NCR Voyix Corp (VYX) 2007 Q2 法說會逐字稿

Welcome to the Retalix second-quarter 2007 conference call. Leading the call is Retalix Chairman and CEO, Barry Shaked. Joining him is Danny Moshaioff, the Company's Chief Financial Officer and Avinoam Bloch, the Company's Chief Operating Officer.

Before I turn the call over to them, I would like to remind our listeners that management's remarks contain forward-looking statements. These statements include comments regarding the guidance about revenues and net income, anticipated demand for the Company's software products, expectations with regard to the implementation and rollout of existing license agreements, the completion of projects and continued support, analysis of market conditions, investment in R&D, pipeline of prospective customers, anticipated rate of growth and management's expectations as to the Company's future financial performance. Such forward-looking statements are subject to risks and uncertainties and, therefore, Retalix claims the protection for such statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and we'd like to refer you to a more detailed discussion of all of these risks and uncertainties contained in the Company's filings with the SEC, and in particular on Form 20-F.

Also, I would like to remind you that Retalix reports its net income and earnings per share on both a GAAP basis and an adjusted non-GAAP basis that excludes the amortization of intangibles related to the acquisitions and stock-based payment charges. This presentation of net income and earnings per share will enhance your understanding of the Company's historical financial performance and will facilitate analysis of the business and meaningful period-to-period comparisons. Today's press release includes a reconciliation of non-GAAP information to the most directly comparable GAAP information and is posted in the investor section of the Company's Web site at www.Retalix.com.

I will now turn the call over to the CEO of Retalix, Barry Shaked.

Thank you, Judy. Welcome to all of you and thank you for joining us on this call. This morning, we reported our results for the second quarter 2007. As we predicted, our revenues in the first quarter, the first two quarters of 2007, were just above 45% of our financial guidance for this year. While the market is very nervous of our results, we believe that we are on track to achieve our stated top and bottom line goals for this year. We have a healthy pipeline of prospective customers and we are working on getting these new license contracts signed by the end of this year.

While our markets remain strong, we also continue to address the challenges. In the second quarter, we impacted -- we were impacted by rate increases in Israel, currency changes and other one-off costs. We [will] continue our currency investments in the business, but we also are taking steps to improve our cost structure and reduce operating expenses. We have made this top priority and have a number of internal initiatives underway to improve our operating margins, like moving R&D development to professional services as InSync, Loyalty and [Store.net] products mature.

Before we talk about the future, Danny will provide a financial review for the second quarter.

Thank you, Barry. During the second quarter, our total revenues were up 21% year-over-year and 12% for the first six months Company compared to the first six months of last year. Our U.S. operations generated 57% of revenues during the second quarter and 43% were generated from the international operations. The adjusted gross margin for the quarter was 55% compared to gross margins of over 60% in the second quarter of 2006.

As we mentioned in our previous call, we increased our headcount in the first and second quarters to enable us to customize our products, to make local requirements into markets as we had demonstrated, such as (inaudible) Eastern Europe. These investments resulted in lower service margins, but we feel it necessary to support future sales in these regions. We estimate that our annual gross margin will be around 60% for the year.

During the second quarter, our costs were impacted by annual wage increases, mainly professional service and development, which incurs an increase in provisions for [severance] (inaudible). In addition, we were affected by currency fluctuations and it impacted our non-dollar wage costs.

As a result of all of these factors, we recorded a nonrecurring cost in this quarter of about $1.2 million. This onetime cost will not affect the remaining two quarters of the year. These factors also affected our R&D expenses in the second quarter. We estimate our R&D percentages at an annual level to be between 27 and 28%.

During the quarter, we also recorded a onetime charge of about $700,000 used in fees and other expenses related to two M&A opportunities which we have been working on but did not complete. These are helping incur accounting and legal costs and other expenses. The onetime charge we recorded for these M&A activities was excluded from our adjusted non-GAAP results. We expect for 2007 a non-GAAP effective tax rate to be about 25%. Our cash flow from operations usually follows our net profit figures, and we expect the cash flow to be positive in the second half of 2007.

During the second quarter, we completed the IDS transaction by releasing about 207,000 shares that we have in escrow as earnout conditions were met. This increased our goodwill and shareholders equity by about $4.9 million. The number of total outstanding shares for the quarter was 19,881,000 fully diluted. The number of Retalix employees at the end of the second quarter was 1550 employees, which is a net increase of 30 employees compared to the previous quarter.

