Q4 2023 NICE Ltd Earnings Call

Operator: Welcome to the NICE conference call discussing fourth quarter 2023 results, and thank you all for joining. All participants are at present in a listen-only mode.

Welcome to the Nice conference call discussing fourth quarter 2020 through 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 question and answer session.

Operator: Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded on February 22nd, 2024. I would now like to turn this call over to Mr. Marty Cohen, Vice President, Investor Relations at Nice. Please go ahead.

As a reminder, this conference is being recorded February 22nd 2024, I would now like to turn this call over to Mr. Marty Cohen, Vice President Investor Relations at Nice. Please go ahead.

Marty Cohen: Thank you, operator. With me on the call today are Barak Eilam, Chief Executive Officer, and Beth Gaspich, 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, please be advised that the company's actual results could differ materially from these forward-looking statements.

Marty Cohen: Thank you operator with me on the call today are brought the alarm Chief Executive Officer, and best gas gas pitcher Chief Financial Officer.

Marty Cohen: Before we started 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, please be advised that the company's actual results could differ materially from these forward looking statements.

Marty Cohen: Additional information regarding the factors that could cause actual results and performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company's 2022 Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on March 30, 2023. During today's call, we will present a more detailed discussion of fourth quarter 2023 results and the company's guidance for the first quarter and full year 2024. You can find our press release as well as PDFs of our financial results on NICE's Investor Relations website. Follow our comments; there will be an opportunity for questions.

Marty Cohen: Additional information regarding the factors that could cause actual results and performance of the company to differ materially is contained in the section titled risk factors in item three of the company's 2022 our annual report on form 20-F as filed with the Securities Exchange Commission on March 30th 2023.

Marty Cohen: During today's call we are presenting more detailed discussion of fourth quarter 2023 results and the company's guidance for the first quarter and full year 2024.

Marty Cohen: You can find our press release as well as P. D. S of our financial results on <unk> Investor Relations website.

Marty Cohen: Our comments there'll be an opportunity for questions.

Marty Cohen: 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 accepted accounting principles, reflected mainly in accounting for share-based compensation, amortization of acquired intangible assets, acquisition-related Expenses, amortization of discount on debt and loss from extinguishment of debt, and the Tax Effect of the Non-GAAP Adjustment. The differences between the non-GAAP-adjusted results and the equivalent GAAP figures are detailed in today's press release. The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties, and assumptions. I'll now turn the call over to Brock.

Marty Cohen: 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 accepted accounting principles.

Marty Cohen: As reflected mainly in accounting for share based compensation.

Marty Cohen: Amortization of acquired intangible assets acquisition related expenses amortization of discount on debt and loss from extinguishment of debt and the tax effect of the non-GAAP adjustments.

Marty Cohen: The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release.

Marty Cohen: The information.

Marty Cohen: Some of our comments discuss on this call may contain may contain forward looking statements that are subject to risks uncertainties and assumptions.

Marty Cohen: Now I'll turn the call over to Brook.

Barak Eilam: Thank you, Marty, and welcome, everyone. We are once again proud to finish another excellent quarter, fueling our industry-leading fully resolved 22% cloud growth, $2.4 billion of total revenue, cloud growth margin of 70.5%, operating margins of 30% 15% growth in EPS, a rock-solid balance sheet, and record cash generation of $561 million for the year.

Brook: Thank you Marty and welcome everyone.

Brook: Well once again proud to finish another excellent quarter fueling our industry, leading full year results.

Brook: 22% cloud goes to $4 billion of total revenue.

Brook: Cloud gross margin of 17, 5% operating margin go 30%.

Brook: 15% growth in EPS, and a rock solid balance sheet and record cash generation with $561 million for the year.

Barak Eilam: These results not only outperform our competition by a wide margin, but they also put us in the upper echelon of enterprise software. Our cloud growth is at the highest in our industry and on a much larger scale, showcasing our accelerating market share expansion. Nice's best-in-class gross margin, owing to our unrivaled cloud architecture, allows us to substantially out-innovate while consistently delivering increasing profitability. This market-leading profitable growth places Nice in an elite group of enterprise software companies and provides us with a robust balance sheet enabling the Nice team to consistently deliver quarter-to-quarter, shaping the future of our markets while remaining steadfast to our long-term strategy, uninterrupted.

Brook: These results not only outperform our competition by a wide margin.

Brook: They also put us at the upper echelon of enterprise software.

Brook: Our cloud growth is at the highest in our industry and on a much larger scheme showcasing our accelerating market share expansion.

Brook: Nice has best in class gross margin owing to unrivaled cloud architecture allows us to substantially.

Brook: While consistently delivering increasing profitability.

Brook: These market, leading profitable growth places nice in an elite group of enterprise software companies and provides us a robust balance sheet, enabling the nice team to consistently deliver quarter to quarter.

Shaping the future of all markets, while remaining steadfast to our long term strategy on interrupted.

Barak Eilam: 2023 was filled with tremendous growth and expansion across the board, leading to additional successful milestones achieved throughout the year. We continue to increase our market share, adding nearly 1,000 new customers, anddisplacing competitors with each newly acquired logo. We are leading the cloud migration at the high end of the market, with 26% growth in enterprise cloud customers, billing over $1 million in ARR. We achieved strong international cloud goals with over 50% increase in our international cloud revenue. Above all, 2023 will be remembered for two era-defining landmarks for Nice, taking command of the digital engagement market and sharpening the course of AI in the CX industry. As we enter 2024, following the great success of last year, it is now concretely clear that AI has become an overarching catalyst, unlocking multiple vectors of growth.

Brook: Yeah.

Brook: Turning to Israel was filled with tremendous growth and expansion across the board leading to additional successful milestones achieved throughout the year.

Brook: We continue to increase our market share, adding nearly 1000, new customers displacing competitors with each newly acquired logo.

Brook: We are leading the cloud migration and the high end of the market with 26% growth the enterprise cloud customers dealing with the $1 million in L. A.

Brook: We achieved strong international cloud goals with over 50% increase in our international cloud revenue.

Brook: Hey, ball 2023 will be remembered for two era defining landmarks for nice.

Brook: Taking command of the digital engagement market and charting the course OPI in the CX industry.

Brook: As we enter 2024 following the great success of last year. It is now completely clear that the eye has become an overarching catalyst unlocking multiple vectors of growth.

Barak Eilam: Our leading-edge AI with its unique data assets is increasing Nice's cloud win rates across the board, is the bedrock of a rapid expansion into digital engagement, and is the convergence power igniting the adoption of our platform. And it is an endless source for a growing number of brand new AI-based solutions with incremental revenue streams. Let me delve a bit deeper into these four growth pillars.

Brook: Our leading edge AI with its unique data assets.

Brook: Increasing nicely cloud win rates across the board.

Brook: Is the bedrock of our rapid expansion into digital engagement.

Brook: He is the convergence power igniting the adoption of our platform.

Brook: And it is an endless source for a growing number of brand new AI based solutions, we're seeing demento revenue streams.

Brook: Let me delve a bit deeper into these four growth pillars.

With only 20% of the CX market shifted to the cloud the most exciting part of this transition is about to happen over the next several years.

Barak Eilam: With only 20% of the CX market shifted to the cloud, the most exciting part of this transition is about to happen over the next several years. We are already leading with the highest market share in the cloud, attributed to the breadth and depth, scalability, and overall superiority of CX1. AI is now turbocharging our differentiation, further expanding our win rate. In 2023, we saw a 32% increase in the total ACV of CX-1 competitive displacement.

Brook: We are already leading was the highest market share in the cloud attribute it to the breadth and depth scalability and although our superiority of six one.

Brook: AI is now global child, you know differentiation further expanding our win rates.

Brook: In 'twenty two 'twenty three we still have 32% increase in the total HCV.

Brook: Next one competitive displacements.

Barak Eilam: In fact, we delivered a 40% increase year over year in cloud enterprise deals, each with an ACV exceeding $1 million. For example, we signed a 7-digit CX1 deal with a very large provider to the financial services industry. This customer used an incumbent Sika solution for multiple years, but their IVA failed to deliver the much desired automation and AI capabilities.

Brook: In fact, we delivered a 40% increase year over year in cloud enterprise deals each with an ACB exceeding $1 million.

For example, we signed a seven digit six one deal with a very large provider to the financial services industry.

Brook: These customer used an incumbent CCAR solution for multiple years, but theyre I E sales to deliver the margins or the automation and AI capabilities.

Barak Eilam: We displaced that incumbent thanks to the completeness of CX-1. But above all, it was our enlightened Autopilot providing scalable AI self-service that sealed the deal. We also drove a 7-digit CX-1 win with a very large international airline.

Brook: We displaced the incumbent thanks to the completeness of six one but the bubble it was our enlightened autopilot, providing scalable east of Suez the seal the deal.

Brook: He also drove a seven digit six one win with a very large international airline after.

Barak Eilam: After many years of settling with multiple legacy on-premises providers, they conducted a comprehensive evaluation to migrate, consolidate, and upgrade to the cloud. KX1 was exceptional in all criteria, with the decision becoming a no-brainer as soon as they experienced our vast AI offerings. Another deal that demonstrated how AI is increasing our win rate was a seven-digit displacement of an incumbent with a large pharmacy provider. Once again, while Nice was the preferred vendor, it was Enlighten.ai that made it clear that we were the obvious choice to become the future cloud provider for all their CX needs. Moving on to the second pillar.

Brook: After many years of settling with multiple legacy on Prem providers.

Brook: They conducted a comprehensive evaluation to migrate consolidate and upgrade to the clouds.

Brook: <unk> was exceptional in all criteria.

Brook: This decision, becoming a no brainer as soon as the excuse me in some last year offering.

Brook: And now they'll deal that demonstrated how he is increasing our win rate in the seven digit displacement of incumbent with a large pharmacy provider.

Brook: Once again, one nice was the preferred vendor it wasn't light nai and place.

Brook: It's clear that we were the obvious choice to become those tier two cloud providers. So all their CX needs.

Brook: Yeah.

Brook: Moving to the second pillar, 81% of consumer interactions with enterprises are digital and the volume continues to grow exponentially.

Barak Eilam: 81% of consumer interactions with enterprises are digital, and the volume continues to grow exponentially. Digital engagements provide the potential to be the most successful for consumer satisfaction, bring the greatest cost efficiency for the enterprise, and deliver the utmost tech simplicity. However, most enterprises are still using basic and siloed point solutions to engage with consumers digitally, failing to deliver on this great potential.

Brook: Digital engagements provoke I had the potential to be the most successful for consumers the resection bring the greatest cost efficiency efficiency for the enterprise and deliver the outmost Teck's next simplicity.

Brook: However, most enterprises are still using basic in silos point solutions to engage with consumers digitally failing to deliver on this great potential.

