Q4 2021 Nice Ltd Earnings Call

Welcome to nice conference call discussing fourth quarter and full year 2021 results and thank you all for holding all participants are at present in a listen only mode.

Speaker 1: Welcome to my conference call discussing fourth quarter and full year 2021 results. And thank you all for holding. All participants are at present in a listen only mode. Following management's formal presentation, instructions will be given for the questions and answers.

Following management's formal presentation.

Instructions will be given for the question and answer session.

As a reminder, this conference is being recorded.

February 17th 2022.

I would now like to turn this call over to Mr. Marty Marty Cohen.

Speaker 1: I would now like to turn this call over to Mr. Marty Cohen, Vice President Investor Relations at NICE. Please go ahead sir. Please go ahead sir.

White President Investor Relations at nice.

Please go ahead Sir.

Yeah.

Please go ahead Sir.

Okay do you have can you hear us.

Hello.

Hello.

How are you able to hear you, yes, we are in design.

Yes, Mr. <unk> to go ahead and are you able to hear us.

And you hear us.

Yes, what happened.

Speaker 2: What happened? I'm not sure. Your line is unmuted.

Hello.

I am not sure your line is on mute.

Thank you operator.

Please go ahead. Thank you.

Speaker 3: With me on the call today are Barak Elam, Chief Executive Officer, and Beth Gaspis, Chief Financial Officer. Before we start, I'd like to point out that some of the statements made on this call will constitute forward-looking statements.

With me on the call today are for Rocky alarm, Chief Executive Officer, and best gas Fish, Chief Financial Officer before we start I'd like to point out that some of the statements made on this call will constitute forward looking statements.

In accordance with the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Speaker 3: In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward looking states.

Please be advised that the company's actual results could differ materially from these forward looking statements.

Additional information regarding the factors that could cause actual results or performance of the copies to differ materially is contained in the section entitled risk factors.

Speaker 3: Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the inspection entitled Risk Factors.

And item three of the company's 2020 I report on form 20-F, as filed with Securities and Exchange Commission.

'twenty three 2021 .

During today's call we will present, the more detailed discussion of fourth quarter 2021 results and the company's guidance for the first quarter and full year 2000 and twice.

Speaker 3: During today's call, we will present a more detailed discussion of fourth quarter 2021 results and the company's guidance for the first quarter in full year 2022. All in the comments there will be a link to the video description below.

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 generally accepted accounting principles as reflected mainly in accounting for acquisition related revenues and expenses Ameren.

Speaker 3: differ in certain respects from generally accepted accounting principles.

Speaker 3: amortization of intangible assets and accounting for stock based compensation.

Amortization of intangible assets and accounting for stock based compensation.

The difference between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release I'll now turn the call over to Ralph.

Thank you Marty and welcome everyone.

'twenty one was an outstanding year for nice as we continue to drive acceleration across the board.

Speaker 4: 2021 was an outstanding year for NICE as we continued to drive acceleration across the board.

Speaker 4: We reported double-digit revenue growth in every quarter, leading to 16% revenue growth for the full year.

Reported double digit revenue growth in every quarter, leading to 16% revenue golf for the full year.

Speaker 4: We surpassed the $1 billion cloud revenue mark with 30% year-over-year growth.

We surpassed the $1 billion of cloud revenue, Mark with 30% you'll be uncle.

Our international expansion continues to gain momentum in both EMEA and APAC.

Speaker 4: our international expansion continues to gain momentum in both EMEA and APAC.

Speaker 4: Digital is gaining massive scale and speed with 260% growth in the number of digital first deals in 2021.

Digital is gaining massive scale and speed with 260% growth in the number of digital first deal in 2020 one.

Speaker 4: AI Booking increased fivefold, quickly transforming NICE from an analytics leader to an AI powerhouse.

Hey bookings increased five fold quicker transforming nice from an analytics leader to an AI powerhouse.

Nice in the fast growing Israeli there, it's game with Blue chip profitability.

Speaker 4: Nice is a fast growing edge eye leader at scale with blue chip profitability.

We expect to continue to accelerate all double digit growth and at the same time, so they'll progress towards all 30% or higher operating margin targets.

Speaker 4: We expect to continue to accelerate our double digit growth and at the same time further progress towards our 30% or higher operating margin target.

Speaker 4: Our leadership is clearly reflected in our Q4 results, as highlighted by similar attributes that drove our momentum throughout 2021.

I believe you'll see is clearly reflected in our Q4 results.

As highlighted by similar attributes that drove our momentum throughout 2021.

Speaker 4: growing number of large enterprise deals, wider adoption of our comprehensive portfolio, a growing surge in competitive replacements, accelerating international expansion, soaring demand for digital and AI, and the continued signing of new strategic partnerships.

The growing number of large enterprise deals wider adoption of our comprehensive portfolio.

Going surge in competitive replacements accelerating international expansion so.

Growing demand for digital linear and the continued signing of new strategic partnerships.

We have our artist fitted leadership recognition, we continue to experience unparalleled success at the high end of the market due to the unrivaled breadth and depth of our cloud platforms.

Speaker 4: With our undisputed leadership recognition, we continue to experience unparalleled success at the high end of the market due to the unrivaled breath and death of our cloud platform.

In Q4, we signed a record number of eight digit deals with large enterprises that included among others. One of the world's largest asset management groups and top 10 U S bank and not a very large U S banks and large loan servicing company, a well known travel company and one of them.

Speaker 4: In Q4, we signed a record number of 8-digit deals with large enterprises that included, among others, one of the world's largest asset management groups, a top 10 US bank, another very large US bank, a large loan servicing company, a well-known travel company, and one of the largest US municipalities.

The largest U S municipalities.

Our first our first class portfolio that was built with strategic investment of tens of thousands of development. Many years to date continues to increase our win rate as well as our growing base of Upsells and cross sells.

Speaker 4: Our first class portfolio that was built with strategic investment of tens of thousands of development many years to date continues to increase our win rate as well as our growing pace of upsells and crosses.

For example in Q4, there were a digital portfolio expansion deal with a large I just services company as well as allows repeal.

Speaker 4: For example, in Q4, there are 8-digit portfolio expansion deals with a large IT services company as well as a large BPO.

Speaker 4: Other seven digital deals of customers who adopted a bold part of our portfolio included two large utility companies and a worldwide provider of industrial automation, among others.

Other seven digit deal of customers, who have adopted the both parts of our portfolio included two large utility company and a worldwide provider of industrial automation among others.

As the market is rapidly evolving and decisions on cloud digital nei all converging organizations are becoming more selective on the vendor of choice.

Speaker 4: As the market is rapidly evolving and decisions on cloud, digital and AI are converging, organizations are becoming more selective on the vendor of choice.

This creates an insurmountable barrier for new players and legacy providers further widening our competitive differentiation.

Speaker 4: This creates an insurmountable barrier for new players and legacy providers, further widening our competitive differentiation.

Speaker 4: Q4 was characterized by a dramatic increase in competitive replacements, including seven digit deals with well-known health insurance company, a very large and prominent consumer brand company, a well-known payment processor, a very large European bank, and a Midwest community bank.

Q4 was characterized by a dramatic increase in competitive replacements.

<unk> seven digit deal with well known health insurance company.

A very large and prominent con consumer brands company.

Well known payment process or a very large European bank and in Midwest community Bank.

Speaker 4: In a largely untapped market, international is a tremendous goal of opportunity.

In a largely untapped market international is a tremendous golf opportunity.

Speaker 4: our scale, global presence and our agile platforms are the reason behind our solid execution internationally.

Our scale global presence and our agent platforms, all the reason behind our solid execution internationally.

In Q4, we reported accelerated double digit international growth led by some very large seven did you deal including <unk>.

Speaker 4: In Q4, we reported accelerated double digit international goals led by some very large seven digit deals, including a large UK government agency, a global French financial institution, a large APEC based utility company and a prominent UK based insurance company.

A large UK government agency, a global French financial institution allows apex based utility company and a prominent U K based insurance company.

[noise] in 2020 , one we catapulted nice to the center of the digital Arena and we are experiencing an unprecedented demand for our nexgen AI and digital solutions.

Speaker 4: In 2021, we catapulted NICE to the center of the digital arena, and we are experiencing an unprecedented demand for our next-gen AI and digital solutions.

Seven digit deals in the quarter included a tier one telecommunication company, a leading U K based media company, one of the largest property and casualty insurance companies and well known tax advisor with Jeremy and every known coffee company.

Speaker 4: Seven digit deals in the quarter included a T1 telecommunication company, a leading UK-based media company, one of the largest property and casualty insurance companies, a well-known tax advisor firm, and a renowned coffee company.

