“our first quarter and full year guidance now assumes a 15% SaaS mix of new business and upsell ARR, up from 5% previously.”

In context

“longer sales cycles and an increase in unemployment expectations among a worsening of other economic conditions. From a SaaS transition standpoint, we are factoring in a six-month ramp-up period, which began in early January when the new sales comp plan was introduced. Our guidance also assumes increased sales force turnover in the first half of the year, lower sales productivity as our sales force gains comfort in selling the new product as well as longer sales cycles as on-prem subscription deals in the pipeline may convert to SaaS. These assumptions will primarily impact the first and second quarters and are based on learnings from our last transition. While all of these factors create a level of uncertainty, this is already contemplated in our guidance. Before I get into the numbers, our first quarter and full year guidance now assumes a 15% SaaS mix of new business and upsell ARR, up from 5% previously. This reflects the encouraging initial reception from our customers and our sales force to our new SaaS product in the fourth quarter. We have a two-phase approach to the transition. In Phase 1, which we just initiated, we are focused on selling SaaS to new customers, and this metric will help you gauge the success of this initiative. Phase 2, which is converting our base of existing customers to SaaS will come later on. But if an existing customer wants the benefit of our SaaS earlier, we will, of course, work with them as we always do. To be clear, the SaaS mix calculation is SaaS new business and upsell ARR divided by total new business and upsell ARR. For example, if we had a renewal of $100,000 that converts to SaaS at $150,000, then we would only include the incremental $50,000 of u”