Verint Systems Inc (VRNT) 2004 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Verint Systems first quarter fiscal year 2004 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. If anyone should require assistance during the conference please press star then zero on your touch-tone telephone. As a reminder this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Alan Roden. Mr. Roden, you may begin.

Thank you, operator. Hello. I'm Alan Roden, VP of Corporate Development and Investor Relations for Verint Systems. We trade on NASDAQ, ticker symbol VRNT. With me on the call today are Dan Bodner, our President and CEO, and Igal Nissim, our Chief Financial Officer.

Before we start the call I would look like to mention that certain statements that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words estimate, project, intend, expect, believe and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and some uncertainties. Any of a number of factors could cause the actual results performance or achievements of the company to be materially different from those either expressed or implied by such forward-looking information.

Certain numbers and [INAUDIBLE] have been rounded and may be approximations. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Verint Systems is strictly prohibited. For a discussion of principal risk factors that may cause actual results to be different please refer to the aforementioned press release and the company's filings with the Securities and Exchange Commission.

By now you all should have seen a copy of our press release which was issued after the market closed this afternoon. If you did not receive this release, please refer to businesswire.com or our website, verint.com. Please refer to our press release for a reconciliation of our GAAP and pro forma net income discussed on this call. The content of this conference call is time sensitive and reflects the company's perspective as of June 2, 2004. We undertake no obligation to update the content of this call including any forward-looking statements even though events, circumstances or expectations change after this call. Any questions regarding our guidance and business model should be addressed during this conference call as we do not intend to address guidance and model related increase following the call.

During today's call, Dan Bodner will present a perspective on our business and market trends, and Igal Nissim will present a more detailed review of our first quarter results and financial guidance. We will conclude with a question-and-answer session. With that I will turn the microphone over to Dan Bodner. Dan?

Thank you, Alan. Hello, everyone, and thank you for joining us today for a review of our fiscal 2004 first quarter results for the period ended April 30, 2004. Our first quarter results represent a record quarter for Verint in terms of sales. This growth was due to strong demand for Actionable Intelligence solutions in both the security and business intelligence market. In the first quarter we had sales of $56.6 million, representing year over year growth of 28% and sequential growth of 8.1%. Pro forma income [INAUDIBLE] for the quarter was $5.9 million, representing year over year growth of 66%. This increase was primarily driven by sales growth and improved gross margin. Pro forma diluted earnings per share for the quarter was 18 cents based on 32.2 million weighted-average shares outstanding.

Verint Solutions generates Actionable Intelligence by capturing structured and unstructured information from voice, video and IT networks, applying advanced analytics on critical intelligence and delivering this intelligence to decision makers for effective action. Sales of our Actionable Intelligence solutions into security markets increased 27% year over year and 5.5% sequentially and represented nearly two-thirds of our total sales. Sales of our Actionable Intelligence solutions in the business intelligence market increased 28% year over year and 13% sequentially and represented slightly more than one-third of our total sales. During the first quarter the business intelligence market continued to improve mainly due to a better I.T. spending environment and a higher level of interest in our business intelligence solutions. Our Actionable Intelligence solutions addressed multiple applications including communications section, network video, and content center actionable intelligence.

Our Communications Interception solutions enable government and law enforcement organizations to intercept communications for a variety of purposes including gathering intelligence in order to identify and prevent criminal activities and establishing evidence for the conviction of criminals. Recently we received orders from both existing and new customers and continued our geographic expansion of this business. Example of these orders include an order for new a new GSN and CBNA for international wireless service provider which is deploying our communications and interception solutions to comply with local government mandates requiring it to intercept wireless communications. An order for new government customer in a new country for Verint. This government customer is deploying our communications and interception solution to enhance national security by having the ability to intercept and analyze mass amounts of information collected from second data networks operated by ISPs. Expansion orders for existing government and service provider customers including a multi-million dollar order. These orders are being driven by our customers' needs for more capacity, new data and voice analytical capability and that ability to intercept new protocols.

In addition to these orders we recently entered into a master purchase agreement with a new U.S. wireless service provider customer. This customer has selected our communications interception solution for its new nationwide second data wireless network to help comply with the Communications Systems for Law Enforcement Act also known as [INAUDIBLE].

