Nice Ltd (NICE) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the NICE System's conference call discussing fourth quarter and full year 2011 results and thank you all for holding.

All participants are at present in a listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder this conference is being recorded February 15, 2012.

I would now like to turn this call over to Mr. Marty Cohen, VP Investor Relations. Please go ahead.

Thank you operator. With me on the call today is Zeevi Bregman, President and Chief Executive Officer and Dafna Gruber, Chief Financial Officer.

Before we start I'd like to point out that some of the statements made on this call will constitute forward-looking statements in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please be advised that the Company's actual results could differ materially from these forward-looking statements.

Additional information regarding the factors that could cause action results or performance of the Company to differ materially is contained in the section entitled Risk Factors in Item Three of the Company's 2011 annual report on Form 20-F as filed with the Securities and Exchange Commission on March 31, 2011.

During today's call we will present a more detailed discussion of fourth quarter and full year 2011 results and the Company's guidance for the first quarter and full year 2012. Following our comments there will be an opportunity for questions.

Let me remind you that unless otherwise noted on this call we will be commenting on our adjusted results of operations which differ in certain respects from generally accepted accounting principles as reflected mainly in accounting for acquisition related revenues and expenses, amortization of intangible assets and accounting for stock based compensation. The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release.

With that, I will now turn the call over to Zeevi. Zeevi.

Thank you Marty and welcome everyone to our fourth quarter and full year 2011 earnings call. We are pleased to report strong fourth quarter and full year results.

Fourth quarter non-GAAP revenue increased 14% compared to the fourth quarter of 2010 reaching a record $214m.

Full year non-GAAP revenue increased 15% to $798m.

Non-GAAP EPS in Q4 increased 17% compared to the fourth quarter of last year reaching a record $0.60 and bringing full year non-GAAP EPS to $2.10, an increase of 20% compared to 2010.

We had a very strong finish to the year resulting in book to bill ratio much greater than 1 in the fourth quarter. For the full year 2011 our book to bill ratio was greater than 1 and our backlog as we enter 2012 is at an all time high.

When we look at the drivers of our strong performance in 2011 the strength came from diverse areas of our business. We had particularly strong execution in the Americas and in APAC. Both our Enterprise and our Security business grew in the mid-teens and we saw an increase in the number of large deals. And, importantly, our clear focus on growing our analytics-based solutions resulted in high growth rates for these products. We expect these solutions to continue to fuel our revenue growth going forward. We are also seeing increasing demand for our abilities in the cyber crime space, which span across our financial crime and compliance solutions and our security solutions.

Moreover, in 2011 we announced four acquisitions which further strengthened our already strong product portfolio. We enhanced our offering for the small and mid-sized enterprises, strengthened our real time impact technology, added a real time feedback solution and are now adding a market leading closed loop performance management solution with last week's closing of our acquisition of Merced.

These acquisitions, combined with our continued focus on innovation into advanced application and unstructured data analytics underscore our commitment to provide our customers with the market leading, best of class analytics based solutions. As our portfolio broadens, we continue to further penetrate our existing customer base and win new customers.

Let us now move to discussing our business in more detail. Let's start with our Enterprise business. In 2011 we generated high teen's growth in the Customer Interactions business, which was fueled by high growth rates of our analytics based solutions. These solutions benefited from increased adoption and geographic expansion.

In the Americas, where we reported strong growth, leading financial institutions and companies with a significant focus on customer care are continuing to increase their adoption of our analytics based applications, many with sizeable deals. For example, in Q4 a top five American bank placed an eight digit interaction analytics order which is our largest ever analytics deal. Our customers are looking at NICE to provide them with the best of suite solutions and to become the vendor of choice for all analytics and interaction based solutions.

The adoption of analytics is expanding globally. In 2011 we introduced our solutions in new languages including Chinese, Japanese, Turkish and Russian and we won our first interaction analytics deals in Poland, Russia, South Africa and Singapore. We extended our presence in countries such as Brazil, Mexico, India and Australia.

In 2011 several leading industry analysts recognized our leadership such as DMG Consulting, Frost & Sullivan and most recently, Gartner who again placed us in the leaders position of its Magic Quadrant for Contact Center Workforce Optimization. The Gartner report described the functionality of our workforce optimization offering as "best of breed," and our business consulting services as "exceeding expectations."

