Allot Ltd (ALLT) 2013 Q3 法說會逐字稿

Good day and welcome to the Allot Communications 2013 Q3 results conference call.

Today's conference is being recorded.

At this time I would like to turn the conference over to Rami Rosen.

Please go ahead, sir.

Thank you very much and thank you all for joining us on our third quarter 2013 conference call.

My name is Rami Rosen, and joining me today are Allot President and CEO Rami Hadar as well as our Chief Financial Officer, Nachum Falek.

The press release announcing our third-quarter results is available on the investor relations section of our website at www.Allot.com.

All results and expectations we review on the call are on a non-GAAP basis unless otherwise described as GAAP.

Non-GAAP net income and non-GAAP net income per share excludes stock-based compensation expense, revenue adjustments due to acquisitions, expenses related to M&A activities, deferred tax assets and amortization of certain intangibles.

Please note that all earnings per share amounts are on a fully diluted basis.

A reconciliation of each non-GAAP measure to its nearest GAAP equivalent is available in the press release containing our third-quarter results.

Before we begin, let me remind you that certain statements made on the call today may be considered forward-looking statements which reflect management's best judgments based on currently available information.

I refer specifically to the discussion of our expectations and beliefs regarding our pipeline and summary of potential future business.

Our actual results may differ materially from those projected in these forward-looking statements.

I direct your attention to the risk factors contained in the annual report on Form 20-F filed by Allot with the US Securities and Exchange Commission and those referenced in today's press release, both of which detail factors which could cause our actual results to be materially different from those projected in the forward-looking statements.

With that, I would now like to turn the call over to Rami Hadar.

Thank you, Rami, and thank you all for joining us today.

Our third-quarter revenue totaled $24.1 million, up 12% sequentially.

Book-to-bill was once again above 1, highlighted by the fact that booking strength was achieved despite typical third-quarter seasonality.

We note that this is the third consecutive quarter of book-to-bill above 1. We expect the positive business momentum we are experiencing will be translated into sequential revenue growth during the fourth quarter.

Our value-added service business segment continues to play a meaningful role in our overall growth trajectory.

During the third quarter, value-added service represented 28% of our bookings and 30.6% year to date.

Upselling value-added services solutions was also the main contributor to the increase of our gross margin numbers to 77%.

During the quarter we received large orders from 14 service providers, two of which were from new customers.

Four of these orders were from mobile operators.

This quarter we had two 10% customers, both of them tier 1 service providers.

This quarter is a good example of our strategy to generate recurring business from existing service provider customers.

We believe that our ability to maintain long-term customer loyalship is the key enabler to upselling new value-added services and creates stickiness which is fundamental to our growth in high-gross margin.

We announced today that we have won a $12 million expansion order from a major APAC tier 1 fixed line operator.

This new project includes our Service Gateway Sigma platform, intelligent steering function in two of our value-added service solutions.

We are extremely pleased with this deal, which represents a record size for a single transaction.

It also demonstrates continuous execution in our service gateway strategy.

We note that we received this order during the third quarter, but please keep in mind that as we do more high-profile deals with tier 1 service providers, the conversion time from booking to revenue lasts between one to three quarters on average.

During the quarter we announced a multimillion dollar order from a major US-based cloud provider.

The Allot Service Gateway helps in prioritizing mission-critical applications, guarantees SLAs and ensures that data service will flow smoothly between the customer premises and the data centers, thus preventing congestion and ensuring quality of service.

We see strong relevance of our DPI technology to cloud solutions as mission-critical applications require application-based prioritization of solutions.

As an example, hospitals prioritize their telemedicine application versus visitors doing web surfing over a local Wi-Fi network, or data centers serving multiple enterprises would need to allocate capacity fairly between different users.

We continue to execute on our strategy to expand our value-added service portfolio by recently introducing two very exciting new offerings.

During the quarter, we introduced Allot WebSafe Personal, the third solution in our suite of network-based security products.

