Nice Ltd (NICE) 2012 Q3 法說會逐字稿

Welcome to the NICE Systems conference call discussing third quarter 2012 results, and thank you 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, October 31st, 2012.

I would now like to turn the call over to Mr. Marty Cohen, Vice President Investor Relations at NICE. Please go ahead, sir. Thank you.

Thank you, operator. With me on the call today are Zeevi Bregman, President and Chief Executive Officer, Dafna Gruber, Chief Financial Officer, and Eran Liron, Executive Vice President, Corporate Development.

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 actual results or performance of the Company to differ materially is contained in the section entitled Risk Factors in item 3 of the Company's 2011 annual report on Form 20-F as filed with the Securities and Exchange Commission on March 31, 2012.

During today's call we will present a more detailed discussion of third quarter 2012 results and the Company's guidance for the fourth quarter and full year. 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 difference between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release.

With that, I now turn it over to Zeevi.

Thank you, Marty, and welcome, everyone, to our third quarter 2012 earnings call.

Once again, NICE reported solid quarterly results. Non-GAAP total revenue was a record $221 million, up 10% compared to the third quarter of 2011. Non-GAAP EPS for the Q3 was a record $0.64, representing an increase of 19% compared to the third quarter of last year, and ahead of the high end of our guidance range.

Our book-to-bill ratio was slightly below 1, and our backlog remained strong, at more than two quarters of revenues.

We expect a strong fourth quarter for both booking and revenues. While the macro environment continued to be challenging, resulting in longer sales cycles, our Q4 pipeline is stronger than ever, and we are expecting a strong finish to the year. And for 2012 to be another year of profitable growth for NICE.

Much of our growth is driven by our analytics-based solutions, which helped organizations meet the challenges and the opportunities presented to them by Big Data. With our analytics-based solutions, NICE is effectively addressing all four Vs of Big Data -- volume, velocity, variety, and value.

On volume, NICE analytics solutions analyze massive amounts of structure and unstructured data. Our largest customer for interaction analytics is processing close to 200 million interactions per month.

On velocity, NICE analytics solutions are fast, providing data analysis, decisioning and guidance in lead time, giving our customers the ability to make an impact at the decisive moment, as the event occurs.

On variety, NICE analytics are cross-channel, meaning our solutions analyze data coming from multiple sources such as voice, chat, e-mail, video, social media, Web and financial transactions.

On value, our solutions have a proven strong return on investment by helping our customers improve operational efficiency, better adhere to compliance and regulations, enhance the customer experience and provide increased protection and security for people and assets.

We continue to see further expansion of our analytics solutions within our customer base. Moreover, our analytics solutions, especially our real-time solutions, are becoming closely tied to the operations of our customers. They serve many functions within the organization, and touch many of the employees.

Moving on to our Customer Interactions business, we see strong demand for analytics-based solutions in the customer interactions space, to help our customers, one, comply with regulations, two, help them improve internal operations, three, provide a better experience for their customers, and four, combat fraud, which has become a high priority for our customers.

On regulation, Dodd-Frank is currently having a large impact around trading and consumer protection, and we expect it will continue to provide opportunities for us in the future as well.

For trading operations, the sophisticated requirements for trade reconstruction investigation led to a very strong bookings quarter in Q3. We closed many deals with top US banks, and see great opportunities to continue to expand our presence in these accounts by up-selling more compliance analytics. We see similar opportunities with financial institutions outside the US, whose trading floors do business with the US. We signed one such deal in Q3, with a major brokerage house whose European trading business regularly interacts with its US-based trading business. And finally, trading compliance for mobile transactions represent another opportunity. One of the deals this past quarter with a major US brokerage house included a mobile company. Mobile recording began in Europe, and is now expanding to the US.

The compliance demands from contact centers are becoming more aligned with those seen for trading floors, as consumer financial protection regulations have far-reaching implications. Given that keeping evidence for regulatory compliance is required by law, companies are adopting a 100% recording approach. Next, there are requirements such as validating the suitability of the financial offer, clear and personalized disclosure of the product or service terms, and the documentation of the offer made. These are all addressed by our solutions' abilities for reconstructing the chain of interactions related to a specific transaction, and providing the agent real-time guidance to ensure process adherence.

