Greetings. Welcome to the SailPoint Technologies Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Brian Denyeau from ICR. You may begin.

Good afternoon, and thank you for joining us today to discuss SailPoint’s fourth quarter 2021 financial results. Joining me today are SailPoint’s CEO and Co-Founder, Mark McClain; and our Interim Chief Financial Officer, Cam McMartin. Please note, today’s call will include forward-looking statements, and because those statements are based on the Company’s current intent, expectations and projections, they are not guarantees of future performance and a variety of factors could cause actual results to differ materially. Since this call will include references to non-GAAP results, which excludes special items, please reference this afternoon’s press release in the Investors section of sailpoint.com for further information regarding forward-looking statements and a reconciliation of GAAP to non-GAAP results. And now, I’d like to turn the call over to Mark McClain.

Thanks, Brian, and thanks to each of you for joining the call today. I’m very pleased to share the business and financial performance that led to a record-breaking fourth quarter and year. 2021 was an outstanding year for SailPoint. We demonstrated our market leadership and the differentiated value our identity security offerings deliver. Our record-breaking Q4 helped us to close 2021, exceeding the plan we set forth at the start of the fiscal year. As we highlighted then and continue to see throughout the year, enterprises worldwide have elevated identity security to a top-level IT priority. Our performance has made it clear that the market for SaaS identity security solutions is large and growing, and demand is very strong, as our solution is being adopted by customers even faster than we anticipated. As a result, we are increasingly confident in our ability to generate strong growth for years to come. To fully capitalize on the attractive market opportunity in front of us, we will continue to invest in our go-to-market and product development initiatives in 2022. As Cam will discuss in more detail shortly, these investments, together with a faster-than-expected revenue model transition, will have a near-term impact on our profitability. We strongly believe this best positions SailPoint to generate high revenue growth rates, significant margin expansion and substantial shareholder value over the long term. Now, let me provide some insight into our Q4 performance, which exceeded the high end of our ARR and revenue guidance. We ended the year with approximately $370 million of ARR, up 48% year-over-year and subscription revenue of approximately $273 million, up 39% year-over-year. ARR performance this past quarter was driven by three . First, customers continue to choose our SaaS platform at an increasing rate, driving strong growth in our recurring revenue base. As…

Thank you, Mark, and thanks to everyone for joining us on the call today. Before reviewing our strong performance this past quarter, I’d like to remind everyone that we posted a few slides to the Investor Relations section of SailPoint’s website. These supplemental materials include additional disclosures we introduced last quarter. We believe they further highlight SailPoint’s continued strong performance and the success we’ve had shifting the business to a subscription model. As Mark noted earlier, we had a terrific fourth quarter with revenue and bookings well ahead of our expectations. The fourth quarter yielded SailPoint’s largest ever bookings performance and enabled us to comfortably exceed our guidance on revenue and ARR. Total ARR grew sequentially by more than $46 million, ending the period at approximately $370 million. This represents a 48% year-over-year growth rate and a result that is $10 million above the high end of the guidance range we provided on our last call. We ended the fourth quarter with approximately $221 million of ARR from our subscription-based offerings, which represents an 87% year-over-year increase. Our subscription ARR consists of over $161 million from SaaS and approximately $60 million from recurring term licenses. The increasing portion of total ARR that is coming from our subscription offerings speaks to the great success we are having in driving SaaS adoption. We anticipate this mix will continue to increase meaningfully in 2022. While subscription offerings are driving the bulk of total ARR growth, our recurring perpetual maintenance base continues to expand as well, ending the quarter at approximately $150 million. This growth is an important demonstration of the strength of our customer relationships and their commitment to SailPoint. As I highlighted on the last earnings call, we expect to see an increase in migrations of maintenance customers to our SaaS offering…

And our first question comes from the line of Matt Hedberg with RBC Capital Markets.

Great. Thanks for taking my questions, guys. Congrats on the results. It just really good to see, and also great to hear the news on Colleen. Cam, certainly to miss chatting with you, but I know you’re still going to be around things here. So, I appreciate your time here. I guess, there’s a lot to focus on here, obviously, with the momentum in SaaS. When you think about some of these incremental sort of go-to-marketish initiatives for 2022, how are you prioritizing where those dollars are going? And I guess I’m wondering, between partners or sort of like direct facing initiatives. Just sort of wondering if you can talk a little bit about that.

