Q3 2023 Sapiens International Corp NV Earnings Call
To meet the demand.
Okay.
Thank you.
Ladies and gentlemen, thank you for standing by the conference will begin shortly.
[music].
Okay.
[music].
Yes.
[music].
And with that.
Okay.
Okay.
[music].
Okay.
Right.
[music].
Yeah.
No.
Okay.
Yeah.
Good evening.
We will be.
[noise] [music].
Yes.
Okay.
Okay.
Ladies and gentlemen, thank you for standing by the conference will begin shortly.
[music].
[noise] BBB BBB BBB to BBB.
Yeah.
Yes.
Welcome to Sapiens International Corporation, 2023 third 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.
It's now my pleasure to introduce your host Jaco, calling me for a chief marketing officer and head of Investor Relations. Thank you you offer you may now begin.
Oh corridor I want to welcome you to shaping conference call.
Our third quarter results for 2023.
With me on the call today.
The president and CEO.
So all you do.
CFO and Mr. Alex Zuckerman, Chief strategy Officer.
Following the summary of the results will be available to answer any question.
Before we start I would like to remind everyone that this conference call may contain projections or other forward looking statements.
Hey, Pablo provisions in the press release issued today also apply to the content of the call.
<unk> expressly disclaims any obligation to update or revise any of these forward looking statements, whether because of future events new information a J.
Which means our expectation.
Right.
On today's call, we will make sure to the non-GAAP financial measures.
I close the nation gets too long to get through what has been provided in our press release issued before the market opened this morning.
Is it all of this call will be available after the call.
That's the relations section of the Companys website.
The website link which is available in the earnings release.
We published it.
I will turn the call over to warm yoga, president and CEO of sapiens.
Hey.
Good morning, everyone and thank you for joining us today for Pip in third quarter of 2023 and he called it.
And since they needed another phone call thing in 2023, and they want to solve highlighting some key points that demonstrate the spot.
They've been Pall mall.
I'm committed to the neighborhood as does the language the patient we said it'll be in D. C. In each quarter of three core pillars b.
Yeah, they need the revenue growth with expanding margins.
The first quarter was yet another strong quarter marked by plugging improvements in our operating margins.
Revenue in the third quarter of 2023.
Huntington therapy, we didn't pull up up to nine 9% with you.
But the margin is.
Okay.
So 18 point focus and you'll see continued momentum in theory.
North America, all investment grade since seen it contributes six.
2023.
And the New York, we have maintained our one for four months.
And we are excited about the momentum.
Let's start with North America.
Yeah, we are getting traction to new logos and expansion with existing customers.
But even in North America increased by 10.7%.
Yes.
One example is double if it's when.
And pulses mutual aid Association and Anthro Pizza lunch, a solution provider for military families and Victor.
We selected sapiens for its customer acquisition, that's solution, consisting with Densification. All his assertion boy I bet, I think Paul and sapiens intelligence.
Okay legacy modernization and automation and it should be.
A a N a a selected thick and based on our proven ability to deliver great panic quality products and services and the G. T cell involvement enabling them to better serve their members.
This is in your second customer who is implementing scheduled for completion during the second quarter of 'twenty 'twenty four.
Well, Paul It's got to go only with sapiens is gaining strength in North America.
The first quarter, we now I'll call on you all accidents.
State Agency, that's also walkers competition doing whole governmental entities selected sapiens core suite for workers' compensation.
That's a more intuitive system and diesel or walk through automation.
We will also implement the sapiens digital suite Incipiency intelligence full mold engaging user experience and then that's an important thing.
Secondly, they need really to they've been successful.
Moving to email.
We'll continue to be a key region for growth there.
Revenue in the territory.
They try to pinpoint it puts and you'll really and continued the growth momentum we saw in previous quarters.
But no big cell focused Virginia, New York.
Well, we continue to get going.
Well to your life.
One of the three none so life insurance.
Back then it would be.
To meet these full system transformation, we have been sculpsure for life and pension.
They've been selected.
Oregon experiencing complex insurance ecosystem integration and full providing an end to end cloud digital and that's.
Since last fall.
They didn't go product called life.
And pension insurance.
I've said recently experienced rapid changing customer behavior.
Digital airports are good because they have to walk and then seeing efficiency.
And integrating the customer experience along with the new product offerings.
Moving to South Africa.
As opposed to a long standing customer of sapiens and sell stuff. He got a tier one bank expanded your.
Coffee for license and Chin to Lunching group risk pool position.
