Q2 2023 Sapiens International Corporation NV Earnings Call
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Ladies and gentlemen, thank you for standing by the conference will begin shortly.
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Welcome to Sapiens International Corporation, 2023 second quarter financial results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
For operator assistance during the conference. Please press Star Zero as a reminder, this conference is being recorded August 2nd 2023.
It is now my pleasure to introduce your host Yap of call any trial, Chief marketing officer, and head of Investor Relations.
Thank you Yeah. Paul you May now begin thank you operator, I would like to welcome all of you to.
Second conference call to review, our second quarter results.
Great.
With me on the call today are Mr. Roy.
Yes.
And see you.
What is it would be useful.
Following the summary results would be available to answer any questions.
Before we start I would like to remind everyone that this conference call may contain projections or other forward looking statements.
That's all the provisions in the press release issued today also apply to the content with Nicole.
<unk> expressly disclaims any obligation to update or revise any of these forward looking statements.
Because of future events, new information a change in your expectation.
Thank God.
On the call today.
Sure.
<unk> financial measures.
A reconciliation of GAAP to non-GAAP results has been provided in our press release issued before the market opened this morning.
A replay of this call will be available after the call.
Our Investor Relations section of the company's website.
The website link which is available.
Probably should be.
I will now turn the call over to one year ago, President and she also did well.
Okay.
Good morning, everyone and thank you all for joining us today for sapiens second quarter 2023 any call.
I'm drinking share updates on our recent progress and achievements.
Second to achieve a strong second quarter with 8.2% year over year revenue growth and 18.2% operating margin.
Our third quarter performance was driven by significant achievements across multiple lines of business and geographies.
This quarter, Oh, North America revenue yoga, his golf exceed 8% and EMEA revenue increased by over 5%.
Our P&C and life businesses, all experiencing global sub six.
We have established a robust pipeline of opportunity.
Looking ahead, we are increasingly optimistic about our performance in the second half of the year.
Oh as I told the quarter almost all music collection of our accomplishment, but they'll also inflection or followed education of execution innovation and delivering outstanding solution to all affected customers.
Let's dive into our performance in our two largest regions North America and email.
In North America, our team remains dedicated to acquiring new clients and expanding relationships with existing ones.
It's called maintenance reserves and impressive growth in gauging Julian good second quarter.
Our goal is to close all of our lines of businesses.
Life and annuity B M C.
Walters competition and other insurance.
We are actively adding sales and marketing resources to support our future growth our investment in our life solution has proven highly successful this region.
This quarter, we signed several business application deals for large customer you think bolt on wings in their own right, but they are.
Also put us in a strong position for expansion into digital and calls me inspection opportunities is difficult.
With exciting go live implementations.
In the P&C space, where the major win for why insurance muscle solution.
In select Twenty-twenty tree ceded reinsurance solution Global report, which was published in July sapiens reinsurance Marseille was recognized as the luminary solution adopting and so then technical capability might take Paul advanced technology and breadth of functionality.
They've been central in sport was also like organized in the report.
Functionality sent out for blood full functionality.
Hey, coordination by segment, not only solidified our position as the reinsurance market leader, but also he has.
Our ongoing commitment to provide exceptional technology solution for the insurance industry.
In the workers' compensation space the positive momentum continue.
As I said in the previous call. These markets represent a significant opportunity for sapiens and U S and Canada. This year and then to come in deals.
Moving to EMEA region, we're focused on U K Nordic the E Bay area, South Africa, and Central Europe .
The weakness being a growing interest in systems placements towards this region and our position is exceptionally strong to capture a larger market share the market rent of cloud migration and the demand for SAP solution. A line we saw our capabilities.
Additionally, I'll walk you agent presence and commitment to maintaining customer relationships through their entire lifecycle silver competitive advantage.
With customers in these regions secondly, growing presence in EMEA region that activity results from our strategic effort to them.
Getting our product and establish a robust local footholds in these market conditions.
We said substantial customer base and our key market.
Bus fleet to market product portfolio.
To meet the market demand and a large team of a lot.
Her employer in the region.
We gotta gripped with significant competitive advantage, enabling us to expand further in this important region.
This quarter I want to emphasize our recent achievements in the APAC region.
Which has demonstrated consistent momentum and show our successful land and expand strategy. We firmly believe this region will be an additional growth catalysts for sapiens.
We are actively investing in their territory.
It's all about the evening promising results.
Sometimes in this market are showing interest in our offering and we are attracting the attention from various stakeholders.