In addition to the success we achieved through organic growth in 2011, we recently made two strategic acquisitions to enhance our analytics based offering.

The addition of Fizzback and Merced Solutions to our product portfolio gives our customers the ability to have a complete view of their customers' experience and to tie it to the employees' performance. Furthermore, by enhancing these solutions with NICE Analytics we enable our customers to respond to specific interactions of their customers in real time during and immediately after the interaction. This enhances customer experience, improves profitability, increases sales, reduce churn and ensure compliance.

With Fizzback's real time feedback we provide a complete voice of the customer solution. Fizzback adds direct feedback to our already existing indirect and inferred voice of the customer capabilities. The solution provides a real time context based, flexible dialogue with the customer and yields high response rates; a combination which allows for the use of consumer feedback solutions in ways not possible before. The feedback is then weaved into our customers' daily operations. The integration of Fizzback is going well and we already have deals in the pipeline with NICE existing customers who are now interested in our customer feedback solutions.

In the fourth quarter, among the deals won by Fizzback was a UK-based utility firm. This customer purchased the feedback solution to ensure compliance with regulatory oversight of customer satisfaction. Our customer is using the solution to reduce complaints by identifying and resolving underlying issues before consumers call in. The solution is expected to help our customers reduce operational costs, while improving the customers' experience. The addressable market for our feedback solution continues to grow as buyers are starting to shift from tactical local need fulfillment to an enterprise-wide strategy to help increase overall customer retention and improve operational cost and employee performance.

Merced is the leader in service and in sales performance management solutions. The Merced solution for evaluating agent performance provides "one version of the truth" across the organization and aligns coaching and incentive management with the organization's strategic goals. Adding our capabilities in real time interaction analytics and real time customer feedback to the traditional data sources is expected to deliver even more granular and accurate performance measurement and insights. The announcement of this acquisition was received very favorably by our customers and we look forward to the many opportunities for growth that the Merced acquisition will provide.

Turning to Financial Crime and Compliance, which is part of our Enterprise business, we expected the fourth quarter to be a very strong quarter for this business but it came in below our expectations resulting in low single digit growth for 2011. We experienced certain execution issues, primarily in our go-to-market organization which we have been addressing.

The market opportunity for this business is significant. And we expect to resume double digit growth for the full year 2012 as we continue to see strong demand for our solutions from the largest financial institutes. These leading global institutions are turning to NICE because we can support their sophisticated needs with enterprise-wide solutions on which they can standardized globally and across the different parts of their businesses.

Regulatory changes and the increasing sophistication of fraud attacks, especially in remote banking, are causing many firms to realize that their systems, which are often home grown, cannot effectively support today's needs. Therefore, they choose to replace siloed technology with solutions from us, as we are the leading provider offering a comprehensive product-based enterprise-wide solution that can support their needs to leveraging cross-channel information.

As we continue to see an even greater focus on regulation and enforcement as evident by initiatives such as Dodd-Frank, FATCA and new initiatives currently under discussion, we expect to see continued strong demand from these large global financial institutions.

We also see market opportunities in the energy vertical in the hedge fund industry, in the mid-market and from further geographic expansion. In energy, the opportunities around energy trading compliance and in Q4 we signed a contract with another top 10 global energy firm. In the hedge fund industry, new regulatory pressures are taking place due to the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act -- and in Q4 we won our first hedge fund deal with a US-based early adopter of the new requirements. And, in the mid-market, especially in North America, we are seeing increasing demand as smaller companies are playing catch up in implementing compliance and fraud prevention solutions.

Finally, in 2011 our Financial Crime and Compliance solutions continued to win awards and recognition from experts in its market, such as Gartner for web fraud detection, and Chartis for financial crime risk management. Most recently we were pleased to be named, for the third consecutive year, as the leader in innovation in anti-money laundering category in Financial-i Magazine's Award. NICE Actimize was selected for its commitment to product and service innovation and the impressive functionality it delivers to a range of financial institutions.

Let me move onto our Security business. We are very pleased with the performance of this business which finished the year very strongly with good execution.

We had strong booking growth in our Surveillance business, led by our situation management solution which continues to gain interest as an effective solution for the collaboration and streamlining security operations.

We see many opportunities in the Safe City vertical, with increasing demand in developing markets like Latin America and Eastern Europe, along with good momentum in the Critical Facilities vertical.