The expanded use of sickness coffee for lots of attention and focus.
The bank's strategy.
New and improved products Who's got all day.
Duffy Beckman Coulter it for life and pension satisfied the requirements for complete and robust policy administration solution.
In addition, the tier one South African bank, which expanded relationship consistent into new theoretically went like in the media.
You can see deep suite for property and casualty.
It's because he's standpoint, scholten non life insurance business.
The bank all of that would be you did suites.
Skull Chopin operations in South Africa, and sapiens <unk> for life and pension for life and annuity business.
He did suites was chosen by the box for each expansion in the media based on the positive experience.
They've been foolish and cheap and successfully limitation.
Secondly, deep suites in South Africa.
This win exemplifies how our relationships and so a customer who their lifestyle and some big growth well I think it will take and shifting to our product portfolio that is all the capability and functionality to compete effectively in any region shipments go sell them.
We take complaints, but thoughtfully and dynamic platform that supports the entire product lifecycle to bring.
Solutions to customer business application digital data and decision management product on top of our core P&C and life platform.
Hello.
Including life, P&C workers' compensation, and digitized performed well again in the third quarter and we remain committed to provide innovative solution that needs to be.
Well, we've made to our clients.
Yeah, he didn't get Walton endorsement for industry, I believe well close with Clarkson pension platforms in North America and email.
These support our growth expectation for this product line.
The region.
In the third quarter pet influential in smartphone platform.
And when we needed solution and then we did the insurance solutions Global reports.
Sapiens coffee for life and annuity platform was named Luminaire heat.
Policy administration solution by cement and North America.
It didn't compete for life and pension and then 20% between Excellence Awards.
Breadth of functionality category in EMEA region, and the man and luminary solution.
In October 2023, you hosted Oh, North America customer summit in Tucson, Arizona, I want to take a moment to discuss the importance of our customer summit, which was critical event for us.
He has done it was the largest Israel, there's over 500 attendees from other consulting company.
Including new and long time customer from all of our business because they see walkers called life ventral and decision for lunch and compliance. In addition, we hosted all spread and then basically except something then that both Microsoft and more.
Well, having followed by the trust and the confidence our customers have been taken.
We were also proud to add 23 partners that dependent.
18th sponsoring these end.
Microsoft was the Gulf sponsor and I didn't even really supported the summit.
Until I think the strength of our partnerships and the value they bring to our customers.
Oh got somewhat dominate the platform for meaningful discussion about the ultimate solution and you get to trend.
With panels, featuring industry analyst and customer.
Opening valuable insight into our industry.
Future I'm confident insight no Glenn and capabilities for all posted.
The stomach vocals on our cloud based digital and data hopefully because of cultural and business application solution.
Our customer the goal why realized openness and games, we had a fantastic feedback from attendees and there is tremendous excitement around the improvement I'll walk so that it can bring to their businesses.
The success of our customer summit reflect the collective airports.
Customer success marketing the needs of the management team and the North America region.
Our salt leadership and strong partnership really enable our customers to go on the most critical business functionality, that's really going.
During the cultural and to announce the launch of systems with teaching more than AI, they're not going to see a solution to enhance automation speed integrate didn't Microsoft's youll open AI services.
So you shouldn't model AI products and systems, which is an AI portfolio will address the growing market demand.
Management technology, driven like machine learning and they are integration.
I want to take a few moments and address the situation is and as you all know there tends to be the global company founded the headquarter or anything.
October seven is that it was under attack by come out with the Allergan organization.
400 people working in that that 242 or kidnapped.
She villas babies children and the elderly people.
These attacks chose Israel into a wall.
Our thoughts are with all the pizza well suffer.
Suffering from the situation and those who have lost loved ones.
The mature global organization.
Remember in operation across the globe.
Global operation include developing and support center in 22 countries, including the United States, Europe, and getting but they.
Additionally, we have a global operation Center, which will establish a business continued cheap all gum amongst each center.
We are well prepared and organized to continue supporting our customer and employee.
During this challenging time.
In conclusion, we are confident in executing our strategy effectively because of all the published lead in various product categories in which we compete.
Our team's dedication highly execution level.
In fact, all our long term like God Sake's.
Wanted then fuels our commitment to deliver excellent results for customers and shareholders.
Now I would like to turn it over to CFO to provide more detail on our financial performance.
Thank you Tony.
Begin with a review of our third quarter of 2023 non-GAAP results.