In the second quarter, we announced that Vietnam Digital insurance Lopez chose sapiens for modernization, it's called P&C insurance system, they've been seeded suite for P&C, coupled with Fitbit competitor Jen will provide Apis, a turnkey solution for expanding its businesses.
Yeah.
Sapiens already had growing presence in another country in the APAC region by Lange following the selection of sapiens bi cooking sure BK I called digital transformation.
Yeah. He is one of the island, leading P&C insurer, and then implementing including more than 90 product across personal and commercial lines integrating more than 53rd party system and transforming underwriting claims channels accounting and reinsurance forces.
It's worth noting that the APAC region is large enough to offer us opportunity for expansion.
These markets are opening up to us and we have made significant headway in countries such as on Kong, Singapore, Australia.
The past two years in Thailand and Vietnam.
That's done.
Our product platform.
This quarter I would like to highlight our life businesses.
I'll call life businesses globally is growing we delivered strong growth.
Date signed major deals in EMEA and North America.
And all experiencing an acceleration in our revenue from this product line.
This quarter, we expanded our partnership with local to pure La life, the fourth largest life insurance company in Finland.
The extended agreement will now include sapiens cloud services for a 10 years period.
Additionally, as we reported previously.
Those two substantive deal in North America doing what's it for 2022 and quarter one 2023.
Given our strong momentum, although the recent quarter, we anticipate continued growth in this area.
Which could positively impact our overall performance.
Looking ahead, we have a strong pipeline.
The momentum continues to build.
We see a strong growth opportunity for us in the life market leveraging unique global capabilities of our life platform and our leadership and competitive position.
Our investment in our core life platform and business application product is ER positive outcomes and we are proud to say that sapiens is establish a significant presence in the life insurance because.
Last month sapiens co suite for life and pensions, one the 'twenty to 'twenty three Atlanta Excellent award in the EMEA region.
Sapiens co suites was recognized as the luminary policy administration solution, the top tier and select technical capability matrix for advanced technology, and breadth of functionality and email.
And then another excellent people kept its core suite for life platform was also named US The Luminary policy administration solution like the land in North America.
On the partnership front this quarter, we announce.
Breaking collaboration with Microsoft.
Their parents will integrate Microsoft Azure will open and I and as you Powell virtual agents to provide general AI solution for the insurance companies, allowing customers to easily navigate complex documents, such as policies terms and condition and more using.
<unk> neutral language AI model.
We see a potential for what generally P. V. I can do for the next generation of insurance solution Incipiency integration of a dual open AI will allow us to explore and define the right solution for insurance worldwide.
And lastly, it may sapiens hosted its largest international current conference in Barcelona.
This year's client confidence team was exploring the possibilities.
Focusing on key trends and innovation driven go industry.
We enjoy significant participation from our customer prospects and industry experts, we sold 300 participants in attendance representatives for Microsoft to land and various participants from sapiens ensure pick ecosystem.
Insightful presentation and participated in expert partners or feedback from our customer and partners was supposedly pes and the strong focus on leveraging the latest technology to an Intel solution was well received.
In conclusion, we are.
Delighted we sell global pull this especially in our largest region EMEA North America and our success in APAC.
I was appalled at four months in the life businesses ongoing achievements in P&C and collaboration with smartphone so I'd direct outcome of our dedication to innovation and continuous improvement.
Delivering innovation solution to our customers remain our top priority for us.
We have confidence that they'll airport will drive growth and create significant value for all stakeholders.
Thank you again for joining us today, and I look forward to sharing more updates in the future.
Now I will turn it over to our CFO to provide more details on our financial performance.
Thank you Ronnie.
I will begin my commentary really is the view of our strong second quarter 2023, and non-GAAP results followed by comments on the balance sheet and cash flow.
I will wrap up with a view for a guidance, which will include increasing our outlook for 2023 revenue and profit.
Revenue in the second quarter of 2023 was $128 4 million go along and in Gs of eight 2% compared to $118 6 million go along in the second quarter of 2022.
During the quarter, we faced its more currency headwinds.
And in a constant currency basis.
It is by eight 4% compared to Q2 previous view.
Revenue in North America was 52 1 million compared to $48 2 million in the comparable quarter.
And Jesus eight 2% and $4 million.
Do you think the revenue results from growth across most of our lines of business and it reflects the momentum in this region.
Revenue in Europe was 63 million rollout.
Yields are using trees from 59 9 million or growth of five 2%.