As part of our strategy to address the growing interest in our communications interception solutions internationally, we recently signed a new reseller agreement with a leading switch manufacturer. Under the agreement the switch manufacturer will integrate various communications interception solutions into their GSM and CDMA switches and resell it to certain of its wireless service provider customers worldwide.

During the quarter we completed the previously announced acquisition of Easy Sales Communications interception business. Since closing we have been integrating the acquisition into Verint's communications interception business and have started to offer an expanded portfolio of actionable intelligence solutions to our combined set of customers. The acquisition was completed late in the quarter and contributed minimally to revenue.

We continue to see demand for our communications interception solutions from new and existing customers due to the needs of better intelligence, advanced analytics and otherwise growing volumes of data and voice communications and the ability to intercept new protocols. Verint's network video solutions enable organizations to enhance the security of their facility by networking video across multiple locations, applying advanced content analytics to extract actionable intelligence and alerting security personnel to potential security threats. A number of organizations that have historical used video for security are sticking to leverage video content to generate business intelligence to help meet important operating objectives such as enhancing customer service and profitability.

Our network video solutions are addressing the broad range of security and business intelligence initiatives across a number of different markets. In the transportation market, our network video solutions are being used to protect critical infrastructure such as airports, ports, rail systems, bridges and tunnels. Examples of some recent orders with transportation customers include an order for the Detroit Transit Authority which has deployed our video security solution to create a safe environment for railroad passengers and to protect infrastructure through a collection and analysis video from multiple railroad station platforms. An order for a European transportation authority responsibility for operating a passenger rail system in a major city. This customer is deploying Verint's video security solutions to generate actionable intelligence to help protect railroad infrastructure.

Verint's video security solutions are designed to enable railroads to essentially monitor the first rail facilities including passenger platforms and vulnerable remote portions of the track such as tunnels. Orders for airports including the Orlando International Airport which are deploying our video security solution to enhance security at a number of locations throughout the airports including passenger terminals, perimeters and other sensitive areas. Verint's video security solution are well suited for the transportation market as they enable the management and analysis of video across multiple locations for the protection and protection against security breaches.

In the government market, our network video solutions are being used to enhance security of sensitive government facilities and military assets and protect national borders and points of entry. Examples of some recent orders from government customers include: An order for a division of the U.S. Army which is deploying our video security solution including advanced auto motion detection to generate actionable intelligence to help protect certain domestic military personnel. An order for the Department of Defense agency customer which is expanding the deployment of our video security solution to protect operational and control facilities located in the Washington, D.C. area. Verint's video security solution is helping this government customer enhance security by networking and analyzing video across a large campus perimeter. Secure point of entry in highly sensitive facilities.

Orders for a European government agency responsible for customs at the country's borders. This government agency is deploying Verint's video security solutions in the customs area at multiple points of entry to enhance security and to help prevent the smuggling of illegal substances into the country. Orders for a new U.K. government agency customer which is deploying our video security solution at multiple locations throughout the United Kingdom as part of its ongoing program to enhance security in high profile government facilities.

As part of our strategy to address the growing interest in our network solutions internationally, we continue to expand our relationship with key distributors and systems integrators around the world. During the quarter we entered into an distribution agreement with NORBANE, a leading security systems integrator in the United Kingdom. NORBANE will provide Verint a strong partner to address the growing demand for Verint's video solutions in Europe.

We continue to see demand for our network video solutions for a wide range of security initiatives including protecting public transportation, military facilities, enterprises, core infrastructure and government facilities. Our Contact Center actionable intelligence solutions enables enterprises to capture and analyze customer interaction data from their contact centers. Increasingly, businesses are seeking to generate actionable intelligence to help optimize business processes and develop more effective customer strategies. Recently we received orders for our Ultra Solution including our intelligence content analytics across a broad range of industries including financial services, energy, insurance, utilities and healthcare.

Examples of companies that have either selected or implemented Ultra recently include CIBC which is deploying Verint's Ultra Solutions to enhance customer experience across it's ten network contact centers. Ultra is designed to help CIBC drive growth by identifying best practices and enabling agents to more effectively cross-sell CIBC's broad range of financial products. [INAUDIBLE] Financial which is deploying Verint's's Ultra voice-over IP solution at its contact center of sale solutions in India to improve customer service for its life insurance customers. Ultra is designed to enable AXA to quickly pinpoint and resolve business process breakdowns for faster claims processing and greater customer satisfaction. Anthem, a national healthcare provider which has selected Verint's Ultra solutions and is currently deploying Verint's solutions at 7 of its 42 contact centers which serve 26 million healthcare customers nationwide. Ultra is designed to help Anthem effectively train agents to deliver appropriate level of customer service with three key constituent groups, patients, doctors and corporate customers, each with their own unique service requirements.

