Q2 2024 Verint Systems Inc Earnings Call

Unknown Attendee: Non-gap financial information should not be considered in isolation from as a substitute for or superior to gap financial information. But it's included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and it's useful to investors for informational and comparative purposes.

Information, but is included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes.

non-GAAP financial measures. The company uses have limitations and may differ from those used by other companies now.

Now I'd like to turn the call over to Dan Dan.

Thank you Matt.

Dan Bodner: Today, I will start with a review of our Q2 and H1 key metrics including bookings and revenue dynamics. Then, I will review the latest innovation in our CX optimization platform and our AI-powered specialized bots.

Today, I will start with a review of our Q2 and H one key metrics.

Including bookings and revenue dynamics.

Then I will review the latest innovation in our CX automation platform.

And our AI powered specialized boss.

Dan Bodner: Finally, I will provide a mid-year update on our expectations for the second half of the year. In Q2, we delivered solid performance across key SaaS metrics including SaaS new bookings, renewals, and SaaS AR. We believe our SaaS momentum reflects our differentiated CX optimization platform and the growing customer interest in our AI capabilities.

Finally, I will provide a midyear update on our expectations for the second half of the year.

In Q2, we delivered solid performance across key metrics.

Including <unk>, new bookings renewals and such a R.

We believe our SaaS momentum reflects our differentiated CX automation platform.

And the growing customer interest in our AI capabilities.

Dan Bodner: Let me start with Q2 and H1 bookings and deal activity. In Q2, new SaaS ACV bookings came in at $26.5 million up strongly from Q1 and consisted with our average query level throughout last year. As discussed in a prior call, in Q1, we saw elongated sales cycle due to the macroeconomic environment and approximately $11 million ACV of deals shifted to the right out of Q1 relative to our expectations. We are pleased to report that this $11 million of Q1 deals were subsequently all booked in Q2.

Let me start with Q2, and H, one bookings and deal activity.

In Q2.

<unk> ACD bookings.

<unk> of $26 5 million.

Up strongly from Q1.

And consistent with our average quarterly level throughout last year.

As discussed on our prior call.

In Q1, we saw elongated sales cycle do.

Due to the macroeconomic environment.

And approximately $11 million ACB of deals Chi.

To the right out of Q1.

Relative to our expectations.

We're pleased to report that this $11 million of Q1 deals were subsequently all booked in Q2.

Dan Bodner: During our last call, we also shared our expectations of more than $60 million of new SaaS ACV bookings for the first half. Our actual results came in at $42 million. Elangated sales cycles persisted in Q2 leading to over $8 million ACV of deals shifting to the right and out of Q2. Based on our current forecast, we expect the majority of which to be booked in Q3. Given our experience in the first half of bookings shifting to the right in both Q1 and Q2, we're assuming economic conditions will remain the same in Q3 and Q4, resulting in approximately $10 million of bookings shifting from H2 into next year. For the year, we now see $102 million of new SaaS ACV bookings compared to our prior expectations of approximately $112 million.

During our last call we also shared our expectations.

Of more than $50 million of new staff ACB bookings for the first half.

Our actual results came in at $42 million.

Elongated sales cycles persisted in Q2.

Leading to over $8 million.

<unk> of deals shifting to the right and out of Q2.

Based on our current forecast.

We expect the majority of which to be booked in Q3.

Given our experience in the first half of bookings shifting to the right in both Q1 and Q2.

We're assuming the economic conditions will remain the same in Q3 and Q4.

Resulting in approximately $10 million of bookings.

Shifting from <unk> into next year.

For the year, we now see a $102 million.

Of new SUS ACB bookings.

Compared to our prior expectations of approximately $112 million.

Dan Bodner: Grants will discuss later the expected progression of our bookings throughout the year. Now, let's take a closer look at our Q2 deal activity and recent market trends. In Q2, we continue to have significant wins across existing annual logos. With respect to existing customers, we received more than 20 orders in excess of $1 million QCV. As large enterprises across the globe, continued to expand and adapt more applications from our platform. These orders included a $20 million QCV order from a leading financial services company in the US.

Grant will discuss later the expected progression of our bookings throughout the year.

Now, let's take a closer look at our Q2 deal activity.

And recent market trends.

In Q2, we continue to have significant wins.

Across existing and new logos.

With respect to existing customers, we received more than 20 orders in excess of $1 million differently.

As large enterprises across the globe.

<unk> to expand and adapt more applications from our platform.

These orders included a $20 million <unk> order from a leading financial services company in the U S.

Dan Bodner: A $6 million QCV order from a leading telecom company in Europe, and a $6 million QCV order from one of the largest banks in the Asia-Pacific region. With respect to new logos, in Q2, we again added more than 100 new logos, including large brands such as Samsung and Semicmores. New logos customers typically start with small orders, and our objective is to have them expand in our cloud platform over time. Another customer trend that is important to note is strong interest in our AI capabilities.

At 6 million or <unk> order from a leading telecom company in Europe .

And the 6 million <unk> order from one of the largest banks in the Asia Pacific region.

With respect to new logos in Q2, we again added more than 100, new logos.

Including large brands, such as Samsung and Philip Morris.

New logos customers typically start with small orders and.

And our objective is to have them expand in a plant in a cloud platform over time.

Another customer trend that is important to note.

He is a strong interest in our AI capabilities.

Dan Bodner: I'm pleased to report that the majority of the new size ACV booked in Q2 include one or more very specialized bots. We believe the market is in the early stage of the AI adoption cycle, and variant is well positioned with variant of inch AI at the core of our platform.

I am pleased to report that the majority of the new SaaS ACB booked in Q2.

Includes one or more very specialized boss.

We believe the market is in the early stage of the AI adoption cycle.

And <unk> is well positioned with varying da Vinci AI at the core of our platform.

Dan Bodner: In summary, in H1, we saw allocated sales cycles, which impacted the timing of our bookings. At the same time, we saw positive trends, including increased interest in very specialized bots, resulting in pipeline growth, strong renewal rates consistent with the prior year, more than 100 new logos, and the average trend length of new orders remaining close to two and a half years. Our solid Q2 new SACV booking combined with strong SaaS renewal rates drove SaaS ARR growth of 17% in Q2 and on a year-over-year basis, for a strong SaaS ARR growth in the first quarter.

In summary.

In <unk>, we saw elevated sales cycles, which impacted the timing of our bookings.

At the same time, we saw positive trends in.

<unk>.

Increased interest in various specialized box.

<unk> and pipeline growth.

Strong renewal rates consistent with the prior year.

More than 100, new logos.

And the average term length of new orders remaining close to two and a half years.

Our solid Q2, new ACD bookings combined with strong SaaS renewal rates.

George SaaS AOR growth of 17% in Q2.

