AudioCodes Ltd (AUDC) 2024 Q3 法說會逐字稿

Greetings, welcome to AudioCodes third quarter, 2024 earnings conference call.

At this time, all participants are in a listen-only mode.

A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Please note this conference is being recorded.

I will now turn the conference over to your host, Roger L. Chuchen, Vice President of Investor Relations.

You may begin.

Thank you, operator hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer and Niran Baruch Vice President of Finance and Chief Financial Officer.

Before we begin, I'd like to remind you that the information provided during this call may contain forward-looking statements relating to audio codes, business outlook, future economic performance, product introductions, plans and objectives related there too and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are forward-looking statements as the term is defined under us, federal securities law, forward-looking statements are subject to various risks and uncertainties and other factors that could cause actual results to different materially from those stated in such statements, these risks uncertainties and factors include but are not limited to the effect of global economic conditions in general and conditions in AudioCodes, industry and target markets in particular shifts in supply and demand, market acceptance of new products and the demand for existing products.

The impact of competitive products and pricing on audio codes and its customers, products and markets, timely, product and technology development upgrades and ability to manage changes and market conditions as needed possible need for additional financing, the ability to satisfy covenants in the company's loan agreements, possible disruptions from acquisitions, the ability of Audiocodes to successfully integrate the products and operations of acquired companies into AudioCodes.

Business, possible adverse impact of the COVID 19 pandemic on our business and results of operations.

The effects of the current terrorist attacks by Hamas and the war and hostilities between Israel and Hamas and Israel and Hezbollah.

As well as the possibility that this could develop into a broader regional conflict involving Israel with other parties may affect our operations and may limit our ability to produce and sell our solutions.

Any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel and other factors detailed in AudioCodes, filings with the US securities and exchange commission.

Audiocodes assumes no obligation to update this information.

In addition, during the call, AudioCodes will refer to Non-GAAP net income and net income per share.

AOS has provided a full reconciliation of the Non-GAAP net income and income per share to net income and net income per share.

According to GAAP, in the press release, that is posted on its website before I turn the call over to management.

I'd like to remind everyone that this call is being recorded and archive webcast will be made available on the investor relations section of the company's website.

At the conclusion of the call with all that said, I would like to turn the call over the Shabtai, Shabtai please go ahead.

Thank you, Roger.

Good morning and good afternoon, everybody.

I would like to welcome all to our third quarter, 2024 conference call with me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of a code.

Niran will start off by presenting a financial overview of the core.

I will then review the business highlights and summary for the core and discuss trends and developments in our business and industry.

We will then turn it into the Q&A session.

Niran?

Thank you Shabtai and Hello everyone.

Before I start my formal remarks, I would like to remind everyone that in conjunction with our earnings release this morning, we will post shortly on our investor relations website and earnings supplemental deck on today's call.

We will be referring to both GAAP and Non-GAAP financial results.

The earnings press release that we issued earlier this morning contains a reconciliation of the supplemental Non-GAAP financial information that I will be discussing on this call.

We will be comparing our third quarter, 2024 results to the prior quarter.

As we believe it provides a better gauge of our financial performance revenues for the third quarter were 60.2 million.

A decrease of 0.1% over the 60.3 million reported in the second quarter of the current year.

Services revenues for the third quarter were 32.5 million.

An increase of 1.7% over the 32 million reported in the second quarter of the current year services revenues in the third quarter accounted for 54% of total revenues.

The amount of deferred revenues as of September 30th, 2024 was 78.6 million compared to 80 million.

As of June 30th, 2024 revenues by geographical region for the quarter were split as follows North America.

47% EMEA for 33% Asia Pacific, 13% and Central and Latin America 7%.

Our TOP15 customers represented an aggregate of 56% of our revenues.

In the third quarter of which 39% was attributed to our 10 largest distributors.

GAAP Results are as follows.

Gross margin for the quarter was 65.2% compared to 65.5% in Q2, 2024 operating income for the third quarter.

Was 4.9 million or 8.1% of revenues compared to operating income of 4.9 million or 8.2% of revenues in Q2 2024.

EBITDA for the quarter was 5.9 million compared to EBITDA 6.2 million for Q2 2024.

Net income for the quarter was 2.7 million or $0.09 per diluted share.

Compared to net income of 3.8 million or $0.12 per diluted share.

For Q2 2024.

Non-GAAP results are as follows.