That concludes [a complete] financial review. Back to Barry.

Thank you, Danny. As we have discussed with you in the past, our growth strategy is a combination of product development, partnership and acquisition. We believe each of these elements can help us to maximize opportunity in our business.

Earlier this year, we looked very seriously into two possible M&A deals which seem to provide good opportunities to grow our business more rapidly. In the course of the due diligence process, both we and our counterpartners identified many synergies that would be generated from the proposed transaction, but also many risks that these opportunities involve. The ultimate conclusion was that the risk overweighed the opportunities and that the shareholders would be better served if we did not proceed with these [deals].

However, we will keep on looking at all possibilities to continue to grow the Company and to achieve maximum return for our shareholders. Our M&A strategy is focused at looking at two kinds of possible acquisitions. The first kind is companies with proven top reputations that would complement our solution offering, or expand our potential market like we did with OMI, TCI and IDS. The second kind is companies that have strong market presence in geographies where Retalix has little or no presence and where local presence is [potential] like we did in Italy with [Unix].

In both cases, we will focus on acquisitions that would be immediately accretive to our earnings.

We remain focused on realizing the opportunities in the market. To that end, you may have seen this morning we announced a promotion of Avinoam Bloch to position of Chief Operating Officer. Avinoam is one of Retalix's longest-serving executives. He joined the Company in 1985 and has been part of our leadership team for 22 years. Avinoam's promotion is a result of his outstanding performance as Chief Operating Officer of the international business unit, which operates in Europe, Israel, Africa and Asia-Pacific. Under his leadership, international business units grew rapidly and doubled its revenues within less than four years, expanded into new geographies, successfully executed complicated projects and integrated acquisitions in Italy and in the UK into the Retalix family. To help us manage and drive the next phase of our growth, Avinoam is now assuming responsibilities for our day-to-day business and operation worldwide in addition to his current responsibility of EMEA and Asia-Pacific. This expansion of Avinoam's role will permit me to focus more on the Company's strategy development, key customers and investment relations in my role as CEO and Chairman of the Board.

I would like to introduce Avinoam to you and to take this opportunity to have him review some of the highlights of the operations of the international business unit during the second quarter.

Thank you, Barry, and hello everybody. I'm very excited by the opportunities I see globally in our markets and look forward to working with the team in my expanded role. 2007 has been very exciting for the international business unit so far, especially because of our recent contract wins in China.

In addition to the Wal-Mart and HomeBuy wins, we have already announced -- that we have already announced, during the second quarter, we also signed a contract with a large petroleum retailer in China. We're dedicating significant efforts to the execution of these contracts in China. We know that succeeding with these three retailers will position us as a leading solution provider in China as we are already in Western countries. In order to facilitate the execution of these projects on time, we are relocating employees to China and hiring people on-site in Beijing.

Another interesting new geography for us is Russia where we saw the start of the rollout of our point-of-sale solution in the fuel and convenience store side of a major chain. 60 stores have already been installed since April and we are continuing to work to make sure this project will be a success. Again, succeeding in this project will position us very well in the consolidating retail and fuel market in Russia and neighboring countries.

During the second quarter, we signed a new contract with Delhaize group for the licensing of our point-of-sale solution at their 200 Alpha-Beta stores in Greece. And in a way, we deepened further our relationship with the Reitan group with a new contract to install our solution in the YX fuel site that they recently acquired. Following the rollout of our point-of-sale system in the Australian sites of BP earlier this year, BP went live with our POS in the UK next. The next phase of this global project will take our POS solution to BP-owned sites in the United States.

In the UK, Sainsbury's installed their first in-store restaurant with Retalix StoreLine Quick Service Restaurant module. This new module allows sales of complex meals and menus with orders being sent to the kitchen in preparation and service to the customer at the table, all within the supermarket and using the same system as in the checkout lane.

As you can see, our teams are very busy. We're also working on several good business opportunities that we hope to win in the coming months. I look forward to meeting you and having more good news to report on the next conference call. Now back to Barry.

