Nice Ltd (NICE) 2013 Q1 法說會逐字稿

Welcome to the NICE Systems conference call discussing first quarter 2013 results, and thank you, all, for holding. (Operator Instructions). As a reminder, this conference is being recorded May 8, 2013.

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

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 those 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 25, 2013.

During today's call, we will present in more detail a discussion of first quarter 2013 results and the Company's guidance for the second 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 and amortization of intangible assets and accounting for stock-based compensation. The differences between non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release.

I will now turn the call over to Zeevi.

Welcome, everyone, to our first quarter 2013 earnings call.

We are pleased with our results for the first quarter. Non-GAAP total revenues were $225 million, up 4.5% compared to the first quarter of 2012. Non-GAAP EPS for Q1 was $0.61, representing an increase of 7% compared to the first quarter of last year.

I just returned from our annual customer conference, which was our largest ever with 2,000 participants. I spoke to many of our customers throughout the event, and there are some observations worth noting.

First, our strategy of providing our customers with real value-added solutions to help them improve business results is gathering momentum within our customer base. More and more customers continue to implement an increasing number of solutions from our broad portfolio of applications. Around 70 customers presented at the conference on how the NICE solutions are supporting their business needs.

Secondly, improving customer experience has become a top focus for our customers. In many cases, these initiatives are driven by the CEO, who sets clear and measurable objectives for the organization. Many of the conference sessions presented by our customers centered on the use of our solutions to improve customer experience.

Thirdly, in conjunction with the growing number of application implementations, we are noticing that a wider array of managers and operational areas outside the contact center using our analytic solutions to help them solve various business issues and operationalize the insights gathered from our solutions.

And, finally, compliance remains an area of high interest, as evidenced by the crowded compliance-related sessions.

Other crowded sessions were around cloud and hosting, mobile, social, and cyber, all areas in which we continue to invest.

We continue to significantly expand our product portfolio as part of our strategy to continue to offer our customers the best solutions to address their business needs. Our focus for this conference was to present our next-generation sales of solutions around big data, where we focus on analyzing massive amounts of structured and unstructured data such as human speech, video feeds, and data streams; deliver solutions that capture and analyze the full cycle of an event before, during, and after; deliver solutions that solve real business needs and generate proven ROI; and help our customer better understand the individual's preference and behaviors with our newly introduced solution that maps the entire journey across channels.

Some of the next-generation solutions represented at our customer conference were our Proactive Compliance suite for consumer protection, which enable organizations to effectively manage compliance across the enterprise, prepare for CFPB audits, and meet continuously changing regulatory environments; the industry's first full cloud-based Workforce Optimization suite; Situator Express, a situation management solution that enables organizations to monitor, manage, and correlate data from four principal security systems -- video, access control, intrusion, and file detection -- at a low total cost of ownership; and our recently announced Customer Engagement Analytic platform on which I will elaborate later.

In our Customer Interactions business, we recorded year-over-year double-digit growth in bookings, which we expect to support continued future revenue growth. We also had a year-over-year increase in advanced applications and in deal size, reflecting more strategic but also more complexity. We continued to witness longer booking to revenue cycle, as we indicated in the past, due to the evolution of our business model towards more advanced applications, SaaS and hosting.

We have often talked about providing our customers the ability to improve customer experience and business results by better understanding their customer behavior and preferences with our cross-channel analytic solutions. We have greatly expanded these capabilities with our recently announced Customer Engagement Analytics platform, which is a technical leap forward in the analytics space. The new platform takes full advantage of big data by leveraging the Hadoop infrastructure and predictive capabilities. With this big data infrastructure, we are first to effectively combine interaction and transaction analytics across multiple channels, which enables our customers to better understand the entire customer journey. With NICE solutions on top of the new platforms, our customers are able to operationalize real-time and post-event insights and this can serve as a catalyst for change and action within an organization.