Over the past few years and continued into the fourth quarter, we have greatly expanded our strategic partnerships, which has helped drive the Gulf our solutions worldwide.

Speaker 4: Over the past few years and continued into the fourth quarter, we have greatly expanded our strategic partnerships, which has helped drive the growth of our solutions worldwide.

In Q4, we signed a strategic partnership with Google for six one optimization as well as integration integrating six one with Google Cloud contact center artificial intelligence.

Speaker 4: In Q4, we signed a strategic partnership with Google for CX1 optimization, as well as integrating CX1 with Google Cloud Contact Center Artificial Intelligence.

We also announced a partnership with at least a lot to bring six one to the UAE in the middle East.

Speaker 4: We also announced a partnership with Efi Salah to bring CX-1 to the UAE and the Middle East.

Speaker 4: In another partnership just recently signed, Deutsche Telekom Global Business is now offering 6,1 in Europe .

And another partnership just recently signed Deutsche Telekom Global business. He is now offering six one in Europe .

Our outstanding results in Q4, epitomize outperformance throughout 'twenty, 'twenty, one where we accelerated revenue growth to a new record.

Speaker 4: Our outstanding results in Q4 epitomize our performance throughout 2021, where we accelerated revenue growth to a new record, continued to invest for our future success and at the same time improved our growth margin and delivered double digit growth in profitability.

Continue to invest for future success and at the same time improved our gross margin and delivered double digit growth and profitability.

2021 what was the greatest year in license eastern and it sets us up to accelerate our growth strategy and aggressively execute on bold new vision for nice for 2022 and beyond.

Speaker 4: 2021 was the greatest year in NICE's history, and it sets us up to accelerate our growth strategy and aggressively execute on bold new vision for NICE for 2022 and beyond.

The massive digital evolution of the last two years turned every consumer to be digital by default.

Speaker 4: The massive digital evolution of the last two years turned every consumer to be digital by default.

At the same time organizations, even those that have already moved to the cloud are still struggling to provide smooth and cohesive digital native services.

Speaker 4: At the same time, organizations, even those that have already moved to the cloud, are still struggling to provide smooth and cohesive digital native services.

Therefore, the foster that digitalization progresses, the more consumers frustration go always brands, creating mountain friction and further deterioration in experiences.

Speaker 4: Therefore, the faster that digitalization progresses, the more consumers' frustrations grow with brands, creating mountain friction and further deterioration in experiences.

Speaker 4: The past decade has multiple examples of companies that successfully introduced visionary approaches to eliminate the friction in their respective markets.

The past decade has multiple examples of companies that successfully introduced visionary approaches to eliminate the friction in their respective markets.

Speaker 4: They were successful in the execution because they managed to bring together best in class platform, technology, deep domain expertise and extreme focus.

They were successful in the execution because they managed to bring together best in class platform technology deep domain expertise and extreme focus.

We operate today in markets that are full of friction and now on the verge of their own frictionless evolution.

Speaker 4: We operate today in markets that are full of friction and are on the verge of their own frictionless revolution.

This is generating more than just a significant increase in our Tam.

Speaker 4: This is generating more than just a significant increase in R10, but rather a revolutionary way of thinking about the opportunity ahead of us.

But the other evolutionary way of thinking about the opportunity ahead of us.

Our vision is to create a frictionless consumer reality.

Speaker 4: Our vision is to create a frictionless consumer reality across the three friction-filled markets we operate in.

Across the three friction field markets, we operate in.

Speaker 4: The CX market is facing a rush to digital and self-service by consumers of all generations.

The CX market is facing a rush to digital and self service by consumers of all generations.

Speaker 4: At the same time, with 15 million agents globally, labor still represents 87% of spend by organizations.

Same time, we 15 million agents globally labor still represents 87% of spend by organizations.

This disconnect creates an ever growing friction cause these organizations failed to keep up with the pace and expectations of the digital and customers.

Speaker 4: This disconnect creates an ever growing friction as these organizations fail to keep up with the pace and expectations of the digital end customers.

This is the vision behind the creation and the evolution of six one.

Speaker 4: This is the vision behind the creation and the evolution of CX-1 as it is now ready to take on the new mission of creating frictionless CX.

She is now ready to take on a new mission of creating frictionless CX.

Speaker 4: With thousands of customers globally, the largest market data repository, purpose-built AI, natively integrated digital capabilities, and hundreds of new features every year, CX1 is uniquely positioned to drive a dramatic shift of enterprise spent from customer service labor to next-gen technology.

With thousands of customers globally, the largest market data repository.

It's built natively.

Natively integrated digital capabilities and hundreds of new features every year six one is uniquely positioned to drive a dramatic shift of enterprise spend from customer service labor to Nextgen technology.

This next phase is dramatically increasing our wallet share opportunity per customer. The revenue profile is shifting from a limited number of agents to a limitless and exponentially growing number of interactions.

Speaker 4: This next phase is dramatically increasing our wallet share opportunity per customer as the revenue profile is shifting from a limited number of agents to a limitless and exponentially growing number of interactions.

In the financial crime and compliance market.

Speaker 4: In the financial common compliance market, banks started their journey towards a digital reality by catching up on the front end services. But they are held back and slowed down by back office processes and compliance safeguards, which are a must for creating customer trust and safety, but an enormous roadblock for speed.

Banks started their journey towards a digital reality by catching up on the front end services.

They are held back and slowed down by back office processes, and compliance safeguards, which are a masterful, creating customer trust and safety, but an enormous roseland roadblock for speed.

Excites, our financial crime and compliance cloud platform is quickly, becoming the leading cloud platform for Frictionless Trust and for managing risk in the digital banking era.

Speaker 4: excites our Financial Common Compliance cloud platform is quickly becoming the leading cloud platform for frictionless trust and for managing risk in the digital banking era.

The momentum we saw in our financial crime and compliance business in 2020 . One represents an inflection point as organizations are massively investing in modernizing their compliance environment. So that they can advance to frictionless digital banking.

Speaker 4: The momentum we saw in our financial common compliance business in 2021 represents an inflection point as organizations are massively investing in modernizing their compliance environments so that they can advance to frictionless digital banking.

Speaker 4: Lastly, when it comes to criminal justice market, the eruption of digital is an essential source of evidence is creating a massive data overload.

Lastly, when it comes to criminal Justice market.

Eruption of digital is an essential source of evidence is and it is an essential source of evidence is creating a massive data overload.

Speaker 4: This introduces an impossible level of friction that is already ascertaining the effectiveness of the criminal justice system.

This introduces an impossible level of friction that is already certainly the effectiveness of the criminal Justice system.

With years of leadership in co policing, we're doubling down on our criminal Justice digital cloud platform evidenced central.

Speaker 4: With years of leadership in co-policing, we are doubling down on our criminal justice digital cloud platform, Evidence Central.

Speaker 4: With Evidence Central, we are providing the only end-to-end digital evidence management cloud platform that serves all relevant stakeholders.

With evidence central we are providing the only end to end digital evidence management cloud platform that serves all of 11 stakeholders.

This represents a whole new end market for us with a revenue opportunity that rapidly goes with every piece of evidence added to evidence central.

Speaker 4: This represents a whole new end market for us with a revenue opportunity that rapidly grows with every piece of evidence added to Evidence Central.

Yeah.

Speaker 4: The massive digitalization that our markets are undergoing is forcing organizations to stall the frictionless revolution immediately and to move quickly.

The massive digitalization that our markets are undergoing is forcing organizations to styles of frictionless evolution immediately and to move quickly.

Over the years, we partner with our customers and together with success it successfully charge forward multiple transformations.

Speaker 4: Over the years, we've powered them with our customers, and together, we successfully charged forward for multiple transformations.

With our cloud native platform.

Speaker 4: with our cloud native platforms, our industry specific AI, and our unique domain expertise, we are perfectly positioned to lead organizations worldwide to a frictionless reality.

And just with specific AI and our unique domain expertise, we are perfectly positioned to lead organizations worldwide to a frictionless reality.

Speaker 4: At the same time, this rush to digital presents the largest time and growth opportunity we've seen today.

At the same time these swaps to digital presents the largest Tam in Gulf opportunity, we've seen to date.

We already delivered tremendous success in 2021 and now heading into 2022 we're in the best competitive position in our history.

Speaker 4: We already delivered tremendous success in 2021, and now heading into 2022, we are in the best competitive position in our history.