On a constant currency basis revenue increased by five 4% compared to Q2 of 2022.
Revenue in Q2 of 2023 was slightly lower than Q1 of 2023.
Due to the revenue catch up in Q1 that you mentioned in the previous Investor calls.
Every new Extrabold, which include South Africa, and APAC increased by 25, 5%.
Compared to what I always like ortho standpoint, and $6 million, mainly due to strong new deals we signed in the region in Brinci in life and pension.
Gross profit reached 58 million go along an increase of $4 8 million from the comparable quarter.
While gross margin improved 30 basis points to 45, 2% compared to 44, 9% last year.
Yeah.
Operating expenses were $34 6 million, an increase of six 5% compared to $32 5 million go lives in Q2 of 2022.
R&D investment was $17 $4 million.
Eight 4% compared to.
Q2 of 2022.
Presenting 13, 6% of our total revenue and reflecting increased investment in cloud and digital solutions.
SG&A expenses were $17 2 million up four 6% compared to the second quarter of 2022.
Empting 13, 4% of all those other things.
Operating profit and margin in the second quarter of 2023.
$23 4 million.
And 18, 2% respectively.
And Jesus coupons and $7 million over an additional 70 basis points compared to the same quarter of last year.
The increase in operating profit and margin was primarily due to higher gross margin and improved cost management in G&A.
The higher gross margin is dry form one.
The higher ratio of product and post production services revenue out of total revenue, which imply higher quality revenue with a better margin profile.
Two.
In Jesus you know if your ratio.
Financial expenses this quarter totaled $560000 compared to 2.5 below.
In the comparable quarter.
The low interest cost was mainly due to interest income on the bank deposit, which was offset by hedging transaction costs and interest on debentures.
Net income attributable to shareholders for the second quarter of 2023 was $18 6 million up 24, 2% from 15 million build out in Q2 of 2022.
EPS was <unk> 33 cents per diluted share for the second quarter of 2023, an increase of 22, 2% or 6% higher than Q2 of 2022.
EBITA increased by 12, 4% to $24.4 million.
19% of revenue in the second quarter of 2023, compared to 21 7 million below or 18, 3% of revenue in Q2 of 2022.
Starting in 2023.
Well, we're adding an additional breakdown of our revenue into two groups.
Software product.
And post production services and pre production implementation services.
Provide period over period comparison.
Each new good easily bolted.
In Q2, 2023 revenue from recurring software product and reoccurring Postproduction services.
Doug $82 6 million compared to $72 million in Q2 of 2022.
At $10 6 million or 14, 7% growth.
Gross margin for this group was 51, 4% compared to 52, 2% in Q2 of 2022.
We want to reiterate that revenue can fluctuate between quarters.
We are confident that we will continue to grow over you probably get into software program and reoccurring services on a yearly basis.
The growth will come from the sort of main street.
She leaves.
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Continued converting customers from the implementation phases.
Both production phases.
Two.
Shifting gradually to SAS solution, we've already started Brookfield solution for several product you know for America.
We are starting to do so also in Europe .
We intend to implement this gradually in order to maintain our revenue growth.
Three.
Mike that's existing customers drove a cloud solution today.
All of our new deals I wonder cloud yet most of our existing customers are not in the cloud and we intend to migrate them to our cloud solution over the next few years.
Which will drive incremental recurring revenue stream, we tied in with margin.
Turning to our balance sheet and adjusted free cash flow.
June 30 of 2023 with cash and cash equivalents and short term deposits totaling $179 $4 million.
Outstanding Debenture about $60 million and we paid in three equal installments over three years.
During Q2 of 2023, we generated an adjusted free cash flow of $12 1 million compared to $4 $2 million in Q2 of 2022.
This quarter, we paid in incremental of $4 6 million rollout do you say tax authorities due to new section 174 for R&D expenses related to 2022.
The additional payment tempo of difference and does not have an effect on the P&L only on the cash flow.
Do you have an H one of 2023, we converted 89, 4% of our non-GAAP net income to adjusted free cash flow.
Moving to dividend.
We announced today that the board of directors have approved the distribution of a cash dividend of 26 cents per share.
$14 $4 million in total for the first six months of 2023.
The dividend is in line with the dividend policy of this would be true.
Semi annual basis up to 40% of its annual non-GAAP net income.
The dividend will be paid on August 32023 to stop in shareholder of record as of August 16 2023.