Thank you, Avinoam, and good luck. In the United States, we also won new contracts and progressed with the execution of significant projects during the second quarter. A mid-sized grocery chain selected Retalix point of sale, headquarters and demand forecasting solutions. One of the American grocery chains signed up for a significant project to deploy our software solutions for their fuel sites. The convenient and fuel retailer that has been using our point of sale for several years signed up for our customer loyalty solution and Publix Supermarkets started deploying their Retalix StoreLine Quick Service Restaurant module similar to the one being rolled out by Sainsbury's in the UK.

A major foodservice distributor selected our Retalix InSync master data management system and two other mid-sized distributors selected our Power Enterprise Suite. We also continued to make good progress at StoreNext, which as you know is offering (inaudible) specifically designed for full chains and independent grocery retailers. During the second quarter, StoreNext USA launched a new online service for [connected] payments that helps independent grocery reduce electronic payment fees.

Six grocery stores are already using this service successfully and we believe this is a compelling element that will help accelerate the growth of the StoreNext business model in the U.S.

Finally, I'm sure you have all been reading the media stories about the Tesco's planned stores opening in the U.S. this fall. As one of our long-standing customers, our teams are working with Tesco to execute this planned rollout.

In our R&D efforts, we're progressing with the development of the Retalix InSync application. Retalix InSync master date management is moving from piloting stage to the production stage. Last month, the first Retalix InSync MDM installation went live, connected to an existing Retalix purchasing system at a U.S. customer. Two other MDM systems are scheduled to go live this year. The development of other key modules for InSync is also progressing. Base versions of Retalix InSync purchasing, order management and billing applications will be released in December and Retalix InSync warehouse management will be available early in 2008.

I'm sometimes asked by some investors in Retalix -- sorry -- I'm sometimes asked why our investment -- our (inaudible) investment in Retalix InSync and in R&D in general is needed. We continue to see strong opportunities in our market for these solutions. We view Enterprise solutions as key part of our future growth opportunity. Some investors have suggested we reduce our R&D immediately and move 5 or 10% of revenues down to operating income. While that approach would provide us with a short term improvement in the results, I strongly believe we would be [missing] the future. When we speak to retailers, they frequently talk about the need for truly and fully integrated solutions. Gartner Research recently completed a retail technology study that was published by Retail Information Systems Magazine. According to this study, retailers are now more favorable, including towards integrated solution suites than any other option. In fact, 50% of retailers that Gartner surveyed said that they are seeking integrated solution suites. According to Gartner studies, the factor driving this trend includes the development of highly focused applications that fit together in well-defined suites and the ability to install these applications in [phased] and [bolt-on] components to build fully integrated suites. All of this permits retailers to avoid problems of in-house software development.

What Gartner research has pointed out is exactly the strategy that Retalix is implementing. Retalix has a unique offering of point solutions that we developed especially for food retailers and distributors and our strategy provides a clear roadmap for integrated synchronized suites. I strongly believe in the potential of a next-generation platform and application. We could easily cut down R&D expense and offer only our existing point solutions, but if we did that, we would lose the potential growth that we can come from the 56% of retailers that Gartner says are seeking integrated solution suites.

In order to meet the expectations of our customers, the investment -- the intensive development efforts we continue in the next -- will continue in the next four quarters. I believe that R&D as a percentage of revenue will start to drop in the second half of 2008 and that in 2009 we will be able to decrease R&D in dollar terms as well. We have grown Retalix during 25 years through the belief in innovation and product development as a key to our success. We are now setting the grounds for the next phase in the Company's evolution and success.

Before I close, I would like to invite you to join us to our annual conference for customers and partners in Dallas, Texas on Monday, October 29. This will be an excellent opportunity for you to learn more about our vision, our products and industry trends, meet our management team, talk to our customers and partners and hear more about case studies and success stories. Please visit our web site for future information.

We appreciate the continued support of our shareholders, and in closing I would like to thank all Retalix employees all over the world for their efforts and dedication. Thank you for your attention, and now we would be happy to answer your questions.

(OPERATOR INSTRUCTIONS) Raghavan Sarathy, Ferris Baker Watts.

With regard to the new contract that you signed with (inaudible) signed with the [program] retailer, when do you expect to start recognizing revenues on the deal?

We will start recognizing this year in the second half.

Is it going to be third quarter or fourth quarter?

It looks like fourth quarter.

Okay. And then, just a clarification question on the expenses side. You said the quarter included (inaudible) in nonrecurring senses. I presume that includes (inaudible) related to the [transaction] costs. Is that correct?