Speaker 4: Our success is a direct result of the unique combination of passion and dedication that our team is demonstrating every day. And I would like to take this opportunity to thank each and every one of our employees for making 2021 the banner year it was. Thank you and I will now turn the call over to Beth.

Our success is a direct result of the unique combination of passion and dedication that our team is demonstrating every day.

And I would like to take this opportunity to thank each and every one of our employees for making 2021, the new year. It was thank you and I will now turn the call over to Beth.

Thank you Barak and good day, everyone I am pleased to provide the analysis of our financial results and business performance for the fourth quarter of 2021, and our outlook for the first quarter and full year for 2022.

Speaker 5: Thank you, Barack, and good day, everyone. I am pleased to provide the analysis of our financial results and business performance for the fourth quarter of 2021 and our outlook for the first quarter and full year for 2022. Our fourth quarter financial results were outstanding with 18% year-over-year growth in total revenue, which was the fourth consecutive quarter that we reported double-digit growth.

Our fourth quarter financial results were outstanding with 18% year over year growth in total revenue, which was the fourth consecutive quarter that we reported double digit growth.

Speaker 5: Total revenue for the fourth quarter reached a record of $515 million compared to $438 million in the same period of last year.

Total revenue for the fourth quarter reached a record of $515 million compared to $438 million in the same period of last year.

Speaker 5: Our financial performance in the fourth quarter reflected the strong execution that we demonstrated throughout 2021. We delivered double digit, year over year total revenue growth in both our business segments of customer engagement and financial crime and compliance, internationally in both EMEA and APAC, and increased our gross margins for all three business lines, cloud, product and service.

Our financial performance in the fourth quarter reflected the strong execution that we demonstrated throughout 2021.

We delivered double digit year over year total revenue growth in both our business segments customer engagement and financial crime and compliance internationally in both EMEA and APAC and increased our gross margins for all three business lines cloud product and services.

Speaker 5: The Q4 top line was driven by another stellar quarter in the cloud with 28% year-over-year cloud revenue growth, coupled with an outstanding performance in our product revenue, which grew 54% year-over-year.

The Q4 top line was driven by another stellar quarter in the cloud with 28% year over year cloud revenue growth, coupled with an outstanding performance in our product revenue, which grew 54% year over year.

Cloud revenue contributed $285 million and reached a record 55% of our total revenue services revenue totaled $166 million and contributed 32% and the remaining $64 million or 13% with product revs.

Speaker 5: cloud revenue contributed $285 million and reached a record 55% of our total revenue. Services revenue totaled $166 million and contributed 32%. And the remaining $64 million, or 13%, was product revenue.

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In Q4, our cloud revenue sequential growth rate accelerated to 9%, resulting in exceeding the $1 billion milestone of cloud revenue for 2021.

Speaker 5: In Q4, our cloud revenue sequential growth rate accelerated to 9%, resulting in exceeding the $1 billion milestone of cloud revenue for 2021, a feat accomplished by our continued penetration in large enterprises, expansion of our offering to cover the complete customer journey in digital and self service and success in the global market.

He's accomplished by our continued penetration in large enterprises expansion of our offering to cover the complete customer journey and digital and self service and success in the global market.

Speaker 5: We recorded impressive revenue growth across all geographies during the fourth quarter. The Americas region, which represented 82% of total revenue, grew 16% year over year. Our existing strong international go-to-market presence, coupled with our growing partnerships, is contributing to our strong growth globally.

We recorded impressive revenue growth across all geographies during the fourth quarter.

The Americas region, which represented 82% of total revenue grew 16% year over year, our existing strong international go to market presence, coupled with our growing partnerships is contributing to our strong growth globally.

Speaker 5: The EMEA region grew 30% year over year and represented 12% of our total revenue. APAC grew 15% year over year and represented the remaining 6%.

The EMEA region grew 30% year over year and represented 12% of our total revenue.

APAC grew 15% year over year and represented the remaining 6%.

Speaker 5: Moving to our business unit breakdown, customer engagement revenues, which represented 81 percent of our total revenue in Q4, totaled $420 million, a 16 percent increase compared to the same quarter last year. CX1 remains the primary growth driver of our continued top-line growth in customer engagement.

Moving to our business unit breakdown customer engagement revenues, which represented 81% of our total revenue in Q4 totaled $420 million, a 16% increase compared to the same quarter last year.

<unk> remains the primary growth driver of our continued topline growth and customer engagement.

Speaker 5: Revenues from Financial Crime and Compliance, which represented 19% of our total revenue in Q4 and totaled $95 million, exhibited accelerated growth in each quarter of 2021 to a record of 24% growth year over year.

Revenues from financial crime, and compliance, which represented 19% of our total revenue in Q4 and totaled $95 million exhibited accelerated growth in each quarter of 2021 to a record of 24% growth year over year.

Nice is well positioned financially for continued success, increasing our topline revenue growth by expanding our market share while simultaneously reporting industry, leading profitability and a healthy cash flow from our operation.

Speaker 5: NICE is well positioned financially for continued success, increasing our top line revenue growth by expanding our market share while simultaneously reporting industry leading profitability and a healthy cash flow from our operations.

Speaker 5: Our gross profit grew to a record $376 million in the fourth quarter of 2021, compared to $317 million for the fourth quarter of 2020.

Our gross profit grew to a record $376 million in the fourth quarter of 2021 compared to $317 million for the fourth quarter of 2020.

Gross margin increased to a record 73% compared to 72.2% in Q4 last year.

Speaker 5: gross margin increased to a record 73% compared to 72.2% in Q4 last year. The increase in gross margin in the quarter was mainly attributed to an increase of 191 basis points in the product gross margin and a 57 basis point increase in the cloud margin, which reached a record 68.2% gross margin in Q4.

The increase in gross margin in the quarter was mainly attributed to an increase of 191 basis points in the product gross margin and a 57 basis point increase in the cloud margin, which reached a record 68, 2% gross margin in Q4.

Speaker 5: In Q4, operating income increased by 11% year over year to $146 million compared to $132 million in Q4 2020. And operating margin was 28.2%.

In Q4 operating income increased by 11% year over year to $146 million compared to $132 million in Q4, 2020, and operating margin was 28, 2%.

Speaker 5: earnings per share for the fourth quarter totaled a record $1.73, an increase of 7% compared to Q4 last year. We experienced another strong quarter in operating cash flow, which totaled $113 million in Q4.

Earnings per share for the fourth quarter totaled a record $1.73, an increase of 7% compared to Q4 last year.

We experienced another strong quarter in operating cash flow, which totaled $113 million in Q4.

Total cash and investments at the end of this December totaled 1 billion and $425 million our debt net of the hedge instrument was $532 million, resulting in net cash and investments of $893 million.

Speaker 5: Total cash and investment at the end of December totaled $1,425,000,000. Our debt, net of a hedge instrument, was $532 million, resulting in net cash and investments of $893 million.

Speaker 5: Our strong cash flow generation and healthy balance sheet continue to allow us to capitalize on synergistic strategic acquisitions that are consistent with our cloud and digital growth strategy and capital allocation plan.

Our strong cash flow generation and healthy balance sheet continue to allow us to capitalize on synergistic strategic acquisitions that are consistent with our cloud and digital growth strategy and capital allocation plan.

As we step into 2022, we expect our momentum to continue with double digit growth on both the topline and Bottomline and cloud revenue growth of 27% or greater operating.

Speaker 5: As we step into 2022, we expect our momentum to continue with double digit growth on both the top line and bottom line and cloud revenue growth of 27% or greater. Operating margin is expected to increase for 2022. Our tax rate for 2022 is expected to be in a range of 21 to 22%.

<unk> margin is expected to increase for 2022, our tax rate for 'twenty two 2022 is expected to be in a range of 21% to 22%.

Speaker 5: I will conclude my remarks with guidance. For the first quarter of 2022, we expect total revenue to be in the range of $505 million to $515 million. We expect the first quarter 2022 fully diluted earnings per share to be in a range of $1.65 to $1.75.

I will conclude my remarks with guidance.

For the first quarter of 'twenty, two we expect total revenues to be in the range of $505 million to $515 million. We expect the first quarter 2022 fully diluted earnings per share to be in a range of $1 65 to $1 75.

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For the full year 2022 we expect total revenue to be in the range of $2 billion and $140 million to 2 billion and $160 million, representing 12% growth at the midpoint compared to full year 2021.

Speaker 5: For the full year 2022, we expect total revenue to be in the range of $2,140,000,000 to $2,160,000,000 representing 12% growth at the midpoint compared to full year 2021.

Speaker 5: We expect the full year 2022 fully diluted earnings per share to be in a range of $7.07 to $7.27, representing 10% growth at the midpoint compared to full year 2021. I will now turn the call over to the operator for questions. Operator? Operator?