As part of our strategy to address the growing interest in our center actionable intelligent solution internationally, we continue to expand our relationship with key distributors and system integrators around the world. Recently we announced a new partnership with REPRO, a leading provider of IT solutions and services in India. Our growing presence in India is enabling Verint to support the offshore customer service strategy of U.S. customers as well as to participate in the growth of Indian service providers. We continue to see growing demand for contact center actual intelligence solutions including our advanced analytical applications across a number of different markets.

Before turning it over to Igal to present our financial results I would like to summarize our first quarter. Our first quarter results were driven by strong demand for actionable intelligence solutions for both security and business intelligence markets. We continue to see demand for actionable intelligence solutions and ended the quarter with backlog in excess of one quarter of revenue. We added new customers and many of our existing customers continued to expand their deployment, adding more sites, additional capacity and new analytical capabilities.

We continue to believe that the market for actionable intelligence is in its early stages. In the security market the migration to actionable intelligence solutions is being driven by the need to better detect risks and prevent criminal and terrorist activity. In the business intelligence market the migration is being driven by the desire to improve business processes and enhance profitability. Although the drivers are different in the security and business intelligence markets, the challenge of extracting intelligence from large amounts of structured and unstructured data is similar. Verint is addressing this common challenge by investing in new core analytical capability applicable to both markets. [INAUDIBLE] sales and marketing activities, developing new relationships with key systems integrators worldwide and expanding our geographic presence.

In the first quarter we benefited from these investments in both the security and business intelligence markets. As the business intelligence market continues to strengthen we are encouraged by the willingness of corporations to invest in actionable intelligence solutions that improve business processes, help drive profitability and offer an attractive return on investment. Going forward Verint remains committed to growing by understanding our customers specific requirements, delivering new actionable intelligence solutions that leverage various core capabilities and global infrastructure. At the same time we believe that we can augment our internal growth with strategic acquisitions and our focus on identifying companies that help us expand the capability for our solutions, broaden our offerings and expand our geographical presence. We continue to search for companies that meet our strategic objectives and are currently reviewing a number of different acquisition opportunities.

Igal will now present a review of our financial results along with guidance. Igal?

Thank you, Dan. The first quarter represented a record quarter for Verint and our tenth consecutive quarter of sequential revenue growth. In the first quarter we had sales of $56.6 million, representing year over year growth of 28% and sequential growth of 8.1%. The increase was due to higher sales of both our security and business intelligence solutions. Sales for the security market increased 27% year over year and 5.5% sequentially. And sales for the business intelligence market increased 28% year over year and 13% sequentially.

Looking at the geographical breakdown of sales. in the first quarter we generated approximately 60% of our sales in the Americas, approximately 32% in EMEA and the balance in Asia Pacific. Pro forma gross margins for the first quarter were 54.8%. This quarter represented our tenth consecutive quarter of gross margin expansion. Net research and development expenses for the first quarter represented 12 percent of sales. SG&A expenses represented 32 percent of sales.

In the first quarter we had pro forma income from operations of $5.9 million, representing year over year growth of 66%. Interest and other income for the first quarter decreased to $582,000 from $857,000 in Q4. Our pro forma effective tax rate for the first quarter was 9%. Pro forma net income for the quarter was $5.9 million, or 10.5 percent of sales. Pro forma diluted earnings per share was 18 cents based on an average share count of 32.2 million shares. On a GAAP basis diluted EPS was 5 cents. Pro forma numbers discussed today exclude non-cash charges consisting of one time charges associated with the acquisition of Easy Tell, the amortization of intangible assets and stock based compensation charges. Please refer to our press release for a full reconciliation of our GAAP and pro forma financial results.