In the past year we won several seven and eight digit deals in the safe city and critical facilities verticals in Latin America. For example, we won a seven digit deal with a federal organization with very high security needs where we are providing our situation management and video analytics solution in the first phase and our incident investigation management solution in the next phase. These solutions will connect to a number of sub-systems in the facility and will allow the customer to manage incidents in real time and also run post-incident analysis. Our ability to offer complete incident lifecycle management and our role as trusted advisor were key to winning this lucrative deal.

We are seeing strong demand for our abilities in the cyber crime space. In this space our product offering generates cross-selling opportunities and in Q4 we won a large seven digit deal by applying our financial crime and compliance technology to an existing security customer.

We will continue leveraging our comprehensive portfolio of products and solutions as NICE is the only company to offer complete lifecycle management -- prevention and prediction and real time and post-incident analysis -- for security and safety operations.

In closing, 2011 was another year of profitable growth for NICE with strong execution and further expansion of our analytics based solutions portfolio through continued innovation.

The strong finish to 2011 positions us well as we head into 2012 as a rapidly increasing number of customers are recognizing our cross-channel and real time solution capabilities. Customers are proactively looking for advanced capabilities to analyze structured and unstructured data to deliver insights and impact. As the leader in delivering advanced, analytics-based applications to the market, we have a clear focus on helping them tap the wealth of information created from Big Data.

The energy and morale inside NICE is stronger than ever and we are looking forward to another year of profitable growth.

I would like to thank the NICE team for the strong performance in this quarter and the year. And with that, I will turn the call over to Dafna Gruber, our CFO, Dafna.

Thank you Zeevi. I am pleased to provide you with the analysis of our financial results and business performance for the fourth quarter and full year 2011 and our outlook for the first quarter and full year of 2012.

Revenues for the fourth quarter were a record of $214m, up 14% from $187m in Q4 last year. For the full year, our revenues were $798m, which was an increase of 15% compared to 2010.

We reported year over year double digit growth in both our Enterprise and Security businesses.

Our revenues by businesses were as follows. Enterprise revenues were a record $159m for the fourth quarter, up 8% from last year's fourth quarter. For the full year 2011 Enterprise revenue was $605m, up 14% compared to 2010.

Security revenues were a record $55m for the fourth quarter, up 37% from the fourth quarter of last year. As mentioned in the past, the Security business has been lumpy, sometimes resulting in uneven quarter to quarter results. For the full year 2011 Security revenues were $193m up, 16% from 2010.

Moving on to the revenues by region --

Revenues in the Americas in the fourth quarter increased 17% to $136m compared to the fourth quarter of 2010. Full year 2011 revenues were $501m, up 16% from last year.

Our fourth quarter 2011 revenues in Europe, Middle East and Africa increased 3% to $52m compared to Q4 of 2010. For the full year revenues in EMEA were $199m, up 8% from 2010.

The Asia Pacific region continued to show the fastest growth with revenues growing 26% to $26m for Q4 2011. Full year 2011 revenues were $98m which was an increase of 28% from 2010.

For 2011 the America region accounted for 64% of total revenues, EMEA 24% and APAC 12%.

Product revenues accounted for approximately 46% of Q4 total revenues and 45% of the full year total revenues.

Maintenance represented 35% of total revenues for the fourth quarter of 2011 and 36% for the full year compared to 34% for the full year 2010.

Professional services accounted for 19% of Q4 total revenues as well as 19% for full year 2011 and full year 2010 total revenues.

Going forward, we do not expect major changes in our product-services mix on a yearly basis.

Fourth quarter 2011 gross margin was 66.3%, slightly ahead of last year, bringing full year gross margin to 65.5% compared to 65% in 2010. In 2012 we expect the annual gross margin to remain relatively unchanged from the gross margin reported in 2011.

Our operating margin for the fourth quarter was 18.6% unchanged from the fourth quarter of 2010. For Q4, which was the first quarter that Fizzback was included in the consolidated results, we are pleased to have been able to offset the slight reduction in margin through organic growth. And for the full year 2011, the operating margin was 18.7% compared to 17.8% for 2010. We continue to target at least 25% operating margin on incremental organic growth and expect to see continued operating margin expansion in 2012 and beyond.

Fourth quarter 2011 net income increased 15% to $37.6m compared to $32.7m in Q4 of 2010. Full year 2011 net income was up 20% to $134.6m compared to $112.1m in 2010.