Non-GAAP gross margin for the quarter was 65.6% compared to 65.8% in Q2 2024 Non-GAAP operating income for the quarter for the third quarter was 7 million or 11.7% of revenues compared to 7.2 million or 11.9% of revenues in Q2, 2024 Non-NAAP EBITDA for the quarter was 7.9 million compared to Non-GAAP EBITDA of 8.3 million for Q2 2024 Non-GAAP net income for the third quarter was 4.9 million or $0.16 per diluted share compared to 5.5 million or $0.18 per diluted share in Q2 2024.

At the end of September 2024 cash equivalents, bank deposits, marketable securities and financial investments totaled 88.4 million net cash provided by operating activities was 7.9 million for the third quarter of 2024 day sales outstanding as of September 30th, 2024 were 112 days in July 2024 we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares.

The court approval also permits us to declare a dividend of any part of this amount.

The approval is valid through January 1st, 2025.

On July 30th 2024 we declared a cash dividend of $0.18 per share.

The aggregate amount of the dividend was approximately 5.4 million.

The dividend was paid on August 29th, 2024 to our shareholders of record at the close of trading of August 15th, 2024.

During the quarter, we acquired 333,000 of our ordinary shares for a total consideration of approximately 3.6 million.

We reiterate our guidance for revenues for 2024 to be in the range of 240 million to 250 million and Non-GAAP EBITDA in the range of 33 million to 39 million.

I will now turn the call back over to Shabtai.

Thank you Niran.

I'm pleased to report successful execution against our strategic priorities in the core as we continue our journey to transform the company to UCaaS and CCaaS cloud software and services company.

We perform this expected on our key business operations related to VIP networking and connectivity.

And we're able to make substantial progress on our efforts to advance our main growth engine, the conversational AI business in our key business area.

Third core Microsoft business grew 8%.

Sequentially highlighted by steady growth in North America and in the DACH region, Microsoft teams business in the third quarter was up 9.2%.

Sequentially, our services business kept evolving in the third quarter.

Third quarter, services revenue grew 6.4% year over year and accounting for 54% of revenue.

The highest on record for us fuel the strength of our services.

Revenue stream is our primary growth engine for live managed services and conversational AI specifically Live Teams business grew 21% year over year and accounted for 44% of total Microsoft business compared to just 37% a year ago.

Also our success in building live managed services and recurring revenue stream is translated to strong year over year, annual recurring revenue growth of 40% ending third quarter at 60 million annual recurring revenue.

Up from 48 million existing 2023.

This success is owed to the trust we have built throughout the years with partners and enterprise customers in the voice services space.

There's no better proof than our long term standing multi year partnership with AT&T in North America.

Leveraging our expertise in providing secure voice connectivity to help their business customers on board.

To Microsoft teams.

This fruitful partnership has contributed multi million of annual recurring revenues over the last several years and then underscoring growth in our live business is the growth of backlog of the contract signed.

We ended third quarter 24 with a live and manage services backlog at 67 million as compared to just 27 million in the year ago quarter.

This represents close to 150 year over year growth which bodes well for a strong stream of revenues in coming years.

As such.

Once we combining the growth in backlog of live services with the reporter's recognized revenue for the third quarter, we get a very positive result for the core and outlook going forward on conversational AI third quarter dollar value of contracts signed increased roughly 50% versus the year ago period.

Speaking of conversational AI, strong operational momentum continues driven by long term tailwind of infusing AI into UC and CX workflows in customers growing demand to drive ongoing productivity gains accordingly.

We have since significant pickup in pipeline activities across our entire conversational A I suite including Voca CIC or AI first CX solution for Microsoft teams such recording solutions such as meeting insights and interaction, recording and voice AI connect just as we did in 2023.

We are investing in 2024 in this new growth engine for us.

This year revenue will grow about 30% 40% and we will cross the for the first time, the 10 million level as we are in an investment mode in this conversational AI business, we are curing losses in that specific line about 9 million in 2023 and around the same figure in 2024.

Glad to say that the investments are already showing good potential and results and substantial growth of number of business voice projects and application for the UCaaS and CCaaS markets emerge overall.

We delivered on our business priorities in the core, the strength in our live business, reinforcing the healthy overall pipeline for our major practice such as Microsoft Business, CX and concessional AI.

We believe that this bodes well for seeing improved topline growth performance as we add into 2025 and beyond.

Let me discuss some of the notable wins in the core.