This solution has two main functions, personalized parental control protection and anti-malware protection and enables mobile operators to deploy opt-in personalized parental control service.

In recent deployments we have seen mobile service providers offer this solution on a monthly subscription basis, thus contributing to top-line revenues and profitability.

The solution indirectly increases customer satisfaction and quality of experience.

We believe that in mobile networks with plurality of mobile subscriber devices in the home it will be easier for end users to sign up for these is services rather than install and maintain clients on multiple edge devices.

This a solution is industry ready and will be offered as a software and status off-the-shelf platform or as an integrated blade in our Service Gateway platform.

The second value-added service we recently announced is our new analytics offering, ClearSee, which we launched last week.

Allot's ClearSee is a rich and powerful big data analytics solution that allows service providers to capture and analyze application, subscriber, device and Quality of Experience data from their networks.

By using our business intelligence tool, our customers will be able to transform the data into valuable business insights that may drive service profitability, personalized charging plans and customer satisfaction.

It gives us, the operators, unprecedented dimensions of visibility and insight into network and subscriber activity, all from a single vantage point at the core of the network.

This a solution is also NFV ready.

ClearSee will be offered in two ways, as raw data generation solution where our service gateway is acting as an intelligent probe exporting data into third-party existing middleware and BI platform, as preferred by our customers; or as a combined solution with our new business intelligence platform offering an end-to end solution.

We have already demonstrated interoperability with third-party middleware and BI platforms.

The value proposition of the two recently launched value-added service offerings are mainly relevant for monetization of the network in contrary to optimization and seems to be getting more and more attention from service providers as they are trying to fight reduction in data ARPU and differentiation versus low-cost providers.

The combination of our previously announced application-based charging solution with subscriber analytics is quite unique to Allot.

Now, with a single solution, our customers can better understand usage patterns and applications preferences by their users and, after analysis, can leverage application-based charging to offer tailored charging plan to individual users.

For example, online gamers can pay a premium to receive high quality of experience on their favorite games in front of rates and all the rest of their applications.

In summary, we believe that our solutions can have a profound effect on topline revenue and profitability of service providers who adopt digital lifestyle strategies.

In summary, in turning the first quarter, we believe that our recent exciting product announcement, booking trends and forward funnel will support continued growth into Q4.

We are pleased with the high gross margins we demonstrated, our market and in the value of our solutions to customers.

I will now hand the call over to Nachum for a short financial review.

Nachum, Please go ahead.

Thanks, Rami, and welcome, everyone.

Let me take a few minutes to review the results we published earlier today.

I will be discussing non-GAAP numbers which exclude the impact of share-based compensation, adjustment Q2 acquisition, expenses related to M&A activity, deferred tax assets, amortization of certain intangibles and payment of grants to the Israeli Office of the Chief Scientist.

Full reconciliation of the pro forma results discussed on this call to GAAP results is currently available for review on our website and in the press release issued today.

Now let me walk you through the results for the quarter.

Revenues for the third quarter on a nonGAAP basis were $24.1 million, up 12% versus the second quarter of 2013.

As a percentage of our revenues, sales in America accounted for 34%, EMEA 35% and Asia-Pacific 31%.

During the quarter, we had two w0% customers.

Out of total revenues during the quarter, products were 65% and services 35%.

Gross margin for the third quarter was 77%.

Our operating expenses were $17.5 million versus $17.4 million in the second quarter and in line with our expectation.

Our total headcount is now 448 employees.

For the quarter, we reported earnings per share of $0.03.

As OpEx stayed flat versus the second quarter, the increasing revenue affected the bottom line, keeping the gross margin at the level of 77%.

On the balance sheet side, cash balances were $150 million.

We had a negative cash flow from operations during the quarter, mainly due to their repayment of the chief scientist debt.

Our DSO was 89 days versus 96 days we had last quarter.

Deferred revenues went down by $600,000, mainly due to the recognition of prepaid support and maintenance along with some product dealer recognition.