Now, let me move to another area, which is helping our customers improve internal operations and provide a better experience to their customers. This is being achieved with our full suite of cross-channel analytics solutions, from speech analytics to real-time guidance. The proof of the growing demand for these solutions is there, evidenced by the increasing amount of customers expanding their analytics deployment to cover larger parts of the operations. One such deal I can mention was a seven-digit deal with a major financial institution to implement analytics for around 10,000 agents. Analytics are still very underpenetrated within the thousands of our customers in the contact center space.

The fourth area I mentioned is fraud. While there have been big investments to date around Web security, the contact center has been somewhat neglected in this area, leaving it highly vulnerable to fraud. As a result, we are starting to see the next wave of anti-fraud investments being made in the contact center. We are capturing this opportunity with our Contact Center Fraud Prevention and Authentication solution. Our solution takes a real-time, multi-layered approach to fraud prevention. It utilizes cutting edge voice biometrics to match the voice of the caller against a fraudster match list, as a first layer of protection. Interaction analytics are used as another layer of protection, to identify fraud patterns and social engineering attempts based on real-time speech analytics, emotion detection and analysis of agent desktop interactions. We are seeing active interest from customers globally for this solution. In the area of fraud, we have a strong competitive edge in our industry, because we can provide customers with unique solutions that combine our expertise in both customer interaction and financial crime and compliance.

Finally, we recently announced an expansion of our Big Data offering through a partnership with IBM. This expanded offering is enhancing our abilities around Big Data analytics, in order to help companies leverage in real-time the structured and unstructured data gathered from customer interactions that take place across multiple communication channels.

Moving on to our Financial Crime and Compliance business. The growth drivers remain strong, and the pipeline is healthy. At the same time, we did experience a few instances that -- where it took longer to close certain deals. And this led to slightly lower than expected Q3 revenues in this business.

We remain confident about the strength of our financial crime and compliance business, and expect a strong finish to the year.

Lastly, we hosted approximately 350 participants at our NICE Actimize Annual Client Forum held in New York. The insights that customers and industry analysts shared with us clearly reinforced our strategy and roadmap. We also received good feedback on the Redkite acquisition, which I will elaborate on later.

There were a lot of sessions covering cybercrime. If it becomes clear that the same technological changes that are enhancing convenience for the consumer - for example, mobile applications and emerging payment methods - are also creating additional exposure to risk, and allowing more sophisticated fraud schemes.

We also heard a lot of discussions around cloud-based financial crime and compliance solutions. Financial institutions have become more receptive to SaaS than in the past, as reducing deployment time and lowering total cost of ownership have become more critical. While cloud-based solutions have always been more accepted among mid-market and smaller financial institutions, tier-1 firms are also now moving more to the cloud, to complement their main on-premise installations with cloud-based solutions for smaller, remote locations.

We also heard a lot about broader and deeper regulations in all areas of our business - Fraud, which is starting to draw more attention from regulators, AML, which remains a hot topic due to recent increased enforcement, and trading compliance, where financial institutions face additional regulations for real-time, intraday monitoring to support high frequency trading.

And, speaking of cloud and trade compliance, this brings me to the acquisition we announced last week. The acquisition of Redkite will put us in a strong position to benefit from the adoption of cloud-based trading surveillance, and gives us the ability to immediately provide our customers with real-time, intraday trade surveillance. Combining this technology with our leading enterprise trading compliance solution suite and platform will greatly enhance our offering and open up many more opportunities within and outside our customer base.

As I mentioned, our pipeline is strong across our solutions. We also continue to see good momentum in the mid-market. We believe that the upcoming deadlines and subsequent enforcement of many of the new regulations will benefit our business even further in the mid-term.

Let me move on to our Security business, which had another strong bookings quarter, a greater than 30% increase compared to Q3 2011.