The first one relates to a multinational bank that had both our connectivity gear of the last several years to deliver UC and CX to their over 30 country operations, operating with a tight budget and managing complex it infrastructure coupled with the need to meet service level expectations.

The company prefer to move with us to share subscription service model in lay of capital spending.

We are one of the many RFP respondents issued 12 months ago.

Among these were some of several of the world's largest global system integrators.

I want to mention names.

We won mainly due to our long standing relationship and goodwill built with the customer as well as the trust in the quality of our solutions.

The master contract signed with total contract value in the low seven figures range over multiple years for voice infrastructure management.

This win demonstrates our success in transitioning from point product solution player to a trusted vendor of mission critical services on the UC and CX connectivity and leveraging that to successfully cross sell our conversational portfolio.

In another opportunity, we signed a 36 month contract with a multinational industrial equipment dealer providing live pro managed gateway and device as a service in North America and UK.

As the initial phase of a broader multi core global teams voice rollout.

Third win.

We signed a contract with the foreign government putting Voca CIC to be in the pole position to be the defect of team based CCS platform.

As the CX contracts of various government agencies came up for renewal.

These examples are a testimonial to the success of our land and expand strategy where we follow suit on our connectivity services business with our new growing portfolio of business voice application powered by gen AI and capabilities.

The potential for upselling these same account is big potential for further business growth.

Before turning to detailed business line discussion, let's quickly shift to the third core profitability metrics.

A Non-GAAP gross margin of core came at 65.6% within the 65 to 68 long term range planned for the business.

And compared to last core levels of 65.8%. 3rd quarter, Non-GAAP OpEx was 32.5 million in line with second core levels and higher than our initial budget planning for the year.

Key factor in maintaining a larger budget relates to the initial success when joining our evolving recessional AI business and the need to support larger investment and growing number of projects in this space.

On top of our current conversational activity which I'll cover in the following.

We intend to announce two new solutions in coming weeks and months.

Regarding count, we ended the second quarter with count of 935 full time employees down from 940 employees in the second quarter.

And compared to 938 employees in the third quarter of 2023 third quarter, just to be down 7.9 million or 13.1% margin compared to last quarter, levels of 8.3 million or 13.8%.

Again, all as a result of high investment in growing our conversational AI business which should present NAS return on investment already in 2025 net cash provided by operating activities was 7.9 million, which alludes to our health nature of the business.

Now to our Microsoft business, our third quarter, Microsoft business grew 8% sequentially highlighted by steady growth in North America in the dark region.

In terms of our strategic business line, Microsoft Teams business in the third quarter was up 9.2% sequentially.

Well, in line with our planning, recurring teams live business grew 21.4% year over year.

Accounting now to 45% of the team's business compared to just 37% in the year ago quarter, live managed services and recurring revenue stream have translated to strong year over year annual recurring revenue growth of 40%.

And in third quarter, 60 million, up from 48 million exiting 2023.

At the same time, CapEx based teams business was down 12.7% in the quarter.

Accounting now for 56% of teams business again as compared to over 63% in the year ago quarter.

So with the continued focus on live teams, recurring business and declining CapEx teams business.

We expect to see a return to growth of double digit Microsoft business in coming years.

Importantly, our pipeline of greatest opportunity remains robust up 12% sequentially and 90% year over year which bodes well for continued growth in this Microsoft ecosystem.

With just over 20 million teams from PSDN users, a fraction of over 320 million teams monthly active users.

Today, we believe there is a long runway for teams voice adoption in our live business side of us.

What could further spare adoption of teams phone in coming years is the recent incorporation of Microsoft Copilot and Gen AI features supporting Microsoft Teams phone system.

And as a result, a rising demand for the live business.

Another important trend in the US market and in the Microsoft Teams phone space is the merging search for a business voice application that may provide added value.

These applications include among others, contact center applications, recording applications, analytics, application and CRM integration.

All representing a opportunities for us.

According to a study published by research firm, the demand for value added services is bound to grow substantially in coming years which will further support our land and expand strategy for the Microsoft teams segment.

Now moving to CX set core 2024 CX business grew 4.4% helped by continued steady growth in North America and ongoing strength in live CX.

In terms of booking for live CX, we grew above 100% from 2022 to 2023.

And now we expect to grow another 30% to 40% in 24.

Compared to 23.

The strong momentum in live CX is driven by se trying to flo enterprises embarking on their cloud migration journey.

Given the complexity associated with migrating from legacy system and the mission critical nature of the contract center infrastructure these enterprises are increasingly turning to trust managed service provider like a code to support them in this endeavor.