Yes. Matt, Cam here. First, thanks for the kind words. It’s been a real pleasure to be back working with the team. And I’m, as you can appreciate, excited we’ve identified and then have Colleen ready to come on board to pick up the ball and run with it. We’re very excited about 2022 and really beyond, I would say. As it relates to your specific question, the prioritization of investments as it relates to go-to-market is really focused in two areas. First is continuing to grow the global sales capacity. We saw very good productivity in calendar 2021 in terms of the adds we made across the geographies and very pleased with the ramp rate and productivity of that field force both in terms of the existing force, but also the folks we added during calendar ‘21. The second is demand generation. Because as Mark highlighted in his comments, we’re seeing really quite healthy demand and accelerating demand for our SaaS solutions, while we, quite frankly, see still very good demand for our term license business as well in certain categories of use. We feel like accelerating the spend on a dollar basis in 2022 is a good investment that will yield productive results. And so, we’re focused really on maintaining our investment philosophy in 2022. And in doing that, you’re seeing, I think, the investment go across the total go-to-market team.

That makes a lot of sense. And I like how you characterize ex the transition where profitability would have been. And then, I guess, Mark, known you guys for long time, we’ve asked you about the competitive landscape for years. And I know you guys are -- play well in the upper end of the market here. But for those who are wondering about sort of perhaps newcomers in the space and whatnot, could you talk about sort of the competitive landscape today? Are you still seeing a lot of these deals more greenfield in nature or a lack of competition. Just wondering if you can put a little better point on that.

No massive shift, Matt, in the last quarter since we spoke to the market. I still feel like we see some amount -- a fair amount of installed legacy solutions, some portion of which gets interested in talking to us about migration off of those older solutions every quarter. I do think that as the strength of our SaaS solution has become better known, we’ve won some very large deals with our SaaS solution. I think that catches people’s attention in their peer groups when they see very large organizations choosing to move towards a SaaS offering for this part of their solution landscape. And then, I think we’ve certainly been attuned to some of the concerns about entrants into the market. I guess, the two notables that people ask us about are Microsoft and Okta. And it’s still kind of the story we’ve been saying for quite some time. We do believe that they are active kind of in the lower end of the market where we are just not as focused. So, I think they’re probably capturing some market share there, which is good for their business, but not really at our expense to date. We find that we are still very, very successful in competing with what we consider kind of our core mid- to large enterprise segment, and particularly in organizations that have a complex infrastructure to deal with. And in those scenarios, we’re still very, very pleased with the win rates and our ability to do quite well against all the competition we face in those segments.

Our next question comes from the line of Rob Owens with Piper Sandler.

I was wondering if you could double-click on your commentary around the increase in the maintenance base transitioning to SaaS, just whether or not you’re seeing that here, or is that within your expectations as we look at the next couple of years.

Yes, Rob, Cam here. As you recall from the last earnings call back in the fall, we had highlighted that this was a motion that we were beginning to see early activity around. We did see a handful of deals, not a large number in Q4 close that relate to customers looking to migrate from IdentityIQ maintenance to our SaaS solution platform. That was not an area of selling focus for us. Quite frankly, it’s demand coming to us rather than us outreaching to our installed base. So, that, I think, is a good indicator. As we come into 2022, as we highlighted back in the October, November time frame, really, the focus now will be to be a bit more intentional. What do I mean by that? It means we’re organizing from an engineering perspective to make sure we have the tools to migrate folks successfully and in a predictable fashion. We’re working from a go-to-market perspective to have the right motion to address those customers that are interested in making the migrations. Our expectations remain that 2022 will be a get off the ground year is the way to think about it. We’ll have a good number of opportunities, we believe, to migrate customers to SaaS, but this will be a story that plays out over a multiyear basis.

Great. And then second, I was wondering if you could touch on the license strength that you saw in the quarter. I mean, ironically, I think it’s the largest license quarter you’ve ever seen, despite the fact that you are focused on SaaS and transitioning the business. So, was this just the way the pipeline shook out for the quarter? Did you overachieve on what you thought would be there. And as you look forward, how should we think about that license line, which has been declining over the last year and then was up 27% year-over-year. Thanks.