That concludes my remarks and we will now open the call for questions.

(Operator Instructions) Matt Robison, Wunderlich Securities.

Thanks for taking the question and congratulations on the booking.

So with regard to the bookings, were they up year-over-year?

Yes.

You mean between this quarter in Q3 of last quarter?

Yes.

Yes.

And your 10% customers -- what kind of customers were they?

One mobile, one fixed.

And you are getting -- it looks like you have expanded significantly into the fixed space.

What kind of product features are driving this?

You are right; this is an interesting quarter where we are seeing some orders come back on the fixed side.

I can't say it's a trend, so it's too early to look at strategies or themes here.

But as we noted in the past, traffic in fixed networks is growing as well, maybe not as fast as the mobile.

But I do believe it's in the 20% or 30% year-over-year, driven by, of course, say, video applications.

And what we are seeing is anything from adapting to certain value-added services, pure services, keeping peer-to-peer.

It's a very classical type of application.

On the bookings, we do have a dealer that is not into revenues yet, but we do have a deal that actually the customer will be doing application-based charging as part of deploying our solution.

How many of your customers are using the DDoS prevention?

I don't have the numbers out of my hand, but I would say that, let's say, from -- if we have roughly 100 mobile service providers, maybe 20% of them have adopted our DDoS solution as an add-on.

It's much harder to give the statistics on fixed.

On the inventory, you have had quite a bit of growth there.

Can you give us a flavor of how that -- what is causing that and how we might see that map into revenue?

Yes.

So, Matt, you are absolutely correct; inventory did increase in little bit during the quarter.

But I have to say that most of it is related to logistic inventory, which means it is backed by orders or equipment that we already shipped and didn't recognize the revenues, and therefore the equipment still sits in our inventory.

Were you able to close the order that slipped out of the second quarter?

Yes.

Part of it we already recognized during the third quarter.

And as we said, it's the second half revenues volume.

So you have got some more to recognize in the current quarter?

Yes.

Yes.

And the book-to-bill being up -- a bit of a surprise, being better than 1. I don't think you've seen that in the third quarter since 2010, when the denominator in the calculation was a lot smaller.

Do you feel like you have consumed a lot of your pipeline for the fourth quarter and achieving this strong book-to-bill?

No.

And I think the picture is obvious.

As we said in the past, as we said, our order patterns are lumpy.

This quarter, actually we said on the positive side of lumpiness.

The big $12 million purchase orders totally put our booking this quarter -- it's fairly high numbers.

Okay, I'll let somebody ask questions.

Thanks a lot.

Mark Sue, RBC Capital Markets.

Just a question on value added services and the traction you are gaining there.

Is that mostly with existing customers, or are you having active dialogue with new customers where you are starting to see new customers thinking about value-added services as they lead into the other applications that you provide?

And then competitively, if you could just give us a sense of if anything has changed out there.

Thank you.

So let's say we sell value-added services in maybe three scenarios.

The most common scenario is us selling to existing customers, as I mentioned on the call.

They already have the Service Gateway, so a very easy and cost-effective solution to adopt one or more of our value-added solutions.

So that's the majority of the cases.

We are seeing that, as we educate our market about Service Gateway rather than DPI, that -- so the new deals come ready day one with at least one requirement for value-added service.

But this is a beginning and growing trend.

Very rarely, but it has happened once or twice that we get deployed not for, let's say, a policy in control and traffic shaping, but rather just for certain value-added service.

And that's the main proposition of this new deployment.

That has happened, but it's rare.

So the majority of the cases, it's upselling to existing customers.

And then if I were to look at the competition, clearly S5 has amassed some assets here and they want to move deeper into this market and look at it as an integration for their overall platform.

How do you see that changing how you go to market and whether you need other partnerships or other things that you might do technically because of the evolving competitive environment?

Mark, you are referring to large routing vendors trying to add DPI into their routers?

That, and also application delivery controller companies that are trying to add it as well.