The increase in bookings is resulting for the last -- the rapid technological changes that are elevating not only financial crime, but also other crime and terrorism risks. In today's environment, cyberspace and mobile technologies pose significant challenges for governments as these technologies are being increasingly used as a means for cybercrime, terrorism, and other security threats. We at NICE have unique technology and solutions around cyber intelligence and accurate mobile location tracking, and this, coupled with the strong demand in the market, has led to good results in our government business. For example, in the past two quarters, we signed two strategic 8-digit deals with prime agencies in developed countries related to these technologies.

In the surveillance business, we signed in the third quarter, our first situation management deal with a major city in the US, which includes both Situator and NICE Vision. We are providing solutions in the public safety domain to the majority or the large US cities, and this presents another opportunity to upsell our situation management solution.

In closing, our opportunities around Big Data are growing. We continue to strengthen our domain-leading position in Big Data analytics through further product development, strategic partnerships and acquisitions. Our best in class real-time analytics solutions provide our customers with the capabilities to better extract value from Big Data. This helps them to understand what is transpiring from within, across and outside their organizations and to better support their mission critical operations. This enables our customers to meet the challenges around compliance and regulation, fraud prevention, safety and security, and organizations' needs to improve operations and enhance the customer experience amid rapidly increasing social media influence. Our broad offering of analytics solutions is where the future growth lies for NICE.

I would like to thank the NICE team for their work in the quarter. I will now turn the call to Dafna Gruber, our CFO. Dafna?

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

Revenue for the third quarter reached a record of $221 million, up 10% from $200 million in Q3 last year. Our enterprise business revenues totaled $171 million, up 13% from Q3 2011. Of that total, customer interaction revenues were $141 million, and financial crime and compliance revenues were $30 million.

Security revenues were $50 million, up 3% from $49 million in the third quarter of last year. Security revenue continues to be uneven from quarter to quarter, due to the large project involved.

Moving to the regional breakdown, revenues in the Americas in the third quarter of 2012 increased 6%, to $135 million, compared to the third quarter of last year. Revenue in Europe, Middle East and Africa increased 11% to $55 million, compared to Q3 of last year. And revenue from Asia/Pacific region was $31 million, up 28% from Q3 2011.

For the third quarter, the America region accounted for 61% of total revenues, EMEA 25%, and APAC, 14%.

Product revenues in Q3 accounted for 42% of total revenues, while maintenance represented 37% of total revenues. Professional services, including SaaS and hosting accounted for the remaining 21%.

The 2012 third quarter gross margin reached 65.6%, compared to 64.6% in Q3 last year.

We continue to show sequential growth in margin. Our operating margin for the third quarter of 2012 was 19.1%.

Q3 taxes benefited from the filing of certain income tax return and reflected a favorable geographical mix in our income, leaving tax at $4 million, or 9% of income.

Third quarter 2012 net income increased 15% to a record of $39.7 million, compared to $34.5 million in Q3 last year.

Third quarter 2012 fully diluted earnings per share was a record $0.64, which was an increase of 19% compared to $0.54 in Q3 2011, and better than we had expected. The improvement in EPS is a combination of better than expected operating margin, lower tax expenses, and continued positive impact from the share buyback plan.

Cash flow from operation was $12 million in the third quarter. Our total cash and financial investments were approximately $422 million at the end of September 2012, with no debt.

Headcount at the end of the third quarter totaled to 3,371 people, compared to 2,993 last year, and 3,125 people at the end of December last year.

During the third quarter, we also paid about $28 million to repurchase approximately 860,000 shares as part of our share repurchase plan. In the first nine months of 2012, we repurchased a total of $2.7 million for $94 million -- sorry, 2.7 million shares for $94 million.

Last week, we completed the second $100 million program announced in November 2011. Our Board has just approved a third share buyback program to buy up to $100 million, which we will begin executing in Q4, and plan to continue throughout 2013. Since we began repurchasing shares in 2011, and up until now, we have bought back a total of approximately 6 million shares, for $200 million, and thereby reduced our share count by 9%.