You bet, Rob. I guess, first, let me remind everyone that Q4 seasonally is always our strongest quarter of the year. It also tends to be that quarter when we see a lot of, what I’m going to characterize is, year-end money that tends to flush itself out. The pipeline was healthy across the board. As I highlighted in my prepared remarks, this was the best booking performance we’ve ever seen as a company. And that’s really true across all the lines, SaaS, term and perpetual in terms of what we expected. So, we’re pleased with the performance. It was a very healthy mix, Rob, of contribution from customers expanding their installed installations of -- installed program, if you will, of IdentityIQ. We like that expansion motion with our installed base because it basically signals, as I highlighted in my remarks that the customers are happy with IdentityIQ and are investing in it as they continue to grow their identity security programs. And I think we recognize retaining those customers and keeping them actively using our solutions and growing their platforms speaks on a long-term basis to what we think will be the opportunity at some point in the future to migrate them to SaaS because they’re clearly comfortable with, confident in SailPoint as their identity security solution provider. And that’s really what we’re focused on. So, pleased with the result, definitely had a larger-than-expected quarter in IIQ perpetual. But again, nothing atypical in terms of the profile of the quarter, just a really strong full spectrum quarter.

Our next question comes from the line of Hamza Fodderwala with Morgan Stanley.

Maybe a question for Cam and perhaps Mark can chime in. I’m just curious, when you look at the ARR guide for ‘22, which was obviously much stronger than a lot of us were expecting. How much of that would you say is coming from underlying demand growth, which seems to be really strong, but also what seems to be an incremental shift from your existing maintenance base to SaaS over the last couple of quarters. So, can you help us sort of break that out a little bit?

Sure, Hamza. First of all, thanks for the questions. The answer is the former is the driver, the latter is an emerging factor is the way to think about it, fundamentally. So at the end of the day, the strength of this ARR guide is entirely in the way I think about it, driven by the underlying strength of the SaaS business. Mark highlighted it for you. Competitively, we’re well positioned. We’re winning at a high rate across the full spectrum, across the full market, if you will, that we address from a vertical standpoint, from a size standpoint, from a geography standpoint. So, that -- the totality of the go-to-market energy is really paying off at a high level. And we’re quite pleased by it and that -- back to the earlier question Matt Hedberg asked, we’re investing behind that trend fundamentally, and we believe it will yield in a similar fashion in ‘22 and ‘23 as we saw in the ‘20, ‘21 and now ‘22 timeframe. So, we like the setup that we’re seeing. To the second half of your question, the maintenance migration is emerging. It’s a small contributor. We want to grow it, but we’re going to be very intentional about how we grow it. We want those customers that get migrated to be fully successful in a predictable and timely manner as we migrate them off IIQ and on to ID now. And so, we’ll let demand come to us and we’ll fill that demand. But you’re not going to see us put our foot on the accelerator in ‘22 as it relates to how much ARR growth might be contributed from that maintenance migration.

Got it. And maybe just a follow-up question. Can you remind us what is the ARR multiple when you move a customer from maintenance on IdentityIQ to SaaS IdentityNow?

The answer is it’s too early to tell, if I’m candid with you. I mean, at the end of the day, it’s ranged from mid-1s to 3 in terms of the totality. But, I would say, the sample size is so small at this juncture that I wouldn’t draw any conclusions from it. because we’re more interested in working with customers that are ready to migrate and position to migrate that is organized to migrate, we can work with them as compared to optimizing the economics of this first handful of customers. We’ll -- much like you’ve seen us do, we’ll optimize the economics as we accelerate, and we’re comfortable as we’ve looked at what the possibilities are, we’re comfortable we’re going to see a very healthy contribution from these migrations in the fullness of time.

Next question comes from the line of Brent Thill with Jefferies.

Hey, guys. You have Joe on for Brent. I really appreciate the question. And Cam, I want to echo the earlier sentiment. It was a pleasure working with you. Should we think of operating margin as a proxy for cash flow? How should we think about cash flow inflection? And is that a ‘22 event or more of a ‘23 event given the transition?

Joe, thanks very much for the comments. It’s a pleasure to work with you and your team. The way to think about it fundamentally is the free cash flow profile of this business will largely follow the non-GAAP operating in profile of this business. Substantively, you can appreciate the delta between non-GAAP operating income and free cash flow for us is modest. It’s a little bit of CapEx that we drive in the business. And so we’ll get some typical model transition benefit in this period of ‘22 and into ‘23, as we see more SaaS contribution and diminishing term contribution at the margin. But largely speaking, I think you can anticipate that the free cash flow profile will track non-GAAP operating income. And we’ve given you some thinking around that for ‘22. I think as well, we’ve indicated that we see this as ‘22 as a trough year, and we’ll begin to see into ‘23 revenue growth acceleration and correspondingly non-GAAP operating income acceleration, hence, free cash flow acceleration as well.