The dividend is subject to the withholding of Israeli tax it. So it's a range of 25% of the dividend amount payable to Israeli withdrawal and non Israeli shareholders of cycles.
I want to know to our guidance for 2023.
We are raising our full year 2023, non-GAAP revenue guidance from a range of five five and 7 million below 200.
$112 million.
To a new range of 511, two firefighters and $16 million.
On the non-GAAP operating margin, we are increasing the low end of our guidance from 17, 8% to 18%.
Our full year 2023, non-GAAP operating margin is now 18% with pinpoint 2%.
To summarize.
Our Q2 2023 was a very strong quarter for us up in our revenue grew eight 2% our software product and reoccurring Postproduction services grew 14, 7% and we signed deals across all our key products in the period.
We witnessed improved momentum in North America.
Our operating margin reached 18, four 2% with an EBITDA of $24 4 million or 19% of revenue.
We converted a net profit to adjusted free cash flow at the rate of 89% in the first six months of 2023, and lastly, we continue to distribute cash dividend to our shareholders and dividends in the amount of $14 4 million for the first six months of 2023.
We remain committed to growth while it will be helpful for you.
I will now turn the call back to only adults only.
Thank you Lonnie we delivered a strong second quarter and first half in 2023, given the great success across our businesses, both geographically and by product line and importantly, we have the robust pipeline for new opportunity with highly competitive portfolio of offering.
They position us for continued success operator, we are ready to open the call for Q&A.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment and kind of what's the handset before pressing the numbers. Please ask your question in a loud and clear voice question.
We'll be Paul.
In the order they rfps please standby, while we poll for your questions.
The first question is from my young <unk> Tandon of Needham and company. Please go ahead.
Hey, guys. This is actually Sam on for Laurence today, Thanks for taking my questions here.
Nice results it seems like the demand environment is getting a bit better here.
Guys give us some more color into that.
Customer conversations have changed from last quarter, and maybe parse that out between North America and Europe .
Hi, This is roni al Dor.
Yeah.
We all continue to see interest in North America as well in Europe .
And then in North America.
Very strong getting the save a lot of those types of areas as I mentioned and the work that's called Maria in the P&C area in there the insurance area and the likes it business those type.
And but we still as the same demand in Europe also in our life on the P&C and reinsurance, so where overall and as you'll know we all very diverse so oh, so in terms of her product.
What we also see the demand of.
Our digital data and cloud so and the majority of all the new business is coming we say at least say 123 pieces from all what they mentioned.
Got it that's helpful. Thanks.
And then can you guys just talk a little bit more about what is driving the improved margin outlook.
And you know just what exactly you guys are doing here that gives you that confidence.
Okay.
Hi, Sam this is Oh Gee.
On the margin the outlook, we only engage the lawyer in the range of the guidance from 17.8, we've been so the new range is a deemed to it I'm going to end.
Several factors.
Allowing us to do so and improve profitability while drawing.
Number one is the mix of.
Caring the product and the Nokia instead, and he says that you're engaging with a higher margin.
The second was in offshore ratio that allow us to improve profitability.
That being said we are doing some may save in the items on the overhead cost, but also increasing the sales of these metro and.
Both of these say all of these three levels alone allowed us to improve profitability while juggling.
Got it that's helpful. Thanks, guys nice quarter.
Thank you.
The next question is from Dylan Becker of William Blair. Please go ahead.
Hey, gentlemen, nice job here.
Well.
He cannot sticking them.
First question, a little bit of it.
Different way Raleigh April how carriers that gasoline kind of to the current landscape right. We're seeing that there are under a lot of cost pressure there emphasizing data out there starting to take rates.
Yes.
Thinking about kind of prioritizing their internal resources in this current environment.
Again as a as I mentioned, we all of them.
The cat M. As you'll know the majority of 10 still using a legacy system and therefore, there may also weigh one of them the high priority is efficiency.
As it goes to the Pos.
And I think the system that we are serving kid named pool improve their efficiency, yes, it starting with the investment itself, but all the automation and the analytics and that is so that's about the efficiency in front in terms of.
Desktop.
I think the digital path to become more and more important because this is a again its still heavily in the COVID-19.
Now everything that a customer expects to their clients.
Clients on digital so again, it's also and they need to make sure they call system.
Both of these returns and sometimes they're also buying from us so.
So even that that the there are challenges, but I think you said was we are seeing we are seeing more than all other seats coming.
Because the there is a big demand.
Got it Okay, that's super helpful and maybe.