We expect the full year 2022 fully diluted earnings per share to be in a range of $7.07 to.

The $7 and 27.

A 10% growth at the midpoint compared to full year 2021.

I'll now turn the call over to the operator for questions operator.

Yeah.

Operator, we're now ready for questions.

[noise].

Or are you there we're now ready for questions.

Speaker 6: So we are making an announcement. Please stay connected. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

So we are making an announcement please stay connected.

Ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Speaker 6: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove yourself from the question queue.

A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove yourself from the question queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker 6: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Our first question comes from the line of Summit's Amano with Jefferies. Please go ahead.

Speaker 6: The first question comes from the line of Samad Samana with Jefferies, please go ahead.

Hi, good morning, Congrats on the strong finish to 2021, maybe first Barack if we can maybe dig into I know you highlighted strong momentum for 2021 and the close of the year, maybe you could help could you help US understand you know early into 2020 to you what the pipeline looks like.

Speaker 7: Hi, good morning. Congrats on the strong finish to 2021. Maybe first, Barack, if we could maybe dig into, I think you highlighted strong momentum for 2021.

Speaker 7: and the close of the year. Maybe you could help, can you help us understand, you know, early into 2022, what the pipeline looks like, especially around large deals.

Especially around large deals and in particularly with the context of the world were turning I think everyday a little bit more toward normal how should we think about the pipeline and what's embedded in that guidance.

Speaker 7: and particularly with the context of the world returning, I think, every day a little bit more toward normal, how should we think about the pipeline and what's embedded in that guidance?

Thank you. So first of all yeah, we had a very strong finish for the year and we're entering 2022 with very strong momentum in the pipeline.

Speaker 4: Thank you. So first of all, yeah, we had a very strong finish for the year. And we're entering 2022 with a very strong momentum. The pipeline is the strongest one we have seen and the highest growth that we have seen. So we have both great visibility into 2022. And at the same time, we believe that the momentum of booking of new deals.

Is the strongest one we've seen and the highest growth that we have seen so we have both greater visibility into 2022 and at the same time, we believe that the momentum of our booking of new deals.

Speaker 4: from in all different divisions and in all different market segments will continue.

From a in all different divisions and in all different market segments.

We'll continue.

Speaker 4: And it's driven by the same trends that I've mentioned that we saw in 2021. Great success of the enterprise, large enterprise market.

Driven by the same trends that I've mentioned that we saw in 2021, great success of the enterprise large enterprise market and.

Speaker 4: an increase in win rate and competitive replacement.

The increase in win rates in win rates in competitive replacement.

Speaker 4: the surge that we see in digital and AI, and of course the international markets that are starting to yield very high and healthy growth.

Surge that we've seen a digital and AI and of course, the international market starting to yield.

Hi, and healthy growth.

Great and then Beth maybe a couple of follow ups for you when I think about the the cloud revenue and <unk> is absolutely healthy above the company's boardroom guidance can you maybe help us understand if you saw the same seasonality on the networking connectivity side or just any puts in.

Speaker 7: Great. And then Beth, maybe a couple of, uh, followups for you. When I think about the cloud revenue and in 4Q is honestly healthy above the company's launch from guidance. Can you maybe help us understand if, if you thought the same seasonality on, on the networking connectivity side, or just any puts and takes that we should consider as far as context for this December's cloud revenue versus last year.

<unk> that we should consider as far as context for this December as cloud revenue versus last year.

Yeah. Thank you for the question.

Speaker 5: Yeah, thank you for the questions. As you highlighted, we saw extremely healthy growth in our cloud revenue in Q4 with our 28% growth.

As you highlighted we saw extremely healthy growth in our cloud revenue and in Q4 with our 28% growth. When you looked at that relative to last year. As you highlighted we had received some surge in activity coming up as a result of Covid, our last year and so it was against.

Speaker 5: When you looked at that relative to last year, as you highlighted, we had received some surge in activities coming as a result of COVID last year. And so it was against a higher bar in terms of the cloud growth.

A higher bar in terms of the cloud growth.

Speaker 5: Looking forward, as we look at the cloud, you know, we've reiterated, we have extremely strong confidence in the continued growth of our cloud business overall.

Looking forward as we look at the cloud you know we've reiterated we have extremely strong confidence in the continued growth of our cloud business overall and as we look forward to 2022, and we actually expect to have our cloud revenue achieved 27% or greater gross looking for.

Speaker 5: And as we look forward to 2022, we actually expect to have our cloud revenue achieve 27% or greater growth looking forward. And of course, that's on an extremely large cloud run rate in excess of $1 billion.

Forward and of course, that's on an extremely large cloud run rate in excess of $1 billion.

Great.

Speaker 7: Great. And just last one as a follow up to that, the guidance was stronger than I think most people are expecting. I was just wondering if you can maybe unpack how we should think about CX1's contribution to that versus financial crime and compliance, which sounds like that's ramping nicely as well. And just how we should contextualize the guidance with with those two.

Last one is a follow up to that the guidance was stronger than I think most people were expecting I was just wondering if you could maybe unpack how we should think about oh, yeah one's contribution to that versus financial crime and compliance, which sounds like that's ramping nicely as well and just how we should contextualize the guidance, but with those two sub segments.

Speaker 5: Yeah, sure. So as I just mentioned, you know, we have very strong confidence in our cloud growth heading into 2022. Barack talked about the strength of our pipeline, which we see across all business segments, but certainly CX-1 continues to be the primary contributor that is driving that ongoing growth in our cloud. We expect that, of course, to continue into 2022. We had great results that were underscored by the CX-1 platform during the course of 2021, and we expect that to continue on into 2022.

Yeah sure. So as I just mentioned you know we have very strong confidence in our cloud growth heading into 2022 Barack talked about the strength of our pipeline, which we see across all business segments, but certainly CX. One continues to be the primary contributor that is driving that ongoing growth in our cloud.

And we expect that of course to continue into 2022.

We had.

<unk> results that were underscored by the CX one our platform during the course of 2021, and we expect that to continue on into 2022.

Great. Thanks, again for taking my questions. Thank.

Speaker 7: Great, thanks again for taking my questions. Thank you.

Thank you.

Operator, thank you.

Speaker 1: Thank you. The next question comes from the line of Tim Horan with Oppenheimer. Please go ahead.

Thank you. The next question comes from the line of Tim Horan with Oppenheimer. Please go ahead.

Well. Thanks, guys can you give us a sense of how important digital is to revenue growth at this point, but you didn't either qualitatively or quantitatively and I know you mentioned, you're starting to see some breakdowns in internal barriers, both a regulatory perspective.

Speaker 8: Thanks guys. Can you give us a sense of how important digital is to revenue growth at this point, either qualitatively or quantitatively? And I know you mentioned you're starting to see some breakdowns in internal barriers, both a regulatory and IP perspective, to digital adoption. Any more color around what's going on there would be great.

The digital adoption and any more color around what's going on there would be great.

Sure. So you know, we think of digital and do a few ways first of all by itself. As we said you know with consumer is becoming digital by default organization I'll now trying to catch up do you realize that the old way of doing it in a very siloed way thinking of different parts of it.

Speaker 4: Sure, so we think of digital in a few ways. First of all, by itself, as we said, with consumers becoming digital by default, organizations are now trying to catch up. They realize that the old way of doing it, in a very silent way, thinking of different parts of the organization separately, just doesn't fly, doesn't work. Hence, we see the need to provide a much more holistic CX vision, and we came up with.

Organizations separately, just doesn't fly doesn't work.

Hence, we see a need to provide a much more holistic CX division and we came up with <unk>.

Speaker 4: CXI, which is this exact thing of convergence of markets. I'll remind you that in the past.

<unk>, which is this the exact thing of a convergence of markets I'll remind you that in the past we were the first one in the market the converging.

Speaker 4: We were the first one in the market that converging CCAS or routing with W, with workforce management, with analytics and we created a new standard in the market that was well adopted. We now see that exactly happening and we are now converging or leading the convergence of digital with everything, all the rest together with AI.

CCAR, so routing with W. M.

Of course management, our wisdom teeth and with greater than your standards in the market that was well adopted we now see that exactly happening and we are now converging well, leading the convergence of digital with everything with all the rest together with AI.

Speaker 4: So first of all that's the right way to go about it and it increases our win rate and we see a lot of deals

So first of all that's the right way to go about it and it increases our win rate and we see a lot of deals where we are leading with digital or digital is part of what we are selling from a revenue contribution.