On a year over year basis.

Following strong Saturday our growth in the first quarter.

Dan Bodner: We believe SaaS ARR is a very useful operating metric for management as it normalizes all SaaS constructs to reflect the consistent and annualized rather bold review that is closely aligned with a SaaS cash load generation. As a reminder, for an accounting perspective, our bundle SaaS constructs are recognized reliably, while our unbundled SaaS constructs are recognized largely at front and their AST-606 accounting standard. This difference is addressed by the SAS ARR metric.

We believe that there are is a very useful operating metric for management.

As it normalizes all SaaS contract.

To reflect the consistent and annualized ratable view.

That is closely aligned with the SaaS cash flow generation.

As a reminder for the.

Accounting perspective.

Bundled SaaS contracts are recognized ratably.

While our unbundled SaaS contracts are recognized largely upfronts.

ASC 606 accounting standards.

This difference.

Is addressed by the SaaS, we have our metric.

Dan Bodner: Going forward, we intend to report SAS ARR on a quarterly basis to help investors better understand our SAS growth trends.

Going forward, we intend to report slightly IRR on a quarterly basis.

To help investors better understand our SaaS growth trends.

Dan Bodner: Coming to platform innovation, during Q2 we held our engaged customer conference in which we showcased our latest ARR metrics. We are looking to leverage AI to increase CX automation, so they can achieve their strategic objectives of elevating customer experience and reducing labor costs. Verint Open Platform is designed with CX Automation at the center. In Q2 we unveiled many new bots, as part of the large team of specialized bots currently available in our platform.

Turning to platform innovation during Q2, we held our engaged customer conference.

In which we showcased our latest AI innovation.

Brands are looking to leverage AI to increase CX reclamation.

So they can achieve their strategic objectives of elevating customer experience and reducing labor costs.

Burnt open platform is.

It's designed with CX automation at the center.

In Q2.

We unveiled many new boss.

As part of the large team of specialists boss currently available in our platform.

Dan Bodner: These bots are designed to augment the human workforce and deliver significant customer ROI. Customer Reaction has been extremely positive and as I mentioned earlier the majority of the new SAS ACV we booked in Q2 included one or more bots. With regards to pricing of bots, it's important to note that customer level of consumption is related to the volume of data processed by the bots and type of bots and not just to the size of the customer's human workforce. We believe bot consumption in our platform will increase over time given the cost of deploying the variant bots is much lower than the cost of hiring additional people.

These bots are designed to augment the human workforce.

And deliver significant customer ROI.

Customer reaction has been extremely positive.

And as I mentioned earlier, the majority of the new SaaS ACD, we booked in Q2.

Included one or more bots.

With regards to pricing of bots.

It is important to note that customer level of consumption.

Is it related to the volume of data processed by the bots and.

And type of Bot and.

And not just to the size of the customers human workforce.

We believe both consumption and our platform will increase over time.

Given the cost of deploying the very bought as.

Is much lower than the cost of hiring additional people.

Dan Bodner: Let's take a look at the customer ROI delivered by some of our bots. As you can see from the slide, each bot is designed to perform a single task and is focused on helping a specific human role. Customers can deploy a team of bots from the variant platform to assist roles across all enterprise customer engagement functions. For example, a financial services company with 2000 customer engagement employees and with an average call handle time of five minutes can save millions of dollars annually by deploying the team of variant bots.

Let's take a look at the customer ROI.

Delivered by some of our box.

As you can see from the slide each box is designed to perform a single task and is focused on helping our specific human role.

Customers can deploy a team of <unk> from the <unk> platform.

To assist roles across all enterprise customer engagement functions.

For example, the Pheno.

Actual services company with 2000 customer engagements employees and with an average call handle time of five minutes.

Can save millions of dollars annually.

By deploying that team ovarian bots.

Dan Bodner: In this example, the customer is deploying three bots. The rapper bots to assist the agents with automating the after-call work and potentially reducing their work by 60 seconds per call. The containment bots will significantly increase the agent's capacity by having the bot respond to a 30% of consumers' questions. And the compliance bots to assist customer service management to automate the compliance monitoring program to significantly reduce compliance errors and avoid signs. The customer can deploy additional bots from the variant platform for automating different tasks and to generate even greater ROI.

In this example, the customer is deploying three box.

The rapid bot to.

To assist the agent with automating the after call work.

And potentially reducing their work by 60 seconds per call.

The containment box.

The significantly increased agent capacity.

By having the board respond to 30% of consumers questions.

And the compliance boss to assist customer service management.

To automate the compliance monitoring program.

<unk> significantly reduced compliance errors and.

And avoid fines.

The customer can deploy additional loss from the variant platform for automating different tests and to generate even greater ROI.

Dan Bodner: In summary, we believe that brands, investment in bots, is more cross-effective than increasing the size of the human workforce, this dynamic should drive increased consumption from our platform and increase our time over time.

In summary, we believe that brands investment in box.

It's more cost effective and increasing the size of the human workforce.

This dynamic should drive increased consumption from our platform.

And increase our Tam over time.

Dan Bodner: Next I would like to discuss the trends that we see for the second half of the year. First, our perpetual to such transition is progressing as planned and we are on to act to achieve 88% of our softer revenue to come from recurring sources for the year. As a reminder, most of our remaining perpetual revenue comes from the financial services company with a preference for on-premise deployments and we expect them to remain on-premises for the foreseeable future.

Next I would like to discuss the trends that we see for the second half of the year.

First our perpetual to SaaS transition is progressing as planned and.

And we are on track to achieve 88% of our software revenue.

To come from recurring sources for the year.

As a reminder, most of our remaining perpetual revenue.

From the financial services companies.

With a preference for on premise deployments.

And we expect them to remain on premises for the foreseeable future.

Dan Bodner: Therefore, the revenue headwinds that we experienced from the perpetual transition over the last couple years and during the current year are expected to be behind us next year. Second, regarding SaaS revenue growth, we had 16% growth in the first half and we expect growth in the second half to improve slightly resulting in full-year growth of 18 to 20% or approximately $500 and $30 million of SaaS revenue at the midpoint. Supporting our expectations for H2 SaaS revenue growth is a combination of new booking and a significant amount of renewals scheduled in Q4, which grant will discuss later.

Therefore.

The revenue headwinds that we experienced from the potential transition over the last couple of years Andrew.

And during the current year.

I expect it to be behind Us next year.

Second.

Regarding SaaS revenue growth.

We had 16% growth in the first half.

And we expect growth in the second half to improve slightly.

Resulting in full year growth of 18% to 20%.

Or approximately $530 million of SaaS revenue at the midpoint.

Supporting our expectations for H to SaaS revenue growth is.

It's a combination of new bookings.