The first application to be launched on the Customer Engagement Analytics platform is Call Volume Reduction. With this application, for example, the company may discover that a large number of customers are calling the contact center to pay their invoices after visiting the company's Website that allows online payment. The company can understand from this that there is an issue with the usability of online invoice payments, resolve it, and facilitate a self-service invoice payment. The result is significant reduction in call volume into the contact center and an improved customer experience. Call Volume Reduction is only the first of many more applications we plan to launch on the new platform.

Among other new solutions we recently introduced, we are seeing a growing demand and sales for solutions to help our customers improve customer experience, like our Real-Time Authentication solution and our Voice of the Customer solutions, including our customer feedback solution.

For Real-Time Authentication, we continue to build our pipeline. This solution allows organizations to improve the customer experience and reduce costs by using voice biometrics to significantly reduce the amount of time it takes to identify a caller calling into the contact center. A key differentiator for NICE is the patent-pending passive enrollment that significantly increases the adoption of the product by end users. Identifying customers using voice biometrics spares the customers the time and the frustration of laboring through what sometimes seems to be endless amounts of security questions and also shortens the average handle time of the call, which results in savings for the organization.

For our cloud-based customer feedback solution, we won a large deal with a US-based telecom service provider which has been a Performance Management customer for a few years now. The customer was using an IVR Survey solution but was dissatisfied with the response rate and the lack of free-text-based insight into customer behavior. They have therefore decided at the senior executive level to replace it with our solution in an implementation that includes tens of thousands of agents and a few million surveys a month. A key driver for choosing our feedback solution was our ability to integrate our solution with their existing performance management system. One of the benefits of our cloud solutions is the ability to provide a very fast implementation, and this implementation was completed within weeks from receipt of order. Since implementation, the response rate has already more than doubled, and our customer is very pleased with the solution's ability to obtain customer insights.

In our Financial Crime and Compliance business, we recorded double-digit growth compared to Q1 last year. Significant attacks and enforcement actions alongside a growing and expanding market continue to be the key drivers for this business. Financial institutions continue to shift from homegrown solutions to commercial software as they realize their internal abilities are insufficient to keep up with the fast evolution of the complex regulatory environment and increasing sophistication of criminals and fraudsters.

Moreover, enterprises see an increasing need to consolidate systems to get a 360-degree view of the customer, and we offer an enterprise-wide platform on which financial institutions are able to implement and manage their financial crime and compliance solutions. A key component of our financial crime and compliance platform is a tool called Risk Case Manager, which can be used across our business lines. The Risk Case Manager is a truly cross-enterprise tool which helps organizations proactively address risk issues using a single application for holistic case and alert management. With the ability to integrate all alerts from across the organization-- branches, ATMs, Websites, and contact centers, our customers are able to see full picture of high-risk activity.

We had a particularly strong quarter in anti-money laundering due to the continuation of the enforcement wave that we have discussed in previous calls. The market continues to be very active, as financial institutions are pressured to comply with regulation. During the quarter, we won a very large deal with a major financial institution, which included our platform and our AML Know Your Customer solution. This institution made a strategic decision to standardize its operation, investigation, and regulatory filings of AML, fraud and compliance systems on our platform. Thousands of employees would be using the platform, benefiting from better collaboration between departments and systems.

Let me move on to our Security business, which has a strong start to 2013 with double-digit growth in revenues in Q1.

The tragic event in Boston a few weeks ago not only reminded all of us of the security threats that prevail in our world, but also demonstrated the power of technology that enabled the speedy investigation and capture of the criminals of the bombings.

What we all witnessed in Boston was the importance of collaboration between the public and private sectors in video surveillance in supporting better security and safety.

At NICE, we are also seeing our video management customers collaborate in the same manner, and the demand to integrate the management of public and private video cameras is increasing. For example, in Q1, we closed an expansion deal with an existing Situator municipal customer, which is integrating additional video channels into the system, some of which are from private company facilities within the region.

In our Cyber and Intelligence business, we won a major, eight-digit deal with an Asian law enforcement agency. The deal includes communication interception, content analysis, and filtering of massive amounts of information collected from multiple sensors, all within unified monitoring center. These key capabilities will help our customer fight organized crime and prevent serious criminal activities.