Speaker 4: where we are either leading with digital or digital is part of what we are selling. From a revenue contribution, we think the potential is just tremendous, as I highlighted in my earlier remarks.

The potential is just tremendous and as I highlighted in my earlier remarks, because it's shifting the way we view the business.

Speaker 4: because it's shifting the way we view the business from a very agent-centric and a seed-centric business to be the ones that are enabling every interaction beyond an attended interaction by a human being. And if you think about it this way, all of a sudden our business is attached to an exponential growth in the number of interactions. So in the future, we think it can be a major contributor to our growth.

Gary.

Agent centric NSE centric business.

To be are the ones that are enabling every interaction beyond and attended interaction by a human being and if you think about it this way all of a sudden our business is attached to an exponential growth in the number of interactions.

Future, we think it can be a major contributor to our growth.

Speaker 4: In the immediate term, it still represents the smaller part of our business, but going much much faster than the rest of the business.

In the immediate term, but then you know the smaller part of our business, but growing much much faster than the rest of the business.

Yeah.

And just any commentary around the breakdown the ability for enterprises to adopt.

Speaker 8: And just any commentary around the ability for enterprises to adopt, breaking down some of the barriers that they have now.

Breaking out some of the barriers that they have now.

Yeah. This is a this is maybe the second part so it sort of I missed that but breaking down the barrier is the realization that enterprises are going through right now, but you know just adopting certain channel digital looking at being Siloed.

Speaker 4: Yeah, this is maybe the second part. So sorry that I missed that. But breaking down the barrier is the realization that enterprise are going through right now.

Speaker 4: that you know just adopting a certain channel of digital, looking at things siloed.

Speaker 4: just doesn't work. So we see more and more enterprises, mid-size and large.

It doesn't work so we see more and more enterprises mid size and large realizing that point either of appointing a head of digital.

Speaker 4: realizing that, either appointing a head of digital, digital experience that understand that, or bringing digital into the customer service operation. And that's exactly what helps us as a dominant player in the customer service domain.

Digital experience, let's understand that well, bringing digital into the customer service operation and Thats exactly what helps us.

A dominant player in the customer service domain to embrace digital as part of our portfolio and be the play though to provide a full journey and a cohesive approach to customer service and CX as a whole.

Speaker 4: to embrace digital as part of our portfolio and be that leader that provides a full journey and a cohesive approach to customer service and CX as a whole.

Thank you.

Speaker 1: Thank you. The next question comes from the line of Rishi Jaluria with RBC. Please go ahead.

Thank you.

Next question comes from the line of Rishi Januvia with RBC. Please go ahead.

Alright wonderful. Thanks, so much for taking my questions nice to see continued strength in the cloud business Oh, Matt I wanted to maybe go a little bit more down into what you're seeing in and on in cloud in the FCC side of the equation.

Speaker 3: All right, wonderful. Thanks so much for taking my questions. Nice to see continued strength in the cloud business. On that, I wanted to maybe drill a little bit more down into what you're seeing in cloud in the FCC side of the equation. You know, are you starting to see more customers warm up to that? You know, any sort of directional call you can give around there, an adoption of Exide would be helpful. And then I've got a follow-up.

Are you are you starting to see more customers warm up to that.

Any sort of directional color you can give around there and adoption of X that would be helpful. And then I've got a follow up.

Sure. So first of all as you can stay on the financial crime and compliance. Our business are you know we said for a few years you know a kind of a wait and see that our we see certain trends that will materialize into revenue I think from the throughout the year, but even more so in the second half of the year.

Speaker 4: So first of all as you can see in the financial compliance our business you know we said for a few years you know we kind of wait and see that we see certain trends that will materialize into the revenue I think from the throughout the year but even more so in the second half of the year you're starting to we are starting to see the acceleration.

We're starting to see the acceleration first of all it because what I said in my earlier remarks that the market overall, the whole process. The whole notion of banks are moving to digital banking and at the same time, realizing that back office is holding them back is introducing a new map.

Speaker 4: First of all, it's because of what I said in my earlier remarks that the market overall, the whole process, the whole notion of...

Speaker 4: moving to digital banking at the same time realizing that back office is holding them back is introducing a new massive wave of investments into Rebuilding and refreshing the way they do compliance. So that's just a general Comment about this the health of this market

Z wave of investments into a rebuilding and refreshing the way they do a compliance. So that's just a general comment.

Comment about just the health of this market.

Speaker 4: About cloud adoption, we see two parts of the market. In the mid-market, where we now have a great offering, following the acquisition of Guard Analytics almost two years ago.

About cloud adoption, we see a two parts of the market in the mid market.

We now have a great offering following the acquisition of AR goggle analytics about almost two years ago. When our operating this market, where we did not have a viable offering before dark and that's doing extremely well and that's purely cloud so mid banks or mid sized bank I'm, sorry have a full adoption of cloud.

Speaker 4: we now are operating this market where we did not had a viable offering before that and that's doing extremely well and that's purely cloud so mid-sized banks have a full adoption of cloud.

Speaker 4: And we're starting to see the higher end of the market, part of the portfolio, and certain part of the need being consumed from the cloud. And we believe that we have a great road runway over here to have the exact same playbook we had at the customer service. We have a great customer base.

And we're starting to see the higher in other markets.

Part of the portfolio <unk> and.

And third and part of the.

They need a.

Being consumed from the cloud and we believe that we have a great Hum roads a runway over here.

The exact same playbook, we had at the customer service, we have a great customer base, great market share and converting these.

Speaker 4: great market share and converting these customers that are on prem to the cloud have the opportunity to more than double the revenue from each one of those customers on an annual basis.

These are customers that are on prem to the cloud have the opportunity to more than double the revenue from each one of those customers on an annual basis.

Alright got it that's super helpful.

Speaker 8: I got it. That's super helpful. And then just philosophically, I wanted to think about, you know, the CX1 business.

And then just philosophically want wanted to think about the CX one business.

Speaker 3: With re-openings happening, we've seen some really large companies announce that they're going to start opening their offices back up as soon as end of this month, at least domestically. How do you think about that and the impact on your CX1 business and maybe more importantly

With reopening is happening you know we've seen some really large companies announce that they're going to start.

Opening their office is back up as soon as end of this month at least domestically.

How do you think about that and the impact on your <unk> excellent business and maybe more importantly could.

Speaker 3: Could Office reopening actually be a tailwind to accelerating displacements of your legacy of Viya and Cisco Contact Center solutions and get them more over to CX1? Thanks.

Office reopening actually be a tailwind to accelerating displacements of.

Your legacy Avaya, and Cisco, our contact center solutions and get them. Moreover to see excellent. Thanks.

Speaker 4: Yeah, I don't we don't see any, you know, negative or positive impact to, you know, different waves, if you would like of COVID.

Yeah, I I don't we don't see any negative or positive impact to a different.

Waves, if you like of of Covid.

Speaker 4: We see an overall positive trend that started with the outbreak of the pandemic, where a lot of the trends that we thought will happen five, six years from now, you know, few among others, obviously the move to the cloud, the notion of digital, those are accelerating, and we don't see them necessarily slowing down or anything like that due to office reopening.

We see an overall positive trend that started with the outbreak of the pandemic, where a lot of the trends that we thought would happened five six years from now.

You know a few among among others, obviously the move to the cloud the notion of digital those are accelerating and we don't see them necessarily slowing down or anything like that due to our office are reopening.

So all in all we see continue the acceleration in those trend with respect to the you know some of the names that you've mentioned this is our business. There is still with everything that we're doing in our business still I would say 85 of the market is still on Prem we.

Speaker 4: So all in all, we see continued acceleration in those trends. With respect to some of the names that you've mentioned, this is our business. There is still, with everything that we are doing in our business, still, I would say, 85% of the market is still on-prem. We are accelerating the displacement of those legacy providers that do not have a viable cloud option.

We're accelerating the displacement of those legacy providers that do not have a viable cloud option.

Speaker 4: And as we do that, you know, as I said before, in the fourth quarter, we saw a dramatic increase in the number of competitive replacements and in our win rate, and we believe that will continue.

And as we do that you know as I said before in the fourth quarter, we saw a dramatic increase in the number of competitive replacements and in our win rate and we believe that will continue.

Alright wonderful. Thank you so much thank you.

Thank you. The next question comes from the line of meta Marshall with Morgan Stanley . Please go ahead.

Speaker 1: Thank you. The next question comes from the line of Mera Marshall with Morgan Stanley . Please go ahead.