And a significant amount of renewals scheduled in Q4.

Which grant will discuss later.

Grant Highlander: Turning to our outlook for total revenue margins, adjusted EBDA and deluded EPS. For revenue, we are adjusting our annual outlook to $910 million due to the macroeconomic environment. For margin, we now expect faster growth and operating margin expansion and a place to be in a position to maintain our earnings outlook. For the full year, we expect $250 million of adjusted EBDA and $2.65 of deluded EPS, reflecting mid-single digit growth at the midpoint of our outlook.

Turning to our outlook for total revenue margins Jeff.

<unk> EBITDA and diluted EPS.

For revenue, we are adjusting our outlook to $910 million.

Due to the macroeconomic environment.

For margin, we now expect faster growth and operating margin expansion.

And I'm pleased to be in a position to maintain our earnings outlook.

For the full year, we expect $250 million of adjusted EBITDA.

And $2.65 of diluted EPS.

Reflecting mid single digit growth at.

At the midpoint of our outlook.

Dan Bodner: In summary, very open platform is the center of the ex-reformation, delivering AI-powered specialized bots to augment the workforce. We believe a bot consumption model is very attractive to customers. In Q2, solid new SaaS-ACD bookings combined with strong new rates drove 70% growth in SaaS ARR. We now expect the current macroeconomic environment to persist in the second half, resulting in approximately $10 million of new SaaS-ACD bookings shifting into next year. We are adjusting our revenue guidance and maintaining our earning guidance, driven by ongoing improvements in our growth model, and a stoke margins and cash flow generation provide us flexibility and we intend to continue executing on our previously announced talk-by-backed program.

In summary.

<unk> open platform is at the center of six automation.

Delivering AI powered specialist bots to augment the workforce.

We believe about consumption model is very attractive to customers.

In Q2 solid new ACD bookings combined with strong renewal rates.

Drove 17% growth in subs.

We now expect the current macroeconomic environment to persist in the second half.

Resulting in approximately $10 million of newsletters ACB bookings shifting into next year.

We're adjusting our revenue guidance and maintaining our earning guidance driven by ongoing improvement in our gross margin.

And our strong margins and cash flow generation.

Our flexibility.

And we intend to continue executing on our previously announced stock buyback program.

Grant Highlander: Now let me turn the call over to Grant to discuss our financials in more detail. Grant? Thanks Dan, good afternoon everyone.

Now, let me turn the call over to grant.

Discuss our financials in more detail.

Grant.

Thanks, Dan Good afternoon, everyone.

Grant Highlander: Our discussion today will include non-gap financial measures. A reconciliation between our gap and non-gap financial measures is available as Matt mentioned in our earnings release and in the IR section of our website. Differences between our gap and non-gap financial measures include adjustments related to acquisitions, including fair value revenue adjustments, amortization of acquisition related intangibles, certain other acquisition related expenses, stock base compensation expenses, separation related expenses, accelerated lease costs, IT facilities and infrastructure realignment, as well as certain other items that can vary significantly in amount and frequency from period to period.

Our discussion today will include non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available as Matt mentioned in our earnings release and in the IR section of our website.

Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions, including fair value revenue adjustments amortization of acquisition related intangibles certain other acquisition related expenses stock based compensation expenses separation related.

Expenses accelerated lease costs.

Facilities and infrastructure realignment as well as certain other items that can vary significantly in apparel and frequency from period to period.

Grant Highlander: Starting with our Q2 P&L metrics, revenue came in at $210 million. Non-gap gross margins expanded to 70% up more than 70 basis points year over year. And non-gap deluded EPS came in at $0.48. Turning to our SaaS metrics, new SaaS ACV bookings came in solid at $26.5 million, up strongly from Q1. The percentage of our software revenue that is recurring increased to 86% compared to 84% the year ago in the same period.

Starting with our Q2 P&L metrics revenue came in at $210 million.

non-GAAP gross margins expanded to 70% up more than 70 basis points year over year.

And non-GAAP diluted EPS came in at 48.

Turning to our SaaS metrics.

<unk> SaaS ACB bookings came in solid at $26 5 million up strongly from Q1.

The percentage of our software revenue that is recurring increased to 86% compared to 84% a year ago in the same period.

Grant Highlander: And SaaS ARR came in strong with a 17% increase year over year. Earlier this year, we introduced SaaS annual recurring revenue or SaaS ARR. SaaS ARR is an operating metric that represents the annualized quarterly run rate value of active or signed SaaS contracts as of the end of a period. Management uses SaaS ARR to understand the annual recurring value of customer contracts at the end of a reporting period and to monitor the growth of our recurring business as we shift to SaaS.

And SaaS AAR came in strong with a 17% increase year over year.

Earlier this year, we introduced SaaS annual recurring revenue or SaaS error.

That's <unk> is an operating metric that represents the annualized quarterly run rate value of active or signed contracts as of the end of a period.

Management uses SaaS <unk> to.

The annual recurring value of customer contracts at the end of a reporting period and to monitor the growth of our recurring business as we shift to SaaS.

Grant Highlander: One of the benefits of SaaS ARR is that it normalizes all SaaS contracts to reflect a consistent and annualized ratable view despite the different accounting treatments for unbundled SaaS which is recognized up front under ASC 606 and for bundled SaaS which is recognized radically over the term of the contracts. The reason this is important is that our mix of unbundled SaaS and bundled SaaS bookings can vary quarter to quarter and impact year over year growth trends in SaaS revenue.

One of the benefits of SaaS IRR is that it normalizes, all SaaS contracts to reflect a consistent and annualized ratable view. Despite the different accounting treatments for unbundled SaaS, which is recognized upfront under ASC 606, and for bundled SaaS, which is recognized ratably.

Over the term of the contracts.

The reason this is important is that our mix of unbundled SaaS and bundled SaaS bookings can vary quarter to quarter and impact year over year growth trends and SaaS revenue.

Grant Highlander: This is exactly what happened in Q2. Non-gap SaaS revenue increased 10% year over year compared to our 17% increase in the new SaaS ACB booking level in Q2 this year was similar to the level we achieved in Q2 last year. However, the mix of SaaS bookings was weighted more towards bundled SaaS, to address the fact that our SaaS bookings mix can vary quarter to quarter, going forward we intended to disclose SaaS ARR on a quarterly basis.

This is exactly what happened in Q2.

non-GAAP SaaS revenue increased 10% year over year compared to our 17% increase in SaaS <unk>.

Reflecting the growth normalized roundtables basis.

The new SAS ACB booking level in Q2 this year with similar to the level, we achieved in Q2 last year.

However, the mix of SaaS bookings was weighted more towards bundled SaaS.

To address the fact that our SaaS bookings mix can vary quarter to quarter going forward, we intend to disclose that <unk>.