No, it doesn't. That's waged related. It's onetime increase in severance pay because of the wage increases and some influence of currency fluctuations this quarter compared to the last quarter.

Okay, so how much was this wage increase versus the currency impact?

Both numbers are about $1.2 million.

That's combined, okay. Services margin declined 600 basis points sequentially. How many people did you hire in the quarter? Of the new hires, now many employees are consultants? And then what should we expect in terms of services margin over the next couple of quarters?

I said in my brief, part of the expenses that we incurred because of entering new territories, having to -- have to prepare the fiscal requirements of each country we come in. And once we do that, we will be able in the next couple of quarters to recognize the license fees that [involve with these] projects. We do expect our margins to be 60% for the year.

Right, but if I look at the headcount addition, you only added 30 people in the second quarter, but your services margins are up by 600 basis points. And I don't see any decline in your product line as product licensing as well. So what's incremental between first and second quarter here?

We did have increases in headcount in this quarter and some outside third-party contractors, too. So you cannot see all that, but that also caused the reduction in the margins.

Alright. G&A expenses excluding stock-based comp, (inaudible) expenses increased [850 sequentially], another similar increase last year as well. You didn't address this in your prepared comments. [You're obviously serious] about what drove the large sequential increase in D&A expenses.

We had some professional fees were mainly related to the SOX project that we're going through now with advisers on that subject.

So this would continue to increase through the year until we (inaudible) SOX compliance?

Yes, we will have those kinds of expenses this year, and next year they should decrease. [But as] the first year, we are going through the audited SOX process.

Okay. And on the topic of profitability, through the first half of the year, you recorded non-GAAP income of about 14% of your mid-point (inaudible) your original non-GAAP net income guidance of 15 to $22 million. Do you still think that midpoint of original guidance is achievable this year, or could you narrow down your non-GAAP net income outlook for the year now that you're eight months into the year?

We definitely believe that we can meet not only our top-line, but our bottom-line. As revenues will grow for the second half, remember traditionally 55% of revenues are in the second half of the year. With a moderate increase in headcount, most of the increase will come into the bottom line and the investments that we have done in the first half of the year will be -- the fruits come in the second half.

I understand that. What is expectation here? It's a pretty wide range, 15 to $22 million, I understand that (inaudible) at the beginning of the year. Now that they are eight months, what should we expect is mid-point or the lower end of the guidance? Can you give us some color on that?

We will fall somewhere between the first 15 to 22, somewhere mid-point, maybe a bit lower than that.

Okay, one final question. So when we [went] back, how should we think about the distribution for revenue and non-GAAP net income for the next couple of quarters?

We gave the guidance and accordingly, those are the figures. We will be mid-point in revenue and mid to lower point in bottom-line.

Just to emphasize this, in terms of revenue, we will be mid-point and up, and in terms of profits, we will be mid-point and low. But all of this will be within our guidance and that is our belief.

I understand that. I'm trying to understand the distributions in third and fourth quarter. Is it going to be up or will it be weighted towards the fourth quarter or are you going to see some, maybe [46 through] distribution in the third and fourth quarter? The second quarter was way below what I expected.

We stated last time that the third -- second quarter would be similar to the first, but in terms of the percentages, I would say about 47, 48% in third quarter and 53, 54% in the second quarter.

In the fourth -- I mean, third and fourth.

I'm sorry, are you talking about revenue here or (inaudible)?

Revenue.

And then in terms of earnings?

That will be skewed a bit more to the fourth quarter.

Ehud Eisenstein, Oscar Gruss.

I hope that my line is better, I couldn't hear most of the previous conversation so excuse me if I repeat questions that already have been asked. But what are the milestones that you have to achieve towards the end of the year in the second half in order to meet the mid range of the guidance?

We have got some customers that have indicated that they have selected us as their preferred supplier, and we have to sign contracts and have the ability to recognize products that are mature and to execute on some of the large projects that we're working on. These are the main elements that we're working on. I would say maybe 5 to 10% of revenue is related to these milestones. All of the rest is pretty much known.

Do you [think] more back-end loaded in the historical seasonality that you had, or it's pretty much within the ongoing business for you guys?

I would say pretty much on the ongoing, and you will see that there's a linear increase between the third and fourth quarter. [Of course in there] profitability, while the increase in the first quarter of revenues, most of it will go down to the bottom line, in profitability, it's more in the fourth quarter.