It compares in a year over year versus Q3, 2012, due unless otherwise stated I will follow with the comments on the balance sheet and cash flow and wrap up with our guidance for 2023.
Revenue in the third quarter of 2023 threes do onetime to several people 8 million below up nine 9% from the third quarter of 2022.
On a constant currency basis, our organic growth rates compared to Q3 of 2022 or six 9%.
Our revenue in North America totaled 54, 8 million comparing favorably to $46 million in Q3 of 2022.
And Jesus $5 2 million or 10, 7%.
They gave me more familiar childhood Hulu Youtube golf of course, most of our lines of business and it was linked to our momentum in this region.
Last five school to our local America region grew quarter over quarter, reflecting the initiatives we implemented to go decision.
All you'll deem revenue totaled 64 7 million.
Oh for the U T. The 13, 8% compared to $56 9 million below in Q3, you'll see it doesn't really do.
On a constant currency basis, reflecting organic growth of seven 5%.
Revenue from the rest of World, which includes South Africa, and APAC declined 10, 6% to $11 3 million in Q3 of 2023 compared to $12 6 million rollout in the same quarter of last year.
The decline is temporary and it was mainly due to or did you go lives.
Overall year to date.
Golar region, all going all yesterday's walk comparing to nine months ended September 2022 on a constant currency basis.
Eight 3%.
Collecting seven 2% growth in North America, nine, 7% in Europe, and six 5% in the rest of world.
We'll move now to revenue mix.
The revenue mix in Q3 of 2023 for a weekend and social products and health care and Postproduction services totaled 87, 4 million compared to 75 million rollout in the same quarter of last year.
At $1.4 million in Gs or 16, 6% growth from Q3 of 2022.
We are extremely pleased with the momentum and go well for all the color of the Neocart and the way they used to.
Which is I would remind you is higher gross margin than our one time implementation and the company overall gross margin.
We used to recurring software product.
Production services represent 66, 8% of our total revenue this quarter compared to 63% in Q3 of last year and 64, 3% in Q2 of 2023.
Gross profit.
In Q3 of 2023.
$9 3 million growing by 10, 7% compared to Q3 of last year.
Our gross margin this quarter was 45, 3%.
70 basis points higher compared to Q3 of 2022.
Operating expenses were 75 2 million go along and in Jesus seven 8% compared to $72 6 million in the third quarter of 2022.
Both of our R&D and sales investment has grown this quarter to support product position and sell and sold globally.
Operating profit in Q3 of.
For 2023.
$4 1 million go along in the case of 15, 1%.
Operating margin increased from $17 six to 18, 4%.
During the quarter with savings from the new Israeli shekel versus the receivable, along which reduced some of our costs and was partly offset by higher investments.
Net income attributable to southern shareholders for the third quarter of 2023 was $19 1 million.
<unk> to $16 9 million in Q3 of 2022.
EPS for the quarter was 74 cents per diluted share.
In terms of full cent or 13, 3% compared to 30 cents per diluted share in the third quarter of last year.
EBITDA increased by 12, 4% to $24 8 million or.
Oh 18, 9% of revenue.
Compared to $22 million or 18, 5% of revenue in Q3 of 2022.
Turning to our balance sheet and adjusted free cash flow.
As of September 30 of 2020, we had cash and cash equivalents and short term deposits totaling $173 million with a total debt of 59 million umbrella, which is schedule to mature in three equal annual crunches until January 2026.
You wouldn't get third quarter of 2023, we generated adjusted free cash flow of $1 7 million compared.
Compared to $1 9 million in Q3 of 2022.
During the third quarter, we paid a cash dividend of 26 cents per share.
Selecting a total dividend of $14 4 million for the first six months of 2023.
They span all dividend policy, we will announce the second half of 2023 dividend when we announced the 20th reports for 2023.
I would like to turn no dog guidance for 2023.
We are reiterating our full year 2022, non-GAAP revenue guidance in the range of 511, two five partisan 16 million Rollouts.
Which reflects year over year Gulf of eight 1% at the new deposits.
However, we are increasing our non-GAAP operating margin guidance for the Angels 18 to 18, 2% to a range of 18.2 to 18, 3%.
To summarize this was another strong quarter.
Our revenue grew nine 9% or six 9% on a constant currency basis.
After a product into the old gear and Postproduction services grew by 16, 6% and represent 66% of our revenues and operating margin was 18, 4% with an EBITDA margin of 19%.
In closing.
We'd like to leave you with the following thoughts.
First and foremost.