In summary, we are pleased to report another quarter of profitable growth at NICE, and we believe we are on track to meet our annual expectations.

We continue to further penetrate our customer base and win new customers with the most innovative and industry-leading, next-generation analytics and advanced applications. These solutions are helping our customers comply with regulation, prevent fraud, improve customer experience, enhance safety and security, and improve business results. As I mentioned earlier, we announced our new Customer Engagement Analytics platform, which we believe is another example of market-leading technology incorporating advanced big data capabilities to enable our customers to further operationalize big data.

The great success of our customer conference, the expanding use of our advanced applications to a broader user base of managers and operational areas outside the contact center, and the positive feedback we are receiving from our customers tell us that we are delivering great value to them with the right products at the right time.

I would like to thank the NICE team for their work in the quarter.

I will now turn the call over to Dafna Gruber, our CFO.

I am pleased to provide you with an analysis of our financial results and business performance for the first quarter of 2013 and our outlook for the second quarter and full year.

Revenues for the first quarter were $225 million, up 4.5% from $215 million in Q1 last year. Customer interaction revenues were $138 million, down 2% compared to $140 million in Q1 2012, resulting mainly from the continued trend of longer booking to revenue cycles. Financial crime and compliance revenues were $34 million, up 14% from $30 million last year. Security revenues were $53 million, up 17% from $45 million in the first quarter of last year. For the first quarter, customer interactions accounted for 62% of total revenues, financial crime and compliance 15%, and security 23%.

Looking at the regional breakdown, revenue in Americas increased 8% from the first quarter of last year to $146 million, revenue in EMEA decreased 3% to $50 million, and revenues from the Asia Pacific region increased 3% to $29 million, compared to the first quarter of last year. For the first quarter, the America accounted for 65% of total revenues, EMEA 22%, and APAC 13%.

Product revenues in Q1 accounted for 40% of total revenues, and maintenance represented 40% of total revenues. Professional services, including SaaS and hosting, accounted for the remaining 20%.

Gross margin in Q1 was 66.9%, compared to 64.8% in Q1 last year. Operating margin reached 19.4%, up 110 basis points from 18.3% in Q1 2012.

Earnings per share were $0.61 in Q1, representing an increase of 7% compared to $0.57 in Q1 2012.

First quarter cash flow from operations was $58 million, and our total cash and financial investments were approximately $501 million at the end of March 2013.

Headcount at the end of March totaled to 3,414 people, compared to 3,399 people at the end of December 2012.

Since the beginning of the year and until today, we paid about $14 million to repurchase approximately 395,000 shares as part of our share repurchase plan.

You may recall that, back in February, we announced that the board of directors approved the dividend plan under which we intend to pay quarterly cash dividends to holders of our ordinary shares and ADRs and that we expect the initial annual dividend to be $0.64 per share, or $0.16 per share quarterly.

With the dividend, we are pleased to be able enhance shareholder return and further optimize our capital structure. We believe that our cash balance, together with our strong cash generation, can support future acquisitions, dividend payment, and share repurchases.

NICE board of directors just approved the first dividend payment of $0.16 per share. The record date is May 23, and the payment date is June 6, 2013.

Turning to the guidance for the second quarter of 2013, please note that the guidance takes into account the share buyback executed so far but excludes future buybacks that may be executed going forward.

We expect second quarter 2013 total revenue to be in the range of $220 million to $230 million and fully diluted earnings per share to be in the range of $0.58 to $0.64.

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

(Operator Instructions). Shaul Eyal, Oppenheimer & Co.

Good quarter, considering the environment and the guidance as well. That's good stuff. A couple of quick questions on my hand. Dafna, this quarter, I'm pleasantly surprised with kind of the cash from operations at $58 million. Should we be looking at that as some sort of kind of a quarterly run rate as we start thinking about the remainder of the year?