Turning to our balance sheet, cash, cash equivalents and short term investments decreased to $209 million at the end of Q1 from $229 million at the end of the fourth quarter. The decrease was due to the $35 million acquisition of Easy Tell's communications interception business. During the quarter we generated $14 million of cash-flow from operating activities. In Q1 our DSOs improved to 54 days from 58 days in Q4. Our guidance for DSOs remains at 60 to 80 days. As of April 30, 2004, we had total assets of $342 million, working capital of $178 million, and shareholder's equity of $252 million.

We are introducing guidance for the second quarter of fiscal 2004 as follows: Sales of $59 million and pro forma diluted EPS of 19 cents, based on a 32.2 million diluted shares outstanding. We expect second quarter earnings per share on a GAAP basis to be 3 cents lower than pro forma EPS. For fiscal 2004 we are raising guidance from sales of $230 million to $236 million, and pro forma diluted EPS from 77 cents to 79 cents on 32.2 million diluted shares outstanding. We expect fiscal 2004 EPS on a GAAP basis of 57 cents. We believe that the market for actionable intelligence solutions is in its early stages and our guidance reflects continued demand for our actionable intelligence solutions worldwide.

Operator, we'll now been happy to answer questions.

Thank you. [Caller Instructions]. Our first question comes from Israel Hernandez of Lehman Brothers.

Good afternoon, everyone. The Easy Tell acquisition closed at the end of March. Could you provide us some color as to how much revenue was recognized in the April quarter, if any, as well as what the expense impact was, and what should our expectation be for Easy Tell revenue in the current quarter? Thank you.

Okay. So acquisition was closed on March 31 which was late in the quarter. And I mentioned in the script before in terms of revenue that it was minimal.

So last month it did no revenue, Easy Tell.

It was some revenue but really very minimal, just the first month. so it was not enough time to recognize revenue. As far as expenses we have integrated the Easy Tell business. It included moving over approximately 75 employees and expenses for the one month were less than $1 million.

Okay. And expectations for the current quarter around the contribution from Easy Tell?

We have integrated the people and the technology into our business so basically as of today you would find Easy Tell R&D people working in Verint's R&D department and sales department and so forth so there's really no segregation of these two businesses any more. That's true also for the products. We've now come with the advantage product. This is the new brand that we are going to market the combined Easy Tell, Verint product which we are now offering to the customer base and prospects. And from this point on it's going to be not practical to try and separate Easy Tell revenue from Verint revenue. However we did provide last quarter some insight into the Easy Tell business with last year roughly $12 million for the year. We anticipate ten months of Easy Tell business this year. Obviously we believe that Verint will be capable to grow that base as we integrate to our technology and offer it to our joint base a much more attractive product offering.

Okay. Great. Can you give us, there's been a lot of activity around Homeland Security, [INAUDIBLE] his mouth out there for a couple of weeks, a lot of these Homeland Security stocks have risen in sympathy in anticipation of additional spending down the pike. What have you guys actually seen? Are you seeing increases in pipeline, new deal activity, new customers if you haven't seen before? You probably have can give us some qualitative guidance as to what our expectations should be here. Thank you.

We did increase our guidance by $6 million. This was due to better outlook in both the security and business intelligence markets. So first relating to the security market, the fundamental driver for the security market we believe are intact. There is growing need for using technology to solve some of this challenges. Initially most of the money was spent on people, deploying people to enhance security and gradually this is shifting more into putting technology to work not just instead of people but also more effectively than just people. So it's a combination of people and technology. And our actual intelligence technology lends itself very well to address many of the threats that both government and commercial organizations are facing.

Within the security we think that a lot of opportunities are present in this infrastructure that will take years to implement. Some of these projects were kicked off and are being deployed over the year and some are yet to be kicked off. We can report obviously the sub market in the security, for example, in the transportation market, we've seen a lot of activity recently including airports, ports, rail systems, bridges, tunnels. And we've participated in a number of projects both in the U.S. as well as internationally. As this became a very important topic in many countries worldwide. So it's early science but I think the transportation is probably an area that will be some more progress and more dollars coming in. Obviously there's many other areas of security including military outfits and facilities and high profile buildings and so forth that will be candidates for actionable intelligence technology in the coming years. So Homeland Security is, our outlook which is 20 to 30% annual growth, we believe is still intact; with some potential for acceleration in some sub segments, again, depends on the circumstances.