Barak Eilam: Over the past two years, we have been strategically trailblazing the digital engagement market, expanding the power of CX1 to cover the entirety of digital engagement and fulfilling the void in the market. The momentum of our ongoing innovation accelerated dramatically in 2023 as we infused our digital engagement capabilities with AI. This is now the fastest-expanding part of our business, reflected by an astonishing 6x growth in the volume of digital engagements managed by CX1 daily, cementing it as the industry's fastest-growing platform. Our digital success in 2023 is also substantiated by a 53% increase in digital bookings.

Brook: Although the past two years, we have been strategically trailblazing the digital engagement market expanding the power of six one to cover the entirety of digital engagement and fulfilling the void in the market.

Brook: The momentum to ongoing innovation accelerated dramatically in 2020 see ethylene fueled our digital engagement capabilities with AI.

Brook: This is not the fastest expanding part of our business reflected by an astonishing six X growth in the volume of digital engagements managed voice, TX one daily cementing it is the industry's fastest growing platform.

Brook: Our digital success in 2020 is also substantiated by 53% increase in digital bookings.

Barak Eilam: Our AI-driven digital engagement wins continued to accelerate in Q4. In a seven-digit ACB deal, one of the world's largest hotel chains, presently undergoing a digital transformation, came to us for a best-in-class AI digital engagement offering. They selected CX1 to be their end-to-end platform, replacing multiple Gen 1 digital pure play providers.

Brook: Our AI driven digital engagement Tweens continues to accelerate in Q4.

Brook: In a seven digit ACB deal one of the world's largest hotel chains presently undergoing a digital transformation came to us for a best in class digital engagement offering.

Brook: They selected six one to be their end to end platform, replacing multiple gen. One digital pure play providers.

Barak Eilam: While consolidation of the siloed digital touchpoints was the top priority, it was our state-of-the-art AI capability, natively embedded in CX-1, that fast-tracked their decision. These same positive trends repeated themselves time and again in Q4, including a 7-digit ACV win with a large insurance provider in the APAC region and a 7-digit ACV deal with a well-known commercial provider of integrated security AI Convergence Power Supercharging Platformization is the third growth pillar.

Brook: While consolidation of the silo digital touch points with the top priority.

Brook: It was our state of the RTI capabilities natively embedded in six one the fast track their decision.

Brook: These positive trends will repeat itself time, and again in Q2, including a seven digit ACB win with a large insurance provider in the APAC region, and a seven digit ACB deal with a well known commercial provider of integrated security solutions among many others.

Brook: Yeah.

Brook: Yeah.

Brook: AIA convergence power Supercharging platform innovation is the third growth pillar.

Barak Eilam: Similar to other enterprise software segments, CX buyers are pivoting 180 degrees from multiple point solutions to building and simplifying their tech stack by standardizing on a single platform. While the value proposition of platform is well understood, its adoption is now gaining a significant boost because it is the only viable way to implement AI that works. Platforms don't appear overnight. It takes strenuous planning with ongoing strategic decisioning, along with a significant decade-long engineering investment.

Brook: Similar to other enterprise software segments six buyers are pivoting 180 degrees from multiple point solution to building and simplifying their tech stack.

Brook: Standardizing on a single platform.

Brook: While the valuable position of platform is well understood. Its adoption is now gaining a significant boost because it is the only viable way to implement the eye that works.

Brook: Platforms don't appeal overnight.

Brook: It takes 20th planning with ongoing strategic Decisioning, along with the significant decade long engineering investments.

Barak Eilam: CX1 is the only platform in the CX market that was built on these principles from day one, and we have seen the fruits of that investment significantly materialize. AI now adds a new tailwind for customers and prospects to standardize on CX1. In Q4, bookings from new customers adopting CX-1 as a platform increased to 100%. In these deals, customers selected CX-1 with three or more applications, displacing at least two incumbent point

Brook: Six one is the only platform in the CX market that was built on these principles from day one.

Brook: And we've seen the fruits of that investment significantly materialize.

Speaker Change: Hey, now Ed.

Speaker Change: New tailwind for customers and prospects to standardize on six one.

Speaker Change: In Q4 bookings from new customers adopting six one as the platform increased 200%.

Speaker Change: In these deals customers selected six one we feel more applications displacing at least two incumbent point solutions.

Barak Eilam: One of those AI-driven platform wins was a seven-digit ACB deal with a global provider of technology for commercial real estate, which was uplifting the experience of millions of their customers and thousands of their users by deploying CX1 as an AI platform, eliminating several incumbent legacy solutions. This theme of AI initiatives spearheading platform decisions appeared in multiple other seven-digit ACV competitive wins in the quarter, including one with a large northeastern utility company where we replaced two incumbents, and a large European technology consulting company undergoing complete CX modernization driven by AI. Lastly, while AI is powering our superior win rate in codification, digitalization, and platformization, it is also a source for a growing number of AI-driven use cases, each contributing to an incremental revenue opportunity. Unlike for individuals, the AI adoption cycle for enterprises is complex.

Speaker Change: One of those AI driven platform win was a seven digit ACP deal with a global provider of technology for commercial real estate.

Speaker Change: We're uplifting the experience to millions of their customers and thousands of new users by deploying six one is in a platform.

Speaker Change: Eliminating several incumbent legacy solutions.

Speaker Change: This theme of AI initiatives spearheading platform decisions appeared in multiple other seven digit HCV competitive wins in the quarter include.

Speaker Change: Including one with a lousy eastern utility company, where we replaced two incumbents and allowed European technology consulting company undergoing complete CX modernization driven by AI.

Speaker Change: Lastly, well.

Speaker Change: AI is barring a superior win rate in codification digitalization and customization.

Speaker Change: It is also a source for a growing number of AI driven use cases.

Speaker Change: H contract, so an incremental revenue opportunity.

Speaker Change: Unlike for individuals.

Speaker Change: The adoption cycle for enterprises is complex.

Barak Eilam: And it is even more so for CX, which is a highly specialized market. We are experiencing a spike in the number of customers and prospects approaching us after trying to leverage general purpose generative AI technologies unsuccessfully. They come to us with the clear realization that Enlighten, with its thousands of CX-specific models that are constantly expanding and evolving from billions of interactions, is the only viable option.

Speaker Change: And it is even more so for CX, which is the high specialized markets.

Speaker Change: We are experiencing a spike in the number of customers and prospects approaching us after trying to leverage general purpose generative AI technologies unsuccessfully.

Speaker Change: They come to us with clear realization that enlightened with thousands of X specific models.

Speaker Change: Constantly expanding and evolving from billions of interactions.

Speaker Change: The only viable options.

Speaker Change: We are defining how AI is adopted for CX as demonstrated by an astounding, 375% increase in enlighten bookings in Q4.

Barak Eilam: We are defining how AI is adopted for CX, as demonstrated by an astounding 375% increase in enlightened bookings in Q4. We signed a seven-digit ACV deal with one of the world's largest home furnishing companies for Enlightened Co-Pilot and Autopilot. In this deal, we replaced the incumbent, and competitors competed against two other large cloud and two pure play AI vendors, with Nice winning for all for its all-encompassing single platform in CX1 and its AI excellence. The wave of adopting enlightened AI, including co-pilot and autopilot, led to several other seven-digit ACP deals, including one with a marquee business service company, one of the largest banks in the world, and a very As we plow steam ahead into 2024, our energy and momentum are at a level higher than I've ever witnessed before in a record-setting pipeline.

Speaker Change: We signed a seven digit <unk> deal with one of the world's largest home furnishing companies for enlighten copilot and autopilot.

Speaker Change: In this deal we replaced incumbent and competed competed against two other large cloud and two pure play vendors with nice willing to all so it's all encompassing single platform in six one and it's a excellence.

Speaker Change: The wave of adopting enlightening, including Copilots, an autopilot led several other seven digit ACB deals, including one with some of our key business service company one of the largest banks in the world and a very large telecommunications companies.

Speaker Change: Okay.

Speaker Change: As we plow steam ahead into 'twenty, two and four hour energy and momentum is at a level higher than I've ever weakness before and a record setting pipeline.

Barak Eilam: At the heart of our expanding win rate is our first-class global sales team with unmatched domain expertise, augmented by the industry's largest partner network. This ecosystem continues to grow as partners are always drawn to market winners. And in 2023, 75% of our business was closed with all two partners.

Speaker Change: At the heart of our expanding win rate is our first first class global sales team with unmatched domain expertise.

Speaker Change: Minted by the industry largest partner network.

Barak Eilam: The foundation of the great results of 2023 and the Jetstream-like momentum we are carrying into 2024 is our 8,400 NICERs, the most energetic, dedicated, and talented group of employees in our industry. I want to thank them for their continued commitment to making Nice the world-class company that it is today. I also want to take this opportunity to thank you, our customers, partners, and shareholders. We appreciate the confidence you place in us and your unwavering support. For us, this great journey to date is only just the overture.

Beth Gaspich: The main act is yet to come. I will now turn the call over to Beth. Thank you, Barack, and good day, everyone.

Speaker Change: The main act is yet to come.

Speaker Change: I will now turn the call over to best.

Best: Thank you Barack and today everyone.

Beth Gaspich: 2023 was another record year for Nice, capped off by an impressive fourth quarter with strong momentum going into 2024. Both the fourth quarter and full year 2023 once again demonstrated that our financial results shine in the enterprise software market with best-in-class cloud growth in the CX industry, coupled with our ever-expanding profitability and cash generation. Before I move to our fourth-quarter results, I'd like to start by reiterating that the financial results for Q4 do not include any contribution in the P&L from the LiveOx acquisition, which will only contribute to Nice's results starting in 2024. In Q4, both total revenue and EPS came in well in excess of our expectations. Total revenue for the fourth quarter was a record $623 million, up 10% year-over-year, driven by the ongoing strength of our cloud business, which now represents a record 69% of our total revenue compared to 63% last year.

Best: Thousand twenty-three with another record year for nice capped off by an impressive fourth quarter with strong momentum going into 2024.

Best: Both the fourth quarter and full year 2023, once again demonstrated that our financial results Shine in the enterprise software market with best in class cloud growth in the CX industry, coupled with our ever expanding profitability and cash generation.

Best: Before I moved to our fourth quarter results I'd like to start by reiterating that the financial results for Q4 do not include any contribution in the P&L from the live ox acquisition, which will only contribute to nicer results starting in 2024.

Best: In queue for both total revenue and EPS came in well in excess of our expectations total revenue for the fourth quarter was a record $623 million of 10% year over year, driven by the ongoing strength of our cloud business, which now represents a record 60.

Best: 89% of our total revenue compared to 63% last year.