And then maybe for Mark, can you just talk about the traction with federal and local government? And has any of that picked up given the recent geopolitical issues?

Yes. I’d say, -- thanks, Joe, nothing that I would point to specifically coming out of the last literally weeks. We’ve had a very strong presence in both, federal and we call SLED, state, local and ed. And certainly getting some traction around the world in some of the federal governments from our strong position in the U.S. federal government that tends to play well. And just generally finding that the whole public sector is a good market for us. But I wouldn’t point to any inflection or any substantive change. I think, when we see things like we’re all witnessing, which is, of course, incredibly difficult and unfortunate for those people involved, but in the long run from anything like this, I think it just -- we saw it -- COVID from a completely different angle, where anything that kind of raises the concerns around security tends to benefit the space, the sector. And within security, identity, I think, is well understood to be a key contributor to better security profile, and we tend to benefit from those things as kind of long-term tailwinds. But, I wouldn’t point to any short-term inflection of note.

Our next question comes from the line of Brian Essex with Goldman Sachs.

Hi. This is Charlotte Bedick on for Brian. Congrats on a great quarter. I guess, a quick question. Now that you’ve seen greater parity with IdentityIQ, is your typical customer profile changing? For example, like are you seeing -- what is the mix of traditional hybrid and Oracle rip-out versus an emerging cloud native business? Thank you.

You bet. Yes, no substantial change there. I think in many ways, we’re seeing, as I said earlier, about the legacy displacement, kind of a steady progression. I’ve said for a number of quarters, we would love to point you to a short-term inflection there, but we just continue to see a steady progression. I would point out, you’ve seen some of the customer anecdotes we’ve been highlighting in the last few quarters. Increasingly, SaaS having a stronger impact at the high -- mid- to high end of the market, particularly for us, while it’s been quite well performing in the mid-market for a long time, as Cam said. Therefore, think SaaS is performing well across the board. Well, when we see that, I think we fundamentally see the same market dynamics and market requirements that we have seen. Obviously, you’ve still got the backdrop of the IT landscape, digital transformation being a driver as people get more aggressive about some of those moves. But in general, every large enterprise we’re dealing with has a lot of the same underlying challenges. They’re going through some flavor of digital transformation. They’re shifting workloads to the cloud. They’re bringing in new SaaS apps and building new bespoke cloud-based apps. A lot of the dynamics are fairly consistent, which is great for us because it means we have a good market opportunity kind of across the horizontal landscape. Obviously, the handful of vertical is a little stronger for us historically. But in general, we still see really good demand and good execution across all the verticals.

Great. Thank you. And can you speak of a vertical that saw significant strength this last quarter, if any?

I wouldn’t call out anything that was uniquely strong. The great news continues to be -- I’ve looked at the data for the last 2 or 3 quarters, and there’s been real balance across the verticals. We typically see and we did in the second half of the year, a bit of a governmental pop. That’s not atypical. That’s budget cycle driven. But on balance, as you look across the industries that we’re selling into, it remains a quite balanced profile and nothing that I would call out for you that set itself apart really for the second half of the year, actually.

Our next question comes from the line of Joel Fishbein with Truist.

Hi, guys. Hey Mark. Thanks for the color on the call with some of the large wins. It sounds like you’re getting some traction there. I’d love to just get a little bit more color, if you can, on any average deal sizes or how if you’re landing bigger, some of these overall, that would be really helpful.

Yes. I mean I think in general, from an average deal size, Joel, as we see a lot of traction in the mid- to high end of the market, and we’ve highlighted some of those, in general, obviously, the larger the customer, the larger the deal, I’d say, as the thing I might point to is as we’ve seen more and more traction with our AI offerings around our core, and that’s becoming a more natural motion, both from a demand from the customer and a selling motion with our team, that tends to increase the overall selling deal size because we’re attaching those AI products at initial sale time. Quite often, we still have situations where that isn’t happening, maybe it’s because the deal has been in the pipeline a long time and things like that. And we have a nice steady drum beat of upsell, cross-sell of those AI products into our installed base. So, those things are helping probably drive more expansion, just larger companies in general and the attachment of AI. But, yes, in general, I think we’re still really pleased with the overall progression of average sales over time, partly as I think people recognize our strength in the market, we tend to command a premium price. We do get a lot of price pressure in the market. Honestly, we’ve talked about that before, but we’re I think able to hold that price point pretty well because of the perceived superiority of the solution.