On the business intelligence side, we now had a second quarter, second consecutive quarter of healthy year over year growth in the business intelligence market and we are encouraged by the willingness of corporations to spend money on solutions to help drive profitability. So we now believe that we can achieve low double-digit growth for the year. And obviously as we stated before at some point we believe that business intelligence markets should achieve similar growth levels, growth rate level to the security markets. But at this point our outlook is still at low double digits.

Thank you. Thank you.

Our next question comes from Paul Coster of JP Morgan.

Hi, a couple quick questions if I may: Are you in a position to break out the revenue on the security and surveillance sight between communications interception and additional video solutions? That's usually about 50/50, isn't it? Was it the same break out this quarter?

Yes.

And the backlog, was that a similar proportion as well?

Well, as we growing into revenue each quarter we are also growing in backlog [INAUDIBLE -- AUDIO DIFFICULTIES] $59 million the next quarter and it is greater than $59 million.

Okay. But the proportionate break out is essentially a third, a third, a third as to video, communications interception and business intelligence?

Okay, the break down of backlog is about one-third in business intelligence, two-thirds in security. I'm not sure what the break down of the backlog between the various product lines.

But at the moment you don't see any major change in the business.

We've seen growth opportunities for network video solutions and communications interception solutions. Each represents a very cost-effective solution for our customers.

Great. Quick question on [INAUDIBLE]. Sorry about the background noises here. Can you give us some sense of how the INAUDIBLE] is changing and who are you seeing [INAUDIBLE]?

You know, it's very much the same major competitors as we named in previous conference calls. There are many small companies, start ups, that are attracted to this market and funded by venture capital lists trying to develop capabilities and obviously they win some projects here and there. So the more of those, there is no significant [inaudible] going on in the market at this point.

Last question. Given [INAUDIBLE] and similar applications are you generally finding that customers are finding you now or is it still very much a missionary style with a long sell cycle?

It's definitely better. I think it's, the Verint brand has momentum and I think we have more situations where customers are finding us but I still think we are in a stage where we more so than they finding us we needing to out and educate them about actionable intelligence in general and very specifically in value.

Thanks very much.

Room for improvement.

Thank you. [Caller Instructions]. Our next question comes from Brian Ruttenberg from Morgan Keegan.

Thank you. I was wondering if you could give us specific numbers on security and enterprise. You've given us percentage break out but I don't know if you have exact numbers right now. And additionally it looks like the U.S. percentage of your revenue dropped by about, it was 25% last quarter and it dropped to 15%, yet Asia was up 10%. Can you just talk about the mix in the period and then what you see going forward?

Let me first address the first question. Roughly $37 million in security and $19.5 million in enterprise. Regarding the mix in our geographical sales, overall the geographic mix has been 50% America, one-third Europe and the balance in Asia. However this mix will fluctuate from quarter to quarter due to specific customer orders. This quarter we had higher sales in Asia. We are investing in Asia. We believe that there are many countries in Asia that can benefit from our security solutions as well as some countries that can benefit from our business intelligence solutions. But generally speaking we believe that our growth opportunities in all geographical markets will continue to invest in the Americas, EMEA and Asia-Pacific and we expect the mix to remain relatively at the same historical levels that I mentioned before.

Okay. And then two other questions. On pro forma, if you can just talk about the reason for the pro forma, the need for the pro forma this quarter and next quarter, refresh your memory, and then tax rate going forward. The main reason, the.

The main reason, the main difference between GAAP and pro forma this quarter is from technology that was overlapping between the Easy Tell interception business and Verint interception communication business and writing off this redundant technology was the primary contributor to the difference in in the two numbers. In terms of tax rate, our tax rate for this year we expect it to be under 12%.

Great. And the rest of the write off for Easy Tell will be the 3 cents in the next period. And then we don't expect any other charges after next period?

Well, we expect roughly 3 cents every quarter for this year. And if it's going to come down the next year but it's not down zero in some of the organization over a long period of time some of the organization is going over five years.

So we can expect a couple pennies each quarter kind of going forward on GAAP versus pro forma?

What we guided as 3 cents in Q2 and you should expect that for Q3 and 4 as well.

Great. Thank you.

Our next question comes from Alan Weinfeld of Fulcrum Global Partners.