Turning to guidance, please note that both the fourth quarter and full year guidance take into account the share buyback executed so far, but excludes future buybacks that may be executed going forward.

We expect the fourth quarter 2012 total revenue to be in the range of $237 million to $257 million, and fully diluted earnings per share to be in the range of $0.64 to $0.69. We now expect total revenues for the full year 2012 to be in the range of $890 million to $910 million, and better than previously expected, fully diluted earnings per share to now be in the range of $2.41 to $2.46.

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

Certainly, thank you. (Operator instructions) Okay, our first question is from Shaul Eyal of Oppenheimer & Co. Please go ahead.

Thank you, operator. Good afternoon, Zeevi, Dafna, Marty. Two quick questions on mine. So, clearly, seasonality has been playing in more for this year, kind of looking back at the second quarter guidance. But as you project back on the third quarter and looking into the fourth quarter, what are we seeing from a cash flow perspective, from a bookings perspective? And maybe it's too early, but any initial thoughts on 2013 guidance at this stage?

So as we clearly indicated, we are forecasting a very strong fourth quarter, in bookings, in revenues, and also in cash flow. The seasonality, we always have Q4 and Q1 as very strong for our cash flow, and the lower cash flow in Q2 and Q3. So we expect a strong Q4 in all financial parameters.

As it relates to next year, we expect that next year will be another growth year for NICE. The exact magnitude of the growth, we will share at the -- at our next earning call, when we provide guidance for the year.

Got it. And with respect to your geographical breakdown this quarter, seems to me that, contrary to other companies in the tech space and probably last quarter, Europe had seen kind of a little bit -- or has been staging a little bit of a comeback. Is that being driven, for example, by the eight digit contract you announced just minutes ago on the deal, or some other contracts basically coming back that were slipped from the second quarter?

So the contract that we announced, on the deal, we didn't say that it's in Europe, and also, it didn't get to contribute yet in a major way to our revenues.

When we look at Europe, we see growth in Europe, and we are happy to see growth in Europe. And we expect to continue to have growth in Europe. But when we are looking at the regional growth, I think that we should look more at the year to date trends, and less on the quarterly trends. Still, it has shown nice growth in the -- in our EMEA region, which is Europe and some emerging markets, where we also saw some growth.

Got it. Okay, thank you very much for now.

Thanks very much for your question. Our next question is from Daniel Ives with FBR. Please proceed with your question.

Yes, just for Q4, what type of closure rates are you looking at relative to historical, in terms of guidance? And have you factored below average, normal -- I mean, just given what we've seen over the last few quarters. [I'm trying] to have an understanding (multiple speakers) --

Daniel, the way we look is, we are looking at our pipeline and analyzing the pipeline, and some of the adjustment of the conversion rate in the pipeline was done by our sales force. We are -- already, it's done by our sales forces. We are looking in a more diligent way the different deals, and part of it was done by our model, by changing the model of closure rate.

Okay, so Q4 already reflects like -- within a more conservative closure rate than we've seen historically?

That's -- that is our assumption.

Okay. Just -- well, could you just talk -- when you talk about the pipeline on the security deals, specifically on the larger ones, I mean, where are we? I mean, obviously, you're not going to give numbers, but are we getting closer now that you've had some success, but are we starting to get closer to seeing more of these deals come through? Maybe just anecdotally talk about where we are in the sales cycle in terms of the larger security deals.

We always said about our security deals that this is a lumpy business. And also, we have to be careful. We were very successful at the first three quarters of the year, in terms of securing deals and increasing the booking, and we are very happy for it. We have a lot of large deals in the pipeline. It's very difficult to forecast when these deals will close. We have our model, but this is the part that is most difficult to have a model within our pipeline.

So the large security deals, we have a very healthy pipeline there. In terms of closure rate, it's very lumpy.

Good. Thanks.

Thank you very much for your question. Our next question is from the line of Mr. Daniel Meron, RBC Capital Market. Please proceed.