On a quarterly basis.

Grant Highlander: Let's take a closer look at the bookings dynamics in Q2 and how it impacted our Q2 SaaS revenue. As Dan mentioned, during H1, we experienced elongated sales cycles due to the macroeconomic environment. For Q1, we previously discussed our expectations to book 27 million ACV of which 16 million closed and 11 million shifted out of Q1. These 11 million ACV worth of deals were subsequently booked in Q2. Similarly, we were expecting around 34 million ACV in Q2 of which we booked 26.5 million and over 8 million shifted out of Q2.

Let's take a closer look at the bookings dynamics in Q2, and how it impacted our Q2 SaaS revenue.

As Dan mentioned during each one we experienced elongated sales cycles due to the macroeconomic environment for.

For Q1, we previously discussed our expectations to booked $27 million ACB of which $16 million close and $11 million shifted out of Q1.

These 11 million ECB worth of deals were subsequently booked in Q2.

Similarly, we were expecting around 34 million ACB in Q2 of which we booked $26 5 million and over $8 million shifted out of Q2.

Grant Highlander: Important to note that the slip deals similar to Q1 were not lost in the majority of which is expected to be booked in Q3. In addition to the shift to the right, I'd also like to highlight our mix of the bookings of 8 million ACV we didn't book in the quarter approximately 50% or 3.5 million were for unbundled SaaS deals. Since revenue from the unbundled SaaS deals are recognized up front with a standard term of three years, the revenue impact from the 3.5 million deal shortfall was 11 million of revenue in Q2. As a result, the unbundled SaaS deals were the primary reason for our Q2 SaaS revenue and total revenue coming in below the prior expectations we discussed. The first of a slight sequential increase from Q1's level.

It's important to note that the slipped deals similar to Q1, we're not lost in the majority of which is expected to be booked in Q3.

In addition to the shift to the right I'd also like to highlight our mix of the bookings.

Of the $8 million ACB, we didn't book in the quarter, approximately 50% or $3 5 million were for unbundled SaaS deals.

Since revenue from the unbundled SaaS deals are recognized upfront with the standard term of three years the revenue impact from the $3 5 million deal shortfall was $11 million of revenue in Q2.

As a result, the unbundled SaaS deals where the primary reason for our Q2 SaaS revenue and total revenue coming in below the prior expectations. We discussed of a slight sequential increase from Q1's level.

Grant Highlander: Turning the fiscal 24 guidance, we expect the shift to the right we experienced in H1 due to the macroeconomic environment to continue into H2 and believe it's prudent to adjust our outlook for new SaaS ACV bookings for the year. Our original outlook for the year was for approximately 11% new SaaS ACV growth or 112 million and we now expect around 10 million of our bookings to shift out of the year. Our current outlook for the second half is 60 million of new SaaS ACV bookings taking the full year to 102 million flat with last year. As a result of the booking shift, we are adjusting our SaaS revenue outlook for the full year to a range of 18 to 20% growth.

Turning to fiscal 'twenty for guidance, we expect the shift to the right. We experienced an H one due to the macroeconomic environment to continue into H, two and believe it's prudent to adjust our outlook for new SaaS ACB bookings for the year.

Our original outlook for the year was for approximately 11%, new SaaS ACB growth or $112 million and we now expect around $10 million of our bookings to ship out of the year.

Our current outlook for the second half to $60 million of new SaaS ACB bookings, taking the full year to $102 million flat with last year.

As a result of the booking shift we are adjusting our SaaS revenue outlook for the full year to a range of 18% to 20% growth.

Grant Highlander: Let me give you some additional color on our annual guidance. With respect to revenue, we expect 10 million ACV booking shift to have a 25 million impact to our revenue this year and are adjusting our revenue outlook to 910 million. While we are adjusting our revenue guidance for the year, we expect greater growth margin and operating margin expansion from accelerated improvements in our SaaS margins. As such, we are maintaining our outlook of $2.65 of diluted EPS for the year.

Let me give you some additional color on our annual guidance.

With respect to revenue, we expect $10 million ACB bookings shift to have a $25 million impact to our revenue this year and are adjusting our revenue outlook to $910 million.

While we are adjusting our revenue guidance for the year, we expect greater gross margin and operating margin expansion from accelerated improvements in our SaaS margins.

As such we are maintaining our outlook of $2 65.

Diluted EPS for the year.

Grant Highlander: Our day looted EPS guidance along with our adjusted EBITDA guidance of 250 million represents 5 percent growth year over year for both metrics. We also continue to expect 190 million of non-gap cash from operations before one-time items. Regarding below-the-line assumptions, we expect interest and other expense on average of $750,000 per quarter. Net income from non-controlling interest should be about $200,000 per quarter. Our cash tax rate should be about 10 percent, and we expect around 75 million fully diluted shares outstanding.

Our diluted EPS guidance, along with our adjusted EBITDA guidance of $250 million represents 5% growth year over year for both metrics.

We also continue to expect $190 million of non-GAAP cash from operations before one time items.

Regarding below the line assumptions.

We expect interest and other expense on average of $750000 per quarter.

Net income from Noncontrolling interest should be about $200000 per quarter.

Our cash tax rate should be about 10% and.

And we expect around 75 million fully diluted shares outstanding.

Grant Highlander: Let me also discuss how we see the second half of the year progressing. Starting with Q3, for bookings, we expect new SaaS ACV bookings to come in at a level similar to Q2. For revenue, we expect the sequential increase from Q2 to around 215 million driven by continued SaaS growth. And for gross margins, we expect another gradual sequential increase in Q3. Turning the Q4, for bookings, we expect new SaaS ACV bookings to grow sequentially from Q3, taking H2 to $60 million in total.

Let me also discuss how we see the second half of the year progressing.

Starting with Q3 for bookings, we expect new SaaS ACB bookings to come in at a level similar to Q2.

For revenue, we expect a sequential increase from Q2 to around $215 million driven by continued SaaS growth.

And for gross margins, we expect another gradual sequential increase in Q3.

Turning to Q4.

For bookings, we expect new SaaS ACB bookings to grow sequentially from Q3, taking H $2 million to $60 million in total.

Grant Highlander: For revenue, we expect to finish the year very strong with around $267 million, up 52 million sequentially from Q3. While this seems like a significant increase sequentially, most of this increase is coming from unbundled SaaS renewals being concentrated in Q4 this year. In fact, we expect approximately 55 million of renewal revenue in Q4 compared to only 15 million in Q3. And for gross margins, we expect a larger sequential increase in Q4 driven by the significant sequential revenue increase from the concentration of renewals.

For revenue, we expect to finish the year very strong with around $267 million up $52 million sequentially from Q3.

