for next year. Starting with revenue, SaaS revenue, we’re expecting 30% growth in SaaS revenue. As you know, we have about 60-40 in revenue between new booking and conversion. So conversion, we expect to continue to grow, but there are different dynamics in terms of the new SaaS booking. So 30% growth is SaaS revenue, 60% from expansion and new logos and 40% of conversion. That’s one assumption. And again, that’s the same mix we have this year. In terms of the booking assumption. We — last year, we — I mean the current year — I’m sorry, the current year in H1, we had 15% new SaaS ACV growth. In H2, we are projecting now 40%. So it’s a big increase from H1 to H2. I’d love to think that this will continue to next year.
But right now, in our guidance, we assumed the same as H1 this year. So 15% is our assumption to drive the guidance. I don’t think that it’s suggesting that we see deceleration. It’s suggesting that we are trying to provide now in December guidance, and we’re trying to look at that from a perspective of what did we achieve this year. And we clearly have acceleration in Q3, which we expect strong new strategy Saas ACV in Q4, but we’re only baking 15% into our guidance assumptions.
Ryan MacDonald: That’s helpful color.
Dan Bodner: Yes. Just to finish, if you’re building the model, you can also assume that about 75% of our new SaaS ACV is bundled SaaS and 25% is unbundled SaaS, so just to give you the numbers. So right at this point, our guidance for this year suggests we’re going to have $120 million of ACV bookings that are new. And that number will grow to about $140 million next year in the guidance and you can assume a 75%, 25% mix for this year and for next year?
Ryan MacDonald: That’s super helpful color. I appreciate that, Dan. And maybe, Doug, for you, on the gross margin expansion, great to see that we’re going to get to 70% for the year here was as that transition accelerates. I’m curious, as you think about next year I know you talked about gross margin expansion. But as perpetual continues to fall off, what structurally do you think gross margins can get to when you think about €˜24 and beyond? Thanks.
Doug Robinson: Yes. Thanks, Ryan. We’ll continue to see gross margin expansion. It’s kind of a weighted average thing, right? So a recurring revenues have a higher gross margin and as that becomes a bigger piece of the puzzle, the gross margins are going to expand. So we’ll see Q4 will be up point or so from Q3, that will give us to 70% for this year. And we’ll probably have 50 bps or so next year and then continuing and we might see acceleration beyond that in the out years.
Dan Bodner: Yes. The numbers in the dashboard, we have over 75% gross margin on recurring and under 50% gross margin on non-recurring. So as we continue to grow recurring next year, 10% and obviously, non-recurring continue to decline, that’s the average of the mix shift towards the 75% plus that we have currently in the recurring gross margin.
Ryan MacDonald: Excellent. Thanks for taking my questions. I’ll hop back in the queue.
Dan Bodner: Yes, sure.
Operator: And our next question is from the line of Peter Levine from Evercore ISI. Your line is open.
Peter Levine: Thanks for taking my question. And Doug, best of luck in your next endeavor. Maybe the first one is the kick stay with the macro theme is what’s the recession playbook for Verint? Like what we’ve seen others kind of take the right steps to kind of resize their business, prioritize investments, focus on efficiencies. Like what cards do you have in your back pocket if things get worse to play? And then it stands today, can you quantify your hiring plans for next year?