Touch on kind of journey II partnership with Microsoft that enough. This is for Ronnie a or maybe Alex to a certain extent to the people.
Wondering again, how maybe that AI tailwind can help kind of support some of those initiatives that you just called out Ronnie does this kind of evolve the underwriting framework.
Insurance model operates today.
And does that drive incremental reliance maybe an insight slope off of an imbalance or are you guys starting to see that in any capacity or things like that maybe just.
How that plays out.
Yes, I will take the call because alexey seek right now so and then the agreement two cycles of these adjustments since we started.
We all that so well.
Given the early stage, but Theyre, both company put a big investment.
We started as you mentioned, we say on the underwriting area with claim area, but there again there is a lot of any of this weekend they plan to integrate it in our system. So it's a again, it's still early stage, but we see a lot of area that we can use these.
Got it okay, sorry, my last one if I can didnt want we leap Roni G hang in here.
I mean, you mentioned.
Long runway for migration activity gets it back likely something that plays out over a number of years and is there any way to kind of contextualize or think about how that opportunity can walk through the mix of body on frame customer basis today, when cloud uplift should look like.
And how that kind of support they need.
Healthy post production momentum we saw this quarter. Thanks.
And I did and this is what I mean, so as we continue to grow and we will see improved ratio in terms of post production their services out of total revenue.
The fifth.
Item. So we then therefore there the first one is the shifting from possible from preproduction to postproduction to thinking one is what Olivier mentioned is moving customer or existing customer to the cloud that we already started doing this and this is a great additional recurring revenue.
We probably margin profile and the last one is also a move in the eye and selling also on access solution, which increased the recurring piece and also in the future. All of these factors and then we will introduce the ratio. We believe that we can pass the 70% the ratio.
75% the ratio of total revenue in the next several years and if you calculate the margin we see ability to improve overall margin as we continue this trend we believe of up to 5%.
Got it very helpful. Thank you guys and congrats again.
Yeah.
The next question is from surrender thinned of Jefferies. Please go ahead.
Thank you can you please.
Providing maybe a bit more color on APAC opportunity here.
Sounded like you were a bit more excited there's a number of wins there but can you also talk about the fragmentation in the region is theres a lot of different countries involved different sales processes.
So it's very small part of the business right now, but how are you thinking about that over the next three to five years.
Okay. This is roni al Dor and at this moment, we are that the product that we are pushing on that on Asia, mainly they'll P&C platform in insurance.
So.
And we started with several other countries like at the beginning and India, Hong Kong, Singapore, and then as we mentioned, we move now to Thailand and Vietnam.
There's a few other countries there for sure Australia, but for sure. There is a few other countries.
But as we are we believe in what we call land and expand so we are as we just thought it would and these are two big countries like Thailand, Vietnam and so we believe after we complete the implementation for the client we are still in discussion with many other cell looking for way to see the results from those.
Clients.
So this is the one thing the second thing is about our life solution that is a big demand.
Our strategy right now is to look for this Oh, you mainly in the future.
And then we also plan to do it together with our partners.
And just because the other demands that we have from other area. So I think for a long time and we see the very interesting region to play we have the advantage that we have a clause.
Close to half of all employee all in India. So we can do all the support from them and when.
When we acquired these type of business from many years ago. They have many many years of experience to work in this region and all sorts of live events safe Tencent. They are there. So we have oh, so many life by the way implementation from the past. So we have the knowledge of the extension of the people who have the low cost.
But we've seen looking fall and also to walk these partnerships as well.
That's helpful.
In terms of a follow up on the agreement with Microsoft and the integration of this some of opened my eyes to policies into the product suite.
Does the roadmap look like.
Oh gosh.
You talked about it being early stages.
So is that a year out before we start to see revenues.
Hum.
How should we think about that part of your agreements.
And I know, you're saying that this is the only G and I really follow up on the what's the already mentioned, we just started the old market together with the.
With the Microsoft both of them are in the lab work in Windows. It wouldn't be a revenue stream. We didn't talk about it obviously, we felt there's a small amount and we hopefully will go into the future. Currently we do not want to exercise the revenue level.
Thank you.
And then a question on the guidance change here are the updates.
Any color on what's the FX assumption is how much of this is an improvement in the fundamentals and how much is.
FX says we've seen the material.
Striking will be euro helps.
This well.
And the impact on the FX, a zoom a theater leases as of Q2 that was also minimal open from eight two to $8. Four so majority of the if the impact is coming from.
Ongoing operational business.
Yeah.