The tax rate in Q4 was 11%, resulting from adjustments for final tax payments made -- payments made, bringing the full year tax rate to 15.2%. While we continue to see some fluctuations in the tax rate resulting from our international tax structure we continue to target 17% to 18% as our average tax rate.

Fourth quarter 2011 fully diluted earnings per share was a record $0.60 which was an increase of $0.09, or 17.6% compared to Q4 2010. Full year fully diluted earnings per share was $2.10, up 20% from $1.75 from 2010.

Cash flow from operations was very strong at $53m for the fourth quarter of 2011 and $154m for the full year. Our cash and financial investments were approximately $563m at the end of December, with no debt.

During the fourth quarter we paid $78m for the acquisition of Fizzback. We also used $11m for our share repurchase plan. As of today, and since we began buying back shares, we already used $115m in our share buyback plan.

Turning to guidance, we are introducing today our guidance for 2012. Please note that both the first quarter and full year guidance take into account the acquisition of Merced which was closed last week as well as the share buyback executed so far, but excludes future buybacks that may be executed during the year.

We expect the first quarter 2012 total revenues to be in the range of $210m to $218m, and fully diluted earnings per share to be in the range of $0.50 to $0.55.

We expect total revenues for the full year 2012 to be in the range of $930m to $950m, and fully diluted earnings per share to be in the range of $2.28 to $2.48.

That concludes my comments. I will now turn the call over to questions, Operator.

Thank you. (Operator Instructions). The first question is from Daniel Meron of RBC Capital Markets. Please go ahead.

Thank you. Hi Zeevi and Dafna. Congrats on the ongoing execution. First, Zeevi or Dafna, can you provide just a little bit more color on the organic revenue growth that you expect into 2012 and also what is the expected growth per business line, be it Enterprise, Actimize, and the Public Safety? Thank you.

Okay, so, the -- we expect double digit growth in all our businesses also going into 2012 and our guidance currently reflects double digit growth for 2012.

Is one of the businesses supposed to grow faster and what's the organic growth rates, excluding Merced?

Based on the -- based on our acquisition, we expect the Customer Interaction business to grow faster than the others because not all the growth is organic. When the -- so, we will see higher growth in the Customer Interactions. And when we're looking at organic growth, we expect the -- both in the custom -- in the Enterprise sector and in the Security sector to see double digit growth.

Okay. And then, Zeevi, I might have missed it, but you referred to some issues with the Actimize business. Can you elaborate a little bit more on that and what are the steps that you are taking to address it? And if I missed it, I'll just go back to the replay.

Now, the -- I think you're -- you didn't miss it. We in Actimize, we have seen a growth of low single digit during the year. This is a result of execution issues, primarily in our go-to-market. And we have been addressing these issues, and we expect that the business will go back to its historic growth rate as we move forward. We believe the opportunities are there, the demand from customers are there, and we are listening and hearing the customers that are telling us that they would like to standardize and further expand with us as we move forward.

Not to beat a dead horse, but just a follow up on that. What exactly -- when you're referring to some execution issues, is it more intense competition? Is it the product? Is it just--?

No, no, no, we thought that it was mostly the go to market. Specifically, it was some changes in the sales management team.

Okay. I'll leave it at that and yield the floor. Thank you.

The next question is from Shyam Patil of Raymond James. Go ahead.

Hi, guys. I'll add my congrats as well. I guess, to follow up on Actimize, Zeevi, you mentioned that you expect it to return to historical growth rates. Should we be thinking 15%, 20%, greater than 20%? How should we think about Actimize--?

If you look at the quarter by quarter, look Q4 by Q4, it probably will be 20%. If you looked at full year, we'll have to do a catch up, so it would be a double digit, but a low double digit.

Okay. Great. And then you talked about analytics based solutions becoming more and more important to NICE and you've talked about that for the past several quarters. Could you offer us any details on how much revenue your analytics based solutions contribute today and just what you're expecting either in terms of revenue or growth from these solutions in 2012?

Well, we are not breaking what is in analytics and what is not because, in many cases, analytics solutions are carrying also infrastructure and it is difficult for us to distinguish between the two. So, it's impossible for us to break. But, when we are looking at our own measurement, we are seeing a growth which is an accelerated growth rate in terms of the uptake in these businesses. And when we are looking -- we are talking about the interaction analytics and solutions that are based on the interaction analytics, we are talking about our real time impact solutions and we're also talking about the Situator -- situation management in the security space.