Historically, a large majority of our live CX contracts wins arose from direct sales contribution.

We have been working diligently to develop this channel to help us better scale in live CX.

I'm glad to report that these efforts are paying off.

For example, over the past several years, we have been working closely with a partner in the KA region on multiple projects totaling over a million in contract signing.

We're now in the process to add additional partners in the near future.

Now to conversational AI, conversational AI third quarter dollar value of contract signing increased roughly 50% of the year ago period.

The strong operational momentum is attractable to the long term tailwind of infusing AI into UC and CX workflows in customers, rising demand to drive ongoing productivity gains.

As enterprises increasingly look to do more with the finite amount of resources as the core.

We expect conversation AI to be our second major long term growth pillar, meriting the disproportionate amount of R&D resources we are now investing into this business line.

Let me walk you through some highlights of the individual business line.

With this conversation with a portfolio.

First, the Voca CIC, representing this the fruits of this R&D investment is Voca CIC or A I first team certified contact center platform.

Leveraging our team's voice dominance in the UC world amidst the secular trend of UC and CX convergence.

Just to give you some idea about the growth we are experiencing.

When looking at the combined revenue from for the first three quarters in the year, we grew about 50% in 2024 compared to 2023 growing substantially in number of bookings.

With regards to our activities in the Voca CIC see activity in the third quarter.

We won a contract with the government office in West Europe replacing an on prem leading legacy on prem vendor Voca CIC was selected as the go to seek a solution for the entire group of the government offices of the country.

Following the onboarding of University of Central Florida, the second largest university in the US in 2023 we continue to show good momentum in the education North America Space with six universities signed in total out of which four signed during 2024 so far.

So we see some very nice growing pipeline.

We see growth of most of 130% year over year in the number of created opportunities and we saw close to 200 growth in pipeline total dollar amount with the release of the callback capability for that product Voca CIc see a full feature purity with virtually any fully fledged contact center solution.

This is centered around voice.

We believe that with the future purity around voice combined with our capability in the conversational AI and OMNI channel situation that place us in the leading pack of the team ccaas space in the Microsoft environment.

Moving on to meeting insights.

We have now a mature and stable product.

The product has been launched in March of this year.

We've deployed the product in seven countries so far.

And now adding in the four square, another three countries sales operation are already active in Israel US and UK.

And we have launched Emea in Europe in September of this year with four countries, Germany, France, Italy, and Netherlands in October, we launched support for Zoom meetings.

In addition to the support for the Microsoft teams meetings, we intend to make the application UCAS agnostic and support all of the major UASS applications including Cisco, Webex and Google Meet.

Now, more than we have now in pro in the running more than 100 proof of concept about third, already paying customers and planning to onboard a few more 10 accounts in fourth quarter, 24.

Just to give you some highlight in the third quarter, we grew 50 in terms of number of meetings, we grew 50% sequentially.

So that represents huge growth mainly due to the fact that we're using generative AI in a major way to provide value to our customers.

Same with active users.

We've grown substantially in a number of users, more than 40%.

Among others.

So to wrap up my presentation, we've made good progress in the quarter on our long term objective to transform into a cloud software and services company with increasing mix of recurring revenues through fostering growth of our two primary engines or live family of many services and conversational AI with the progress we are making in increasing our recurring revenues and with live nearing half of Microsoft teams bookings, we believe we have laid the foundation to support sustainable and top line and margin expansion over the long term.

I'll turn the call now back to the operator.

Thank you.

Thank you.

At this time, we will be conducting a question and answer session.

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One moment please.

While we poll for questions, your first question for today is from Ryan MacWilliams with Barclays.

Hey guys, this is Ryan MacWilliams with Barclays.

Thanks to the question.

Just curious how your customers are thinking about AI investments for next year and our budgets for next year.

Generally getting healthier in your conversations.

Yeah.

Well, as I've mentioned, you know in my presentation, we see increased interest and demand.

We have now actually we have to go to markets one which is, you know, s application including Voca CIC meeting insights.

We have smart app which is a compliance recorder.

We will announce a very interesting new product in coming weeks.

And on the other side, we have projects because in the AI space, when you're talking about implementing a solution, usually you face increasing demand for customization, you know, connectors to our project management applications, connectors to CRM and a few more.

And as such, you know we definitely see huge uptick in in many areas.

One area that's very active is the government space.

So yes, there's a lot of interest in in a solution for that space.

Got it.