Beth Gaspich: Cloud revenue increased 20% year-over-year and 6% sequentially to a record of $429 million in the fourth quarter, as we continue to see increasing adoption of our CX1 platform by large enterprises, driven by demand for our digital and AI solutions, which serve as key differentiators in clinching deals and driving our high win rates. Digital and AI are among the key drivers of growth for our business. The opportunity that we provide with these expanded capabilities makes our cloud offerings the preferred choice for enterprises that desire to deliver cost efficiencies while simultaneously increasing consumer satisfaction. The further adoption of digital and AI will act as significant opportunities for incremental revenue streams into the years ahead. Services revenue, which represented 26% of total revenue, was $162 million, an increase of 1% year-over-year, given higher professional services revenue resulting from large enterprise adoption. In line with our expectations, product revenue from on-premise sales, which represented 5% of total revenue in the quarter, compared to 9% of total revenue last year, decreased to $32 million.

Best: Cloud revenue increased 20% year over year, and 6% sequentially to a record of $429 million in the fourth quarter as we continue to see increasing adoption of our CX one platform by large enterprises, driven by demand for our digital and AI salute.

Best: <unk>, which serve as key differentiators, and clinching deals and driving or high wind rates.

Best: Digital N a I R. Among the key drivers of growth for our business.

Best: The opportunity we provide with these expanded capabilities make our cloud offerings to the preferred choice for enterprises that desire to deliver cost efficiencies, while simultaneously increasing consumer satisfaction.

Best: The further reduction of digital and Eh I Act as significant opportunities for incremental revenue streams into the years ahead.

Best: Services revenue, which represented 26% of total revenue with $162 million, an increase of 1% year over year, given higher professional services revenue, resulting from large enterprise adoption.

Best: In line with our expectations product revenue from on premise sales, which represented five per cent of total revenue in the quarter compared to 9% of total revenue last year decreased to $32 million.

Beth Gaspich: With the ongoing expansion of cloud business across all our segments, our recurring revenue further increased to a record 88% of total revenue in the fourth quarter, compared to 85% last year, and crossed the $2 billion threshold for the full year 2023. Recurring revenue is comprised primarily of a combination of cloud revenue and maintenance revenue, which is a component of our services revenue. From a geographic breakdown, the Americas region, which represented 84% of total revenue in Q4, grew 10% year-over-year.

Best: With the ongoing expansion of cloud business across all our segments a recurring revenue further increased to a record 88% of total revenue in the fourth quarter compared to 85% last year and cross the $2 billion threshold for the full year 2023.

Best: Recurring revenue is comprised primarily of a combination of cloud revenue and maintenance revenue, which is a component in our services revenue.

Best: From a geographic breakdown the Americans region, which represented 84% of total revenue in queue for grew 10% year over year. The Americans region has continued to excel primarily from the success of C X one sales in the region.

Beth Gaspich: The Americas region has continued to excel, primarily due to the success of CX-1 sales in the region. The EMEA region, which represented 10% of our total revenue, increased 2% year over year. The increase in MIA was due to significant growth in cloud revenue, offsetting a decline in on-premise revenue, primarily from the financial crime and compliance segment. The APAC region, which represented 6% of total revenue, increased 11% year-over-year. The foreign exchange hedge wins in APAC and tailwinds in EMEA offset each other such that the net currency exchange impact on total revenue was negligible.

Best: The EMEA region, which represented 10% of our total revenue increased 2% a year over year.

Best: The increase in Mia was due to significant growth in cloud revenue offsetting a decline in on premise related revenue primarily from the financial crime and compliant segment.

Best: APAC region, which represented 6% of total revenue increased 11% year over year, the foreign exchange headwinds and APAC and Tailwinds in EMEA offset each other such that the net currency exchange impact on total revenue was negligible.

Beth Gaspich: The international market is highly underpenetrated in comparison to cloud adoption in the U.S. This represents a significant growth opportunity for Nice, as we have already made considerable investments in our partnerships, data centers, and go-to-market to capitalize on the growing interest in our cloud offering across the globe. Cloud revenue now represents nearly half of our total international revenue. With respect to our business segments, customer engagement revenues, which represented 84% of our total revenue in Q4, were $523 million, a 12% increase. CX1, the most complete customer experience cloud platform, is the growth driver in customer engagement, led by our enterprise-grade CX AI. Revenues from Financial Crime and Compliance, which represented 16% of our total revenue in Q4 and totaled $101 million, delivered as expected and decreased slightly year-over-year.

Best: The national market is highly underpenetrated in comparison to cloud adoption in the U S.

Best: This represents a significant growth opportunity for nice as we have already made considerable investments and our partnerships data centers and go to market to capitalize on the growing interest in our cloud offering across the globe cloud.

Best: Cloud revenue now represents nearly half of our total international revenue.

Best: With respect to our business segments customer engagement revenues, which represented 84% of our total revenue in queue for where $523 million a 12% increase.

Best: X one the most complete customer experience cloud platform is the growth driver and customer engagement led by our enterprise grade see X AI.

Best: Revenues from financial crime, and compliance, which represented 16% of our total revenue in Q4 in total $101 million delivered as expected and decreased slightly year over year.

Beth Gaspich: We are continuing to execute on our strategy to cloudify this segment of the market, both for high-end and mid-tier financial institutions, through adoption of our cloud platforms, Excite and Exceed. In Q4, the cloud revenue growth year-over-year was offset by a decrease in product and service revenue. We expect to see this cloud growth materialize in the revenue stream for financial crime and compliance in future periods and for the segment to return to growth as cloud revenue becomes more meaningful. Our focus on continued expansion of our profitability is unwavering and was demonstrated once again in our robust results in the fourth quarter.

Best: We are continuing to execute on our strategy to cloud of Phi This segment of the market both to the high end and mid to your financial institutions through adoption of our cloud platforms excite and exceed.

Best: In queue for the cloud revenue growth year over year with offset by a decrease in product and services. We expect to see this flower grows materialize and the revenue stream for financial crime and compliance in future periods and for the segment to return to growth as a cloud revenue becomes more meaningful.

Best: Our focus on continued expansion of our profitability is unwavering and was demonstrated once again in our robust results in the fourth quarter.

Beth Gaspich: Our outstanding cloud gross margin reached a record 71.1% in Q4, thanks to our scalable cloud architecture. Our complete CX-1 platform continues to deliver an ever-expanding cloud gross margin as a result of higher attach rates as we go up market, which contributes incremental cloud profitability. In Q4, operating income increased 15% year-over-year to $187 million, and our healthy operating margin increased 140 basis points to 30% compared to 28.6% last year. Earnings per share for the fourth quarter totaled a record $2.36, a 16% increase compared to Q4 last year.

Best: Our outstanding cloud gross margin reached a record 71.1% in queue for thanks to our scalable cloud architecture.

Best: Our complete six one platform continues to deliver an ever expanding cloud gross margin as a result of higher attach rates as we go up market, which contributes incremental cloud profitability.

Best: In queue for operating income increased 15% year over year to $187 million and are healthy operating margin increased 140 basis points to 30% compared to 28.6% last year.

Best: Earnings per share for the fourth quarter totaled a record $2.36, a 16% increase compared to Q4 last year.

Beth Gaspich: Cash flow from operations in Q4 was $180 million, and for the full year, it was a record $561 million, an increase of 17% compared to 2022. Our industry-leading free cash flow generation and profitability are the direct reflection of the consistent focus we maintain on delivering increasing operating leverage in our business. Due to our sales wins and laser-focused expense management, we achieved a 26% free cash flow margin in Q4 and 20% for the full year 2023. The strength of our cash flow generation enables us to execute our capital allocation priorities of M&A, like our recent acquisition of LiveOx, to continue to cement our market leadership and to execute on our share buyback program to return capital to our shareholders. Accordingly, in 2023, we accelerated our buyback program, purchasing $288 million of shares, nearly double the amount purchased in 2022.

Best: Cash flow from operations in Q4 was $180 million and for the full year was a record $561 million, an increase of 17% compared to 2022.

Best: Our industry, leading free cash flow generation and profitability are the direct reflection of the consistent focus we maintain on delivering increasing operating leverage in our business.

Best: Due to our sales wins and laser focused expense management.

Best: <unk>, a 26% free cash flow margin in Q4, and 20% for the full year 2023.

Best: The strength of our cash flow generation enables us to execute our capital allocation priorities of M&A like a recent acquisition of livestock to continue to cement our market leadership and to execute on our share buyback program to return capital to our shareholders.

Best: <unk> 2023, we accelerated our buyback program purchasing $288 million of shares nearly double the amount purchased in 2022 at.

Beth Gaspich: At the end of last year, we announced the introduction of an even larger plan of $300 million, which we expect to complete by the end of 2024. We successfully completed the acquisition of LiveOx near the end of December 2023. Our balance sheet was consolidated on the closing date and reflects the acquired assets and liabilities of LiveOx. Accordingly, total cash and investments at the end of December totaled $1,408,000,000.

Best: At the end of last year, we announced the introduction of an even larger plan a $300 million, which we expect to complete by the end of 2024.

Best: We successfully completed the acquisition of <unk> near the end of December 2023, our balance sheet was consolidated on the closing date and reflects the acquired assets and liabilities of lie box Accordingly, total cash and investments at the end of December totaled $1 billion and 408 million.

Best: This healthy year and cash position is posted closing and outgoing proceeds for the acquisition of lie box.

Beth Gaspich: This healthy year-end cash position is post-closing and outgoing proceeds for the acquisition of LiveOx. Our debt, net of a hedge instrument, was $544 million, resulting in net cash and investments exceeding $864 million. In conclusion, our fourth quarter performance caps off a strong year for Nice, reflecting the foresight of our comprehensive strategy of seamlessly implementing CXAI with quality, accuracy, and security on a single platform at scale. Our new bookings in Q4 served as a positive reinforcement of the growing demand we are seeing for our CXAI solutions, and we are excited to continue the strong execution of our strategy across all our business segments in 2024. Before I conclude my remarks, I would like to highlight a few expectations relative to our 2024 outlook. We are reiterating our expectation of cloud growth of at least 18% in 2024, excluding the contribution of LiveOx. We expect LiveOx to contribute approximately $142 million to total revenue, which will be attributed to our cloud revenue line at the start of 2024.

Best: That instead of a hedge instrument was $544 million, resulting in net cash and investments exceeding $864 million.

Best: In conclusion, our fourth quarter performance caps off a strong year for nice, reflecting the foresight of a comprehensive strategy of seamlessly implementing C X AI with quality accuracy and security on a single platform at scale.

Best: Our new bookings in Q4 served as a positive reinforcement of the growing demand, we're seeing for our CX AI solutions and we're excited to continue the strong execution of our strategy across all our best business segments in 2024.

Speaker Change: Before I conclude my remarks, I would like to highlight a few expectations relative to our 2024 outlook.

Speaker Change: We are reiterating our expectation of cloud growth of at least 18% and 2024, excluding the contribution of live ox, we expect <unk> to contribute approximately $142 million to total revenue, which will be attributed to our cloud revenue line from the start.

Speaker Change: Of 2024.