Okay, so the first one -- we have been watching the large router vendors try to add DPI as to function on their routers.

It has been going on ever since I joined Allot, for the past seven-plus years.

Some of it has gotten a little bit better in recent years, but at the end of the day they are offering what we call a thin layer DPI that can recognize some applications but misses on many others.

Some service providers might settle for that in day zero when they deploy networks, but as they get more congested and as they have more expirations to do monetization things like application-based charging, they run into a limitation and decide to go stand alone.

So when we do see an RFP, the amount of features and functions there -- it always ends up being a standalone solution.

Regarding application delivery controllers, I'm assuming you're mainly referring to a 5 -- it's interesting to note there is some commonality in functions between an application delivery controller in an enterprise versus a Service Gateway in a carrier networking.

In both cases, both of these functions are doing many layer 7 intelligence functions.

Recently F5 added some DPI capabilities, I believe from third parties, to their device.

On the other end, we have added load-balancing and steering capabilities to our Service Gateway.

I believe that, even though some of the functions are similar, there's a still a long way to go between ADC for an enterprise or data center versus the carrier class.

The scalability, the protocols then supported interfaces to third parties, things like NEBS and obviously support infrastructure that -- I'm not saying this is an impossible road, but quite a lengthy and long road.

We have not seen -- in our field that we participate in, we haven't seen any ADC vendor reach the short list.

But I want to be careful; we are not seeing 100% of the deals.

Okay, that's helpful.

Thank you and good luck, gentlemen.

(Operator Instructions) Catharine Trebnick, Northland Securities.

I have a question.

Earlier this month, one of your competitors announce the deal with Skyfire that also does mobile optimization.

Can you give us some color onto how the two acquisitions are working and participating in the value-added services piece of the revenue and the demand for that?

Yes.

So first -- not being flip, but it's nice to see that our thought leadership is once again proven and other players are rushing to team up and catch up to our initiatives.

Right now, video caching is doing well and selling around the globe, winning deals either standalone or as part of our Service Gateway offering, sometimes as a differentiator, sometimes as a standalone solution, going back to Mark's original question.

Video optimization has contributed some amount -- quite small, but it is now participating in about half a dozen trials.

Some of them are very promising and I expect them to start contributing revenues in early part of next year.

Okay, and just for clarity, video caching and video optimization roll into value-added services, and the value-added services, Nachum, are they part of products or services?

Could you just remind me of that?

Value-added services are products.

It's either additional blade servers and primarily software on top of our classical and Service Gateway and DPI function.

Okay, great.

And I will circle back around at the end for other questions.

Kiera Kilkowski, Merrill Lynch.

I just have a few quick questions for you today.

With the growth that we've seen in value-added services the last few quarters and gross margin at the highest that we've seen it, could you maybe talk about some of the puts and takes in gross margin?

And then secondly, you mentioned a lot of the new functions that you are introducing are more on the monetization side.

Is there any color that you could give us on how many of your customers are doing pure optimization versus using the more advanced monetization functions?

I'll take the gross margin question, and then Rami will follow up on the monetization.

I think that basically, of course, we are seeing improvement in the gross margin.

Some of it is mainly due to the mix of product.

As Rami mentioned, when value-added services, which are based mostly on software, have usually better margins than the company average, and that's why we are seeing the improvement in the last couple of quarters.

Another reason is obviously the repayment we did for the chief scientist, and we do not include the royalties anymore in our gross profit.

So I think that if you look at Allot a year ago, we were 70% to 72%, and right now we are 75% to 77%.

Very hard to forecast where exactly we will be, simply because it depends mainly on the mix of product, hardware versus software, etc.

But so far, we are enjoying the improvement.

And how many customers are doing monetization with us?

Let me split monetization into two main categories.

One, in the general area of policy in control and charging in the PC space, at least about half of our customers have been doing use cases that touch on their revenues.

So some use our DPI really just to optimize the network traffic shaping optimization between applications, that saving.

But many of them have used us to do tiered services, charge premium plans, certain plans that have Quality of Experience and applications other than us.