Thank you. Hi, Zeevi, Dafna and Marty. Couple questions on my end. First of all, can you give us a sense on the regional dynamics that you're seeing right now as far as demand per solution group? I mean, is security seeing better trends in Asia/Pacific and Americas versus Europe, or -- you know, is Actimize seeing a little bit better closure rates in Europe or Americas right now? If you can just give us a little bit more per product line. Thank you.

So maybe we'll look at the -- we'll try to give more color on a regional basis. Overall, our -- we look at our market, overall, the US market is a more sophisticated market. And therefore, we -- usually the pipeline for analytics-based and the advanced analytics-based applications is usually stronger in the Americas, where we are really deploying innovation. Where in the rest of the business, we are seeing more, more end market, say, and larger demand to both applications, but also to our traditional business. And when we look at the pipeline, generally we see a very strong pipeline to our analytics applications, across the board.

And when we come to Actimize, there are a few differences, where -- because part of the regulation is global, as the banks that are trading with the US have to comply with US regulations. But part of the trends and part of the drivers are regular -- are local regulation. For example, part of our demand right now in the European market is driven by the ESMA regulation for intraday trading, which is obviously Europe-specific. It does not exist in America. We believe that it will -- at some point, will be implemented in America, but it will take time.

When it comes to security, on the large deals - we have pipeline across the board, and since we are talking about large deals driving regional behavior based on these deals, it's very -- it will not lead to any accurate conclusions. The cyber-security solutions that we are providing are more going to the sophisticated and developed countries, while the basic monitoring solutions are going to the emerging markets that we serve.

That's very helpful, Zeevi. And maybe Dafna, on the guidance, just trying to clarify something here. The range that you provided for the fourth quarter is about plus/minus $10 million to both ends, versus the typical $4 million or even $5 million that you're typically providing. Is there anything to read into that? Is it because of the (inaudible) or any major deals that may swing -- may be swing factors here?

Yes. Well, when we enter Q4, it's clear to us that we expect a very strong booking, and as a result, also good improvement, good increase in revenues. And it -- the pipeline is very big. And the range is actually a reflection of whether it's going to be a very good or excellent quarter.

There is a wide range, because there is still -- there is an environment around us, macroeconomy that might impact, and we prefer to take a more conservative assumption.

Okay, that's helpful. And then, just to follow up on that, can you provide us with a little bit more color on the linearity in the third quarter?

Usually, in terms of booking, there is certain linearity where in the last month of the quarter, we generate a larger portion of the business. And that is pretty consistent in all our quarter.

Q3, maybe a bit more than usual, because of the summer holidays that are taking place in many parts of the world. So --

Okay, understood. Thank you. Good luck.

Thank you.

Operator, next question?

Certainly, thank you. Our next question is from the line of Shyam Patil of Raymond James and Associates. Please go ahead, thank you.

Hi, thank you. When we look at kind of the guidance for the year, it seems like you're expecting mid-single digit organic growth. When you look at the next year -- I know you're not giving guidance, but do you think it's realistic to get back up to, say, double digit organic growth, or is that not possible in the current environment?

Our model is to be in the two digit organic growth. This is where we are aiming. This is where our plan. There might be some gaps in a certain period, but this is our plan, and this is remaining to be our plan.

In terms of next year, we definitely said, we believe that it's going to be a year of the growth. The extent of the growth is something that we'll share in the next earning call.

Got it, okay. And then on Actimize, can you talk a little bit about just what's going on here, and what's impacted the revenue? It seems like it's down sequentially, and maybe year over year as well. And then how Redkite fits in with the current business?

Well, maybe first, Actimize results this quarter are below our expectations. We do see an increase on the bookings on a year over year, a nice double digit growth on the bookings year over year. And we believe that the business will grow in a double digit, is expected to grow in a double digit pace. And we are expecting also a very strong Q4 in Actimize. In terms of this year, we might -- we have the possibility to reach a double digit growth. We might end up in a high single digit.