Not exactly. If you recall, in our history, usually the first quarter is very high in cash generation, the following two quarters are slower, and the fourth quarter is stronger. That has been the history. So the $58 million is definitely a very good start. And we are on track on generating more cash this year compared to last year.

Thank you for that. Second, you spoke about the advanced applications and, I think, also kind of the deal size that kind of continues to grow. Can you provide us with any color you might about kind of some [quantitative] it -- whether it's kind of growing kind of double digits -- 20%, 30%, 40% year over year? Any color would be highly appreciated.

Our advanced applications are growing in a double-digit rate and faster than the mature business. When we look at the areas in which the growth is coming, though, it's coming mainly from our existing customers. This has been... Our strategy is to go deeper within our customers and actually take advantage of our understanding of the business value that we can provide and their business pains and provide them solutions that will fit it. Overall, these are larger deals for the year. Sales cycles are longer. We also -- the revenue cycles are a bit longer. And the value to the customer is longer.

So we are -- overall, this is a journey, and we are pleased with what we see. We see demand in certain areas that we highlighted in the script but I'll repeat them; for example, in the areas of compliance with the holistic solution to address CFPB and the Consumer Protection Act as part of the Dodd-Frank and also other solutions like proactive compliance around Dodd-Frank. We are looking at solutions that are helping the customer experience, like our Fizzback solution for feedback and the Real-Time Authentication, which really reduced the headache of authentication at the beginning of the call that is really intensive and frustrating. And, also, we are seeing demand for our security solutions and fraud prevention; again, because of the demands that are coming within the market.

Got it. One quick question, if I may kind of squeeze another one, going back to your discussion about the telecom provider win, I think, (inaudible) of kind of an IVR provider. I know you kind of highlighted that. Does it have to do also with the fact that, when we look at the IVR guys, most of them do not currently have any on-demand, kind of real-time type of analytics in that respect?

I think this is not related. What we've seen, by the way, we have seen some weakness during this quarter with the -- on the IVR side. I believe that there is more of the self-service that is moving from IVR to self-service activities -- moving from IVR to Web and mobile.

I think that, when we are looking at our space and what we are doing, we are talking here about a feedback solution. So we are doing surveys and polling customers. And the advantage that we have with our solution is that we're providing a real-time solution. It's not IVR. It's more, usually, text-based. It also enables free text and the ability to use free language and also qualitative data not only quantitative data. And it also provides the data in real time. And another benefit is the ability to -- because of these reasons and because we have a customized survey which is in the context of the event, we are seeing a very high response rate.

So the combination of the high response rate, the real-time value that the survey provides, and the ability to provide not only quantitative but also qualitative data, and everything in real time to many people in the organization, we are seeing a big demand and big value that we can bring to customers with this solution.

In terms of the shift from IVR activity within this customer to our solution, this is only -- this is a small piece.

Thank you, Zeevi. Good luck.

Paul Coster, JPMorgan.

Zeevi, can you confirm that you're still looking for $1 billion in bookings this year and that the book to bill is sort of systemically higher than one to one at the moment?

Well, first, I'll confirm we are looking for bookings -- to cross $1 billion in bookings this year, and this is our goal. When we look at the book to bill, we are -- book to bill for the year is going to be above one. What we said in the previous call, and we will be consistent about it -- we will not break book to bill on a quarterly basis. Because of the amount of the seasonality within our booking, we believe that this is not the measurement for the business. We can say, though, that we had a strong booking quarter this quarter.

Okay. Is there anything about the bookings activity by region, in particular, that sort of suggests to you that this decline in Europe will come to an end soon?

First, we had a slight decline in Europe. It's across businesses. I will not measure this decline in Europe as a trend. It's a quarterly event. You have to look at the -- several rolling quarters to look at the curve. And, if you look at several quarters back and you add up the revenues, you see that we are growing in Europe as well.

Overall, what we are seeing in Europe, in general -- we don't see a deterioration in the environment. What we see is an environment that's can be better. But we are seeing a stable environment over the past few quarters.