Beth Gaspich: We assume some revenue redundancy in the initial year of transition and expect this acquisition to show growth in 2025 and beyond. Our total cloud revenue is expected to exceed $2 billion for the full year 2024. We expect our effective tax rate throughout 2024 to be in the range of 20 to 21 percent.

Speaker Change: We assume some revenue redundancy in the initial year of transition and expect this acquisition to show growth in 2025 and beyond.

Speaker Change: Our total cloud revenue is expected to exceed $2 billion for the full year 2024.

Speaker Change: We expect our effective tax rate throughout 2024 to be in the range of 22, 21%.

Beth Gaspich: Now, I'll close with our total revenue and non-GAAP EPS guidance for the first quarter and full year 2024. For the first quarter of 2024, we expect total revenue to be in the range of $650 million to $660 million, representing 15% year-over-year growth at the midpoint. We expect the first quarter 2024 fully diluted earnings per share to be in a range of $2.40 to $2.50, representing 21% year-over-year growth at the midpoint. Full year 2024 total revenue is expected to be in a range of $2,715,000,000 to $2,735,000,000, which represents an increase of 15% at the midpoint. Full year 2024 fully diluted earnings per share is expected to be in a range of $10.40 to $10.60, which represents an increase of 19% at the midpoint.

Speaker Change: Now I will close with our total revenue and non-GAAP EPS guidance for the first quarter and full year 2024.

Speaker Change: For the first quarter of 2024, we expect total revenue to be in the range of $650 million to $660 million, representing 15% year over year growth at the midpoint.

Speaker Change: We expect the first quarter 2024 fully diluted earnings per share to be in a range of $2.40 to $2.50, representing 21% year over year growth at the mid point.

Speaker Change: Full year 2024 total revenue is expected to be in a range of $2 billion and $715 million to 2 billion and $735 million, which represents an increase of 15% at the mid point <unk>.

Speaker Change: Full year 2024 fully diluted earnings per share is expected to be in a range of $10.40 to $10.60, which represents an increase of 19% at the midpoint I will now turn the call over to the operator for questions operator.

Operator: I will now turn the call over to the operator for questions. Operator? Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.

Speaker Change: Confirmation total indicate your sinus and the question queue. You May press start to if you would like to remove your question from the queue of participants.

Samad Samana: For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star 1 to register a question at this time. Today's first question is coming from Samad Samana of Jeffreys. Please go ahead. Hi, good morning, and congrats on the strong close to 2023. Barak, perhaps the first question for you, you spent a lot of time in your prepared remarks talking about the impact of AI. I was curious, when you think about customers and the engagement that you're having, are you seeing them add additional budget to spend on AI products above and beyond what they would have normally spent in a CX engagement? So, for example, if a typical deal was $100,000, are you seeing them spend 20, 30% more because of the additional AI products, and is that their new budget?

Speaker Change: Participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker Change: Again, that's star one to register a question at this time.

Speaker Change: Today's first question is coming from <unk> Jeffries. Please go ahead.

Jeffries: Hi, good morning, and came back and the strong close to 2023 <unk>.

Jeffries: <unk> first question for you you spend a lotta time and be prepared remarks talking about the impact of.

Jeffries: Attraction at the company C. I was curious when you think of that customer customers in it and engage with you you're having are you seeing them add additional budget to spend on a I products.

Jeffries: And what they would have normally spent an a C X engagement. So for example, if a typical deal with $100000, you're receiving them spend 2030 per cent more because of the additional product soon as that new budget. We're just trying to figure it out maybe if there's additional dollars being allocated N C X because of this.

Samad Samana: We're just trying to figure out maybe if there are additional dollars being allocated to CX. Yeah, thanks for the question, Samad. And the short answer is absolutely yes, but I'll give more color about that. First of all, it's important to say that every conversation that we have today, regardless of what, you know, we end up doing with the customer, starts with AI, both in terms of, you know, the way we position it, but, of course, where the customer's focus is, and they understand that in order to have AI, they need to obviously move to the cloud That was important to emphasize. As a, you know, going back to your question, yes, there is more budget funneled to it. First of all, because, generally, there is more budget available to AI, and it's easier for any type of executive to get approval for AI.

Speaker Change: Yeah. Thanks for the question.

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Barak Eilam: There is somewhat of an AI format, if you would like, in enterprises right now. But specifically in CX, the value proposition is very clear. We need to remember that still 90% of the spend in CX goes to labels. With all the respect to, you know, all the technology that is surrounding this, you know, customer representative, still 90% of the cost is in labor. And AI, a very straight position; it has two parts to it.

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Speaker Change: With all due respect to you know older technology surrounding this customer representative.

Speaker Change: 90% of the cost isn't labor.

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Barak Eilam: It has augmented intelligence, where it augments the agent to make it 10x better, obviously much more efficient, so more money can move from labor into technology. And, of course, full automation with AI that allows them to take out the head count on one hand, but apply a healthy amount of it with a great ROI, 25% of it or so, and apply it to the technology side of AI. So I would say that if you look at CX as a whole, potentially, there is no new budget, but there is a major shift from labor to technology. So for us, this is definitely a new incremental budget. Great. And then, you know, just maybe for you or Beth, either way, but you're now, you know, you've closed the live box deal.

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Speaker Change: I would say that if you look at the whole potentially there is no new budget <unk> <unk> can you. Please.

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Speaker Change: Just say before you are back either way, but you are now you know.

Barak Eilam: I'm curious, maybe how the initial phases of the integration are going? How are you thinking about, you know, integrating their workforce into yours? And maybe what's the initial feedback? And how should we think about that, that timeline of integrating the two businesses together more seamlessly? So I'll start saying it's early days, we're just, you know, a few, you know, a month and a half or so, a couple of months after the closing, but it's going extremely well. From day one, when we started to meet with the company, of course, even before the signing and closing, we saw both the potential as well as the two cultures and the great talent LiveVox brought with them and So we integrated them together, and they're very happy to be with Nice. I just met a lot of them at our sales kickoff, which was just phenomenal, and they're all extremely excited to be a part of Nice, and we also see the excitement of our customers and prospects.

Speaker Change: I'm curious maybe had the initial phases of the integration are going how are you thinking about integrating their workforce into yours and maybe what's the initial feedback and how should we think about that that timeline of integrating the two businesses together more seamlessly.

Speaker Change: Mmk and start saying, it's early days would just you know what else do you you know and months and a half or so companies loans. After the closing, but it's getting excuse me when.

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Speaker Change: Nice I just made a lot of them <unk>, it's just phenomenal extremely excited.

Speaker Change: To be nice and also see the excitement you can <unk>.

Barak Eilam: We see the potential within the LiveVox customer base, which was very happy to hear that this is now one company. We see the potential in a nice customer base that all of a sudden understands that we have such, you know, superior capabilities when it comes to proactive outbound and bringing AI into outbound. And above all, it allows us to further increase our win rates when it comes to, you know, completely brand new prospects that are not either LiveVox or Nice customers. Great. Thank you both so much for taking my question.

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Speaker Change: [noise] great. Thank you so much for taking my questions.

Samad Samana: Thank you. Thank you. The next question is coming from Tyler Radke of Citi. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Thank you. The next question is coming from Tyler Radke of city. Please go ahead.

Tyler Radke: Yeah. Good morning, Thanks for taking my question. So <unk> you talked a lot about some pretty impressive enterprise when statistics, you know whether it was the million dollar a C V customer growth International cloud revenue really strong as I look at your cloud revenue performance.

Tyler Radke: Yeah, good morning. Thanks for taking the time to ask the question. So, Barack, you talked a lot about some pretty impressive enterprise win statistics, you know, whether it was the million dollar ACV, customer growth, international cloud revenue, really strong. But as I look at your cloud revenue performance this quarter, the sequential growth in Q4 was a bit below where we saw sequential growth a year ago. So can you just help frame for us kind of the timing of some of this booking strength when you expect that to flow into cloud revenue, you know, can understand there's implementation and, and things take some time to ramp up. And I guess related to that, Beth, any further color and how we should think about the shape of cloud revenue throughout the year? I certainly appreciate the 18% reiteration of the organic cloud guide, but just how we should think about the Thank you. Yeah, thank you, Tyler.

Tyler Radke: This quarter, but the sequential growth in queue for was a bit below where we saw the sequential growth a year ago. So can you just help frame for us kind of the timing of some of this bookings strength when you expect that to.

Tyler Radke: To flow into the the the cloud revenue could I understand there's there's implementation and things take some time to ramp up and I guess related to that Beth any for their color and and how we should think about the shape of a cloud revenue throughout the year certainly appreciate the 18% reiteration.

Beth: Of organic cloud guide, but just how we should think about the you know the the quarterly progression, they're given the strong bookings you saw here in Q4. Thank you.

Beth: Yeah. Thank you Tyler I'll I'll actually start by addressing your question I think first as we talk about our our cloud revenue performance for the fourth quarter is as well as of the year. The full year I can say you know in general we are extremely.

Beth Gaspich: I'll actually start by addressing your question. I think first, as we talk about our cloud revenue performance for the fourth quarter, as well as the year, the full year, I can say, you know, in general, we are extremely pleased with our performance. We delivered 22% growth for the full year and 20% growth in the fourth quarter.

Speaker Change: Pleased with our performance, we delivered 22 per cent growth for the full year, 20% growth in the fourth quarter. If you look at the comps out their relative to the other players in the CX market were greatly outperforming when you look at the the sequential growth throughout the course of 2020.

Beth Gaspich: If you look at the comps out there relative to the other players in the CX market, we're greatly outperforming. When you look at the sequential growth throughout the course of 2023, the contribution that we made to our cloud revenue in absolute dollars each and every quarter continued to increase. And it's really reflective of just the strength of our overall business and the great win rates that we had during the course of last year. As we step into 2024, we're very pleased again with what we see and the momentum there and the opportunity ahead of us. We've given some very clear expectations that we expect to see 18% growth in cloud revenue for the full year of 2024. But today, we're actually near the end of February, and so we can actually say with, you know, strong confidence that we expect that 18% to be steady and really play out pretty uniformly in terms of the quarterly growth year over year, each and every quarter.

Speaker Change: Three the contribution that we made to our cloud revenue uhm in absolute dollars each and every quarter continue to to increase and it's really a reflective of just the strength of our overall business and and the great when rates that we had during the course of last year.

Speaker Change: As we're stepping into 2024 Uhm, we're very pleased again with what we see in the momentum there and the opportunity ahead of US we've given some very clear expectations that we expect to see 18% growth in the cloud revenue for the full year of of 22.

Speaker Change: Three four but today, we're actually near the the end of February and so we can actually stay with you know a strong confidence that we expect that 18% to be steady and really play out pretty uniformly in terms of the quarterly growth year over year, each and every quarter.