While this seems like a significant increase sequentially. Most of this increase is coming from unbundled SaaS renewals being concentrated in Q4 this year.

In fact, we expect approximately 55 million of renewal revenue in Q4 compared to only $15 million in Q3.

And for gross margins, we expect a larger sequential increase in Q4, driven by the significant sequential revenue increase from the concentration of renewals.

Grant Highlander: Next, I will discuss how the trends we are seeing this year should benefit our financial model next year. Let me provide you with some details on these benefits. Starting with revenue growth next year, we see three positive trends. First, we see a high level of interest in our latest AI and bot innovation, and we expect customers to consume more from our platform over time due to the strong ROI of our solutions.

Next I will discuss how the trends we are seeing this year should benefit our financial model next year.

Let me provide you with some details on these benefits.

Grant Highlander: Second, while sales cycles are elongating, our pipeline is growing and we believe there is pent up demand. And third, with fast ARR grown strongly and perpetual revenue leveling off, the headwinds we have had from declining perpetual revenue will be largely behind us. With respect to cash flow, we expect our cash generation to grow at a double-digit rate next year faster than our revenue growth. Behind this expectation is the positive impact to our cash flow from our SaaS ARR growth, as well as the fact that some one-time expenditures associated with our post-COVID office realignment will be behind us, us.

Starting with revenue growth next year, we see three positive trends.

We see a high level of interest in our latest AI and bot innovation and we expect customers to consume more from our platform over time due to the strong ROI of our solutions.

Second.

While sales cycles are long gating, our pipeline is growing and we believe there is pent up demand.

Third with SaaS IRR grown strongly and perpetual revenue leveling off the headlines headwinds we have had from declining perpetual revenue will be largely behind us.

With respect to cash flow, we expect our cash generation to grow at a double digit rate next year faster than our revenue growth.

Behind this expectation is the positive impact to our cash flow from our SaaS <unk> growth.

As well as the fact that some one time expenditures associated with our post Covid office realignment will be behind us.

Grant Highlander: Turning to our balance sheet, we continue to be in a very good financial position. Our net debt remains well under one times last 12-month EBITDA and is further supported by our strong cash flow. We expect our balance sheet to get even stronger going forward as we benefit from the foundation we laid since the spin, resulting in continued improvement in margins and cash flow.

Turning to our balance sheet, we continue to be in a very good financial position.

Our net debt remains well under one times last 12 months EBITDA.

And is further supported by our strong cash flow.

We expect our balance sheet to get even stronger going forward as we benefit from the foundation, we've laid since the spin resulting in continued improvement in margins and cash flow.

Grant Highlander: And regarding our 200 million stock buyback program, today we have repurchased close to 100 million worth of shares and we are committed to completing our previously announced program.

And regarding our 200 million stock buyback program today.

To date, we have repurchased close to $100 million worth of shares and we are committed to completing our previously announced program.

Dan Bodner: In summary, in Q2, we delivered solid performance across key SaaS metrics, including a 17% increase in SaaS ARR. Despite our strong SaaS momentum, we experienced some deal slippage in H1 and believe it's proven to adjust their bookings and revenue outlook for the full year. At the same time, we expect more gross and operating margin expansion and are pleased to be in a position to maintain diluted EPS guidance and expect mid-single digit growth for diluted EPS and adjusted EBITDA this year. Finally, our ability to deliver innovative CX automation and drive significant customer ROI positions us to increase consumption in our platform and sustain long-term growth.

In summary in Q2, we delivered solid performance across key SaaS metrics, including a 17% increase in SaaS.

Despite our strong SaaS momentum, we experienced some deal slippage in H, one and believe it is prudent to adjust our bookings and revenue outlook for the full year.

At the same time, we expect more gross and operating margin expansion and are pleased to be in a position to maintain diluted EPS guidance and expect mid single digit growth.

Diluted EPS and adjusted EBITDA This year.

Finally, our ability to deliver innovative CX automation and drive significant customer ROI positions us to increase consumption and our platform and sustained long term growth.

Dan Bodner: And before we take questions, I'd like to mention that we'll be hosting an investor day in December to highlight our latest innovations and review our financial model in more detail.

And before we take questions I'd like to mention that we'll be hosting an investor day in December to highlight our latest innovations and review our financial model in more detail.

Unknown Attendee: With that operator, please open the line for questions. And thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.

With that operator, please open the line for questions.

Unknown Attendee: To withdraw your question, please press star 11 again. Please stand by, we'll be compiled a Q&A roster and one moment for our first question.

And thank you.

As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby will be compile the Q&A roster.

One moment.

First question.

Ryan Macdonald: And that first question comes from Ryan McDonald from Needham & Company. Your line is now open. All right, thanks for taking my questions and I appreciate the thorough walk through on the on the updated guidance expectations. Dan, maybe we could start there and just provide a little bit more color on maybe what changed, I guess some material, if you will, between first and second quarter and how you're looking into the back half.

And our first question comes from Ryan Macdonald from Needham <unk> Company. Your line is now open.

Alright, Thanks for taking my questions and I appreciate the thorough walk through on the on the updated guidance expectations and Dan maybe you could just we could start there and just provide a little bit more color on maybe what changed I guess, so materially if you will between.

First and second quarter, and how you are looking into the back half and I guess to the extent that in the conversations you're having.

Ryan Macdonald: And I guess to the extent that in the conversations you're having, do you feel like we're getting to a trough point in terms of the sales cycle elongations or what's your viewpoint on sort of the timeline of how long this persists for? Yeah, so what do you think you want, continuing Q2? So we now assume it will continue also in Q3 and Q4. And that's basically elongated sales cycle. So we mentioned 11 million dollars that pushed out of Q1 for the right and we booked them in Q2.

Do you feel like we're getting to a trough point in terms of the sales cycle elongation or or whats your viewpoint on sort of the timeline of how long this persists for.

Yes, so what we think Q1.

Continued in Q2, so we now assume it will continue also in Q3 and Q4.

And that's basically and we'll get a sales cycle. So we mentioned $11 million.

Got pushed out of Q1 to the right and we book them in Q2.

Ryan Macdonald: And that was good. We were happy to see that it's not elongated, you know, multiple quarters, but we closed that shortfall in Q2 but then we had similar to the magnitude of 8 million dollars of deal shifting to the right from Q2 and we mentioned we didn't lose them and we expect to book them later in the year. So there's a shift right. And it's basically when you look at the transit, it's basically just more security, more approval cycles by customers.

And that was good we were happy to say that it.

It's not I don't get it.

Multiple quarters, but we closed that.

Shortfall in Q2, but then we had.

Similar to the magnitude of eight.

$8 million.

Shifting to derived from Q2, and we mentioned we didn't lose them and we expect to.

Booked.

Book them later in the year.