Our next question comes from the line of Andrew Nowinski with Wells Fargo.

Congrats on the great results this quarter. Cam, I thought you did a great job during the interim. I just want to ask a question on your SaaS business. So I know you’re seeing more traction in the mid to high enterprise with adoption of SaaS solution. But given how easy it is to deploy that solution, I would think you should be able to push your IGA solution down to that small and midsized enterprise market that previously could not support or implement an enterprise-grade IGA solution. So, I’m wondering whether that lower end of the segment could actually be a growth driver in 2022. And just wondering if you could give us any color on maybe your new customer growth that we’ve seen over the last 12 months, call it.

Yes. Andy, Cam here. So, first of all, thanks for the comments. I appreciate them. The customer growth has been in line with the business growth fundamentally is the way to think about it, without giving you a lot of specifics, because in these model transition periods, it’s difficult to draw equivalencies in my mind. But what I would tell you is relative to our expectations of the complement of new customer growth that we want to see in the business in order to drive top line growth, we are right on the curve for the year and pleased -- as Mark highlighted, I’d highlight this too as well, pleased with the non-U.S. portion of that contribution. That’s a good indicator of the spectrum of investment that we’re making across the globe and capacity is yielding as we would like it to. As it relates to the customers, we’ve always had a reasonably balanced distribution for lack of a better term of customer contribution across size. We’re not generally going to dip down to the small enterprise category. But in the mid-enterprise and the large enterprise segments where there are, quite frankly, tens of thousands of target enterprises to build this business, we’re winning at a good rate there and across the full spectrum. So, the economics work, the deployment model works, the success model works in a way that we think we can continue to sustain. We’ve highlighted the larger end of the spectrum in the last couple of calls, largely because it’s one of those evolutions around some of the questions we get asked, which is replacement. The large legacy players tended to live at the high end of the market range, and it was a question for us. And I can remember a couple of years ago, we talked about it. And the good news is we’ve now begun to address customer needs at the higher end of this market spectrum. But don’t take that as a conclusion that we’re moving in a concentrated way upmarket. We’re continuing to invest across the full spectrum of those accounts we want to be selling to.

Okay. That’s great. And maybe just a follow-up for you. I know you guys -- I mean, your results are amazing tonight. You’re clearly not having any issues with demand. But I’m wondering if customers are asking you for a more integrated solution with IGA and PAM and SSO. Do they actually want more of a broader platform, or do you see your customers still focusing on best-of-breed solutions for each of those segments?

This is Mark. I’ll take that one. Thanks. Good to talk to you. Yes, kind of related to Cam’s last answer, the more you go down market, our contention has been that that’s where there’s more pressure for that integrated single vendor solution, where, frankly, the subcomponents may or may not be as deep and rich as the mid to large enterprise would require, and they’ll make that trade-off for a single vendor solution with maybe a little less depth and breadth of the solution. Since we are focused in that mid- to high-end enterprise where the -- as I’d like to say, solving the problem is job one, not just getting a single vendor solution. There’s always pressure from procurement and other folks in the industry to consolidate vendors. We get that. But we aren’t feeling significant pressure there to move off of our strategy of increasing the breadth of our solution and the core issues again, we’ve highlighted this. It wasn’t a trivial thing to shift our terminology from identity governance, to identity security. We think there’s a broader array of things that are beyond just the traditional focus on compliance and provisioning that are still well within this realm and don’t take us necessarily into the other core realms of classic privilege and classic access. So, I think we still feel like the market is responding well to that message. We do get asked about integration. I think, Andy, it’s probably the right way for me to talk about that is that at our scope and scale, they want us to integrate with their preferred vendors for those other solutions, but they aren’t necessarily pressuring us in our core markets to be consolidated to a single vendor solution.

Yes. And just to follow on, the addition I would make to Mark’s last comment is that Gradient team worked very hard with the leaders in the PAM solution space. to have high-performing world-class integrations, and we’ve got that. We make investments, they make investments, and it really allows fundamentally across our target customer set. It allows our customers to in effect take advantage of best-of-breed without any -- if you will, any penalty of operating efficiency, they get what they need because we’re jointly investing in those integrations.

Our next question comes from the line of Joshua Tilton with Wolfe Research.