We understand that the ongoing wrong in Israel.
And about the potential implication on stop doing business.
We are closely and continuously monitor the situation ensuring that though he was ready to use those safe conceptions business continue can you sketch to scale back.
All of them.
Even the current situation a global macro concerns or we'd like to provide some high level color on the others.
2020 for revenue trajectory.
We have never provided this level of color you saw in Q3.
But given the above mentioned issues is appropriate.
To us to give you our investors some sense of all the visibility.
We continue to be conservative and feel comfortable delivering on current consensus estimates, it's $550 million revenue in 2024.
The way to gauge what the Orleans those stated Sundance as a global organization, we distribute to the operation worldwide.
93% of substance revenue generated globally outside of the city, but.
85% of all employees are located outside of the fuse right and we have local management position and customer facing employees in each country we operate.
The vast majority of our sales team is outside of Pittsburgh close to our customers and prospects.
We work with global banks around the world.
With a strong balance sheet with $170 million in cash with significant bullshit or forecast, we used $8 we.
We did I will turn the call over to Tony Tony.
Thank you Lonnie we delivered a strong quarter given Brexit of course, our business geographically and by product line and importantly, we remain committed to believe as it does with the line is the station we said earlier the D C.
I will now ask the operator to please open the call for questions.
Thank you ladies and gentlemen at this time, we'll 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're you.
Using speak broker then kind of lift the handset before pressing the numbers. Please ask your question in a loud and clear voice questions will be pulled in the order. They are a seat. Please standby while we poll for your questions.
The first question is from Dylan Becker of William Blair. Please go ahead.
Hey, gentlemen, I appreciate the question and great to hear that you can see.
Families are going to take a while I think I speak for everyone on the call and hoping for a quick quick resolution to the concept there, but ronny maybe maybe.
Maybe talking about the demand drivers and kind of accelerating need for change I wonder when you're talking to those clients. What's the biggest driver there emphasis I need to drive efficiencies and maybe skewed towards new growth initiatives.
Maybe a little bit of both but I'm wondering how your customers are thinking about prioritizing that expensive.
Yeah. This is Alex here.
And then try to answer your question.
At the close.
And there are several drivers who to do business with us.
One major one major.
Driver is operational efficiency and the need to reduce the non.
Non stable financial climate.
I'm sure that there is less in the process of.
Corporation.
With the with clear efficiency and this is now for US our solutions across the board when you look across our data solutions are digital solution.
<unk> solutions.
That's all capabilities around operational efficiency from brand new their high level of automation to the process. There's low code no code the ability to and to expand and extend their ability of users to perform their activities or the direct to consumer and digital engagement to provide those are all together.
Gather platform, a very strong driver for forecast, a little too I'm going to use us.
Another driver that we see is is the ability to quickly identify and openreach or blue.
Blue Ocean type of business by insurance companies and go quickly also this business.
And this is where they really look for our capabilities around strong configuration low code no code than the ability to deploy our systems in a record time.
To allow them to go to market.
Got it Super helpful.
And then maybe two.
That's nice momentum.
Protection product and I think in the North American segment, there seems like the prior sales restructuring.
Some nice traction, but also how customer receptivity has changed if at all.
I'm, a little bit of a recovery from carriers and loss ratio that you're seeing that.
And that is that opening up a willingness to incentivize.
Incentive spend in this area.
Yeah.
He was just saying I hope I can't answer the question it was a little bit difficult really well and so it is it just too shall we say everybody. We we increased dramatically all of it.
So the organization the marketing power the accounting finished there.
And the marketing to all the three areas.
We are seeing.
Assuming we start to see the early stage in a new new things that we didn't see the pass just because we are covering more customers than it was in the past.
The outstanding client confluence I mentioned I don't want to repeat it it's social generated lots of interest around the digital data cloud and decision and found him zone. So when we see a safeguard is going and we are also we have much more to author also on products and also on services.
If I didn't answer the question you, let's say ask again.
No no that makes sense and then maybe two if I could sneak one last one in so coming out of the conference.
Common themes that I have seen that.
I've made around strength in areas like worker's comp insurance and maybe even medical malpractice.
What's the secret sauce from a product perspective, there isn't the contents because again the specialization around that particular line, but anything to call out there and there was another area of encouraging commentary.
Yeah. So this is Alex again.
So we I think we will need to look here. There are two two major factors that are there's all this attention of the market to all solutions. One is the unique capabilities across each one of our core platforms. When you look at workers struggle. It would definitely have a remarkable traction and success.