Great and this is my last question for Dafna. Dafna, around the Merced acquisition, could you just help us understand how to think about the linearity of the revenue throughout the year? I know you guys called out that 4Q is going to be more important than the other three quarters. But, just how to think about the progression of revenue from Merced throughout the year.

Yes, what we've said in the past that it's -- Merced is a typical enterprise software model, which a significant part of the license business occurs in the fourth quarter. And because of that, we would see some linearity in the business throughout the year with the fourth quarter being much significant in revenues than the rest of the year.

Great. Thank you.

The next question is from Paul Coster of JP Morgan. Please go ahead.

Yes, thanks for taking my question. Dafna, I think you said 35% of revenues is now coming from maintenance. Can you hazard a guess as to, of the remaining business, how much of it is sort of recurring in some way, shape, or form? Whether it's sort of sales to existing customers, upgrades that are fairly predictable now or similar?

Most of our revenues to every quarter is from existing customers. So even new licenses and professional services, the majority of them are coming from existing customers of NICE.

We also have -- and I think maybe this is what you also refer to, we have a growing element of the recurring revenues in SaaS and hosting model. It's still, I would say, a few percentage out of both, mainly on service, professional service line, but also some term license deals in our license revenues. As I said, it's a few percentages, still below 10%. But, it's growing very fast, and hopefully during 2011 we will be able to -- it will reach a critical mass that would require us to report it.

There is a great contribution to the recurring revenue model with the acquisition of both Fizzback and Merced. In both these businesses, the portion of recurring business is very high.

Very good. And then what assumptions have you included in your guidance regarding the European outlook and financial services in Europe in particular?

We -- when we looked at the guidance, we looked at Europe being more of the same. So, we didn't look for recovery, but we didn't look for deterioration.

Okay. And then my last question actually is on the SaaS front, which you've already alluded to, Dafna. Are you seeing any competitive pressure there? As you move forward, are SaaS based business models the most likely acquisition targets?

I will take the question, Paul. We are, first of all, I think competition in all forms. So, we always had competition, and we also seeing competition on SaaS. So, we don't see any particular competitive pressures on our SaaS offering more than on our perpetual license ones.

Okay. Thank you.

The next question is from Jonathan Ho of William Blair. Please go ahead.

Good morning. Congratulations on the great quarter. Just the -- in terms of the Security business, can you talk about some of the factors that drove the particularly strong growth in the fourth quarter and, just given some of the lumpiness there, how we should think about that as we take a look at the first quarter?

When we're looking at Security, we had a very strong quarter this quarter. It is -- we said that this business tends to be lumpy and we expect that -- well, we expect the overall Security business to grow in the double digits next year. If you will make the math, you will see that this quarter was a bit exceptional in terms of the revenue number.

Well, was there anything in particular that drove that strength in the quarter; a large deal or milestones or anything that you can maybe give us some color on?

As you know, part of the business, or the revenues in Security is coming from longer term deals; deals that are spread over a few quarters and usually, in order to finish them or finish a milestone, when we finish milestones, we get approvals for the deals. And there was a good combination of deals that was executed and this is why we had the high revenues in the quarter.

As we said earlier, because of this type of business, there might be fluctuations. But, we feel comfortable to say that this business should grow at double digit growth going forward as well if we look over time, Not quarter on quarter, but on I would say rolling four quarters.

Great. And then just a kind of a high level question. You guys said in your prepared remarks that you're looking at some of the financial crimes and cybercrime potentially as a growth area. Are you intending to extend your product line into that area, or do you see some new opportunities to move into the cyber security space? Just trying to understand what the strategy is there.

With the Situator and with the Actimize solutions, we are already active in the cyber security space and there we believe that, based on demand, these areas will grow. And we will see further growth by introduction of new products in this space.

Great. Thank you.

The next question is from David Kaplan of Barclay's Capital. Please go ahead.

Hi, everyone. Good afternoon. I also have a very high level question here. If you look at the trends in tech and on customer CapEx spending to deal with the back end and big data issues that they're all dealing with, can you talk a little bit about how that's impacting your R&D profile and your product profile and what it is that you're doing in order to help your customers deal with that?

