They’re going to do it at their own pace. And we know that at that point, we get some uplift. But we’re not dependent on that transition from customers that only when they move to the cloud, they also buy Verint bots. So we designed it that we decoupled the 2 things, and that’s why we will see in Q4 many unbundled renewals. As Grant said, that’s something we’ve been discussing now, those renewals from these customers, for the last 6 months. That’s typically when we start the renewal process, and we know they’re going to renew in unbundled. And some of them, when they renew in unbundled, they’re going to add new capabilities, new AI capabilities in bundled SaaS.
Operator: Our next question will come from the line of Peter Levine from Evercore.
Peter Levine: Great. Maybe, Grant, I think your comment was interesting to me on gross margin. You talked about you guys — the leverage you’re seeing is coming from the cost savings. So maybe just talk us through how that’s getting calculated and then how you’re thinking about that as you plan for next year.
Grant Highlander: Yes. What I mentioned, Peter, was the cost savings that our customers realize the way we price, right, our SaaS business, the AI, we’re able to capture that — more of that because the ROI is very high. So that’s what we see and why we look at this and the trajectory that we’re on, as Dan mentioned, really driven on the back of the bundled SaaS, the bookings we did this year, driving some accelerated growth next year. And even with the scale on that, we see a path to expanded margins next year and as we continue into the future.
Peter Levine: Your guidance of the $100 million of the unbundled SaaS in Q4, you said that’s, I think, dependent on the number of deals that are coming up for renewal. Maybe talk us through where we are in that cycle, meaning 50%, 60%, 70% of those deals have closed. Or are you still expecting that, meaning how derisked is that number?
Grant Highlander: Yes. What you’re asking is what kind of visibility do we have. It seems like a big number, right? And that’s the important point and one of the reasons why I wanted to share here, of that $100 million, $48 million sequentially, right, up from Q3, and that’s where $40 million of that growth comes from this renewal volume that we have, whereas the $8 million of additional growth comes from new. The renewal business tends to have less risk. We tend to see that because customers already have the software deployed. We began discussions on the renewals with them 6 months in advance. We know funding typically is secured. So it’s a different sales dynamic for this volume of renewals. It’s really just that the timing of when these renewals have come up, more of them are here in the fourth quarter, and that’s what drives a bit of that revenue dynamic.
But looking at it across the year, right, has a little bit more natural dynamic, along with the SaaS ARR that we’re seeing.
Peter Levine: If I could squeeze one last one in, maybe just a follow-up from an earlier question. Is there a way that you can quantify it for us? We talked about some of the deals that pushed out of the first half into the second half. Can you quantify what you saw in Q3? Perhaps like what got pushed into Q4 and then perhaps what’s getting pushed into, call it, the first half of next year?
Dan Bodner: Yes. I think that what we did after Q2 when we saw, again, Q1 slip — deal pushed to Q2, and then there was — we just adjusted our focus, right? We came in Q2, and we said we’re going to lower the guidance for the year based on our reality of the deal cycle is just longer. So we applied that, what we saw in Q2, into Q3, and we were pretty much where we expected to be. So I think we’re reading the market. There was a question before. Are things getting worse? No, they’re not getting worse. I don’t think they’re getting better. But I think we have adjusted our view. And that’s why we got $25 million ACV in Q3. We’re expecting a sequential increase and then a year-over-year increase in Q4. $25 million to $30 million is kind of my range. And we think this is adjusting to the elongated sale cycles already.
Peter Levine: Okay. And will we get any color into fiscal ’25 numbers or your guidance for fiscal ’25 next week?
Dan Bodner: So we will discuss the next 3 years next week, right? That’s why we have Investor Day. So I think we’re going to give you a lot of information about how to think about the opportunity that Verint has and how to model Verint for the next 3 years. I would say that, first, we expect next year, the revenue to grow and improve growth rates because of the bundled SaaS booking this year. So that increase in bundled SaaS this year will drive increase in revenue next year. So obviously, we discussed that. We we’ll discuss the next year, the trends in detail. But the most important thing for us right now as we think about acceleration of growth rates next year and beyond is, of course, the industry that we’re in is very labor intensive, and it’s ripe for automation.