So on that front, in the PCC part of the world, before we talk about value-added services, about half the at least one use case that is relevant to revenue generation.

In terms of the half a dozen value-added services that we introduced into the market in the past two years, here we are a little bit early in the process.

I would say that maybe 10% or 20% of our customers have adopted any value-added service and about half of them are using it for a monetization.

For example, the most exciting new element, which is kind of a crossover, is really application-based charging.

Allot was very instrumental in writing the 3GPP startups for application-based charging.

We are now promoting it, have really a lot of interest out there.

But I would say that maybe only 5% to 10% of our customers are actually deploying these kinds of use cases.

But it certainly is a growing segment of our business, and we expect that eventually all operators will move away from flat rates or just a bandwidth cap to more sophisticated charging plans.

Got it, thank you.

Sanjit Singh, Wedbush.

Regarding your funnel and your bookings activity, with the $12 million order that you announced this morning, the cloud service provider order, and a $5 million order that shipped last quarter, how much of that is booked in revenue?

Maybe is it a certain fraction?

Is the majority of the opportunity still ahead of us over the next 1 to 2 to 3 quarters?

Can you give us any kind of clarity on how much of these large deals have been recognized so far?

Yes.

So I think one -- it changes from one order to another.

Obviously, you know, there are new projects versus old projects or follow-on orders which are usually quickly -- or quicker to recognize the revenues.

In general, I would say it takes us between one to three quarters to recognize revenues, specifically to the orders that you mentioned.

So the $12 million order that we got during the third quarter, we didn't recognize any revenues out of it during the third quarter, and it's definitely fourth quarter and next year's, in 2014, revenues.

Is it -- could we get an update on your product strategy maybe in terms of what we should expect going into calendar year 2014 in terms of your NFV strategy; what you are planning to do with the Service Gateway platform; any potential product refreshes coming up in the next couple of quarters?

Yes.

So we apologize, Sanjit, but obviously, I would be happy to talk about our recent involvement.

But we won't use this call to preannounce any roadmap announcements into the coming quarters.

But we do plan to be aggressive and bring to market, continue to bring to market exciting both platforms and add-ons into the current one.

Having said so, regarding our NFV, as I mentioned on the call, most of our value added service is already offered in an NFV format.

So the carrier can decide either to deploy them integrated into our Service Gateway in the core of the network or more in their carrier and cloud in the future (technical difficulty) environment.

The same thing is true for all of our analytics, reporting and management tool, which are offered in both options as well.

At some point in 2014, we will probably offer a virtualized version of the Service Gateway as well.

And then basically our strategy would be to let service providers either optimize on performance and go with a Service Gateway or optimize for OpEx and easy implementation and going a virtualized way.

Perfect.

And my last question is, can you give us the team's updated view on the US mobile market?

Didn't mention any particular ones this quarter, but given some of the discussions on net neutrality, how do you see the US mobile market, the state of affairs as you see it right now?

So no changes from, let's say, the last two or three quarters.

You know that for years, we have been going after this market.

Net neutrality has a slowed us down.

We changed strategy.

Instead of going after a policy control and charging our use cases, we started positioning our value-added services.

We got two of the top five mobile operators as customers, one as a full-blown platform, and another adopted one of our value-added services.

Obviously, we are now leveraging the momentum in hopes to get more from existing and new ones, now that we have very good references.

So that's pretty much the current strategy, no strategic movement, let's say on the US front.

As we are touching on net neutrality, the EU issued their draft on net neutrality, which I believe is very favorable to our propositions, including the enablement of application-based charging and revenue share.

I hope that the US takes a similar approach.

Thank you.

Joseph Wolf, Barclays.

My first question is if we look at the book to bill being greater than 1 and a couple of pretty large contracts that seem to have been booked in the third quarter, can you talk about the breadth of the bookings that put the book to bill greater than 1?

