“Looking ahead to FY ’26, we anticipate that SaaS will make up approximately 90% of the net new product annual recurring revenue.”

In context

“Brian Carolan (CFO): Thank you, Brian. That’s a good question. In Q4 of fiscal ’25, we experienced strong renewal business, with longer contract lengths leading to increased upfront term-based revenue recognition, which positively impacted our bottom line. This contributed to solid results in both revenue and operating margins. Looking ahead to FY ’26, we anticipate that SaaS will make up approximately 90% of the net new product annual recurring revenue. We expect a 60-40 mix of upfront versus ratable revenue recognition, which may create some headwinds for revenue and margins throughout the year as we focus on SaaS. Specifically for Q1, we foresee an 80-20 mix, based on our pipeline, with the upfront revenue split being about 50-50. We encourage everyone to consider annual recurring revenue as our key metric since the term and SaaS mix can affect in-period revenue growth and operating margins from quarter to quarter. Regarding migrations, we have migrated about 10% of our maintenance annual recurring revenue base so far. Typically, we see a 2x to 3x uplift on the migrated annual recurring revenue, contributing around 3% to 4% to our net revenue retention growth. We expect similar contributions in the coming years, as we still have considerable potential in this area of the business.”