Speaker 9: Hi, team, this is Dave Wakanko on for Meet & Marshall. Thanks for the question. So just with the 5% or sorry, five times increase in AI bookings, are you seeing AI lead deals now? And is the conversation mostly happening at implementation, or are you seeing existing cloud customers at AI?

Hi team. This is pedro cargo on for meta Marshall Thanks for the question.

The 5% or sorry, five times increase.

Okay or are you seeing deals now and is the conversation basically happening.

Implementation or are you seeing I guess just to be cloud customers.

Hi.

Yeah.

Speaker 4: So, as I said before, we have a great customer base and a great leadership in the CX analytics business and we're seeing it now quickly transforming into a very substantial AI business.

So yes it does.

I said before are we.

We have a great customer base and a great dealership in the cut in the CX analytics business and we're seeing it now quickly transforming <unk> into a very substantial business.

Speaker 4: In order to be a leader in AI, you need the three key attributes that we believe we have done big time in our markets. The first one, obviously, you need the AI technology. And we spent the last couple of, more than the last couple of years, in massive amount of development in that domain.

In order to be a leader in AI you need the three key attributes that we believe we have done big time in all markets. The first one obviously you need to add technology and we spend the last couple of more than the last couple of years in massive amount of development in that domain, but the second one which is even more important is to <unk>.

Speaker 4: But the second one, which is more important, is to have the data and the availability of the data in order to make those AI algorithms and AI technology viable in our respective markets. And we have the largest data repository in all of our markets. And the third one, there is no such thing as a generic AI. You need to have deep domain expertise in a certain market, which, of course, we have operating in those markets for so many years.

Have the data are that and the availability of the data in order to make those AI algorithms and AI technology viable in our respective markets and we have the largest data repository.

All of our markets and a third one there is no such thing as a generic ti.

Deep domain expertise in a certain market, which of course, we have operating in those markets for so many years.

I believe that the fact that we have all of those assets and we put it as part of our strategic investment in the last few years.

Speaker 4: I believe that the fact that we have all of those assets, and we put it as part of our strategic investment in the last few years, has led to the results of 2021, which is a five-fold increase in AI booking.

The led to the results of our 2021, which is a five fold increase in air booking.

Speaker 4: And back to your question, we see a couple of scenarios. We see analytics customers of ours that are now advancing into AI, so that's one scenario. We see customers who are trying to deploy self-service and realizing that they need something much more smart coming to us and basically consuming from us.

And back to your question, we see a couple of scenarios, we see analytics customers of ours.

I'll now advancing into AI. So that's one that scenario we.

We see customers, who are trying to deploy our self service and realizing that they need something much more smarts coming to us and basically consuming from us and standalone capabilities.

Speaker 4: standalone AI capabilities and we also see AI as a key differentiator And our success overall with CX-1 as we bundle it into overall portfolio deals.

And we also see AI as a key differentiator in.

And our success overall with six one as we bundle it into our overall portfolio deals.

Got it thanks.

Speaker 9: Got it, thanks. And then maybe just one more for me. What sort of traction are you seeing with some of your channel investments over the last year? Are there additional system integrator relationships you would want to expand on?

And then maybe just one more for me.

What sort of traction are you seeing with some of your channel investments over the last year.

Are there additional system integrator relationships, you would want to expand on.

Okay.

Yeah. So as I mentioned earlier, you know in the U S. We're always happy to take on a new channels, but we have a great sales team very large sales team as well as a well established relationship with a b.

Speaker 4: Yeah, so as I mentioned earlier, you know, in the US, we're always happy to take on new channels, but we have, you know, great sales team, very large sales team as well as the well established relationship with different type of partners, strategic and channels and some others.

Different type of partners.

<unk> in general than some others.

Speaker 4: Our international growth strategy is actually 100% based on powders.

They all international growth strategy is actually a 100% based on the fall through and.

And we have signed dozens of different partners in the past few years, we announced them.

Speaker 4: and we have signed dozens of different partners in the past few years, we announced them every quarter in the past few years and just recently a few more like Deutsche Telekom System, the strategic partnership with Google, Ethicelad which we announced I think just last week and already gaining momentum and few others.

Every quarter in the past two years and just recently a few more like Deutsche Telekom system.

Strategic partnership with Google.

And it's allowed which we announced I think just last week in order to be gaining momentum and a few others. So that's a big part of our international strategy and I believe that the acceleration of.

Speaker 4: So that's a big part of our international strategy, and I believe that the acceleration that you are starting to see on the revenue on the international front is a direct result of that strategy.

But you're starting to see on the revenue on the international front is a direct result of that strategy.

Great. That's helpful. Thank you. Thank you.

Thank you. The next question comes from the line of Pat Wall Ravens with JMP. Please go ahead.

Speaker 1: Thank you. The next question comes from the line of Pat Waldravins with JMP. Please go ahead.

Speaker 7: Oh, great. Thank you. And let me add my congratulations on the strong results.

Oh, great. Thank you and let me add my congratulations on the strong results. So.

Speaker 7: So Barack, given how big the opportunity is in customer engagement.

So barack given how big the opportunity is in customer engagement.

Have you guys thought about in some way spending off financial crime and compliance and public safety and just focusing.

Speaker 7: some way spinning off financial crime and compliance and public safety and just focusing on customer engagement and what are sort of the key factors?

Customer engagement in and what are sort of the.

The key factors that you think about there.

So I think as Ive you know, we see great opportunity in all three markets, we like those markets. We believe that our presence today in those markets. The leadership, we have in those markets. The secondary we are number one in each of those respective markets and.

Speaker 4: I think as I've, you know, we see great opportunity in all three markets. We like those markets. We believe that our presence today in those markets, the leadership we have in those markets, the fact that we are number one in each of those respective markets.

And the fact that the same theme, but we're starting to see ex markets are happening to US right now in financial crime compliance and public safety. We believe there is great opportunity for us to execute extremely well on both public safety and financial crime and compliance.

Speaker 4: and the fact that the same themes that we saw in the CX market are happening to us right now in financial compliance and public safety, we believe there is great opportunity for us to execute extremely well on both public safety and financial compliance.

And the management team over here.

Speaker 4: And the management team over here have a great knowledge on how to run this playbook. And as you can see now in financial compliance, and I believe this will happen to us also or happening already in public safety.

Have a great knowledge on how to run this playbook.

In financial crime compliance and I believe this will happen to US also are happening already in public safety.

Speaker 4: that expertise and competencies that we have, allowing us to be very successful in those three markets with some great synergies without losing any focus on the larger market, which is of course the CX market.

Our expertise and competency that we have allowing us to be very successful in those three markets with some great synergies are without losing any focus on the larger market, which is of course the CX market.

Okay, and then I guess the follow up would be those are all reasons to keep it altogether are there would there be any benefits of splitting it up.

Speaker 7: Okay. And then I guess the follow-up would be those are all reasons to keep it all together. Are there, would there be any benefits to splitting it up?

Okay.

We don't see right now any reason to do that we believe we can continue and appreciate the.

Speaker 4: We don't see right now any reason to do that. We believe we can continue and appreciate the value of each one of those assets separately and the company as a whole. We don't think any of those assets is in any way, shape, or form dilutive to our financials or to the way we manage the company.

The value of each one of those assets separately in the company as a whole.

We don't think any of those assets is in any way shape or form dilutive.

On to our financials or to deal you know the way we manage the company.

Okay, great. Thank you.

Okay.

Thank you. The next question comes from the line of Tyler Radke with Citi. Please go ahead.

Speaker 1: Thank you. The next question comes from the line of Tyler Rocky with Citi. Please go ahead.

Yeah.

Speaker 10: Yes, good morning. Thanks for taking my question. I wanted to just ask a little bit more about the expense side of the house. As you're thinking about the outlook here for 2022, any one-time items we should be aware of, whether it's currency, just in terms of maybe higher than normal, you know, talent retention and acquisition costs, just help us understand kind of the...

Yes. Good morning, Thanks for taking my question.

I wanted to just ask a little bit more about the expense side of the house.

As youre thinking about the outlook here for 2022, any onetime items, we should be aware of whether it's currency.

In terms of maybe higher than normal.

Talent retention and acquisition costs, just help us understand kind of the guidance implied for the expense side. Thank you.

Speaker 10: the guidance implied for the expense side. Thank you.

Yeah. Thank you for the question Tyler and as we look at the guidance for next year and you know, we've led with double digit growth expectations and both the OE revenue as well as in our E. P. S. And of course, you know that is is really highlighted by the expectation that our operating margin.

Speaker 5: Yeah, thank you for the question, Tyler. As we look at the guidance for next year, you know, we've led with double-digit growth expectations in both our revenue as well as in our EPS.