Okay. Sales and marketing as a percentage of revenues in the second half -- I believe you guidance for 15% last quarter. Where do you see it now?

Sales and marketing for the year will be about 13%.

13?

13.

Okay. So that's a little bit lower. Where do you see your financial income and taxes?

Tax rate will be around 25%.

For the year?

Yes.

22?

Between 22 and 25.

And the financial income or expenses?

They will be close, about -- we don't give the [number], but it will be [more or less] 20%.

That's (inaudible) income?

Yes.

Okay. What was the breakdown between store solution and headquarters?

It's about 65% store solution, 35% headquarter solution.

Okay. If we look into next year, what are the main growth drivers that you see for Retalix for next year?

As a Company that moves from the store solutions into enterprise and [way after] checkout, there was a huge investments in doing so. At the end of the day, we believe that we will start getting back returns on our investment. And while the store solutions, and there's a lot of indicators in the market that store solutions are going to grow rapidly, was the move from proprietary to open and there's a lot of indications of that in the market. But, we will tap into the whole investment into this integrated suite of products that we have at checkout. And I believe that one of the growth engines will be that our ability and the only ability in the market to provide an integrated [way after] checkout, and that will be one of the growth engines.

Okay. And I remember that last year, you gave the outlook for '07 around the September quarter earnings day. Are you ready now to start to quantitize next year? I mean if your mid range of the guidance goes for 18 and change for earnings today, do you see it growing 10% next year or high teens? Where do you see it trend for next year?

Like you said, last year we gave it in September or even later than September. I don't want to jump the gun over here. I just can say that I feel strong about the adoptions of those elements which are a key success for the growth of the Company. I believe 2008 will be strong in both terms. One, we will continue to grow. But secondly, as our products mature, we will be able to drop our R&D expense. And what typically happens is that a lot of the customers are requesting more and more professional services. So instead of hiring more developers for professional services, we will be moving people that are in the R&D department into professional services. So we will have experienced people, but we will drop our R&D investment and we will be ready to implement big projects.

Do you have a way to quantitize the InSync contribution, the expected InSync contribution next year versus this year?

I think it will grow dramatically by 100%, definitely over 100%. Just understand that InSync contributions today are less than 2, 3% of the Company.

Joseph Wolf, Lehman Brothers.

I hope I'm not repeating these too much, but I was hoping for some clarity on some of these margin issues. I guess my question is -- how much of this -- it's harder for us to see on the outside, and you seem very calm about the steep ramp that you can achieve in terms of profitability in the second half of the year. But how much of the cost of goods sold and R&D is by design right now, and how much of it is related to the I guess lesser or lower degree of visibility that the company now has because of the move to service and product so that we can get more comparable modeling that going forward? Because there's some steep ramps in hitting that 18 million or so in net income. And second question is just on the product milestone side. I'm just wondering if you could go through a little bit in terms of the next generation, what kind of deliverables or some milestones we can look at in terms of what customers are looking for and what your plans are as you hire R&D over the next three quarters?

Joseph, according to our plans and what we have in hand, we're going to have a much higher portion of license revenue in the second half of the year, which of course will influence both the growth and operating margin. So that is one of the main reasons for operating margins to increase.

In terms of R&D and milestones, we're looking at three major developments that we currently are involved in. One is all around the InSync side of things, which is 50, 60% of our R&D budget and our loyalty products and Store.net products. As I mentioned, you will see more and more releases of our InSync. We have gone live with our MDM products. You can see the purchasing, the ordering, the wealth management at the beginning of 2008. All of these will be released either late this year. Some of them have been just released already next year. Loyalty, you have heard of successes in places like Europe. We've signed up many customers on the international side and we -- I just mentioned today that we signed up some customers in the U.S. or a customer in the U.S. and there's some more to come. The loyalty [order] in the course of 2008 will see a maturity of that product. In terms of our Store.net product, which will be replacing our -- eventually our store solutions, we will continue to invest on that. We have some early adopters of those products, but that side, don't expect to see much releases during 2007. Probably in 2008, we'll see (inaudible) some very big successes that have already signed up its (inaudible) there and (inaudible) we'll only announce it sometime next year.

(inaudible), [Ridgeway & Conger].