And comprehensiveness of the solution.
Its unique product markets.
The way it gives us.
It is the solution.
Thanks to my level to the users and the business of Workers' compensation is exceptional and this is how the market recognizes together with a hyper strong technology and everything is deployed in the cloud and SaaS model strong.
The strongest our grandchildren external ecosystem partners that we brought together through the game. This is definitely allows us to demonstrate a very very mature and comprehensive solution.
But we still see our solutions is also there our ability to serve the customers who show the value to two two.
To help them grow their business in a record time.
And that's definitely another driver. This is therefore, when we look at our Clarksville proposition.
And digital and data capabilities that we bring together with the coal.
To provide a turnkey solution a full end to end solution. This is definitely one of the stress points, having this fully integrated in our platform level being able to deploy them altogether and we see here.
Affecting the market.
That's great very helpful. Thanks, Thanks, a lot.
Thanks.
The next question is from Kevin Kumar of Goldman Sachs. Please go ahead.
Hi, Thanks for taking my question I wanted to ask about the data and do their own.
I know that's been a big focus area for you all and just curious how that's attaching to a new deal maybe how that's trending versus prior quarter and in general can you just talk a little bit about kind of <unk>.
Selling some of these margins back into the customer base and the fact that you're having there.
Yeah. So this is Alex here.
And the way, we look at our digital and data solutions.
Centralized MTT and sapiens to develop.
Those solutions and spread it across our different segments of the business and the different co solution. So what we see is the effect of that in our strategy. We put a huge emphasis on the fact that we provide our core data and digital solutions 40, pre integrated loosely coupled so customers can pick and choose but definitely falling.
Integrated out of the box, which brings a huge operational efficiency both in the project and deployment and in the business as usual.
Impact on all of our business and several of our hospitals one in our typical deal.
Size is increasing the wallet share or statistical do anything crazy because you are not selling only coal as we move forward.
We typically sell it out of.
They call it digital or a data or both solutions and also deployed in the cloud a lot lot less importance of course. These aspects. This win so I think first the first impact is water to second impact is and the attractiveness of our solution.
He's wisely and it seems more and more attractive because we can provide customers a full end to end solutions covering various aspects of its business and their single installation and these brands also.
And a lot of value to the customers the ability to work with one vendor to deploy something that is put into greater than health cost effective.
This also allows us to increase our cross sell now this is something that we are.
Now starting to do more aggressively than before this is also coupled with a high level of maturity of our digital and data solutions.
Seem very very comfortable going forward and that's the only you mentioned, increasing our sales and account executives is soon to be able to go back to our customer base. Most of them are in our core business application.
Research and cross sell with our data and digital solutions.
We start to see this trend both in Europe and in the U S.
Appreciate that.
Helpful.
I wanted to maybe ask also.
He can give an update on your offshore ratio kind of where we are in terms of that.
Maybe how much that is helping drive the margin expansion this year.
Anything else you can comment on kind of you know that.
The success, you're seeing in kind of improving.
Improving profitability this year. Thank you.
Hi, Kevin This is Jean so observations about the 51%.
Okay.
And we are going to say a quarter or the quarter or this quarter. We also buoyed minimal for seven days.
Continue to grow there is always going to impact the gross margin and operational profit.
So this is an important factor in our business this quarter of a day, but it is not coming from the off the ratio is mainly coming from the shekel versus dollar impact that have some benefit to us but we also did this by additional investment in SG&A in the oven.
Believe we can increase the ratio in the next several years and you get additional two percentage.
Movements in operating profits in the next few years.
Great. Thanks for taking my questions.
The next question is from Chris Reimer of Barclays. Please go ahead.
Hi, Thanks for taking my questions.
On another topic.
Crown.
Opex.
I wanted to ask given the strong growth in the regions. How are you looking at.
Men.
I was comparing Q.
Costs.
Can you please repeat the question.
Yes, how are you looking at investments across the regions now that they are growing.
So.
They are producing good results. So how are you looking at the level of investment.
In terms of head count in terms of cost spending in sales and marketing this kind of thing.
I'll try to answer them then they're all in there Alex my follow up.
You can see that there's a lot of value in SG&A and in now in vivo in may.
Quarter over quarter constant.
Constant there all the time.
So in the R&D do you think also that we are having also.
Florida again, so even though this we're adding significant markets include the impact on the Golar It looks like music and reallocate the R&D investments based on the growth engine of the company both to build a core product in the company a growth engine and vast majority of it.