Speaker 5: And of course, you know, that is really highlighted by the expectation that our operating margin will continue to expand. We had double-digit growth in our operating profitability throughout 2021. And as we look to 2022, we'll continue to have that same keen focus and attention to our profitability and operating margin.

We'll continue to expand them, we had a double digit growth in our operating our profitability throughout 2021 and as we look to 2022, we'll continue to have that same keen keen focus and attention to our profitability and operating margin, meaning that too.

Speaker 5: meaning that we expect to see our operating margin increase over what we experienced in 2021 and of course heading further and advancing towards our goal of 30 percent and higher operating margin in the future.

We expect to see our operating margin increase over what we experienced in 2021 and of course heading further and advancing towards our goal of 30% and higher operating margin in the future.

Speaker 10: Great. And I wanted to ask you, maybe for Bharat, just, you know, on the competitive landscape, you know,

Great.

Wanted to ask you maybe for Bob just on the competitive.

<unk> landscape.

<unk>.

Speaker 10: as it relates to kind of your traditional competitors and emerging competitors, and B, what's really changed, been the biggest change on that front over the last year? Thank you.

But.

As it relates to kind of.

You know your traditional competitors and emerging competitors in it.

And b like what what's really changed the been the biggest change on that front over the over the last year. Thank you.

Speaker 4: I don't think there is, you know, something dramatic that changed besides the fact that things that, you know, the trends we've seen in the past are becoming, you know, even more pronounced in 2021 and even more so in Q4. I think that the legacy providers that are the incumbent for the on-prem continue to weaken and I don't think they have a viable route.

I don't think there is you.

You know something dramatic of a change beside the fact that the things that you know the <unk>.

We have seen in the past are becoming.

Even more pronounced in 2021 and even more so in Q4, I think that the legacy providers with all of the incumbent for the on Prem.

<unk> continued to weaken and I don't think they have a viable routes to catch up a into a viable SK native cloud solution that is complete before the offering and that allows us to increase the rate of replacement and doing it in an easier way.

Speaker 4: catch up into a viable S-scale native cloud solution that is complete with all the offerings. And that allows us to increase the rate of replacements and doing it in an easier way.

Speaker 4: I think that the barrier of entry and the barrier of success.

Think about the the barrier of entry.

And the burial success.

Speaker 4: for players in this market. As the platform of CX1 is becoming so rich with so many, thousands of many years invested to date in that and the fact that we have put into CX1 all of the best in class capabilities, starting from the best routing, the best WFO, the best analytics, now digital and AI.

For players in this market as the platform of six one is becoming so rich with so many.

Thousands of man years invested to date.

And the fact that we have put in to fix one all of the best in class capabilities, starting from the best routing the best W. For the best analytics now digital and AI.

Speaker 4: I think it's becoming harder and harder.

I think it's becoming harder and harder for a smaller players.

Speaker 4: for smaller players to really compete at the higher end of the market.

To really compete at the higher end of the market. So it's the same trends that we saw in 2020, but given a even in a more stronger way and we will continue of course.

Speaker 4: So it's the same trend that we saw in 2020, but even in a more stronger way. And we'll continue, of course, to expand CX1 in a way that allows us to increase our win rate and have a bigger footprint with existing customers.

To expand six one in a way that allows us to increase our win rates and have a bigger footprint with existing customers.

Thank you.

Thank you.

Speaker 1: Thank you. The next question comes from Terry Rossner with Barclays. Please go ahead.

Next question comes from Jeffrey Rosner with Barclays. Please go ahead.

Speaker 11: Hi, this is Chris Reimer on Fritavi. Thank you for taking my questions. I just wanted to follow on the competition question just before. Have you seen any increase in a competition or intensification at the lower tiers of the market for just the cloud applications?

Hi, This is Chris Reimer on for Kathy. Thank you for taking my questions.

I just wanted to follow on the competition question just before have you seen any increase in competition or intensification at the lower tiers of the market for for just the cloud applications.

I can't say that there is a very different.

Speaker 4: I can say that there is a very different from what we've seen in the past. The low end of the market, of course, is more competitive because there are smaller startups that are trying to buy their way into this market.

Different from what we've seen in the past the low end of the market of course is.

More competitive because the smaller start ups that are you know trying to buy their way into this market. It's very very different of course are and what you need in order to compete at the lower end of the market versus the higher end also.

Speaker 4: It's very very different of course in what you need in order to compete at the lower end of the market versus the higher end. Also the viability and the financials are very very different at the lower end of the higher end. But we are well segmenting our business in a way that we make sure that we stay competitive in all different parts of the market.

Also the viability and the financials are very very different at the lower end of the hiring but we are a wealth of augmenting our business in a way that we make sure that we stay competitive in all different parts of the market. We do of course your trend, but the smaller customers. Thanks to the the way the six one is built as a platform.

Speaker 4: We do, of course, see a trend that the smaller customers, thanks to the way that CX1 is built as a platform, have the ability to take capabilities and features.

Form.

Has the ability to take our capabilities and features.

Speaker 4: with the right TCO even if they are smaller ones. And I think that gives us also great competitive position at the lower end of the market. But I can't say that we see any dramatic change.

With the right T O.

Even if there are smaller ones and I think that gives us also a great competitive position in the lower end of the market.

I can't say that we see any dramatic change.

Speaker 11: Okay, and just to follow up on enterprise cloud transition, would you be able to quantify maybe the percentage of new cloud wins stemming from the conversion of your on-premise customers?

Okay.

Excuse me.

Just to follow up on an enterprise cloud transition would you be able to quantify maybe the percentage of new cloud wins stemming from the conversion of your on premise customers.

Okay.

Speaker 4: Yeah, this is still a very small portion of the business, which I think is a great opportunity ahead. Most of our cloud business to date is not a conversion of existing customers.

Yeah. This is still a very small portion of the business, which I think is a great opportunity ahead.

Most of our cloud business to date is not a conversion of existing customers.

Customers.

Speaker 4: So there is still a very, very healthy runway moving forward as we start to convert those customers moving forward.

So there is still a very very healthy runway moving forward as we start to convert those customers are moving forward.

Speaker 4: And I'll remind you that as we go and convert those customers, there is a great upside. First, you know, if you just look at it for a like for like, there is potentially 2x.

I'll remind you that as we go and convert those customers. There is a great upside first if you're just looking at sort of like for like there is potentially two X.

Speaker 4: an increase in annual revenue from such a customer, but more so than not, when we convert such a customer, they take a much broader piece of our portfolio, and we take the entire CX environment, starting from routing, W4, analytics, and other, and that can go all the way up to five, six, and seven times the on-prem revenue.

The increase in annual revenue from such a customer, but most of the or not when we convert such a customer they take a much broader.

A piece of our portfolio and we take the entire.

CX environment, starting from routing W for analytics and other and that can go all the way up to five six and seven time.

On Prem revenue.

Speaker 4: And we're very happy to do this because at the same time, our cloud gross margin continues to improve quarter after quarter, as demonstrated throughout 2021. Got it.

We were very happy to do that because at the same time, our cloud gross margin continues to improve quarter after quarter as demonstrated throughout 2021.

Got it.

That's very helpful.

Thank you.

Thank you.

Speaker 1: Thank you. The next question comes from the line of Paul Chung with J.B. Morgan. Please go ahead.

Our next question comes from the line of Paul Chung with Jpmorgan. Please go ahead.

Speaker 6: Hi, thanks for taking my question. So just another follow up on operating margins. You know, how do we think about the pace of expansion, kind of looking beyond 22 and kind of the timing of hitting 30% and where are you targeting the reinvestments in OpEx in the business?

Hi, Thanks for taking my question. So just another follow up on operating margins. How do we think about the pace of expansion kind of looking beyond 'twenty, two and kind of the timing of hitting 30% and where are you targeting the <unk>.

Investments in Opex in the business.

Speaker 5: Yes, so as I highlighted earlier, you know, during the course of 2022, we expect to further increase our operating margin beyond the margins in 2021. And of course, that we expect to have the capability in the subsequent years as well to continue to have that expansion. As we look at our investments and where we're reinvesting back into the organization, of course, we are continuing to drive our R&D development and continue to foster the innovation that we've had that drives our leadership in the market.

Yeah, So as I highlighted earlier during the course of 2022, we expect to further increase our operating margin beyond the margins in 2021 and of course that we expect to us to have the capability in the subsequent years as well to continue to have to have that expansion as we look at our.

<unk> and where we're reinvesting back into the organization of course, we are continuing to drive our R&D development and continue to foster the innovation that we've had that drives our leadership in the market.