Yes. Hey, guys. Thanks for taking my questions, and congrats on the quarter. You guys mentioned that the legacy replacement deals continue to be steady from quarter-to-quarter. But we are starting to hear more of the Saviynt customers migrating over to sale. Anything to comment on that front? And how should we think about that opportunity in 2022 as more of the customers start to come up for renewal?

Yes. So, this is Cam. Thanks for the question. I’ll start and let Mark pick it up. The answer is, as Mark mentioned, the win rates across the last couple of quarters have been quite strong. We’ve been pleased with our ability to win against our competitors, including Saviynt, and that didn’t change in the fourth quarter. And we’re pleased by that. We do have and have -- and I’ve said it for years, we do have a philosophy when we lose to lose gracefully because we -- our experience generally is that people are going to come back around and we’re seeing the come-back-around behavior in a number of customer situations where the reality is that with the passage of time and the evolution of the solution deployed people aren’t able to keep up. And we’re seeing that and feeling that and selling against that reality and having success. So, I think the signals you’re picking up in the market are being borne out in our selling activity, we’re pleased by that. It suggests that when you think about which most folks do, identity is a long-term platform decision that as people get familiar with our competitors’ products, Saviynt and others, we’re able to tell a longer-term story.

Yes. And the only thing I’d add to that, Josh, is kind of tied into the last question from Andy about breadth. Saviynt made a slightly different strategic choice on us. I think they’ve tried to go much wider and their business is somewhat smaller than ours. I don’t know exactly because they’re private. But they’ve tried to get more into the PAM space and a few other areas. And I think as a result, I think their competitiveness directly against us is at times challenged. And as Cam said, we will still occasionally lose, we have lost to them over the years, not at a very high rate but we have. But we have, as you picked up on a little more increase in the rate of some of those customers coming back around, I think, partly because the breadth and depth just isn’t as strong in our deep segment. And so, I think we probably don’t put them as quickly in our mind as a legacy players, say Oracle, IBM and CA, but they’ve been around the game quite some time as well. And yes, I think it is a fair pick up there, good research on your behalf that there’s been a little bit of a pickup there in terms of displacing that.

I appreciate the color. And just as a quick follow-up, you guys did give the disclosure on the bookings mix between perp and subscription. Would it be possible to get the split on subscription between term and SaaS in the quarter? And then also, you mentioned that this is kind of going to be a double transition where first perpetual disappears and then term. So, given that we should start seeing that term mix kind of come down, is there any way to get the mix of term and SaaS that’s baked into the guide for 2022?

Well, we’ve given you some -- we’re evolving the disclosures that we’re making. I would start at that point, if you recall, we provided you incremental visibility as to the composition of ARR last quarter in terms of the three pieces. We haven’t yet made the decision, if you will, to begin to provide you greater bookings visibility of the mix type. I think we’ll do that as we go through time. What we’ve tried to focus on in ‘21 and really as we begin ‘22 is to recognize that this is a subscription business and that we’re focused there fundamentally. We got effectively complete, as we said, in 2021, with the move off of license perpetual business and have had great success in selling both, SaaS and term. And we’re going to continue to see good contribution from both in 2022, growing for SaaS, probably not growing as fast for term. As we go through time, you’ll see us in ‘23 and beyond begin to be more focused on SaaS. But at this point, we’re comfortable with the guidance we’re giving you and the visibility. We think it gives you the right profile of what we’re focusing on for 2022.

Our next question comes from the line of Alex Henderson with Needham.

A couple of just quick housekeeping questions, if I could. Could you just talk a little bit about your exposure to Russia and what your churn rate was in terms of staff churning in the fourth quarter or for the ‘21 time frame, not versus ‘20, but versus ‘19? And what you’re seeing on wage inflation? And I’ve got a follow-up. Thanks.