Thanks and then how should we think about growth of product and service revenue in four Q and 1st year 25 it seems like audio codes is making strides to become a cloud software and services company first.

So just curious how we should think about the revenue breakdown in the near term.

Right?

So, you know, I've been speaking mainly about growth in our key lines which are live services and conversational AI.

However, you know at the face at the same time, we are facing you know to this to kind of I would say restraining sectors.

One is you know as you grow with live services, we witness drop in CapEx in you know perpetual sales of teams.

So, that is kind of impacting or having some a layer on top of our growth.

So that because, you know the I would say the muted growth you're seeing right now, we believe that as Live now is about 44% of revenues and CapEx is about 56.

So as we move forward with you know another three or four cores, all this picture will reverse.

And therefore, you know, live has grown 20% in the core, meaning that as we cross that point in three or four course, you'll start to see nice growth.

And actually I expect you know in 2026 you see that Microsoft business growth.

So that on that the other factor that impacts our revenues.

But less this score actually is the decline of you know the legacy gateway and SBC business, which usually we face a drop mainly from the fourth quarter to the first one in the year.

And then you know, and this was the phenomenon also in the third quarter.

Then during the year we see you know uptick in that business.

So just to give you some idea about you know, in moving from 22 to 23 you know, we were hit by 15 million drop.

I think we will end up 24 with another, I would say 1,011 million drop.

I expect this figure again to be visible in 25.

But now you know probably somewhere between five and 10, which means that, you know, the impact of that decline of legacy will be, you know, substantially weaker.

So those are the trends, you know on one end, we nicely growing business in live and concessional AI and we're still, you know, suffering from, you know, declining of some legacy business, both connectivity and a team Scopex.

Thanks guys.

Your next question for today is from Ryan Koontz with Needham & Company.

The question here you know, with the kind of stall in top line as you talked about here, this transformation from license to subscription, you know, what KPIS are you using internally to track the conti you know, the continued momentum there in your subscription booking subscription business.

Are you looking at bookings?

And can you reflect on those or maybe RPO or ARR any other KPIS that you have an eye on that might shed a light on that subscription business?

Thanks.

Right.

So, yeah actually, we have few such KPIS as you have mentioned, the most important for us, you know is the monthly recurring revenue and then you know, the annual recurring revenue which at the end of the day translates into the revenue we recognize and report.

So that's one KPI the other one by the way which is for me even more important is the bookings.

Because obviously, if you just take a you know analogy from let's say the semiconductor business, talk about book to bill you know our book to bill on booking versus recognition is substantially higher.

So we definitely track a booking as I've, you know mentioned on the call, you know backlog now is that 67 million versus 27 million a year ago.

So we have a steady flow of bookings of about you know 15 million a quarter.

And that's what really drives the business.

I mean, we you know all of the efforts are really pointing towards increasing booking and even in our compensation for our sales force, you know booking is very meaningful.

You know side by side of course with meeting the revenues targets.

Great and that the composition that backlog is it that dominantly your subscription contracts or are there a substantial piece of license maintenance in that backlog?

Yeah, the majority of it of it relates to Microsoft teams manage services, which is a very sound business.

Actually, we see some acceleration.

I mean we all know that the UKS industry is has been growing faster in previous years and now seems to take a lighter trend.

But let's not forget that when whenever we put about to win we basically when you're talking about large companies, you know thousands of seats or 10 thousands of seats, the usual contract you know, initial contract is for you know, hundreds or a few thousands.

So it means, as I've mentioned, you know right now the teams space is 320 million.

Teams phone is you know PSN is just 20 million.

So there's huge runway ahead of us and, and therefore, you know I believe that, you know, we have you know a space that could range 10 and 20 years, you know it's a gradual move and let's not forget that, you know the self spending, you know in 23 and 24 due to the economical crisis.

So all in we're very optimistic that, you know just we you know the growing live line you know outpacing the declining CapEx line you know you'll see us growing in revenues.

It's great. 11 follow up if I could around what you're seeing in the CX market maybe with renewals.

Are you seeing any seat pressures in these renewals in terms of more productivity from agents around AI for your, for your SBCS there at all?

No, I think you know we see fairly stable and steady market for us.

No we don't see any kind of pressure at this stage.

Got it.

All right.

Thanks.

That's all I've got.

Sure.

Your next question for today is from Samad Samana with Jefferies.

Hey guys, this is actually Billy Fitzsimmons on for Samad.