Well of course is we are continuously investing in our go to market teams and the expansion that we see there are both in the Americas and internationally as we continue to broaden the CX one platform and into new territories. So those are the primary areas of investment, but as I said at the same time.

We've always had a very keen eye on profitability at nice that Hasnt changed and we'll continue to drive that in a way at the same time that we're continuing to drive the top line as well.

Thanks for that and then you know the cash balance sitting pretty comfortable here you know.

Speaker 6: Thanks for that. And then, you know, the cash balance sitting pretty comfortable here. You know, how do we think about your kind of acquisition pipeline? And, you know, you also stepped up your share share buyback a little bit this year. Should we expect, you know, similar pace this year?

Speaker 6: pretty comfortable here, you know, how do we think about your kind of acquisition pipeline? And, you know, you also stepped up your share buyback a little bit this year. Should we expect, you know, similar pace this year? Yes, as we look at our cash balance, as you said, I mean, we've always generated a healthy amount of cash in the business, and that really opens us up to great opportunities for acquisitions that are key to our strategy overall. You saw that we did that during the course of 2021 with several

How do we think about your kind of acquisition pipeline.

You also stepped up your share share buyback a little bit this year should we expect similar pace this year.

Speaker 5: Yes, as we look at our cash balance, as you said, I mean, we've always generated a healthy amount of cash in the business, and that really opens us up to great opportunities for acquisitions that are key to our strategy overall. You saw that we did that during the course of 2021 with several technology-focused assets around digital that were quite exciting. And so, of course, that, along with our buyback plan, those will continue to be the primary uses in terms of our capital allocation.

Yeah. So as we look at our cash balance as you said I mean, we've always generated a healthy amount of cash in the business and that really opens us up to great opportunities for acquisitions that are key to our strategy. Overall you saw that we did that during the course of 2021 with several technology focused I'm asked.

That's around digital.

We're quite exciting and so of course that along with our buyback plan. Those will continue to be the primary uses in terms of our of our capital allocation and so were always out there looking for opportunities to continue to add to drive our leadership with potential acquisitions that are.

Speaker 5: So we are always out there looking for opportunities to continue to drive our leadership with potential acquisitions that are

Speaker 5: synergistic to our overall strategy. Gotcha, and then last one, on evidence central, how big do you see this market? Where do you think your market share sits today? And how are you taking share? Any comments would be helpful. Thank you.

Synergistic to our overall strategy.

Got you and then last one on evidence Central you know how how big do you see this market where do you think your market share sits today and how are you taking share any comments would be helpful. Thank you.

Yeah.

Speaker 4: We think the potential is just, it's almost hard to quantify, and I'll explain in a second, that today, if you step into the criminal justice system,

We think of that potentially is just a it's almost hard to quantify and I'll explain in a second but today, if you slip into the criminal Justice system.

Speaker 4: uh... from policing including you know detectives all the way to prosecution and all the way to court uh... you'll be amazed to know how uh... evidence or piece of evidence uh... being moved between one part of this uh... system to the other it's fully manual it's paper-based it's actually box-based and everything is getting replicated and a lot of things are getting lost

From policing and including you know the Texas, all the way through prosecution and all the way to court.

You'll be amazed to know how our evidence or piece of evidence being moved between one part of this system to the other it's fully manual paper based it's actually Bulks base and everything is getting replicating a lot of things are getting lost.

Speaker 4: in the way which of course hurts the ability of that system to be effective and get the bad guy to the right place.

In the way.

Which of course hurts the ability of the system to be effective and get the best Guy to the right place what changed dramatically in the last few years is that the amount of digital evidence available in every incident, whether it's a you know a car accident or anything more severe than that is just tremendous.

Speaker 4: What changed dramatically in the last few years is that the amount of digital evidence available in every incident, whether it's a car accident or anything more severe than that, is just tremendous.

Tremendous.

Speaker 4: and it's getting this whole process completely stuck. It's both the amount and also the quality of those evidence.

And in getting this whole process completely stuck.

It's both the amount and also the quality of those the evidence.

Speaker 4: And all of those policing and criminal justice systems per county are actually now seeking for a way to solve it. So we see a tremendous increase in the need and the desire of those organizations to adopt

And all of those are policing and criminal Justice systems per county, actually are now seeking for a way to solve it.

So we see a tremendous increase in the.

The need and the desire of those organizations to adopt a digital approach to how they manage the evidence and we have developed in the last few years.

Speaker 4: a digital approach to how they manage evidence and we have developed in the last few years.

Speaker 4: those capabilities. We have the best platform out there and we already have several key customers and we believe that this will continue. Now since the pricing overall

Those capabilities, we have the best platform Alder.

And we already have several key customers and we believe that this will continue now it seems the pricing overall.

Speaker 4: is somewhat attached to the number of pieces of evidence that they're putting into the system.

Somewhat attached to the number of a piece of evidence that I'm putting into the system. There is an exponential potential vision for globe with adoption and it's also been it will become a very sticky solution and as you can understand.

Speaker 4: there is an exponential potential over here for growth with adoption. And it just also will become a very sticky solution, as you can understand.

Great. Thank you.

Thank you.

Thank you. The next question comes from the line of Tal Leone with Bank of America. Please go ahead.

Speaker 1: Thank you. The next question comes from the line of Tal Liani with Bank of America. Please go ahead.

Hi, This is not a win Brooks on for Tal just wanted to go over one quick point on.

Speaker 12: Hi, this is Natalie Brooks on fertile. Just want to go over one quick point on the conversion to cloud from enterprise. Just want to touch base and see what are the hurdles or roadblocks that you guys are facing right now when you are trying to transition legacy on prem customers. And then there's a follow up to that. Should we expect increased sales efforts in this area in the coming quarters? Thank you.

On the conversion to cloud from enterprise just wanted to touch base and see what are the hurdles or roadblocks that you guys are facing right. Now when you are trying to transition legacy on Prem customers and then as a follow up to that should we expect increased sales efforts in this area in the coming quarters. Thank you.

Speaker 4: Yeah, so we don't see any major barriers in the conversion, you know, things that we have seen in the notion of clouds three and four years ago are now really non-issue.

Yeah. So we don't see any major barriers on the conversion you know things that we have seen in the notion of cloud three and four years ago.

Now in a non issue.

Speaker 4: The whole notion of organization and large enterprises to cloud, the past fear from cloud, we don't see it anymore. We also have a platform that is well known with great references and have all the different certifications that customer are looking for. So we're not concerned, but most of the effort is about customer's effort to do certain integration to their environment, but these are kind of obvious and it's not a problem.

The notion of organization and large enterprises to cloud the past few from cloud we don't see it any more we also have a platform that is a well known with great references and have all of the different certifications that customers are looking for so we're not concerned but there most of the effort is about.

All our.

Customers, therefore to do certain integration into their environments, but these are kind of obvious and it's not a problem in terms of our sales efforts. We think we have the right investment and we are seeing great leverage on our on ourselves that investment to date, we don't think we need to change.

Speaker 4: In terms of the sales effort, we think we have the right investment and we see great leverage on our sales investment to date. We don't think we need to change the proportion of how much we invest in sales. Actually the increase that you saw in the fourth quarter in sales and marketing expenses

Change the proportion of how much we invest himself actually the increase that you saw in the fourth quarter in sales and marketing expenses. Some of it is the result of a lot of commission, we pay to assess different which we're very happy to do because it means that the business is doing extremely well.

Speaker 4: Some of it is a result of a lot of commission we pay to our salespeople, which we are very happy to do because it means that the business is doing extremely well. The only other investment we see in sales will be much more to international markets, but we've done it already in the past two to three years. And since there we are going mostly, actually predominant, completely exclusively with partners, we don't expect a dramatic increase in sales expenses there. Great. Thanks so much.

On the other investment we see in sales will be much smaller international markets, but we have done it already in the past two to three years.

And since there we're growing mostly actually be predominantly a completely are exclusively with partners. We don't expect a dramatic increase in sales expenses there.

Great. Thanks, so much thank you.

Thank you ladies and gentlemen.

Speaker 1: We have reached the end of question and answer session, and I would like to turn the call back to Barack Ilham for closing remarks.

We have reached the end of question and answer session and I would like to turn the call back to Barack <unk> for closing remarks. Thank you.

Speaker 4: Thank you very much everyone for joining us. Wishing everyone great 2022 and we'll talk to you again on our next call. Thank you.

Thank you very much everyone for joining us we shouldn't get run great 2022, and we'll talk to you again on our next call and thank you.

Yeah.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Speaker 1: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Yeah.