Can you tell us the reasons why the M&A [talks] you were conducting sales?

Well, as you understand, we have signed on confidentiality agreements much more than what I mentioned we cannot discuss.

[Eric Beck], Beck Holdings.

Most of my questions were answered, but I just would like to make a comment as a shareholder. I don't see how this management is going -- you know, we always hear about increasing shareholder value, and in fact you have a decrease in shareholder value all the time [normally]. What is the management going to do going into the future to really increase shareholder value if you take into account that the Company did a secondary of $18 over three years ago when the stock was 15 and change 3.5 years later? Thank you.

Was that a question? Sorry.

Yes, it was a question. It was a comment and a question. As a longtime shareholder, I (inaudible) when the stock wasn't a nice one, just to put it easily. But I want to know what the management is going to do in order to improve shareholder return in Retalix. For example, what took the management so long to realize that (inaudible) [30%] of revenue [is not] sustainable, but everywhere else, (inaudible). And if you look at the returns of your competitors stock wise, you can see that -- and you can take (inaudible) [Systems], [JBAS] and others, they're 60% year-over-year, or just year-to-date returns, while Retalix is minus 25%. And it's (inaudible) it's more frustrating while actually the top line is growing. Thank you.

Well, I understand and I feel your frustration. As you know, I am very strongly and part of the visionary of this Company. And this Company is already providing a vision and executing on that vision.

We grew the Company very strongly with our store solutions, and at some stage, we had to make a decision, how are we going to turn this into a $1 billion company. What we understood is that we all -- we will have to move out of our -- let's call it comfort zone or what we have been mastering for many years. And we decided to move into the end-to-end, warehouse to checkout, exactly what Gartner said what customers are looking for. To do so is a big investment. It's not suddenly we've understood that we have to reduce our R&D from this 30%, 25% to what other companies are actually investing. It's because the maturity of our products, we can't afford to reduce R&D.

I am totally committed to our customers and I believe -- as you know, I'm also a shareholder in this Company -- I believe that jumping to the next step may be painful and may be more painful than what I expected. But I am totally -- I believe that we can become a company of $1 billion [ensuing] market cap or 500 and $1 billion in sales because we are making these investments and maybe even sacrifices on margin for the future. I am a true believer in it. I am all the time looking at how I can improve things, the move of putting of Avinoam as COO of the Company is -- actually now that products are maturing, he is the best man to look at how we can improve the bottom line. He has done this in many aspects or parts of the Company. So we are not neglecting or [trading] away what we believe is our vision of the Company. We're all the time trying to improve. I believe that the investors who have been with us and believe in the Company will see the returns in the future as I will not lead the Company. I will make sure that I am here to see the success of all of the investments.

Does that answer question?

Yes, thank you.

Raghavan Sarathy, Ferris Baker Watts.

If I can drill down on this (inaudible) ramp up in the second half of the year. Danny, what kind of operating margin are we looking at for the third quarter?

We are looking close to (inaudible) [essentially] and (inaudible) in the fourth.

Okay. And then in terms of the product sales as a percentage of revenue, are we still looking at, what, 38% for the full year?

Yes.

(OPERATOR INSTRUCTIONS). There are no further questions as this time. I would like remind participants that a replay of this call is scheduled to begin two hours after the conference. In Israel, please call 03-9255-940, or 1-800-286-285. In the U.S., please call 1-888-326-9310; internationally, please call 9723-9255-940. I would now like to turn over the call back to Mr. Barry Shaked.

We appreciate your time today (MULTIPLE SPEAKERS).

We have another question -- Dan Gallagher UBS.

I have been an investor as well since 2002 and a little frustrated with the R&D spend. As long as we're talking vision, can you give me a sense when we're doing $0.5 billion in revenue what your normalized R&D spend might be. I would appreciate that.

I think that we can get to that within two to three years in revenues, and I believe the normalized should be between 15 and 18%.

Mr. Shaked, back to you.

Assuming that there's no more questions, I definitely appreciate the time everyone has spent. I definitely appreciate all of our investors, those that started with us and believed us when we were $1.50, and today, we, as we mentioned, $15.00, but still some increase. And I am a true believer in what Retalix can still do. So thank you very much and we will speak to you next quarter. Bye.

Thank you. This concludes Retalix's second-quarter 2007 results conference call. Thank you for your participation. You may go ahead and disconnect.