So there is a shift right and it's basically a.

When you look at the trends, it's basically just.

Morris could it anymore.

Approval cycles by customers.

Ryan Macdonald: We didn't see any other trend changes. So, you know, new logos, we had more than 100 new logos in Q2 as well and in Q1 and throughout last year. In terms of the average deal length, very similar, about two and a half years. We saw the deal sizes. So we had 20 over one million dollars to deal so that's from large enterprises. We did see actually the number of total deals increased 30% over year on similar booking in this Q2 versus last Q2.

We didn't see any other.

Changes, though.

New.

New logos, we had more than 100, new logos in Q2, as well and in Q2, and then Q1 and throughout last year.

In terms of.

Average deal length.

Very similar about two and half years.

We saw.

Yes.

The deal sizes. So we had 20 overwhelming <unk> deals with that.

For large enterprises, we did see actually the number of total deals increased 30% year over year on.

On the similar booking in this Q2 versus last Q2 so.

Ryan Macdonald: So that suggests that there is more deals but smaller, but that could be part of the macro environment, but also part of the new bots that we announced in Q2 and we mentioned that half of the deals in Q2 included one or more bots. And we see that customers, as they look at AI, they tend to start small and then increase consumption over time. So that's kind of another change, but generally no change to a new rate, no change to win ratio.

So that suggests that there.

There is more deals but smaller.

But that could be part of the macro environment, but also part of the new box that we announced in Q2.

And we mentioned that half of the deals in Q2 included one or more Barton.

We see that customers as they look at AI. They tend to start small and then Chris consumption over time.

So that's kind of another change, but generally no change to a new rate no change to win ratio it's really.

Ryan Macdonald: It's really longer cell cycles. And then what we did today is we basically took the same trend into Q3 and Q4. We now assume that 10 million dollars of new SaaS ACV will be pushed into next year. So we talked about 112 million dollars this year and we now adjusted that outlook to 102 million dollars. So not material change in the shift the right of new SaaS ECV, but is grant explained at the same time we think that a lot of the unbundled SaaS deals are being pushed and also what we saw is unbundled SaaS is becoming bundled SaaS.

Longer sales cycles, and and then what we what we did today is we basically took the same trend into Q3 and Q4, we now assume that.

$10 million of new South basically it will be pushed into next year. So we talked about.

$112 million this year, and we now adjusted that outlook to $102 million.

So no material change in the shift.

The right of new seismic survey.

But as grant explained.

At the same time.

We think that allows the unbundled SaaS deals.

Being pushed.

And also such a what you saw.

Unbundled SaaS is becoming bundled SaaS and.

Ryan Macdonald: And because when we apply the six or six accounting, bundled SaaS is is is reliable unbundled SaaS is upfront revenue. Obviously, as we see less unbundled SaaS, the revenue impact is more significant. So what was not a big impact on booking is creating a 25 million dollar adjustment to a revenue outlook. But gross margin expanded as we move more to SaaS and SaaS bundle we get better gross margin. So that offset the impact of the revenue adjustment and we are maintaining operating margin.

And because.

When we apply the 56% fixed accounting.

Bundles, such as ratable unbundled SaaS is upfront revenue, obviously as we see less unbundled SaaS the revenue impact is more significant.

So what was not a big impact of the booking is creating a 25 million.

Adjustment to our revenue outlook.

But gross margin expanded as we move more to SaaS and so it's a bundle we get better gross margins so that offset.

Impact of the revenue adjustment and we are maintaining.

Operating margin for EBITDA.

Ryan Macdonald: So EBDA, 250 million and EPS 265. So that's kind of the impact, for this year. Now, since you're asking when that's going to be over, so one interesting thing to know is that a pipeline for the next 12 months actually grew 20%. And that suggests that while these elongated cycles, there's also a tent of demand. And we actually saw that in prior slowdowns, five years that we have slowdowns that pipeline has grown.

150 million and EPS 265, so that's kind of the impact.

For this year now since you're asking what when thats going to be over.

So one interesting.

I think to note is that our pipeline for the next 12 months actually grew 20%.

And that suggests that while there is I don't get it does cycle. There's also a pent up demand.

And we actually saw that in prior slowdowns.

Years that we have slow down is that.

Pipeline has grown and when things improve.

Ryan Macdonald: And when things improved in the macro environment, there was an uptake also in new booking. So we hope to see it back soon, but the pipeline suggests that there's still good demand for our open platform and both. Super helpful color there.

The macro environment. There was an uptick also in new bookings. So we hope to see that soon but the pipeline suggests that there is still good.

Demand for our open platform and thoughts.

Super helpful color, there, maybe just double clicking on the growing pipeline opportunity Dan.

Ryan Macdonald: Maybe just a double-clicking on the growing pipeline opportunity, Dan. At the engage conference, you would talk about some of the new product offerings. And obviously, one of the big debuts is Open Seacast. And I think the strategy around that was to sort of help Verint get more sort of at bats or shots up met. Are you seeing the desired effect from Open Seacast yet or what's the conversation then, Mike, since engage?

At the engage conference you had.

You talked about some of the new product offerings, and obviously one of the Big <unk> is open see cash and I think the strategy around that was just sort of help there and get more sort of add backs or shots at night.

Are you seeing the desired effect from open see costs, yet or what's the conversations been like since since engaged.

Ryan Macdonald: Thanks. I think that customers and partners are really excited about the open platform. I think the industry was looking for a truly open platform that allows them to focus on CX optimization, which is our eye driven, elevating customer experience, reducing the labor cost. And this is exactly where Open Platform is. We have some very good industry coverage, industry research coverage since then. We're getting really good momentum with partners, we just announced the Microsoft partnership recently.

I think that customers and partners are really excited about an open platform I think the industry was looking for a truly open platform.

<unk> allows them to focus on CX reclamation, which is.

Alright, driven elevating customer experience, reducing the labor cost.

And this is exactly where open slot for me is we had some very good industry coverage industry research coverage since then.

We were getting really good momentum with partners, we just announced the Microsoft <unk>.

Arthur shipped.

Currently so we were selected by Microsoft.

Ryan Macdonald: So we were selected by Microsoft to be not only in their marketplace, but also their self-people and they sell Verint, they get commissions, which is obviously the most important element of being in a true partnership. And our Microsoft partnership is just one more to many. But I think it's driven by Open Platform and our ability to work with anyone in the industry to bring value to customers and also fits very seamlessly into the customer existing environment.

To be not only in their marketplace, but also their salespeople when they sell very they get commissions, which is obviously the most important element of being in a true partnership.

In our Microsoft partnership is just one more too many but I think it's driven by open platform.

And our ability to.

Work with anyone in the industry.

To bring value to customers and also fits very seamlessly into the customer existing environment.