Sure, Alex. Cam here. Our exposure to Russia is incredibly small, without giving any specifics. Given the composition of who we serve both on the commercial and the governmental side, we have historically taken the position fundamentally not to serve that market. And so, our exposure is very small there and derivatives of that. Let’s see. The other questions were wage inflation, pretty much in line with what the market is doing. It’s definitely accelerated. I won’t tell you otherwise, we are competing in the global marketplace for talent. And in that regard, it’s become more challenging to both attract and retain talent, and we’re responding accordingly. The performance of the business gives us really the benefit of being able to do that, and we are doing that because we recognize momentum is driven by great people, and we want to attract and retain the right individuals to drive this business. As it relates to turnover for -- I think you asked the question relative to ‘19. ‘21 was higher than ‘19. We’ve been looking at it on a blended basis, really 2021 versus ‘19. And in that regard, substantively no differential in overall pace or rate of folks making the decision to embark sales points. What I will tell you is we’re pleased with the way the second half proceeded both on some decel in that rate, but also excel in the rate at which we’re bringing people on board. So the great news is we look back at the end of 2021, and we’re very happy with where we landed in terms of the complement of staffing, both in terms of go-to-market teams and the engineering teams.

Great. And if I could follow up, could you just give us some sense of what your headcount expectations are for ‘22? And what’s built into the model? And specifically, if you could give us any sense of what the mix of that increase is relative to these sales staff portion of the market?

So, Alex, the -- I won’t give you specifics around the plan. What I’ll do is give you some general understanding, and that is that we would expect headcount to grow largely in line with what we’re trying to do from a top line perspective. That’s, I think, as you heard Mark and me both comment in the prepared remarks, from a go-to-market capacity standpoint, demand generation and product development standpoint, because we’re seeing very healthy ARR growth whether you look at it on a total basis or a net new basis, we’re seeing the kind of productivity that we want to see and therefore, are comfortable making the investments in the team size. The reality is, is that across all the teams, it’s balanced. We’re maintaining an investment philosophy that says, we want to invest behind on the product development side behind the SaaS momentum and as well the total market momentum on the go-to-market teams in terms of all the product portfolio. So, that’s really what we’re doing, nothing out of line there, nothing differential. It’s a continuation largely of what we did in ‘21 would be the way to think about it.

Cam, if I could. I just wanted to clarify. So, you’re saying revenue or are you saying the rate of growth that you were anticipating as if you haven’t done a transition, i.e., the subscription underlying growth rate?

Yes. So Alex, we look at it a couple of different ways is the answer. But substantively, what we’re looking at in terms of the growth in the business is what’s the target for bookings growth? What’s the target for ARR growth? And do we have the capacity available to us to achieve those growth targets? And we ended the year in a very healthy place. And we’ve got a set of objectives for 2022 to continue to grow the field team and the engineering team to support that -- those growth objectives.

Next question comes from the line of Rudy Kessinger with D.A. Davidson.

Last quarter, you said license revenue was about 60% term, 40% perpetual. I’m just curious if you could give us a finer point on what it was in Q4. I’m just curious how much perpetual there was.

Perpetual, I don’t have that number right handy. It came down modestly over Q3 was the answer.

On a percentage basis or a nominal dollar basis?

On a percentage -- yes, sorry, yes. My apologies. On a percentage basis. We obviously, dollar-wise, as everything grew in the quarter. But on a percentage basis, it came down -- it came down modestly over the prior quarter.

Got it. That is helpful. In ‘22, the midpoint of your guidance is 18% top line growth at the midpoint. If you go back about a year ago at your Analyst Day, you said you expected the model transition to be about 10- to 11-point headwind on in ‘22. I know it’s 14% in Q4. Do you still expect that kind of headwind to top line growth in ‘22.

Yes. I think the way to think about it is we had a mid-teens headwind adjusted growth effect in ‘21. And we would expect roughly that sort of effect in ‘22. It will moderate a few percentage points in ‘22 over ‘21, but not significantly. If you think of it a little bit above the mid-teens, a little bit below the mid-teens, that’s the range. And in the way we’ve thought about our business planning, it is, as we’ve said in the prepared remarks, the last meaningful year of headwind effect. We’re going to drop in the single digits as we go into next year.

And your next question comes from the line of Fatima Boolani with Citi.

Thank you for taking my questions. I appreciate it. I just wanted to ask you a question with respect to Phase 1 of the model transition, which is now complete. So just to be 100% clear, the perpetual form factor is entirely out of your price books, it will no longer be sold. And I’m curious about the term and the process with the term licensing format, especially as you reinforce and double down on the SaaS selling. I would love some of your clarification and opinion there. And I have a follow-up for Cam, if I may. Hello operator, I can repeat the question.

Ladies and gentlemen, again, we do apologize for the inconvenience. We have reached the end of the question-and-answer session, unfortunately. And this does conclude today’s conference, and you may disconnect your lines at this time. Thank you for your participation. And again, we do apologize for the inconvenience.