The investment is going to be there and we are focusing on the rest of World North America, and Europe on bridge and because we have a duration. So this is no doubt on.
You May Wanna mention we believe that we can change the same screen and the Coke zero is that could do both in Europe and in North America and as we speak we already doing this we're not seeing significant increase in the SG&A and because we are also reducing some of the costs of the G&A like leases.
You did in this year, so a significant investment in SG&A, because we believe we have the product to sell but the product suite and also good position in North America and Europe.
Got it thank you and.
Regarding the AI product.
Just last month can.
Can you walk us through how how that looks right now.
First is your other pre integrated digital.
Products can you just walk us walk us through how it how it might be different and like what's the potential.
There in terms of what you have in place right now.
She's Alex.
So our decision that we published.
The new regenerative AI capabilities, we've had there.
The decision more than two the decision more than two legged stool, namely usages sapiens wanted to it's a software that is sold to financial institutions banks insurance companies.
And other large financial institutions to manage their business logic and the second their usage is best to use it.
And I can OEM, who as you know we're in parallel other qualities fans, who use it as a tool for information or for business wound management.
In past calls these oh no this new Gen AI capabilities.
Very substantial on both aspects.
We look at it you'll see the decision by our customers as well.
Decision modeling and different food management tool.
Already the first stage that we rolled out the mobile AI allows them to really capture all the logic of the decision model rather than using a firsthand a business I'll, let me throw a model allowed us to win the data we can now consume it from any type of implementation we came in early.
In Mexico, our language and ability to translate natural language into businesses and deploy them. This brings about we estimate at least 30% reduction and therefore in deployment project and business as usual.
This value.
It was really.
And we can harvest the value both to the direct sales of the season as well as using it within the core platforms. The safety of legacy is the entity that manages the business work is also there in terms of both the project implementation. The one time implementation as well as the business as usual maintenance in all grow.
And business management.
There is a substantial reduction.
In the asphalt and in the time that it takes to work with it.
The next stages that we plan to.
Throughout the season.
And Joe May I.
Our island integration.
Around the ability to seamlessly work with machine learning capabilities embedded in their decision model and all of this brings it will bring a huge amount of opportunity for us to improve the business operations to improve our management.
To improve automation for customers both diseases in parallel capability and on the customer side.
Got it. Thank you that's some great color that's it for me.
Thank you. Thank you.
Next question is from only lumpy dark of Leumi partners. Please go ahead.
Okay.
Congratulations on the result on lip balm that any partner there.
Can you comment on the operating cash flow, which was a approximately $4 million.
The third quarter, usually a weak quarter.
So I'll start at the previous year did something change in the consumer side payment terms or something like that and one more thing just making sure I heard right.
The 2024 and midrange Conservative forecast is about 550 million.
I don't know if this is the only jail.
A question regarding the first question and collection.
Some of the prior year's Q3 slightly lower.
We do not expect this to continue.
There is no issue with our customer there is no any a call that we need to go down to the account customer a good relationship only amounts of collection. So we do not expect these two heading into Q4, and we will catch up with you said nuisance. So this is on the collection.
Important again no change in the constructive perspective.
Note also change in customer relationship with Apple.
Yeah.
Regarding the fourth of 2024.
The situation because the.
The medical chart, because invesco approach us we felt that this is right.
Do some things in place in Q3, instead of Q4 to see this stability.
As a company and as we mentioned in the call about 67% of our revenues are recurring in nature.
Yes.
A significant customer while implementing policies tend to them. So we feel very strongly about the ability to continue to grow.
Early in the mandate. This number reflects the existing customer base, we have an additional potential.
Potential prospect in places, we need to convert into revenue. Obviously this needs to be done. So this is why we mentioned the 550 a to make sure that.
Continue to grow as we continue with us.
We need to change it up for the slightly lower diesel being twofold right.
Both of those with this number.
Okay, great. Thanks.
If 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.
This concludes the question and answer session 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 1888 to six.
90005 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 your concluding statement.
Yes. Thank you in conclusion I would.
I want to emphasize though dedication to delivering our promise system to continue to achieve profitability growth. We look forward to continue to be a journey with solar to you. Thank you for trusting supporting sapiens.
Thank you for joining the call today, and we look forward to speaking with you next day, let me close things.
Thank you. This concludes the sapiens International Corporation third quarter 2023 results Conference call. Thank you for your participation you May go ahead and disconnect.
[noise].