I mean our entire focus is -- and most of our new offerings, if not all, are looking at the analytics based solution on the structured and unstructured data. And the unique approach of ours and where we differentiate ourselves is that our solutions are providing things in real time and we are doing things in a cross-channel. So we are looking at the information that is coming from these multiple channels and we are doing it on the individual level.

And we have also a fairly large capability on the unstructured data in areas like voice and video, which we believe are unique. And this is -- most of our focus and most of the opportunity that we have across business lines is to deal and to help our customers with the big data, dealing with their big data problem and providing solutions which will enable them to improve performance, to ensure compliance, to improve the customer experience, and to safeguard people and assets.

Okay. So, if I were though to try and quantify that in some way and I were to think about the number of transactions that your customers are dealing with, are the numbers that they're dealing with growing and is it therefore putting pressure on some of your software solutions or requirements for your software solutions that will require further CapEx or R&D investment on your part in order to help your customers deal with that more efficiently?

Obviously, we are -- if you look at our products and you look at demand for products, we are seeing growing demands and growing demands for larger scale platforms and this is, by the way, where we are in our technology excels. And as the demands are increasing, we are developing larger and larger scale solutions to meet these needs and therefore, it puts pressure on our R&D, but this is something that we are happy to have because there is also a large opportunity that comes with that and therefore, for us, we are seeing it more from the opportunity side than from the pressure side.

Right. I think we'd all like to see organic growth at NICE be a bigger portion of the growth of the business. And I guess if we look at 2011, where there was around 13% of revenues were spent on product development, is that the number you're looking at going forward, or do you think that could increase?

I think that, over time, we will see the number of the R&D spending would be about the same. By the way, our R&D spending includes -- we exclude things like product management from R&D spending. So, R&D spending, if you take some of the internal product management activity, it's a bit higher than the 13%. 13% is pure R&D.

Great. Thanks a lot.

The next question is from Michael Kim of Imperial Capital. Please go ahead.

Hi guys. Just to clarify on the guidance, are you continuing to look from Merced revenue somewhere in the range of $55m and $0.10 increase in this year as well as $0.02 to $0.03 dilution in the first quarter? Thanks.

Yes.

Okay. And then also with Fizzback, are you also looking at something in the -- I guess the similar ranges that you talked about previously in the --

Yes.

-- $20m for the year.

Yes.

Yes. But, you have to factor in that we've already recognized a couple of million dollars of Merced on the fourth quarter.

Right, okay. And are you looking at Fizzback to be slightly dilutive still or--?

Yes.

Okay.

My last sentence was about -- I said of Merced. It's for Fizzback. We recognized a couple of millions of Fizzback on the fourth quarter, not Merced. Could you repeat your question please?

Sure. So, for Fizzback, I think you guys had previous talked about Fizzback in 2012 being slightly dilutive. Are you tracking a little bit better than that or in line with that previous comment?

Well in line with the previous comments about this business that would be dilutive, be accretive after the four quarters from the acquisition.

Okay. Great. And then can you clarify or provide a little more color on the backlog mix? It sounds like we have a little stronger visibility on bookings from the Enterprise side than security. But, any additional color you can provide on the backlog mix?

We have some more backlog coming from acquired companies and since the last two are in the Enterprise space, that had a contribution to backlog. But, in general, I don't -- there is no major difference between the portion of any business in our backlog.

Okay. And then one last housekeeping question. Are you assuming any FX currency headwind or tailwind for the year?

What we see is already embedded in the guidance where we have certain hedging plans in place to keep -- to secure the expense level. Obviously, there will be significant differences from current exchange rates and well, it will have some impact. But what we see now is already embedded in the guidance.

Okay. And I'm sorry, what are you assuming in the guidance?

In the guidance we provide for the year, we're assuming the current exchange rate plus the impact of the hedge plans we have in place.

Great. Thank you very much.

There are no further questions at this time. Before I ask Mr. Bregman to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin in two hours. In the US, please call 1 888 782 4291. In the UK, please call 0800 917 4256. In Israel, please call 03925 5921. And internationally, please call 972 39 25 5921.

Mr. Bregman, please go ahead with your concluding statement.

Thank you everybody for joining us today and have a nice day.

Thank you. This concludes the NICE System fourth quarter and full year 2011 results conference call. Thank you for your participation. You may go ahead and disconnect.