Or maybe -- I don't know if you can give me the whole percentage, but how big the two big announcements were in terms of putting the book to bill greater than 1?

Joseph, I'm sorry, but we want -- obviously, (technical difficulty) thought about what we share in terms of a booking.

I remind you that booking is not a strictly defined financial number.

So what we like to share is the trajectories and momentums.

This is why we share our book-to-bill ratio, which I believe can be a good indicator of things to follow.

All I can say is that the book to bill over 1 -- it was book to bill over 1 in this quarter; and obviously, the $12 million order was a big part of it.

Okay, great.

I wanted to focus for a minute on the cloud wins.

And just curious whether that included the DDoS.

And then, when you think about that cloud services win, how scalable is the announcement that you made both within that customer in a specific location and across a network?

And then how many engagements are out there for this kind of win?

Because it seems like a fairly exciting opportunity.

Yes, it is, even though it is kind of early days and early theme for us.

DDoS is deployed in some of our cloud and solutions, but not in this specific one we announced.

We certainly hope to sell it down the road, but not in this specific one.

But we certainly have sold DDoS functions into other data center deals that we have won this quarter and in the past.

In terms of scalability, I believe we do have a relevant product technology and value proposition for data centers.

And the main challenge there is actually based -- put some of our focus, say, on building channels to this market.

In the past, we mentioned that we had some success with reselling and selling through our service provider customers into their data centers.

So we hope to invest in this theme and grow it.

And what we need to execute really is more on the sales and marketing front, rather than technology.

Okay.

And then just as a sideline to the DDoS; this is developed in house, or is it something that you buy?

And what is the real value in investing heavily in DDoS, because it's such a dynamic portion of attack mitigation right now?

This is an in-house technology well integrated into our Service Gateway.

A pure software function, so when a service provider decides that he wants to buy us for license fee, we simply turn it on.

So it's in-house.

And you are right; in the past two years we have seen a nice uptick in selling DDoS.

I believe that this quarter DDoS was a big part of the VAS offering.

Great, thank you very much.

Peter Misek, Jefferies.

This is Jason North for Peter.

I had a follow-up on the cloud provider opportunity.

What size of cloud provider does it need to be in order to necessitate the carrier class equipment like Allot's?

If you are selling it through service providers, I think it would be more on the enterprise level, or is it more the big kind of -- call it like Amazon/Rackspace-type providers?

So right now, most of our success has been more into, how would I say, come -- data centers than catering to enterprises, hospitals and enterprises, managed services as part of service provider in managed service.

And these -- less, if any, to the likes of Amazon.

Not because of scalability; we believe that what is good for the core of tier 1 networks is scalable also for a large in cloud solution.

But in terms of go to market in our existing channels and our relationship with service providers, that has led more to, say, a private cloud and geared towards enterprise and managed services.

Do you see the bigger cloud providers as a further opportunity in the future, or are you going to be -- the main focus more on building out that channel to the enterprise than to the private clouds?

We know how to predict the future here.

Obviously, we will first go to where we have our comfort zone and existing relationships.

So will we go after these public ones?

At some point, yes, but not in the near future.

Great, thank you.

(Operator Instructions) Michael (inaudible), Oppenheimer.

I was wondering if you could talk about just general RFP activity.

It seems like some of the activity that you have been talking about over the past several quarters is starting to close.

But would you still characterize the level of RFP activity as being healthily up year-over-year?

It is up year-over-year.

The activity is healthy.

I would say that, let's say, quarter over quarter it's hard to fine-tune a subjective quantification of RFP, but it's totally up year-over-year.

We are now exposed to more RFPs as we have solutions that read also on things like video caching and so on.

So some of this growth in RFPs is subjective to us as our solutions grow.

So definitely year-over-year, and some of it is because of our new offering.

Okay.

And then on top of that, how would you characterize the RFP activity right now in North America?

Let's put it this way.

Because of what we discussed before, net neutrality is still there with uncertainty.