Beth Gaspich: We, as part of our business, are constantly monitoring the usage data of our customers, and so we can see that demand and the growth expectation are stabilized, which, again, really further kind of widens the gap, the positive gap that we see relative to other players in the market as we step into this year. And maybe just to add one more thing, if I may, Taylor, because going back to the sequential growth between Q3 and Q4, as Beth highlighted, in absolute dollars, we added, if I'm not mistaken, $28 million, and this is organic. Not all companies in our space are public; actually, most of them are not, but the one that it is, as far as I know, added $8 million, and they didn't highlight that most of it was non-organic, so I think that speaks a lot about our market share expansion. Yeah, and it's a great segue. The follow-up question, Barak, I had about competition. I think last quarter you talked about winning some deals just from competitors that maybe were shopping themselves around. Was that still in play this year?

Speaker Change: We as part of our business are constantly monitoring the usage date of our of our customers and so we can see that that demand and the growth expectation is stabilized, which again really further kind of widens the gap the positive gap that we see relative to other players in the market as we step into.

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Speaker Change: Just a follow up question Barack I had around competition I think last quarter, you talked about winning some deals just from competitors, but maybe we're shopping themselves around.

Speaker Change: Would that still in play this year did you did you still see customers kind of.

Barak Eilam: Did you still see customers kind of default to nice because of some of the M&A activity that some of your competitors are potentially seeking? I think we see a very favorable environment for us in terms of the competitive landscape. It's similar to what I highlighted last quarter. The reasons are obviously, I think at the end of the day, the offering that we have wins. And that's the number one reason.

Speaker Change: Default to nice.

Speaker Change: Because of some of the.

Speaker Change: Emanate activity that some of your competitors are potentially speaking.

Speaker Change: I think we see a very favorable environment for us in terms of the competitive landscape. It's similar to what I highlighted the last quarter. The reasons, obviously I think I'd be able to be offering that we have we have none.

Speaker Change: One reason is now to charge by I, but yes. The other consideration we continue to go.

Barak Eilam: Now, it is turbocharged by AI. But, yes, there are other considerations. We continue to grow our employee base while others are going through multiple rounds of layoffs, and as a result of that, deteriorating the service they provide to customers. One example. We understand that some of our competitors took on an even larger debt, a very significant debt, you know, making sure that in the long run, they are probably not going to yield a lot of innovation. So these are some considerations customers are having. But generally, as I highlighted in the previous quarter and throughout 2023 and in the quarter we just reported, we feel that our win rate continues to expand. And at the end of the day, when you look at the results and our growth, and Beth highlighted both for the past quarter as well as into 2024, it is much higher than what we are aware of the competition, and, of course, on a much higher scale.

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Tyler Radke: Thank you. Thank you. The next question is coming from Meta Marshall of Morgan Stanley. Please go ahead. Beth, there were many this morning.

Speaker Change: Thank you.

Speaker Change: Thank you. The next question is coming from that a martial off Morgan Stanley. Please go ahead.

Martial: Great. Thanks.

Marshall: The past quarters.

Marshall: Some.

Martial: There were a few macro headwinds kind of some of your smaller customers. Just wanted to see if you can kind of give any update on what your scene with that portion of the market and then maybe just a follow up for you.

Meta A. Marshall: And then maybe just a follow-up for you. You know, given all the opportunities, how are you guys? www.youtube.com.uk Thank you for the question, Meta. I guess first addressing the macro headwinds, you know, it's something that we discussed that we saw somewhat throughout the course of 2023 and was mostly materializing really on the smaller customer base and the S&B segment of the market. If you looked at the fourth quarter seasonality relative to what we had seen in prior years, we did see an uptick, and we've talked about the sequential growth quarter to quarter, but relative to prior years, it was But I think what's really important, and I highlighted it in the question from Tyler, is that we have now seen stabilization. You know, the fourth quarter was the culmination of three separate months.

Martial: Given all the opportunity that you were seeing how you guys are balancing investment levels, and deciding where to kind of incremental dollars.

Speaker Change: Thank you for the question <unk> I guess first addressing the the macro headwinds you know, it's it's something that we discussed that we saw somewhat throughout the course of 2023 and was mostly a materializing really on the the smaller customer base in the S. M B.

Speaker Change: Segment of the market if you looked at the fourth quarter seasonality relative to what we have seen in prior years, we did see an uptick in we've talked about the sequential growth quarter to quarter, but relative to prior years. It was lighter again consistent with we what you'd seen throughout the course of the year, but I think what's.

Speaker Change: Really important and I highlighted on the question from Tyler Tyler is that we have now seen the stabilization you know the fourth quarter was the culmination of three separate months, we're now into the first quarter in February and.

Beth Gaspich: We're now into the first quarter, into February, and so we've seen that macro impact, really, I would say, has stabilized, and that's what gives us that confidence to say that 18% is not just our expectation for the full year but really something that we've seen. And that's something that we expect to see pretty consistently throughout the course of each quarter. And I'm sorry, can you repeat your second question? I'll take the second part on the investment, Beth, if that's fine, and I'll answer it. Thanks for the question. So, in terms of how we prioritize investment, given the demand that we see in the market, I'm a great believer in our innovation. Of course, we continue to invest across the board, but I think the source of why we can invest so well, including, and at the same time, increase profitability in such a great way, goes back to our gross margin. We have a gross margin that is north of 70%, very different from what you see in our market. The reason for that is the architecture that we have, with the great economy of scale and great unit economics. It allows us to go back and invest at least 15% of our revenue every year. If you neutralize capitalization, it's about 15%.

Speaker Change: So we've seen that macro impact and really I would say has stabilized and that's what gives us that confidence to say that 18% is not just our expectations for the full year, but but really something that we expect to see pretty consistently throughout the course of each quarter and I'm sorry can you repeat your second <unk>.

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Barak Eilam: This year, it's going to be roughly $400 million that goes back into R&D, allows us to out-innovate, and at the same time, provide such guidance on the EPS, on the operating margin, and operating income. Thank you. The next question is coming from Tim Horan of Oppenheimer & Co. Please go ahead.

Speaker Change: D C. It's going to be roughly $400 million to go back into R&B allows us to out innovate and at the same time provider and such guidance on the E. P. S. On the operating margin going operating income.

Speaker Change: Great. Thank you.

Speaker Change: Thank you. The next question is coming from Tim Horan of Oppenheimer and Coke. Please go ahead.

Timothy Horan: Thanks, guys. Can you describe in a little bit more detail why you're AI or how it's better? Competitors, where has the AI been over the last three to six months? Yeah, thanks for the question. It's a great question, you know, and we continue. I've been in the industry for 25 years or so. And I've lived through different technological waves starting from, you know, hardware, software, internet, mobile, cloud, and these days, AI. And I've seen the pace of innovation of previous waves. And this is nothing like we've seen before.

Timothy Horan: Could you describe it a little bit more detail why your AI or how it's better than your competitors and.

Timothy Horan: Where have you seen the biggest improvements to a little you know in the last three to six months. Thank you.

Timothy Horan: Yeah. Thanks for the question. It's a it's a great question you know and we continue now I've been in the industry for 25 years old.

Timothy Horan: And I lived through the different technology wave starting from you know the hardware softer Internet's mobile cloud and these days the D U I and I've seen the face of innovations previous waves and this is nothing like we've seen before <unk>, we started our a I journey.

Barak Eilam: For us, AI is not new. We started our AI journey several years ago; we sold the opportunity. And, of course, we're very happy that now it takes such a front and center.

Timothy Horan: Several years back we sold your opportunity and of course was very happy that now it takes such phone to center. So we can bring our innovation on time to customers. The reason why we were so successful I believe in white customers come to ask you. Some of the assets that we have that we didn't start building.

Barak Eilam: So we can bring our innovation on time to customers. The reason why we're so successful, I believe, and why customers come to us, are some of the assets that we have that we didn't start building. Yesterday, we started many years ago; we have a lot of data assets. And that's the secret sauce or the important part, you have to have a very solid platform, you have all the information in one place, well organized, well federated, categorized, but then you have to have a lot of historical data that is both current and related to the past in order to make the AI work.

Timothy Horan: Those assets yesterday started many years back we have a lot of data assets and dos D. If you'd like the secret sauce. All the important part you have to have a very soon as platform you have some old information in one place when organized will February to categorize, but then you have to have a modem.

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Timothy Horan: <unk> current and related to the first in order to make the eye working <unk> complicated.

Barak Eilam: CX is complicated. CX is not a generic industry. No one has managed to commoditize CX in the past.

Timothy Horan: Not a generic industry no one managed to commoditize Dx in the past and I don't believe it will be commoditized in the future because of this complexity. So while you're a great use cases to wear general care to see I can help us in his human being and two enterprises in general there is clear.

Barak Eilam: And I don't believe it will be commoditized in the future. Because of this complexity, so while there are great use cases where general purpose AI can help us as human beings and to enterprises in general, there is a clear understanding that when it comes to CX, enterprises come to us. And we have a great example, we'll probably present it at the upcoming investor day, of what happens when you take, just as an example, you do an autosummary with R Enlighten. This is just a very simple, small use case.

Timothy Horan: Understanding that's when it comes to six enterprises come come to Us and we have Great example, bowlby presented in the upcoming.

Timothy Horan: <unk> what happens when you take just as an example.

Timothy Horan: You do an ultra summery with our enlightened.

Timothy Horan: Just a very simple smaller use cases due to some light and <unk> <unk>.

Barak Eilam: Do it with Enlighten, do it with a generic Gen AI or any one of our competitors; the differences are just staggering. And it's a huge difference that makes the end of every conversation with the consumer much easier, saving about a minute. And if you multiply it here, you see why customers are willing to come to us. The same goes to what we do for co-pilot and auto-pilot.

Timothy Horan: A generic Jenny I or any one of our competitors.

Timothy Horan: The different phones I'll, just staggering and it's a huge difference that makes you know and end of every conversation with the consumer.

Timothy Horan: Much easier savings about 10 minutes and if you multiplied here you see why customers are willing to come to US same goes to what you do for a copilot and autopilot and whenever I'm, telling you right now in the months it will become even better because of the way that you do design will improving our platform.

Barak Eilam: And whatever I'm telling you right now, in a month, it will become even better because of the way that it is designed well. Improving our platform with every interaction and transaction it continues to process. So, have you seen a major improvement over the last, you know, year in the features and functionality, or can you point to what's improved? Yeah, a few things have improved quite a bit.

Timothy Horan: With every interaction and transaction it continues to process.

Timothy Horan: So have you seen a major improvement over the last year and the features of functionality or it can you know can you point to what's been proved the most things.

Speaker Change: Yeah, <unk> improved quite a bit the first one and the fact that it's more and more customers are adopting it it helps our own domain expertise.

