It’s also going to be used for increasing customer experience and increasing revenue opportunity with customers. We will discuss and, again, demonstrate all that. We’re going to bring some customers and partner to talk about it next week. So that’s going to be front and center to our discussion, how the industry is shifting to more AI. Verint is shifting to more bundled SaaS, and our TAM is growing because we have a much larger AI opportunity in the future.
Operator: Our next question will come from the line of Hugh Cunningham from Cowen.
Hugh Cunningham: From our side, let’s say — we also want to say our thoughts and prayers are with you, the members of the Verint family that are in Israel. That is still very much on the minds of everyone here. In terms of the question that was just asked, Dan, do you have a sense for your end customers, how many of them are focused on really enhancing their competitive position by improving their customer service and not so focused on reducing cost by reducing contact center head count?
Dan Bodner: Yes. Thank you for your kind note. I would say that today in the current environment, customers are, first and for all, focused on reducing their cost, their labor cost. But at the same time, they can’t keep hiring to introduce better customer experience. So a lot of our customers are reporting that they know they need to hire people to elevate CX. They want to elevate CX because that’s strategically important to them. But they’re already spending a lot of money. They — it’s very hard to hire and retain a set of agents. So they’re looking actually first to stop the bleeding, which is increasing labor cost. I personally, again, had discussions with executive level that are thinking beyond that and understand the power of customer loyalty and revenue generation over time, increasing from better customer sentiment.
So I think that is — personally, I think it’s coming. But if I have to report what I see now in the market, the reason typically that currently they’re buying is help me reduce my labor cost. And because the ROI is also very quick and they don’t have to deploy — if you are a 10,000-agent contact center, the way we provide you the bot consumption is you can have a volume-based consumption. So you can start with 200 agents and just look at what that does to increase capacity. And now that you’ve proven that in your own environment, if you want to expand, it’s only Verint Cloud. It’s really just changing entitlement, and we’re billing them for more bot consumption. So it’s very easy for them to look at, okay, I’m going to start. I’m going to stop the bleeding in terms of I can’t hire people I need now to bring bots.
But as I keep increasing the volume, I may want to start to use those bots for freeing up people to do more customer service and more personal relationship building with customers. I personally think it’s coming, but it’s not yet.
Hugh Cunningham: Okay. And then one question on the bundled/unbundled mix. It would seem to me that the motivation to switch to the Verint Cloud and enter into a bundled agreement is compelling, particularly given that’s the only way to access the bots and Verint AI. What am I missing on the other side? What’s keeping — and there’s this strong renewal this quarter or expected in Q4 for unbundled. Why is there strength still in the unbundled side? Why isn’t everyone going to bundled?
Dan Bodner: Yes. So first, you remember that Verint is very much at the high end of the market, mid to large enterprise customers. And if you look at kind of the industry report, only 20% or under 20% of that end the segment of the market has moved to cloud, while Verint already have the majority of our customers in the cloud so — from a revenue perspective. So the way we did that is we know that our large customers did not want to be disrupted. . Many of them have — when you have thousands of people, it’s not one contact center. It’s multiple. They may be in different countries. They may deal with different technologies. So these large customers really do not have the desire to just rip and replace everything and do one big transformation into the cloud.
So the way we designed our platform is a bot only working in Verint Cloud, but you don’t need to bring your legacy Verint solution to the Verint Cloud. So our bots work in the cloud with your on-prem, or we have many partners that are hosting our software. So a bot in the Verint Cloud can work with a partner cloud, can work with the customer cloud. What that did is it puts us in a position, and when we look at the Q3 booking results that we have a lot of bundled SaaS booking from unbundled SaaS customers. And when it comes time to renew, they renew in unbundled because they’re not ready to rip and replace what’s working. But we gave them a path to consume AI in the Verint Cloud without the need to go through a big transformation. Now at some point in time, they’re going to take the legacy and move it to the cloud as well.