So I'm telling you expressed confidence in the Microsoft business returning to double digit growth next year just to just to double click on that.

Can you expand on what gives you confidence there and kind of what you're seeing in your pipeline?

It sounds like the pipeline there for kind of the biggest opportunities if I'm understanding correctly is up 12% sequentially and 19% over a year.

If you just break down, you know who those customers are maybe how we should think about pipeline versus maybe what occurred in in the third quarter.

Yes, so well we actually you know in the live business, we really to the US largest enterprises, you know, we cannot quote names.

Some are public I mean you know I've mentioned for the CX space, I've mentioned University of Florida that was close to a minor value contract with several such.

The thing is as follows and maybe I should repeat you know the numbers life is now f is now 44% of business, but growing 21% CapEx is now 56% but declining 12%.

So those trends will continue and we will just cross over and you know, growing life will take over that.

That is the source of you know, confidence in our in our ability to come back to double digit growth.

I'm not sure that that's going to be seen already in 25.

But a you'll see you know the continued improvement and, and I'm confident that in 26 we definitely will see double digit growth in Microsoft business.

Got it.

That's helpful.

And then and then if I can ask another one we talked about this a little bit during the prepared remarks.

But can you just give us some anecdotes of customer wins with conversational AI what do customers like about your product?

And for what reason are they purchasing your product there over competitors?

Oh, okay.

Well great.

So our solution is quite unique in the sense that it is an organizational solution.

Now there are a few you know note takers in the market, you know names you can take Otter you can take Ava you can take Firefly a few more names.

All are you know personal you know productivity note takers.

So, you know a person would use that the application for himself.

But that's about it Our product really touches an enterprise.

Let me give you articles as an example.

We have close to 1,000 employees, we have daily 400 of those employees using meeting insights for meetings.

And the use is very strien you know take FMO we all heard about fear of missing out.

Right.

But with meeting there's no forma anymore because any meeting that you have missed, you have full access to it.

You can listen to the you can identify exactly what was said, who said what?

It's being summarized?

It can be shared.

Okay?

I just give you an example.

Last week, Thursday I had a call with a large European system integrator and with just one sales person on the line as we completed the call, you know in order to get and you know, the person I talked to was interested in moving on in the discussion, I did forward that meeting to five of my colleagues, one in the sales department one in the business one in the partners.

And they all now could understand exactly what was the essence of my discussion with that you know system integrator manager.

So that's just one example, think about you know, knowledge retention, you know, one of your best employees, you know, unfortunately tells you he's living now in order to replace him in order to get somebody into his shoes.

Now, that's hard.

Not if you would have a meeting insight as a tool that use daily.

And all of this you know guy calls and meetings were recorded throughout the past two or three years.

So, any new guy coming on the job you know, is capable of you know fully you know, get up quickly to the knowledge and experience that the other guy had before him and I can give you now a list of you know 20 different applications.

So, it's being used in municipalities, it's being used in health organization.

It's being used in defense organization.

I believe that in two years from today, you know most of the companies we know will use it.

I mean it's just like you know just as you use Outlook for messages and you don't read them all.

But you get to that message you need when you need it the same would be with the customer and a project and a product.

Okay.

Yes, all those meetings are going to be recording to be placed into a repository within the company.

And whenever you suppose we have now a new project with, let's say Simmons.

So all I need to do is you know we have a natural language written application which will allow us to identify those meetings in the past three or six months or 12 months that occurred with Simmons being mentioned and the group of managers that have to deal with the subject and, and provide a solution, they will immediately be able to you know query using either co-pilot or any other chat bot and get responses.

So, plenty of use cases and, and we are by at this stage you know probably one of the best you know, organization now, that's the main difference between us and the other guys.

And even when you compare it to Cisco, I'm sorry to Microsoft teams premium.

That's exactly the case.

We all they all do call summarization, but not much beyond that.

We do all of the organizational work that helps you know get the most relevant information helpful.

Thank you very much.

Sure.

We have reached the end of the question and answer session and I will now turn the call over to Shabtai for closing remarks.

Okay.

Thank you, Operat.

I would like to thank everyone who attended our conference call today with continued good business momentum in our enterprise operation and good on the line.

Market growth trend in UCC and CI.

We believe we are transitioning the business towards growth and growing profitability in coming years.

We look forward to your participation in our next quarterly conference call.

Thank you all.

Have a nice day.

This concludes today's conference and you may disconnect your lines at this time.

Thank you for your participation.