Barak Eilam: The first one, the fact that more and more customers are adopting it helps our on-domain expertise in its deployment and how to use it, and how to deploy it according to best practices. And that accumulation of more and more customers, we talked about how many we have added this year, that helps us quite a lot. The second thing is since Enlighten is well embedded in the core of CX-1, every one of our 3,000 developers working on CX-1 continues to develop features that are all powered by AI. So now we have this horsepower of so many engineers thinking about past features that they have, and now they are changing them and doing them that are fully infused with AI. You know, I sit on these demonstrations of our CX-1 versions every six weeks, and I remember sitting on them and seeing the many features we're adding. Now, this meeting used to be for an hour and a half.

Speaker Change: In the deployment and how to use it and how to Detroit and best practices.

Speaker Change: <unk> dot accumulation of some more and more customers, we talked about how many we've added this year.

Speaker Change: That helps us quite a lot. The second thing is seems to enlighten is well embedded in the core of six one every one of <unk>.

Speaker Change: 3000 developers working on six one continue now to develop features that are all powered by <unk>.

Speaker Change: We have the sore spot with so many engineers thinking about past features that they have and I'll do changing them and doing them that is fully infused with me I you know I'm sitting on those demonstration of our shakes. One uhm versions every six weeks and I remember sitting them in you know seeing some.

Speaker Change: The many street you were adding now just meeting used to be an hour and a half now we take four hours because the pace of the innovation just do dramatically and and you know I can tell much more but that's kind of some highlights of this excitement.

Barak Eilam: Now we take four hours because the pace of the innovation just grew dramatically. And I can tell you much more, but that's kind of some highlights of this excitement. Thanks.

Speaker Change: Thank you.

Sitikantha Panigrahi: Thank you. The next question is coming from Siti Panigrahi of Mizuho. Please go ahead.

Speaker Change: Thank you. The next question is coming from city <unk>. Please go ahead.

Sitikantha Panigrahi: Oh, thanks for taking my questions. There will probably be one more AI question. Definitely, we're good to see this AI catalyzing some of this customer conversation. So I'm wondering what traction you are seeing with your AI within your existing install base? Means what is nice doing to encourage, you know, the installed base to uptake AI solutions? And also, are you seeing anything different in AI adoption in the US versus, you know, international? and then I have this for. So thanks for the question.

City: Thanks for taking my questions, probably one more AI questions.

City: Definitely good to see this AI catalyzing someone's this customer conversation. So I'm wondering what traction I do sing with your with AI within your existing installed base <unk>, what what is nice doing to encourage you know even the installed base to update the isolation.

City: It also have you seen anything different in <unk> U S versus you know international.

City: And then I have a fuller.

Speaker Change: Sure. Thanks for the the question. So the answer is yes, we're seeing the attraction of course with a new prospects as a highlighted in the earlier remarks, but definitely within the very loyal and very large customer base. It on behalf. It's also very easy for them to add those capabilities.

Barak Eilam: So the answer is yes. We're seeing the attraction, of course, with new prospects, as I highlighted in my earlier remarks, but definitely within the very loyal and very large customer base that we have. It's also very easy for them to add those capabilities.

Barak Eilam: Don't forget that it's in the cloud. It's a platform that updates itself very frequently, and those capabilities can be toggled on very, very fast.

Let's assume the cloud <unk> update itself very frequently and those capabilities can be totaled on very very fast. So we have a team several teams actually that are making sure that our existing customers you know up to date on all the capabilities and a.

Barak Eilam: So we have a team, several teams, actually, that are making sure that our existing customers are up to date on all the capabilities, and they add those capabilities. Of course, it increases the ARPU and, generally, the ARR we see from existing customers. So this is about that. In terms of the difference in adoption between the U.S. and internationally, the excitement is everywhere, and the adoption of the fact that AI is now triggering our success is equally as we see it in other territories and not just in the U.S. Of course, there are some local differences between one territory and another. There are some European regulations and things like that.

Barak Eilam: You know and those capabilities of course, it increases the our boots and generally we see from existing customers. So this is about that in terms of different of adoption between the U S and internationally.

Barak Eilam: The excitement is everywhere and the adoption or <unk> <unk> <unk> no triggering our success is equally you see it in other three tours and they'll just do the U S of course, there are some local differences between one territory under dos.

European regulations and things like that generally I think that seems the value proposition and decor. Neither so similar I think we'll see the same traction internationally as we see it domestically.

Barak Eilam: But generally, I think that since the value proposition and the core need are so similar, I think we'll see the same traction internationally as we see domestically. And then one follow-up on the Microsoft partnership. If I remember correctly, you guys signed that agreement more than a year ago, probably sometime in 2022. How is that partnership going? So any update on that? Yeah, we have a great partnership with Microsoft. Yes, it was signed, you're right about the timing, but I think it was only July that we actually started to see them go to market, move in full motion, also in terms of their compensation.

Speaker Change: Great and then one follow up on Microsoft partner Soup. If I remember you guys you know signed that agreement.

Barak Eilam: More than a year Friday, sometimes in 2022, how is that partnership growing so any update on that.

Barak Eilam: Yeah, we have we have great leadership with Microsoft Yes. It was signed you write about the timing, but as soon as his only July that real estate actually starting to see Bill go to market moving full motion also in terms of compensation, we have a very large and growing typing them, we should few wins.

Sitikantha Panigrahi: We have a very large and growing pipeline with them. We had a few wins together with Microsoft in the fourth quarter that, you know, the combination of Nice and Microsoft made a difference and helped us win the deal. And I believe it will continue to grow moving forward. Thank you.

Sitikantha Panigrahi: Together with Microsoft in the Sofa <unk>.

Sitikantha Panigrahi: That's you know the combination of nice and Microsoft made a difference and helped US win the deal and I believe it will continue to grow moving forward.

Speaker Change: Great. Thank you.

Patrick Walravens: Thank you. Thank you. The next question is coming from Pat Walravens of Citizens JMP. Please go ahead. Pat, please make sure your phone is not on mute.

Speaker Change: Thank you.

Speaker Change: Thank you. The next question is coming from <unk>, while Ravens of citizens J M. P. Please go ahead.

Patrick Walravens: Pet please make sure your phone is not on mute.

Patrick Walravens: Sorry about that. Barak, what are the top two or three things you need to do to integrate? Pet, I think you're breaking up a bit.

Patrick Walravens: Sorry about that thank you Barack what are the top two or three things you need to do to integrate.

Patrick Walravens: [noise] pet I think you you you're breaking up a bit I think the question was about one of the few things we need to do about the lives looks integration that'd be question.

Barak Eilam: I think the question was about what are the few things we need to do about the LiveOx integration. Was that the question? Yes. Sure. Thanks for that. So, as you know, at Nice, we have a playbook for how we do acquisitions. In the past 10 years, we've done 20 acquisitions, small and big. And, you know, people ask me about why Nice has such great statistics about making acquisitions. There are multiple factors to that.

Speaker Change: Yes, that's correct.

Speaker Change: Sure. Thanks for that so as you know we have it's nice we have a playbook and how we do acquisitions in the past 10 years, we've done 20 acquisitions small and big and you know people ask me about why nice is such a great student statistics about making acquisitions.

Barak Eilam: Multiple factors to that one of them is that before we go and actually close the deal we have the four P. M I and the agent. The first 18 months of the <unk> of the team I fully plan. It's a book with all the details day by day, what are we going to do.

Barak Eilam: One of them is that before we go and actually close the deal, we have the full PMI, the first 18 months of the PMI fully planned. It's a book with all the details, day by day, what we are going to do with all the relevant functions of the company in the first 18 months. So, the minute we close the acquisition, all parties basically move to pure execution mode and follow up on the execution, with no questions that remain out there instead of just starting the planning. So, we are now, as I said, about two months into this execution. And I would say that, first of all, integrating the two organizations behind us, you can also see it in the great profitability that we have guided to this year, not only from LiveVox, but obviously they are accretive to that as well. But on the most strategic part of it, we have combined the, you know, the go-to-market. There is some further training that needs to be done for all the different sales organizations and the partner networks.

Barak Eilam: All the relevant functions the company in the first 18 months. So the minute we close the acquisition all part is basically move to pure execution modem swollen up into execution no questions <unk> instead of just starting to planning. So we will know interested in about two months into this.

Barak Eilam: Execution.

Barak Eilam: And I would say that first of all from.

Barak Eilam: Integrating the two organization that's behind US you can also see T. M D. Great possibility that we have been guided to D. C. Not only from <unk>, obviously, they'll creative to that as well, but the most strategic part of it we have a combined the.

Barak Eilam: You know to go to market is.

Barak Eilam: Sure the training that needs to be done to all different sales organizations in the paddock new networks. That's one of these emotion, but of course it takes it would take a bit more time.

Barak Eilam: That is already in motion, but, of course, it will take a bit more time. And then there are product integrations, very detailed integrations that are planned for the next 12 months. It's already connected and integrated, but we are now making it tighter together, and there is a very solid plan for that in the next 12 months.

Barak Eilam: And then the product integrations very detailed integrations it all planned for.

Barak Eilam: For the next 12 months, it's already connected integrated but we are now I'm, making it tighter together and there is a very solid plan for that so the next 12 months.

Patrick Walravens: That's great. Thank you. Thank you. The next question is coming from Rishi Jaluria of RBC. Please go ahead.

Speaker Change: That's great. Thank you.

Patrick Walravens: Thanks.

Rishi N. Jaluria: Thank you. The next question is coming from <unk> Julia of RBC. Please go ahead.

Rishi N. Jaluria: Oh, wonderful. Thanks so much for taking my question. First, I just wanted to go back to the AI bookings commentary.

Rishi N. Jaluria: Oh wonderful. Thanks, so much for taking my question first I just wanted to go back to the the AI bookings commentary I know you talked about Hey look it's gonna take time to closer to her revenue in those details can you talk a little bit about how old is the actual revenue in pricing model look like when it comes to a I know you've.

Rishi N. Jaluria: I know you talked about, hey, look, it's going to take time to pull through the revenue in those deals. Can you talk a little bit about what the actual revenue and pricing model looks like when it comes to AI? I know you've talked in the past about having maybe some level of consumption when it comes to AI. Maybe if you could help us understand that, that would be helpful to have a quick follow-up. Thanks for the question, Rishi.

Rishi N. Jaluria: Talk to the past about having maybe some level of consumption. When it comes to AIG Uhm, maybe if you could help us understand that that'd be helpful. At a club crowd follow up.

Rishi: Thanks for the question ratios that we've talked about it a bit and and prior quarters, but what we're seeing as we continue to to provide more AI based solutions is that we are now moving towards as you've highlighted both in the agency and <unk>.

Beth Gaspich: So we've talked about it a bit in prior quarters, but what we're seeing as we continue to provide more AI-based solutions is that we are now moving towards, as you've highlighted, both an agency, in some cases, plus an aspect of consumption-based instances or interactions that are happening digitally. And in some cases, when our offerings are purely digital, for example, there may be, for example, a base fee for the software plus an additional fee for the consumption used, again based on the interactions.