In terms of the overall business, what happened in Actimize is that it took us longer to close some deals. Some of them already have been won and are being closed as we speak. And we are confident about the momentum in this business, as evident by the last week conference, client conference that we had. It was well attended, and with a lot of traction in the room.

In terms of Redkite, what Redkite provides, it provides us several things that are complementing our offering. One is the ability to provide a cloud-based offering, which will reduce the deployment time for new regulations to our clients, which is something that they are really aspiring to. It provides them the ability to deal with the country-specific regulations in different countries around the world to support the global operations, while maintaining their corporate processes and corporate oversight on the regulation implementation. It provides us to access the mid-market, and it provides us with capabilities to deal with the emerging trend of regulation, to deal with high frequency trading, which requires things like intraday, that the technology of Redkite is providing us.

And we overall believe that this is complementing our offering and our technologies in these areas, and we are very -- we believe that it's going to be a very strategic integration in our compliance business, and we are very -- we are looking forward to serve our customers and new customers with these features and capabilities.

Thanks, that was helpful. And then, just a couple of quick ones for Dafna. Dafna, how should we think about the gross margins in the fourth quarter and the tax rate as well, maybe in the fourth quarter and beyond?

Yes. Regarding gross margin, we have our gross margin ranges between 65% to 66%, sometimes a bit higher than that, and that should be the range for our margin going forward.

Regarding taxes, we had, I would say, one time phenomena this quarter, where taxes were substantially lower than the usual one, and I -- the best thing to do is to go back to -- in terms of modeling, is to go back to the range that we had before, 17%, 18%. We are currently working on our assumptions and our overall tax planning, and we'll come up and update probably -- we'll probably make a certain change to this model next quarter.

Okay, thank you.

Thanks for your questions. Our next question is from the line of Jonathan Ho, William Blair. Please go ahead with your question. Thank you.

Good morning, guys. Just in terms of the deals that you saw this quarter, did you see a significant number that got pushed out in your core enterprise as well, just given that you said the book-to-bill was below 1, and yet it seems like the bookings was pretty strong in security and Actimize?

We have seen deals where -- we are measuring every quarter the deals that were pushed out from the quarter to the following quarter. There is a large number of deals. It is -- it's pretty much at the same level that it was in Q2.

Got it. And just in terms of the cloud-based opportunity that you guys talked about, can you give us a sense of how quickly that's growing, and perhaps how big of an opportunity you see that as being, longer term?

We believe that the SaaS is going to be a growing area in our offering, and we'll grow the -- if you look at the model of SaaS, the growth is more -- the revenue recognition is taking longer. So when it comes to growth, the deals that we are coming are -- coming in a few quarters, and not in a single quarter, the deals that we are winning. We believe that it's going to be a major -- it's going to be an increasingly important part of our offering, and we believe that this is an area that we'll see growth over time.

Got it. Thank you.

Operator, any more questions?

Thank you for your question. Our next question is from the line of Brian Ruttenbur with CRT Capital. Please go ahead. Thank you.

Thanks very much. I wanted to talk a little bit about European sales, and the outlook, if you could address that. Specifically, what you're seeing in terms of the different divisions in Europe, where there's slowdown maybe by customer type, or where there's a pickup, especially since last quarter, what you're seeing. I'm trying to understand trends since last quarter. There seems to be a drag in Europe. And where you've seen a pickup.

We are selling to a small part of the market, and for us to provide the macroeconomic trend is above our position within the market that we serve, although in Europe, we have seen a strong quarter in Europe. When we discuss the situation with customers, we see stability in terms of the situation, and we don't see deterioration. We also cannot really say that there is an improvement, but we also cannot say that there is a clear deterioration, but this is from the -- from where we look at the market.

When we should remember that the EMEA business is -- has -- part of it is Southern Europe, but it's only a part. It's broader -- it's Central Europe, and Northern Europe, and the Eastern Europe, and the Africa and the Middle East as well, which are less impacted by the macroeconomy that we are all reading about in the newspapers.

So this is overall the European trends, in terms of -- it's also difficult for us to speak about the specific sectors within Europe.