Okay. Got it. My sense is that your revenue visibility is improving significantly. Can you give us some sense, for instance, when you do these seven- and eight-digit deals now, what kind of timeline it takes to realize that revenue?

It really varies from deal to deal; that is, if it's immediate or almost immediate. There are deals that could take a few quarters.

Okay. My last question is really sort of for new investors that are looking at this just somewhat perplexed by the fact that you and your nearest peer are so dominant in the voice and video space. And looking at companies like Oracle and SAP in the CRM space (inaudible) space, why is it that those companies are not the leaders in this advanced analytics from unstructured information space? How is it that you're able to defend or dominate this area?

What we are providing and what is where our core IP is coming from is really the unstructured data. And this is where our real -- on the analytics side, this is where our value is really coming. And this is a very -- it's a more complex problem than analytics of structured data. It's actually a different and more complex problem. I think it's also a more interesting problem in terms of the value that it provides because, if you look at the human nature, people are generating and can be understood on the -- more based on the unstructured data, like video feeds or like the human speech. So we are -- this is a more complicated area, and, therefore, it's difficult to other companies to penetrate into this domain.

In addition, we are very focused on the industries and the business and the use cases that we are serving, and we are coming. And, when we are providing our solutions, we are providing them with a deep domain expertise. We can tailor, and we provide end-to-end solutions that really address the needs of the customers. I'm not sure that some of the companies that you mentioned as a potential can provide this value.

All right. Thank you.

Daniel Ives, FBR Capital Markets.

Hey, guys. This is Jim Moore in for Dan. It sounds like larger deals are coming in. And I was just wondering if you can talk anecdotally about the video business with respect to the larger deals and how the pipeline's looking on the video side and if there's anything changing over the next coming quarters.

What we are seeing is there is more interest, as we highlighted in the script, in solutions that are integrating public video surveillance with the private and other public video surveillance and the ability to get video inputs from different streams and analyze them. And this is part of our management capabilities around our platforms are providing. We definitely see growth and demand in this area.

Okay. Then, on the Actimize side, it sounds like there's good growth there as well. Could you just provide a little color as to the trends and if there's been any changes over the last few months?

First, people that are on this call should not be surprised by the growth in Actimize. We spoke over the last year that we have had booking growth which is double digit, and we expect that it will translate to double-digit growth in revenues. And, indeed, this is what we are seeing on the -- what we've seen in the fourth quarter I think and what we are seeing there during this quarter. I think that this should not be a surprise.

We are all reading the same papers, we are also speaking with some customers, and we see the regulatory pressure around banks in the US and, by the way, also outside the US that is out there in areas like AML, FATCA, and also trading compliance, and consumer protection. And there are other areas that are covered under the Dodd-Frank umbrella. So there is a lot of activity in this area. Also, fraud is something that is constant. There are fraudsters all the time there. We are enjoying the unique ability to integrate our capabilities from the contact center with the Actimize solution. This is important because we are seeing -- in order to get to financial engineering, we are seeing more and more fraudsters that are trying to get to the organization through contact centers as the other touch point or the like Web or digital channels already blocked and protected. So we are enjoying also this, our ability to be on both sides of the systems -- on the Actimize infrastructure and server side and also on the contact center in terms of sensing and the biometric solutions to address fraud.

Great. Thanks very much.

Jonathan Ho, William Blair.

I just wanted to understand whether your full-year guidance assumes a pickup in the macro environment in the second half of the year and, also, whether you could just give us a sense of what's giving you confidence that maybe the second half of the year will be stronger than the first half.

First, our -- we do not assume any change in the macro environment. We do not assume a deterioration, and we don't assume improvement. So our focus is based on the current macro environment as we see it today.

When we look at the -- when we are analyzing our guidance and our forecast for the year, we are looking at our -- we do see the booking and the backlog that we have, we do see the pipeline that we have - and we see the things that are in the near pipeline and things that are in the far end. We do see the customer adoption of the solutions that will require some upgrades down the road. And we look at things that are in the implementation phase and will be launched during the year.

