So I think it will be, and you’ll see it be kind of similar, but what’s driving the expansion year-to-year, ’24 going in ’25 is, once again, we are expecting operational improvements in the bundled SaaS. And once again, given that, that is driving the bookings or driving the revenue growth and the revenue seeing some operational expansion within the bundled SaaS, all of that will help to drive the over 100 basis points that once again, we’re looking for this year.
Joshua Reilly: Got it. And then just a quick follow-up on that. How much of the Managed Services business? Is that factored into that 100 basis point improvement as well? Or did that all…
Grant Highlander: It is factored in, but it’s — the operational improvement of bundled SaaS is obviously driving a good portion of that.
Joshua Reilly: Got it. Thanks, guys.
Grant Highlander: You bet.
Operator: And thank you. [Operator Instructions] And our next question comes from Timothy Horan.
Timothy Horan: Thanks, guys. Can you give us a sense of how big the bundled SaaS is and what percentage of revenue that is? Secondly, I think you have a guidance out there for 10% growth in a couple of years. It sounds like bookings are going a lot better. I mean can you maybe see that happen in more like 18 months or so? And then third, when you — these chat bots from customers spend $1,000 on them. Do you have a sense of how much you’re saving in labor or other expenses in total? Thank you.
Dan Bodner: Yes. Let me start and Grant you can give the SaaS percentage later. So I think that when customers are looking for AI, first, they’re looking for the best solution that they can give them the best ROI, right? So it’s not just bot I need to buy AI, but it’s the ability to drive business outcomes. I think that the gross margin expansion is — and we have it now steady, it’s the result of really innovation. So when you’re delivering strong ROI for customers, they are not really pressuring your pricing, so we’re kind of sharing the benefits of the ROI between what the customer get from labor savings to what we get from innovation in bundled SaaS. Now how much ROI. So I gave in the Investor Day some examples that different bots create different savings.
So the containment bots can reduce the cost of one interaction from $5.50 to just $0.50, so that’s 1 to 10 ratio in terms of cost versus return. And this is a successful containment. This is not just deflection of the call, where the customer calls, talk to bot and then never calls back. This is where we measure that on basis of. We really replaced a person with a bot that gave a full answer to what the customers are trying to do. So again, the quality of the bots are very important. There’s a lot of companies that talk about IVAs and how they can do self-service, but successful self-service meaning, successful containment, not just deflection. But on that basis, this bot is generating 1 to 10 ratio. When you look at the TimeFlex Bot, it depends on how much the customer is investing today in flexibility, but we also see customers that have 1 to 10 ratio of ROI, some have lower than that.
But many customers today, if the employees want to change their shift once a day, they fire them. They just can’t forward employee not adhering to the schedule every day they want to change. With the TimeFlex Bots, we have customer reporting that employees are changing schedule 5 times a day. They want a coffee break. They take 15 minutes of their schedule and they schedule themselves for coffee break. And they take 15 minutes later in somewhere else. So again, the ROI is going to be a little bit customized, and we are helping customers to generate their own ROI models so they can do their internal business justification. But it’s always pretty big. This is why AI is so exciting. We’re talking about the market has shifted completely from let’s just move my telephony to the cloud to no, I need to increase the CX automation.
This shift is because the ROI is huge, and because AI just makes it possible. It wasn’t possible a year ago. Definitely not five years ago, but it is possible now. We architected the whole platform to do this. So it’s open with data and DaVinci AI the core. And all these things are actually making these business outcomes possible now. And the ROI…
Operator: Pardon me, speakers.
Matthew Frankel: Justin, it sounds like we lost Dan. I think, Grant, can you please finish this.
Grant Highlander: Yes. Let me go ahead and address the second part bundled SaaS. So you’re exactly right. bundled SaaS is driving the acceleration of growth, what we laid out there in Investor Day, right, was the mid-single-digit growth and accelerating modestly at 26% and then getting the 10% growth in ’27. And I highlighted, that’s on the back of the bundled SaaS bookings, which then drives the revenue over time. Just to answer the question for perspective, the bundled SaaS in fiscal ’24 and again, I’ll adjust for the managed services divestiture. It made up 28%, $250 million, a little over $250 million of revenue for bundled SaaS was roughly 28% of our overall revenue, again, excluding divestiture. And as you look at this and what we have trajectory, it will grow about 4 points and make up 32% of the $930 million of revenue, right, around that ballpark.
And we expect it to continue just on the pace that we had modeled is going to continue to increase towards 37% in ’26. And it would be 40% of our overall revenue by the fiscal year. So then again, driving that 10% growth on the back of that line. So that’s kind of the magnitude that we see. We’ll still have unbundled SaaS, as Dan mentioned, we give the customers flexibility. They don’t have to migrate all of that unbundled SaaS or term licenses. They can get AI without any disruption of the converged migration, and we expect that will come over time as well. So hopefully, that answers the question.
Timothy Horan: Very helpful. Thank you.
Grant Highlander: You bet.
Operator: And, thank you. Okay, thank you. And I would now like to turn the call back over to Matthew Frankel for closing remarks.
Matthew Frankel: Great. Thank you, Justin, and thank you, everyone, for joining us today. Of course, feel free to reach out with any questions you have, and we look forward to speaking to you again soon. Have a good night.
Operator: This concludes today’s conference call. Thanks for participating. You may now disconnect.