Congratulations, guys, on the best sequential growth increase in revenue in seven quarters. Can you talk a little bit about the federal government, there was a big award just given to EXTENTURE of $10 million. Does it seem to you that, I know this is a big $40 million opportunity there but does it seem that the money is finally starting to move and what are some of the biggest projects you're involved in that could be shorter or longer term.

The reason the U.S. business, we participated in a number of programs with them and we are obviously tracking this program as well as others. There is money coming out into updating security. Some of these projects are more high profile and this specific one is high profile, it's of high interest to the public. Some of the other initiatives are more low profile as the government prefers not to disclose details of -- very often they do not disclose the detail of the [INAUDIBLE] and as you know this is always a challenge for us in terms of our press release policy to be able to obtain customer approval for updating the world on some of the projects that we participate in. We also have to say that some of the projects have been kicked off although they could be very large in scope, we it will drag over many years because of funding issues. So this recent $10 million award seems to be on the pace of being implemented over a couple of years, that's not necessarily typical, there are other projects that may take longer. So it's hard to judge just by the U.S. business program but I think overall as I mentioned for the transportation market where we see activity that is certainly more than we saw a year ago. And also I think what we can report as a trend is that while many of the initiatives were there a year ago they were not as focused on technology as current intiatives. And we kind of predicted that that it will take time for users to get educated on how technology can work to better provide security and in most cases provide better security with lower [INAUDIBLE].

Can you name any of the projects you're involved in? Are you involved in U.S. business at all?

U.S. business specifically does not have any component that we can offer at this point. It's about data basis and metrics, it's about people coming in and the same people going out, it's more about identity cards and biometrics and data bases. At this time we are not participating in this program.

On the financial side, you were a flat quarter over quarter in op ex percent of revenue. Do you see that continuing to decline throughout '04, the 44.4% going down to 44, or how do you see that trending Igal?

Are you referring to operating income?

Operating expenses as a percent of revenue.

Operating expense is comprised basically of two line items, in our case the R&D and the SG&A. And regarding both of these items, we in the past have said that the R&D is going to be roughly 12% of our revenues and we intend to continue at this level. And SG&A, 32 to 33% of revenues. And also remains stable at these levels as we continue to invest both in R&D and in sales and marketing efforts.

Great. Thanks a lot.

[Caller Instructions]. Our next question comes from Scott Griper of Enterberg Tobin.

Congratulations on another good quarter. I wanted to see if you can get into a little bit detail on product mix, software, hardware, services?

Okay. In 2003 our mix was 55% software, 25% hardware, and 20% service. Service is mostly maintenance contract. And the trend in '03 versus '02 was that hardware came down from 30% in '02 to 25% in '03. And we expect that trend to continue as we have more and more customers providing the hardware themselves. So it will be somewhat less than 25% in '04 and trickling down in the next few years.

You've given some guidance before about where you think this mix can go to. Can you give any specific indication of where it was in Q1, where it might be in Q2?

We don't track it that granularly. We look at the overall trend. The trend is exceeded by customers. We offer customers ability to by our solutions and integrate hardware and software to have the advantage of buying a turn key system but we also give them the opportunity to buy the hardware themselves. And those customers that choose to do so we sell them the software and service it which obvious obviously represents for us a better gross margin. So the overall trends, I can still report is pretty strong that more and more customers are providing hardware themselves and that's why hardware as a percentage of sales will continue to decline. But on a quarter to quarter basis we don't track it as we don't see the point in reporting it.

One other question. Phenomenal quarter for EBI much higher than your expectation or the Street and now you've kind of moved guidance from mid single digits to low double digits. Was the 28% growth in Q1, do you look at that as an out layer or are you seeing some more consistency in visibility in this area to show those kind of growth rates going forward?

Well, obviously we believe actionable intelligence in the enterprise market is representing a very compelling, very compelling valuable position. It's very good return on investment. So we said many times that long-term we believe that in this market we should have similar growth levels to the security market. And it's very tempting after two quarters of healthy year over year growth to say, we are there. And we are achieving now this high growth level. But I think we all need to be cautious. It's been two quarters of good performance. But we still need to monitor the over recovery in IT spending in the economy and we will continue to monitor the market and update our outlook in the following quarters.

Okay. Thank you. Congratulations again.

That does conclude the question and answer session. Would you like to proceed with any further remarks, gentlemen?

On behalf of Verint Systems thank you very much for taking part in this conference call and have a great evening.

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.