So, overall, in analyzing that, we believe that we will be able to meet our guidance. And, as we indicated in the past, our business model is moving to be more backend loaded, and we expect the second half and, particularly, Q4 to be very strong.

Got it. That's helpful. And, just in terms of the gross margin for the quarter, it seemed like that ticked up a bit. I just wanted to get a sense of what the main drivers were there.

It's mainly the mix of product, solutions, maintenance. This is what drove gross margin up.

Got it. And then just one final question. There was a reclassification in the statement of cash flows in the deferred and (inaudible). I wonder if you could just walk through what happened there in terms of the numbers.

I think we've just opened and provided more information, and this is why you see separately the cash flow.

Got it. Thank you.

Greg McDowell, JMP Securities.

My first question. I think, back in Q4, you talked about how over 50% of Q4 bookings came from selling advanced application. I was wondering if that was the case again in Q1. And I think you had also talked about some of the incremental revenues coming in at 25%-plus operating margin. So I was wondering if you could, first, comment on that.

First, related to the new bookings in the first quarter, the amount of -- we said in the fourth quarter that we anticipated that, in the first quarter, again, because of seasonality, the number of new bookings that will come from advanced applications will be below 50%. And this is the actual what happened.

Could you repeat your second half of the question?

Just the 25% operating margin on sort of incremental revenues.

This is part of what we are -- this is part of our plan and our model call for 25% leverage on every additional dollar that comes -- of revenue that we are delivering, of course.

Okay. Thank you. And then one quick follow-up, and this is maybe a question to help new investors looking at the name. But the customer interactions business, you talk about double-digit bookings growth, and, yet, revenue was down year over year. So could you just maybe explain the dynamics behind the longer bookings to revenue? And at which point will we see sort of the customer interactions revenue growth more closely approximate the bookings growth? Thank you.

First, when we take bookings, we are focused on things that can be delivered within the coming quarters. Otherwise, we are not recording them as bookings. When we look at the customer interactions in general, we are providing more sophisticated applications. And, with these applications, the time that it takes to deliver and implement them is typically larger than the time that it takes to deliver the simple solutions or simple upgrades. And, therefore, the revenue cycles are larger.

In addition, we are moving more to cloud-based and hosting solutions in which the revenues by the business model are being pushed downstream.

So these two facts, in addition to the seasonality, which in our model caused for a slower start for Q1.

Now, when it comes to the year-over-year growth, I don't think that we should -- one should draw a conclusion from a single quarter. This is not the way that we are running the business, and I advise that you -- people -- you and the investors should look at the trends which are on the rolling quarters and not on any particular single quarter. It is correct to business lines and it is correct to geographies.

Okay. Thank you.

Jeffrey Kessler, Imperial Capital.

In your growing financial and compliance business, what type of growth are you seeing in the demand for cross-border solutions from worldwide enterprises as compared to just internal, single-country enterprises?

We are serving our financial institution customers, many of them, and, in particular, the large ones, are global organizations with facilities across the world. Usually, when they are looking at the domain, they have a global operation for the area that -- for financial risk in the area that they're operating. They are looking at solutions that will serve them globally.

In addition, if you look at certain regulations, like AML or FATCA, the regulation is a US regulation, but the need to comply is global. This is also in some of the Dodd-Frank activities.

Earlier in the year -- sorry -- late last year, we added functionality which is a cloud-based solution which are addressing specifically the need of the organizations to deal with the global reality in which they have to have -- they have very large organization facilities within, for example, the US, and they will have small branch or activity in small country like Czech Republic. And what we will -- and the solutions we are enabling a centralized monitoring and centralized logic, but we are providing solutions which are hosted-based and that are cost-effective also to small countries. And, also, we enable to address local regulation. So it will be a combination of the local regulation and the US-based one.

Is the value proposition for a global solution significant enough for you to demand a higher margin if you're going to be doing something like that?

