“Our full-year guidance now assumes a SaaS mix of new business and upsell ARR of 50% up from 35% previously, and we expect Q3’s SaaS mix to be 45%.”

In context

“six months ended June 30, 2023, we generated $42.6 million of cash from operations, compared to $10.1 million generated in the same period last year and capex was $2.6 million, compared to $6.1 million last year. During the second quarter, we repurchased 207,278 shares at an average purchase price of $24.51 and we have $36 million remaining on our share repurchase authorization. We ended the quarter with approximately 2,150 employees, roughly flat versus last quarter. As expected, we did see some turnover in our salesforce, but it was at lower levels than our previous transition. Overall, we are pleased with the engagement of the vast majority of our salesforce and their ability to transition to selling SaaS continues to show encouraging progress. Turning to our guidance in more detail. Our full-year guidance now assumes a SaaS mix of new business and upsell ARR of 50% up from 35% previously, and we expect Q3’s SaaS mix to be 45%. As a reminder federal’s largest quarter is the third quarter and because we are not yet FedRAMP certified we expect to sell on-prem subscription to that market, which will be a headwind to the Q3 SaaS mix. A couple of additional modeling notes on this metric as we look at the back-half of the year. We are continuing to take a prudent approach in building our SaaS mix outlook as the dollar value of deals we expect to close in the fourth quarter is the largest of the year, which is in-line with historical trends. In Q3 we are assuming $8 million of existing customer conversions that will serve as a headwind to revenue and $10 million in Q4, which is higher than Q2 but consistent with the pipeline we have. We are again raising our ARR guidance to reflect strong adoption trends of Varonis Sa”