Beth Gaspich: Some cases, plus an aspect of a consumption based instances are interactions that are happening digitally and in some cases when our our offerings are purely digital for example, there may be for example, Ah basically on the software plus an additional fee for the the consumption use again based on the.

Beth Gaspich: Interactions. So we are seeing that that is continuing to be more of a hybrid model and of course, it's it's one of the reasons why we have such an enormous Tam opportunity ahead of US we know that the the level of a number of interactions that are happening across the globe are just growing exponentially N as R. P.

Beth Gaspich: So we are seeing that that is continuing to be more of a hybrid model. And, of course, it's one of the reasons why we have such an enormous TAM opportunity ahead of us. We know that the level and number of interactions that are happening across the globe are just growing exponentially. And as our pricing continues to evolve with more and more increases in the sales and bookings of our ANI, that is a great opportunity for us to see that incremental revenue, more so in 2024, late 2024, 2024, and beyond, as we materialize and bring those bookings into revenue. All right, wonderful.

Beth Gaspich: Pricing continues to evolve with more and more increase in the sales and bookings a R. A and I that is a great opportunity for us to see that incremental revenue more so than in 2024 late twenties, who are funny tour and beyond as we can materialize and and bring those bookings into the revenue.

Speaker Change: Alright wonderful and just quickly what is the services of tasks look like for a ideals versus nani ideals.

Rishi N. Jaluria: And just quickly, what does the service as a test look like for AI deals versus non-AI deals? With respect to services in general, you might have noticed that, in particular, in the fourth quarter, we had a very strong quarter of services, and it was actually initiated by our professional services. So across both of our business segments, we see that customers need support with deploying our AI solutions. And so there's an opportunity there for a nice services attach rate. And Barak highlighted earlier in the call that we're often going to market with partners in those deals as well. So there are opportunities both from the collaboration and the growth of our partnership as well as nice attach rates from the professional services side of the house. Thank you so much. The next question is coming from James Fish of Piper Sandler. Please go ahead. Hey guys, on the cloud side, what are you guys seeing with the expansion rates with your existing customers? I'm guessing it ticked up a bit in the first last quarter.

James Fish: With respect to services in general you might've noticed that in particular in the fourth quarter, we had a very strong quarter of of services and it was actually initiated by our professional services so across both of our <unk>.

James Fish: Business segments that we see that our customers need our support with deploying our our AI solutions and so there is an opportunity to be there for a nice services attach right and Barack highlighted earlier in the call, we're offering going to market with partners and those deals as well so.

James Fish: So there are opportunities both from the the collaboration and the growth of our partnership is as well as a nice attach rates from the professional services side of the house.

James Fish: Wonderful. Thank you so much.

Rishi N. Jaluria: Thank you. The next question is coming from James Fish Piper Sandler. Please go ahead.

James Fish: Hey, guys on the clock like what are you guys seeing with expansion rates with your existing customers guessing it picked up a bit first last quarter and then what are you, saying with migrations of your on Prime base. This year versus last year as organizations really tried to understand and figure out there <unk>.

James Fish: And what are you seeing with migrations of your on-prem base this year versus last year as organizations really try to understand and figure out their AI strategy? Yeah, thanks for that. We see, you know, there's constant seasonality, but we see customers continue to expand into the cloud in different segments. It's not a question of if, it's a question of when and how for them.

James Fish: That strategy.

Speaker Change: Yeah. Thanks for that we we see.

James Fish: Constantly Susan analogy, but we see our customers continue to expand into the cloud in different segments. It's not a question of if it's a question of when in house with them.

Barak Eilam: So we continue to do that, and we see our existing customer base continue to, you know, both expand, but also the cross selling activities, as Beth mentioned before, and the what you call the attachment rate of solutions to the core of the cloud solution continue to expand, including with the customer base. So this is kind of the trend generally, as I mentioned before, when it comes to the conversion of existing customers of Nice, but more so, of course, the entire base of other on prem legacy providers. Because I'll remind you, Nice, we don't have, we didn't plan the on prem market of core ACD routing for us every time that we win one of those customers, the logo is a brand new revenue, cloud revenue stream, and Obviously, we also have WM on a prem basis that continues the migration at the same pace that we've seen before. And we think that it has the potential to accelerate. I got it. And Beth, you mentioned the return to growth for the Financial Crimes and Compliance Unit. Did you mean that for 2024?

James Fish: So we continue to do that we see our existing customer base continue to.

Barak Eilam: Both extend but also the cross selling activities as both mentioned before and the what you call the attachment to it of solutions to the core of the guards solution can do to expand.

Barak Eilam: Alluding with the with the customer base. So these are kind of the the twin general information before when it comes to the conversion of existing customer meals night, but more so of course the.

Barak Eilam: Entire basis or the <unk> legacy providers, because it reminded ninth 19, <unk>, we didn't plan on free market.

Barak Eilam: Core AC D routing for US every time between one of those customers. The logo is brand new revenue and cloud revenue stream ignore the conversion. Obviously, we have also the W. M on trim basis, let's continue the migration in the same place that you've seen before.

Barak Eilam: And we think that you have the potential to accelerate.

Speaker Change: Got it thank you.

Beth Gaspich: You had mentioned the return to growth for the financial crisis of implying that did you mean that for 2024, how should we think about the timing.

James Fish: How should we think about timing or segment growth rates underneath for what's included in the guide and and what's the mix of cloud? www.thevenusproject.com. Yeah, thank you for the question, James. So first, I'll say that we are, as I said, pleased with the performance of FCC last year. And our expectation and what we've seen in that business is that the cloud business continues to accelerate and is doing quite well. I think with that business, there are certain financial institutions that still have a preference from time to time to purchase on credit as well.

Speaker Change: Or a segment growth rates under me for for what's included in guide annually and what's the mixer cloud vs on prime within financial crimes, giving you said, it's getting to a meaningful webber level at this point.

Speaker Change: Yeah. Thank you for the the question James So so first I'll say that we are as I said pleased with the performance of F. C C last year, and our expectation and what we've seen in that business as is that at the cloud business continues to accelerate and it is doing quite well.

James Fish: I think with that business there are certain financial institutions that still have a preference from time to time to purchase on prime as well. So you can expect that you may continue to see some of variability and there revenue quarter by quarter you know once.

Beth Gaspich: So you can expect that you may continue to see some variability in their revenue quarter by quarter. You know, once we get to the point where it's really more of an apple to apple basis with a cloud versus cloud comparison, I think that is when you'll really be able to visibly see the kind of more linear growth that we are confident in terms of the momentum that we have in that business that, you know, we will see a nice return to growth. We don't provide guidance specifically for the FCC business on a standalone basis.

Beth Gaspich: We get to the point, where it's really more of an apples to apples basis with a cloud versus cloud comparison I I think that is when you're really be able to visibly see the kind of a more linear growth, but we are confident in terms of the momentum that we have in that business that you know we will see a nice return to growth.

Beth Gaspich: We don't provide guidance specifically for the F. C C business on it on a stand alone basis.

James Fish: But again, I think we're feeling very positive about that business and its trajectory and certainly know that it will return to growth in the future, whether it's 2024 or beyond. With respect to the breakdown or the split of cloud revenue relative to the on-premise part of that business, we do not currently segment it. As you pointed out, it is becoming more meaningful, and certainly we're very pleased with the performance of the cloud growth that they have seen resulting from their Xseed and Xcite platforms. It's something that we are currently reviewing and discussing, and we'll continue to consider whether it may be something that we break out in the future. Thanks, guys.

Beth Gaspich: But again I think we're feeling very positive about that business and et cetera, projector and certainly no that will return to to growth in the future, whether it's 2024 or beyond.

James Fish: Uhm.

James Fish: With respect to the breakdown or the split of cloud revenue relative to the on premise part of that business and we do not currently segmented as you highlighted is becoming more meaningful and certainly we're we're very pleased with the performance of the cloud growth that they have seen resulting from.

James Fish: They're exceed and excite platforms and it's it's something that we are currently reviewing and discussing N N well consider will continue to consider whether it may be something that we break out in the future.

James Fish: Thanks.

Arjun Bhatia: Thank you. The next question is coming from Arjun Bhatia of William Blair. Please go ahead.

Arjun Bhatia: Thank you. The next question is coming from arch on 30th <unk>. Please go ahead.

Arjun Bhatia: Perfect. Thank you all. One on the AI front, Barack, I know you mentioned that 80% of customers are still on on-prem. In your it, I'm sure AI is such a big catalyst to get these customers to move over. But when you think about the timing, are the early signs of ROI on AI implementations enough to get these customers to move over in the near term? Or do you think there needs to be a little bit more proof points and data points on AI ROI before we see a kind of a big inflection curve in, or a big inflection, rather, in how these customers move over? Yeah, it's, you know. I, on a weekly basis, get to speak with a lot of executives throughout enterprises in multiple verticals, multiple segments in terms of size.

Arjun Bhatia: Alright. Thank you all one on the on the AI, France Barack I know you mentioned the 80 per cent of customers are so.

Arjun Bhatia: <unk> I'm sure AI is such a big hurdles to get for your customers to move over but when you think about the timing or the early signs of.

Arjun Bhatia: Roy on a I implementations and up to get for your customers to move over in the near term or do you think.

Arjun Bhatia: Needs to be a little bit more of a recording some beta <unk>, sorry, K I R Y before we see kind of a big question, her and or big infection, rather than hobbies customers came over.

Arjun Bhatia: Yeah, It's you know I I I on a weekly basis.

Arjun Bhatia: <unk> get to speak with a lot of executive <unk> enterprises in multiple <unk> multiple segments you terms of size.

Barak Eilam: And I can tell you, regardless, first for CX, generally, there is somewhat of a FOMO, fear of missing out on AI. And there is a somewhat general wrong expectation, again, not necessarily for CX, in terms of how fast and how big savings AI will bring to, you know, those organizations. Obviously, there are, but, you know, there is a bit of exaggeration, at least for the short term. But when it comes to CX, going back to the notion that it is a very labor-intensive market, as I said, 90% of the spend is still on labor. It's very repetitive in some cases, but on the flip side of it, it is the most mission critical in terms of customer relationships and protecting the brand. So on the one hand, there is the citation.

Arjun Bhatia: And I can tell you, regardless first to see X.

Barak Eilam: <unk> somewhat of a <unk> she was missing out on the ice.

Barak Eilam: There is some general.

Barak Eilam: Mm long expectation again, not necessarily for six in terms of how fast and how big savings AI will bring to to you know to those organizations. Obviously, there are but you know <unk>.

Barak Eilam: <unk> at least for the short term, but when it comes to C X.

Barak Eilam: Going back to the notion dogs it is very labor intensive.

Barak Eilam: Market as I said 90 per cent of the spin is still in labor, it's very repeat it even some cases.