When we are operating, we have -- our differentiation enables us to look for additional margin. The differentiation that we have is our ability to provide enterprise-wide solutions. And this is the approach that we have -- on one hand, we have enterprise-wide solutions, and, on the other hand, it's all product-based and not project-based. It's something that is unique and improves the total cost of ownership to our customers. And, therefore, we can take premium on the competitive solutions which are not enjoying this functionality. Part of being an enterprise-wide solution is our ability to provide the cross-border functionality.

Excellent. Thank you very much.

Matt Hedberg, RBC Capital Markets.

With all the new product introductions, whether it's the proactive compliance suite or some of the predictive analytics, you certainly are becoming more of a fourth-quarter, backend-loaded story. I can appreciate potentially deal cycles lengthening. I guess I'm wondering. Within first quarter, could you talk about the linearity? Was it more or less backend loaded than you thought? And, potentially, from a macro perspective, do you think things either improved or sort of stayed more neutral throughout the quarter?

For the macro environment, I think that things were as usual. Throughout the quarter, I don't think that there were changes. We are seeing more or less stable environment as far as we can judge. At the end, we are seeing a small part of the overall market, so it can only provide a certain indication.

When it comes to quarterly activity, we didn't see -- our quarters tend to be more backend loaded also between the quarters. But we didn't see any irregular activity during this quarter compared to other quarters. There was nothing special. On first quarters, in general, we have some behaviors, for example, in APAC because of the Chinese New Year. There is a special pattern in APAC. But it's really something that we are working with for many years, and there is nothing specific this year.

Thanks. And then, I guess, as a follow-up to that, did you see any deals slip this quarter outside of a normal 1Q?

Every year, we have seen this slipping this quarter -- from Q1 to Q2. But some of them were closed already. Again, this is a bit -- it's not different than what we have seen last year.

Thank you. And then one last question. Headcount growth for the year -- would you expect that to grow in line, above, below revenue? Just kind of directionally, how do you think about headcount growth for the year?

I think it will grow in line or maybe a bit lower than the revenue pace.

Thank you.

Brian Rutterbur, CRT.

A couple housekeeping. Book to bill -- what was it in the quarter? I didn't hear that.

We are not providing quarterly book to bill numbers.

Okay. Had you in the past been covering -- talking about book to bill on a quarterly basis?

Yes. But I think six months, or two quarters, ago, we said that, because of the change in nature of our business, we would not refer to book to bill on a quarterly basis but look at it on a yearly basis.

What I can share with you is that our targets for the year remain unchanged, and we expect book to bill on the yearly basis to be greater than one.

Okay. And, then, because of, I think, some phone issues, I missed if this was asked, so I apologize. Your short-term investments were down $20 million. What was the reason for that?

The overall cash investment or the cash reserve is $501 million. It's higher than previous quarter. The separation between cash, short-term, and long-term investment is made due to decisions on investment, and it is something we have up and down all the time.

Okay. And then, finally, a last question on the security side of your business. Is there a specific region that is your strongest right now and a specific region that is your weakest? I'm just trying to understand geographically where your demand or weaknesses are.

I don't think that there is a particular region that was strong or a particular region that was weak. The business is a bit lumpy, so, also, if you have a single -- we spoke on the call on a very large deal from Asia Pacific customer. But, overall, the business is strong. It's strong across the board. We are -- there is no particular change within -- in this environment.

Okay. Thank you very much.

Jessie Katz, Oscar Gruss.

Could you, please clarify? You said that billings should cross the $1 billion mark. Does this mean that revenues will grow over $1 billion? How can we understand this?

We didn't say the billing. We said the bookings. The way that the bookings will go on -- we are targeting, by the way. We are not providing forecast for booking. But we are targeting a booking goal -- a booking of more than $1 billion this year. The way that we usually see it, the next year revenues are higher than that this year bookings.

Thank you.

We have no further questions in the queue at this time.

Okay. So, thank you, everybody, for joining us today. And have a NICE day.

Thank you. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining, and have a great day.