Ryan Macdonald: They can keep their existing CRM vendor and they can move forward with innovation to deploy bots and help to the workforce, augment the workforce with AI. I think that's all very compelling to customers. Excellent, thanks for saying my question. I'll hop back in the queue. Thank you. And thank you. And one moment for our next question. And our next question comes from Peter Living from Evacore ISI. Your line is now open.

They can keep their existing telephony.

They can keep their existing CRM vendor and they can.

Move forward with innovation to deploy box and helped to the workforce augment that workforce with AI.

I think thats, all very compelling to customers.

Excellent. Thanks for taking my questions I will hop back in the queue.

And thank you.

And one moment our next question.

And our next question comes from Peter Levine from Evercore ISI. Your line is now open.

Ryan Macdonald: Great, thanks, guys, for taking my question here. You know, maybe if I look at top of the funnel metrics, you know, were you as successful at converting leads or your plans and then second, you feel like you have enough sales people. Did you experience any sales churn just trying to get a better understanding if, you know, if the folks that you do have on the front lines or they're achieving their quota.

Great. Thanks, guys for taking my question here, maybe if I look at top of the funnel metrics where you.

As successful at converting leads are adding leads at a similar level versus expectations or your plans and then second do you feel like you have enough salespeople did you experience any sales churn I was just trying to get a better understanding if it's the folks that you do have on the front lines are they achieving their quota.

Ryan Macdonald: Just a general sense of, you know, if you have enough coverage, I think in this market to kind of hit the numbers that you, you know, that you're putting out here. Yes, so you know the living indicators obviously the pipeline and then the progression in the pipeline and I think the pipeline is growing but that's that's good, but also we see I don't get a cycle. So everything takes longer and smaller deals where customers can experiment with AI is definitely quick because they see the AI quickly and it's not big investment and because we have a consumption based pricing model we also make it easier for them to sell to to buy it at an initial consumption level and then increase consumption over time.

The general sense of do you have enough coverage I think in this market.

It kind of hit the numbers that you that you're putting out here for the second half.

Yes.

So you know leading indicators, obviously the pipeline and then the progression in the pipeline.

And I think the pipeline is growing.

That's that's good but also we see I don't get it sounds cycle. So.

Everything takes longer and smaller deals where customers can.

Experiment with AI is definitely quick because they see the ROI quickly and it's not a big investment.

And because we have a consumption based pricing model, we also make it easier for them to see.

At <unk> at an initial consumption level and an increased consumption over time so.

Ryan Macdonald: So for myself for the sector obviously they would rather get the big deals which get them big commission but having other new logos more than half of the deal with boss consumption that's obviously sitting the market with a lot of initial purchases that will grow over time because when people are moving to the platform the open platform it's much easier for them to increase consumption they don't have to go through the whole self process again. When it comes to the size of the workforce I believe we have the right size, we have people with lots of very deep relationships with customers that go many years back and they know customers personally they also understand the customer challenges they understand what customers are trying to solve so we're not just trying to sell technology we really bring to our customers our our driven solutions.

So from a sales force effective obviously.

They would rather get the big deals, which get decommission, but adding 100, new logos more than happy to deal with boss consumption. That's obviously, a seeding the market with a lot of.

Initial purchases that will grow over time, because when people are moving to the cloud platform. The open cloud platform, it's much easier for them to increase consumption. They don't have to go through the whole sales process again.

When it comes to the size of the workforce. So Fortunately I believe we have the right.

Right sized we have people with lots of very deep relationship with customers that go many years back and they they know customers personally and they also understand the customer challenges. They understand what customers are trying to solve so we're not just trying to sell technology, we really bring to our customers our ROI driven solutions.

Ryan Macdonald: In terms of the self commissions we pay commissions based on obviously new bookings but also renewals and renewals are very important for achieving our goals and we also pay self people accelerators for selling more innovations to our customers. So well you know we just we just our bookings expectations by ten million dollars for the year ten million dollars ACV for the year but and self people are most successful in selling cloud innovation they can get accelerators and I hope that we'll see many people coming to our president club next year as they achieve quarters.

In terms of the.

Sales commissions, we pay.

Commissions based on obviously, new bookings, but also renewals and renewals are very important for achieving our goals and we also pay salespeople accelerators for selling more innovation to our customers. So.

Well you know we just.

<unk> reduced our booking expectations by $10 million for the year can mean ACB for the year, but as salespeople are most successfully selling our cloud and innovation that can get accelerators and I hope that we will see many people coming through our president of club next.

Next year as they achieved quarters.

Ryan Macdonald: So maybe it's the follow up to I think Ryan first question was you know didn't that you don't really have you know visibility into when we'll trough out here so one is you know what are your hiring plans into the second half and then what are your initial hiring plans is you think about fiscal 25. Yes that's that's a very good question so so right now our guidance assumes flats operating expenses in Q3 and Q4 so similar to Q1 and Q2 so we have no hiring plans and we're going to maintain the level of expense that we have now and I think in this environment it's it's positioned us to really focus on getting the sales people we have today to build our pipelines and as I said before to push more innovation into into our customer base and and you love us.

Maybe as a follow up to that I think Ryan's first question was given that you don't really have visibility.

Visibility into when will trough out here. So one is what are your hiring plans into the second half and then what are your initial hiring plans as you think about fiscal 'twenty five.

Yes.

That's a very good question.

Right now our guidance assumes flat operating expenses in Q3 and Q4, so similar to Q1 and Q2. So we have no hiring plans and we're going to maintain.

The level of expense that we have now.

And.

I think in this environment, it's positioned us to really focus on.

Getting the salespeople, we have today to build a pipeline and as I said before to push more innovation into into our customer base and new logos.

Ryan Macdonald: And as soon as we see signs that you know this type of demand that we see in our pipeline growth is starting to materialize then we obviously can change that view and and and and and resume hiring but right now for the remainder of the year our guidance assumed that things will remain. Thank you very much for taking my question. And thank you. And if you would like to ask the question that is star 11, again, if you'd like to ask the question star 11, one moment for our next question.

And as soon as we see signs that.

This pent up demand that we see in our pipeline growth.

It's starting to materialize.

And then we we obviously can change that view and.

And could resume hiring but right now for the remainder of the year our guidance assume that things will remain the same.

Okay. Thank you very much for taking my questions.

And thank you and if you would like to ask a question that is star one one again, if you'd like to ask a question Star 111 moment. Our next question.

Okay.

And our next question comes from Mason Marion from Jefferies. Your line is now open.

Hi, Thanks for taking my question here, So I wanted to focus on your existing customer base with them with regards to guidance.