The amount of RFPs in North America are disproportionately low, given that you would expect that North America would be, what, a 20%-30% plus worldwide RFPs; it's not there.

Okay, that's helpful.

And then just lastly, there's just a number of the value-added services right now that you are offering.

I was wondering if you could just, I guess, prioritize or maybe just tell us which ones are gaining the most attraction or if they are all gaining the same amount of traction.

I'm just trying to figure out which value-added services are the bigger piece of your revenue pie and then, going forward, how they should look also.

I'm sorry, Mike, but due to competitive reasons we don't want to be too specific on what is hot and what is cold.

I can tell you also that it might be -- all of them are interesting, all of them are selling.

Obviously, video optimization is a little bit behind, given what we have talked before.

But a general -- sometimes this could vary between quarter to quarter.

For example, this quarter with DDoS was very strong.

Last -- we had quarters where analytics was strong.

So it varies, and we plan not to be too specific about which ones are the most successful one because of competitive reasons.

Okay, all right, thank you.

Dov Rozenberg.

I was wondering, do you see any change in the environment or the visibility, the opportunities, the RFP?

Also, if you can refer per geography, you referred to North America.

But is Europe coming back in any way, or is it more -- the opportunity is more -- RFPs are more in Asia-Pacific?

So to the first part, regarding your visibility, basically, the visibility really means RFPs.

So we discussed that visibility is better than last year.

So, over year, obviously growing quarter over quarter it's very hard to quantify in that kind of resolution.

In terms of geography, so obviously getting a very nice order out of APAC, you can expect that in the coming quarters as we recognize this order, APAC will go up.

I think we are seeing Western Europe stabilize, even maybe moving into slight growth.

We are seeing interesting activities at least with one of our very large mobile operators in Europe, and we expect to see that translating to revenues again in the next few quarters.

So Europe is definitely not getting any worse, maybe starting to get better.

Okay.

The activity you mention with a leading -- with a European operator, you mean more of a follow-on of value-added services or more DPI or -- ?

All of the above.

It's economy, it's macroeconomy reasons and slowdown decisions, deployments, budget.

Once they come back, they come back with the same fundamentals.

As I mentioned in past two quarters and also on the script, we are now seeing more interest on the monetization side, and this is why you are seeing some of our new value-added services geared towards that.

Some of the operators said we are done laying off and cost cutting.

You can do that so much; now we want to find differentiation and ways to increase revenue.

And then in APAC, are the opportunities more fixed line, like this big deal?

Or it's scattered also -- mobile, fixed, value-added services?

A combination, but let's say in New York, we are definitely oriented towards the mobile.

In APAC, it's more balanced.

I think it's not because there's less interest in mobile in APAC; there certainly is.

But actually, we've talked about this in the past.

In Europe, fixed line operators have expressed less interest in massively deploying PCC or policy control and charging solutions.

In Asia, that's not the case.

Fixed operators are also interested in classical DPI-based PCC solutions.

This very big announcement is one example, but there is others.

Beyond that, APAC is certainly a geography, but it's really spread into very different countries, each country a totally different universe than the next country over.

Japan is not China and is not Thailand and definitely not India.

These are different universes just sharing the same continent.

Okay, thank you, that's very helpful.

One last question for me -- just with all the opportunities in cloud and etc., and a move onto these into new territories, do you expect -- do you see enterprise growing beyond 15%-20% revenues annually; not on a quarter-to-quarter basis, but more annually?

Yes, and hopefully not on the expense of our other business, but in absolute terms.

But yes, we -- by doing this press release we are signaling the markets and customers that we want to play in this space and enhance enterprise not by going after a small and medium-sized enterprise deals, but rather going after data centers.

I want to be cautious; it's early days.

We got a nice win with a nice partner.

We hope to achieve more of the same.

Thank you, very helpful.

Thank you.

Thank you, too.

As there are no further questions in the queue, that will conclude today's Q&A session.

And that will also conclude today's conference call.

We thank you for your participation, ladies and gentlemen.

You may now disconnect.