God I apologize I'm talking about the future guidance.
Very small amount of these coming from currency. The majority is coming from ongoing operations of the business.
Thank you.
Thank you.
The next question.
Question is from Kevin Kumar with Goldman Sachs. Please go ahead.
Thanks for taking my question I wanted to ask about North America, great great to see the acceleration in growth in that segment.
And you see more progress in that segment. How are you thinking about the level of investments in sales and marketing and customer success teams required to adequately cover that market should we expect kind of a faster pace in sales and marketing moving forward.
Okay.
Yes, hi, yeah and.
Can you repeat your quick specific question you asked me about all of that sales and marketing and the C. C. I felt these what you ask.
The sales and marketing you know across your North American business, given the growth, there and and and.
The success you've had how are you thinking about the level of investment to kind of sustain that growth in that segment, yes.
Yes, okay. So we are.
Quarter four last year, we started to do some math organization. Our Simpson marketing there are some internal change and bought a new manager the new marketing. So a lot of changes also.
The organization.
And we are higher than a bunch of people for their clients.
He called client to see client support and client relationship handful then youll business. So definitely we are we draw.
Everything in our business take time, even when we hire from the market competition.
It takes time to learn and also to build the relationship with clients. So in terms of investments. We the majority we already did with few more but the majority and I'd, probably say the time to implement to make sure that the on boarding and there we can see the results in the neck.
A few months with a big client confirms what can consummate.
So when we start to start to see a legislation a nice number for the full month.
So it's and so overall, we plan to increase investment.
Kevin if I need to add one more of a view on that we do not see this investment I mean also in Q2.
As I mentioned earlier, we did some cost saves in the items on corporate.
It saves them money and increasing this investment it came on top so this is almost flat.
We probably will see these effects of additional investment coming from Q3 onwards.
That's helpful. Thanks for that and then maybe you can give an update on just your view on M&A.
And are you getting valuations that may have come down a bit and does that enable you to be a bit more aggressive huh.
And on them and they we see the same as you mentioned, Kevin valuation went down.
We were engaged in several opportunities we are engaged in several opportunities I mean, the early states our mobile progress.
And I can tell you that some of the deals that we've been involved went off because of valuation some of them also because not fit.
We have the intention to close hopefully this year if not for sure next year.
Yeah.
Okay. Thanks for taking my questions.
Thank you.
The next question is from Chris Reimer of Barclays. Please go ahead.
Hi, most of my questions have been answered already but I'd like to touch on the previous relating to the APAC region. I was wondering if there's any challenges in that area versus other regions are there any prohibitions or regulatory.
Aspects of activity, there that might be unique to the area and different from where you already operate.
Hi, This is only a high end.
We don't see any issue on the regulation, even and most of the countries is very similar to U K.
So it's mainly on the life of the 10 seats. So we don't see any issue every country that we are until we call. It can be a country now so new countries, we demand some kind of investment for us, but that's a part of our plan.
And then I think the other challenge is there is the menu on the right column. So and then the amount of money they able to them to buy from them to buy from US. So this is why it's the solution that we have this we have the Indian organization able to support almost.
Our end to end.
That's going to allow us to do business in this area.
So we can always bullish and challenges in there and not on Sunday night.
Okay, and just touching on the gross margin down a bit of a decline in the software segment first quarter.
Wondering if you could touch on the.
The contributing factors to that like what made up.
The decline or or in general.
Hi, This is the only G and we started to introduce this a view or a bolt or analyses that you were in 2023. We also mentioned that can be some fluctuation from one quarter to another.
If we review on the accumulated basis for the last six months, we see slight improvement and within the range that we mentioned the gross margin over there should be between 52% to 56% and we are in line to this.
The fluctuation between quarters, if we look on the yearly basis, some improvement year over to you.
Got it.
General target area is 52 to 56.
Yeah.
Thank you very much that's it for me.
Yeah.
Is there any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for more questions.
There are no further questions at this time.
Before I ask Mr. Al Dor to go ahead with his closing statement I would like to remind participants that a replay of this call is scheduled to begin in two hours in the U S. Please call 1888269005.
In Israel. Please call 039 to 55938 and internationally. Please call nine seven to three nine to 55938, Mr. Al Dor would you like to make a concluding statement.
Yes. Thanks.
You for joining us today for the call.
Thank you.
This concludes the sapiens International Corporation second quarter 2023 results Conference call. Thank you for your participation you May go ahead and disconnect.
Sure.
Okay.
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