Ryan Macdonald: We're seeing existing customers reduce licenses or are you seeing any change in the current based on the macro environment? Any color that would be appreciated? The only change is the two changes that we see are, as I call, longer as they bring more executive into their approval cycle. And there's definitely a growing interest in bots. And, you know, we launched the bots in June in our English customer conference. I think some of the analysts investors you were there.

Existing customers reduced licenses are you seeing any change in that.

And the churn based on the macro environment any color there would be appreciated.

Uh huh.

The only change is the two changes that we see are.

Second longer as they bring more executive into the approval cycle.

And there is definitely growing interest in box and.

We launched the bots in joining our engage customer confidence I think.

Some of the analysts and investors you were there and you saw the excitement.

Ryan Macdonald: And you saw the really excitement, customers were thrilled. We're with the bots. We have now about 30 plus bots in our platform. We will introduce 15 more this year. And we expect to introduce about 30 more next year. So very, very rapid innovation. And that's because the Vinci AI is a core of the platform. And it helps us to bring not just variant AI, but any commercial gen AI to bring it into the platform, train it quickly on data and release new bots that augment the workforce to do different tasks.

Excitement customers were thrilled with the box.

We have now about.

30, plus boss in our platform.

We will introduce 15 more this year.

We expect to introduce about 30 more next year, so very very rapid innovation and that's because da Vinci AI is the core of the platform and it helps us to bring not just variant AI, but any commercial Jenna Qian AI to bring it into the platform trainees quickie on data and released new box that augment their workforce to do.

Different tasks.

Ryan Macdonald: So that's clearly exciting customers. So on one hand, they'll get a size cycle. On the other hand, more interested bots and going pipeline. So no, we didn't change. No, no change in renewals. Our renewals were strong in Q2. Of course, renewals low to mid 90s and more than 100% NRR. That's NRR. So when you rate didn't change, we saw big deals. We saw same term lengths, you know, close to two and a half years.

So that's clearly exciting customers. So on one hand delegated satisfy co on the other hand.

Ryan Macdonald: So no, not, not different in behavior, no really difference in behavior. Other than that, you know, the elegant social cycle and the boss interest. Thank you for that. And then on the deals that have been pushed out, are you seeing any clustering in a particular vertical or industry perhaps? Not at all, not at all. It's very random. It's, you know, something that pushed out two weeks. Then we know we already got some Q2 deals in Q3.

More interest in Boston growing pipeline.

So no we didn't change no change in in renewals our renewals were strong in Q2.

Oh.

Gross renewals.

Low to mid Ninety's and more than 100% MLR ethanol are so when your rates didn't change.

We we saw big deals we saw.

Same.

The term length of close to two and half year, so not not different in behavior no real difference in the behavior.

Other than that you know the elegance of cycle in the boss interest.

Yeah.

Thank you for that and then on the deals that have been pushed out.

Any clustering in a particular vertical or our industry perhaps.

Not at all not at all.

Very random.

You know some things are pushed out two weeks then we know we already got some Q2 deals in Q3. So some of the deals are pushed just by a little other these are pushed by month.

Ryan Macdonald: So some of the deals are pushed just by a little, other deals are pushed by months. No rules, no industry pattern. It's really company by company and just a generally cautious approach to IT spending. Yeah, I said last one for me is you've talked a lot about your AI, but how should we think about that impacting like on like a per customer R2 basis, any rule of thumb regarding like an R2 uplift that you're seeing from customers at R2?

No rules.

Industry pattern, its really company by company and just generally cautious.

Our approach to spending.

Got you last one for me is you've talked a lot about your AI bot.

How should we think about that impacting on like a per customer or two basis any rule of thumb regarding like an <unk> uplift that you're seeing from customers that are adopting.

Ryan Macdonald: So we talked last quarter on a potential 10X uplift that we'll see in our customer base. And that's based on analyzing our top customers. This clearly, the spent on labor is very large in customer engagement. We talked about two trillion dollars labor spent annually, and bots are really good at doing just one thing, right? Each bot is automating one task, and it's very easy for customers to kind of convert the price of their bot to the saving that they create.

So we talked last quarter on you know a potential tenex uplift that we see in our customer base.

And that's based on the analyzing our top customers.

There's clearly.

The spend on labor is very large and customer engagement.

We talked about two trillion dollars labor spend annually.

And box is lots of really good at doing just one thing, but each bot.

Is automating one task and it's very easy for customers to kind of comparative price of that thought to the savings that they create.

Ryan Macdonald: And obviously, they can deploy large team of bots and save more than just on one task. But that makes them very easy to deploy from the platform. The bots are deployed embedded in workflow, so there's no disruption to people while they're doing their normal work, they're getting help from bots. So it's a very, very good way for customers to start to increase automation or what we call CX automation, customer experience, elevation and automation at the same time, it's very easy.

And obviously they can deploy a large team of bots and save more than just one test, but that makes it very easy to deploy from the platform.

Both are deployed embedded in workflow, so theres no disruption to people while they are doing their normal work to getting help from box. So it's a very very.

A good way for customers to start to increase automation or what we call CX automation and customer experience innovation and automation.

At the same time.

Ryan Macdonald: So we think, and that's what we mentioned, that we'll see increase in our bot consumption in our base. We have new logos that start small, and our goal is that they will increase bot consumption over time. And that creates a whole new tab that didn't really exist before AI, that Variety is leading the way in terms of bringing AI to the fingertips of the agents. And thank you, and I'm showing no further questions.

It's very easy so we think that's what we mentioned that we'll see.

Increase in our in our in book consumption in our base.

We have new logos to start small and our goal is that they will increase but consumption over time.

And that creates a whole new Tam.

It didn't really exist before AI that variance is leading the way in terms of bringing AI to the fingertips of the agents.

Great. Thank you.

And thank you.

And I'm showing no further questions I would now like to turn the call back over to Matthew Frankel for closing remarks.

Matthew Frankel: I would now like to turn the call back over to Matthew Frankl for closing remarks. Thanks, Justin. And thanks everyone for joining us today. Of course, as always, feel free to reach out to me with any follow-up questions you have. And I will forward to speaking to you again soon. Have a good night.

Thanks, Josh and thanks, everyone for joining us today of course as always feel free to reach out to me with any follow up questions you have.

And I look forward to speaking to you again soon have a good night.

Unknown Attendee: This concludes today's conference call. Thank you for participating. You may now disconnect. [inaudible] you for your time, thank you for your time,[inaudible] Thank you for your time, thank you[inaudible] you for your time, thank you for your time, thank you[inaudible] Thank you for your time, thank you for your time, thank you[inaudible] Thank you for your time, thank you for your time[inaudible] Thank you for your time, thank you for your time[inaudible][inaudible] John John John John John John John Thank you for your time, and I'll see you next time.

This concludes today's conference call. Thank you for participating you may now disconnect.

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