Okay. Can you talk about, at least, since last quarter, where you had some weakness in Europe, and where you're seeing strength this quarter versus last quarter? Can you (multiple speakers) --

I didn't say -- first, we didn't see any weakness in Europe. I said that overall, we are seeing weakness, not --- also in Europe, we didn't say that specifically in Europe -- we said that there is a weakness, that we don't see weakness in APAC. So I don't think that we characterized the specific weakness in Europe in the last quarter.

In terms of changes, there is a certain improvement in terms of -- revenue is up again. I think that the -- I recommend that you look at the year to date figures for the different regions to analyze trends and not on quarterly trends.

Okay. And then, just as a follow up on the security side of the business, can you talk about geography, if you're (inaudible) government versus civilian customer, have you seen any slowdown or pickup in any of the countries on the government side, the normal -- abnormally slow or abnormally strong this time of year?

We are operating on the security on a global basis, and overall, there are different -- each country is a macro -- a cosmos by itself here. So there are some political changes that are changing different countries, and this is part of the reasons for the lumpiness in this business, and part of the reasons why it's very difficult to predict it going forward. And therefore, it's very -- it's not the place to speak about the trends, it's -- we are seeing demand, as I said before, to a cybersecurity, sophisticated solutions in the developed countries, and we are seeing demand for monitoring equipment and situation management in the developed countries. And basically, it can change from -- the timing of projects, can change from one country to another, even within the same region.

Great. Thank you very much.

Thank you very much for your question. Our next question is from the line of Michael Kim with Imperial Capital. Please go ahead. Thank you.

Hi. Just turning back to security, are you seeing some expanded opportunities with other major cities specifically for situation management, and was that the primary driver of the strong bookings in the quarter for security?

Well, for the way that the city deals in security are going, that the initial deal is relatively -- I would define it as a midsize, and then there is a potential for expansion. So this is not what -- this is a deal which is a significant deal, more by its strategic value than by its revenue value. But we believe that the revenue will come in the future.

We are, as I said, we are currently, with our public safety offering, representing the majority of the US -- the top 80 or top 100 metros. And these things, a clear upsell opportunity for us in these accounts.

And in general, for security, are the deals becoming a bit larger? How is that changing the sales cycle or the closure rates for security?

Obviously, the deals are becoming -- the security deals are becoming more, becoming larger and more sophisticated. This means that the -- but we still are enjoying a lot of business which is small, relatively small deals and expansions.

Obviously, when we are talking about more sophisticated applications and more sophisticated solutions, the cycle, the sales cycle is a bit longer, as more budget is required, the approval is tighter, and the evaluation is more -- so -- the deal is taking longer. This is the reality that we are experiencing for the last few years.

And are you seeing any diversions between the developed markets and the emerging markets, given the sophistication of these solutions?

That's what we are seeing. Clearly, in the developed market, people are looking for more sophisticated solutions. In the emerging market, there is a demand for the sophisticated solution, but there is also still a very strong demand for the more basic solutions.

And then, just one on guidance for the fourth quarter. Is it your expectation that the mix in the quarter will be fairly similar to 3Q, or it sounds like Actimize might be a little heavier within that mix?

Overall, the pattern of large deals in the fourth quarter apply more to organizations, and it applies to governments. And therefore, we do expect a stronger -- that the jump in the booking will come from our enterprise customers, either in the customer interactions or in Actimize. On the booking side, part of the growth is coming from our existing customers and maintenance contracts are also for renewal during this quarter, which reflects in the bookings.

So overall, we believe it will be, across the board, maybe more with our enterprise -- in all our enterprise domains, and then in security, but it will be across the board.

Okay, great. Thank you very much.

Thank you, ladies and gentlemen, for your questions. That concludes the Q&A session for now. I would now like to turn the call over to Mr. Zeevi Bregman for closing remarks. Thank you.

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

Thank you very much, ladies and gentlemen. That concludes today's conference call. You may now disconnect your lines. Have a good day. Thank you.