Barak Eilam: On the flip side of it it uses the most mission critical in terms of customer relationship and protecting the brands.

Barak Eilam: So on one hand, there is a situation on the other hand, there is clearly a musician.

Barak Eilam: On the other hand, there is a clear realization that when they want to implement AI, it has to be even better than what is being provided today by people. So in the places where it is deployed, and I can tell you we have many of those, and I have conversations with these executives post-effect, you see great ROI in both areas. One is the augmentation of the user, making it, as I said, 10x better.

Barak Eilam: Do you want to implement.

Barak Eilam: It has to be even better.

Barak Eilam: Is being provided today by people so in the places where it is deployed and I can tell you. We have many of those and have conversations do as executive post effects you see greater Y two blows areas. One is yoga mentation of the user making you didn't <unk>.

Barak Eilam: D C at I G. Great excitement very specific proof point R Y and you choose.

Barak Eilam: They see it, I hear great excitement, very specific proof points of ROI, and this is accelerating very, very nicely. But also, the automation, and the two go together. This notion in the past of it's either automated or not is no longer true when it comes to deploying AI, especially with Nice. It is about augmenting the user, finding tasks, finding areas, finding specific users when they're just doing repetitive work, then fully automated.

Barak Eilam: Accelerating very very nice, but also do two nation ended two goes together this notion in the past it's either automated no note is no longer true when it comes to deploying Gis, especially with nice it is about <unk> user finding task finding areas finding specific users window.

Barak Eilam: Just doing utility won't.

Barak Eilam: Fully automated Dodge journey.

Barak Eilam: That journey gives them the confidence that they can move forward with the AI. So, it was a long answer, but a short version of it: we see a growing number of very specific and proven ROI, and they get it, they like it, and this is why we're so optimistic about this year and moving forward. Perfect. That's super helpful.

Barak Eilam: Give them the confidence that they can move <unk>. So.

Barak Eilam: The longer answer, but the short version agreed that we see <unk> number of very specific improving our y and to get it like it's and this is why we're so optimistic about D C urine and moving forward.

Arjun Bhatia: Thank you. I'll leave it there and congratulate you on the good results. Thank you. Thank you. The next question is coming from Michael Funk of Bank of America. Please go ahead. Yeah, thank you for the questions. Just a couple, if I could.

Speaker Change: Perfect. That's super helpful. Thank you I'll I'll leave it there aren't congrats on the I'm a good results here.

Michael J. Funk: Thank you.

Michael J. Funk: Thank you. The next question is coming from Michael <unk>, a bank of America. Please go ahead.

Michael J. Funk: Yeah. Thank you for the questions couple of five so first one related to the prior question what what are your competitive or sad that they think they're seeing a positive inflection and enterprise migration to the cloud so accelerating movement accelerating demand trends that that Roy first.

Michael J. Funk: So first, I'm related to the prior question. One of your competitors said that they think they're seeing a positive inflection in enterprise migration to the cloud, so an accelerating movement, and an accelerating demand trends that really emerged in the last quarter or two. So I'm just wondering if you're seeing the same trend.

Michael J. Funk: Emerged in the last quarter of two.

Michael J. Funk: So I'm just wondering if you're seeing the same trend and you know if if you are you know why we wouldn't see accelerating cloud grow within 2024.

Barak Eilam: And, you know, if you are, you know, why we wouldn't see accelerating cloud growth in So we gave some statistics about what we see in the enterprise. And we see this is the fastest growing part of our business. And it's very impressive.

Barak Eilam: So we gave some statistics about we'll see what we see in the enterprise and we see this is the fastest growing part of our business and it's very impressive.

Barak Eilam: I think that unlike the, I'm guessing, unlike the other competitors that you've mentioned, in our case, you actually see it in the results, not just in the statements. You know, we saw great growth between Q3 and Q4 in absolute numbers and percentages. And we're giving very healthy guidance and steady growth, starting from Q1 all the way to Q4. And, of course, there is a potential for further acceleration.

Barak Eilam: I think that's unlike the <unk> I'm guessing the unlike the other completely totaled you've mentioned in our case you actually see the results not just in the in the statements. We so a great goes between Q2.

Barak Eilam: Q for an absolute numbers and percentages and they'll give you a very healthy guidance and it's still legal.

Barak Eilam: Q on all the way to queue swollen of course, there was an application for a further acceleration. So it's great and it's actually those things, which speaks about the potential in the market because as we said before 80 per cent of the market is you've been cloud is fine and the majority of it a big chunk of it is.

Michael J. Funk: So it's great. And actually, I think it speaks to the potential in the market. Because, as we said before, 80% of the market has yet been cloudified. And the majority of it, or a big chunk of it, is in the enterprise segment, where we have a superior win rate. Great. Thank you for the color.

Michael J. Funk: At the end of the price segment will we have superior right.

Speaker Change: Alright, great. Thank you have a color in one more quick quantified current last quarter, you noted that two of your competitors.

Michael J. Funk: And one more quick one, if I could. Last quarter, you noted that two of your competitors are attempting to sell themselves actively at books on the market. Is that still your view?

Michael J. Funk: Are attempting to sell themselves accurately a box on the market is that still your view.

Barak Eilam: I think that after our call, there is some actual news coming to the market, so I would like to take credit for being able to be the first to let you know. I don't have any other news to provide you this time, but I'll be, you know, you'll be the first one to know. Okay, I'll look forward to the phone call. Thank you. Thank you. The next question is coming from Michael Lattimore of Northland Capital Markets. Please go ahead. Great, thanks. Yeah, congrats on the strong results here. With regard to AI, can you get a little more color there on maybe the magnitude of the bookings or the revenue? I know it's consumption-based in some situations, so it might be complicated.

Michael J. Funk: I think that after a cool there are some actual news come into the market why you'd like to take credit for being able to do the first to do that you know I don't have any other needs to provide you with this time, but you know you.

Michael J. Funk: You'll be the first one to know.

Michael J. Funk: Okay, I'll look forward to the phone call.

Michael J. Funk: [laughter] [laughter].

Michael J. Funk: Thank you. The next question is coming from my <unk> of Northland Capital markets. Please go ahead.

Michael J. Funk: Great Thanks and congrats.

Michael J. Funk: Strong results here.

Barak Eilam:

Barak Eilam: <unk>.

Michael J. Funk: Can you get a little more color and they're just on the maybe the magnitude of the bookings are the revenue I know it's consumption based on some situations so it might be.

Michael J. Funk: Complicated, but you know that at some point in 24 can we see a I exceed 10 per cent cloud revenue.

Michael J. Funk: But, you know, at some point in 24, can we see AI exceed 10% of cloud revenue? We don't break it down yet. We give some color to it.

Michael J. Funk: We don't break it down.

Michael J. Funk: And yet we give <unk> at some point, we will break it down.

Barak Eilam: At some point, we will break it down. As I've mentioned before, I think it's important to highlight that AI is now well embedded in what we do. There are AI-specific solutions where we can actually call out and say, this is revenue fully dedicated to AI. And there is an uplift in AI-infused solutions, which we see we do broadly within CX1. So there are many ways to go about it.

Barak Eilam: <unk> I think it's important to highlight.

Is that a I is now will embedded in what we do do a specific solutions, where we can actually call out in three D. C revenue fully dedicated <unk> <unk> <unk> <unk> <unk> <unk> <unk> six one so there are many ways to go about it.

Barak Eilam: Definitely, it's a positive, creative, incremental part of our business. If and when we think it's worthwhile to break it down and start pulling it out specifically, we will do that. Great. And then, with regard to autopilot and copilot, is there a noticeable difference in demand for one or the other of those? Or do most customers kind of buy both?

Definitely itchy.

The team <unk>.

Barak Eilam: Mm incremental part of our business, even when we think it's worthwhile to break it down and start pulling out specifically, we will do that.

And then with regard to auto pilot and Copilot is there a noticeable difference in demand for one or.

The other of those or do most customers kinda by boat.

Speaker Change: It's a great question, you know obviously customers Doctor D. C. S. Also the domain expert to six and it really depends on the maturity cycle of of the customer.

Barak Eilam: It's a great question. You know, obviously, customers talk to us. They see us also as the domain expert for CX, and it really depends on the maturity cycle of the customer and how much of theirs and what type of services they provide.

And how macho scale and what type of services. They they provide so in many cases, we find ourselves together with our partners consulting to them on how to go with the always like the if you'd like to be in states, the journey or where they want to have less users, but obviously highly specialized.

Barak Eilam: So in many cases, we find ourselves together with our partners, consulting them on how to go. They always like the, if you'd like, the end states, the journey, or where they want to have fewer users, but obviously, highly specialized ones, highly augmented with a co-pilot, and, you know, seeing money moving from labor to technology with the autopilot. But it really depends on the starting point.

Mmm highly augmented Ah with Ah copilot and see money moving from the labor to technology with auto pilot, but it really depends on the starting point right now I can tell you it's a mix of many things.

Barak Eilam: Right now, I can tell you it's a mix of many things. We see customers starting with co-pilot and saying, okay, we got it. Now we are ready to engage with autopilot. Some start, you know, immediately on autopilot because they have had multiple and usually failed automation issues in the past, like the deal I mentioned with one of our customers that had a CX solution from a CX provider, a very sizable customer that failed to deliver both on the CX, but mainly on what they call IZA, and they come to us.

Customers starting with co pilot a few months later said, okay. We got it now we're ready to engage with auto pilot.

<unk> starts immediately on autopilot, because they had already multiple and usually sales automation issues in the past like the dealer mentioned off one of our customer that was had a <unk> a solution from <unk> provided a very sizable customer.

That's failed to deliver both on the <unk>, what do you call I Z H and they come to us and I will have all the pilots and they'll drink doing it very successfully so it's all of the above will try to you know provide local about it is we.

Barak Eilam: They now have autopilot, and they're doing it very successfully. So it's all of the above. We'll try to, you know, provide more color about it as we continue to deploy those in 2024. Okay, great. Thank you. Thank you. Our final question for today is from Chris Reimer of Barclays. Please go ahead. Hi, thanks for taking my question and congratulations on the strong results. Actually, most of my questions have already been answered, so I won't take long.

Continue to deploy those 2024.

Mmm Okay.

Okay, great. Thank you.

Thank you our final question for <unk> for today is coming from <unk> If Barclays. Please go ahead.

Hi, Thanks for taking my question and congratulations on this time we have.

Actually most of my questions with an aunt and alrighty, So I won't take long I just wanted to.

Chris Reimer: I just wanted to touch on the outlook for the year. There's been so much positive commentary and strong momentum with the AI product. I was wondering if you could touch on anything that you think might be a challenge or a concern, if anything.

Catch on the <unk>, how much positive commentary and strong and then came with the AI product.

Just wondering if you could touch on anything that you think might be a challenge or a concern if anything and do you think some of the Mac related weakness we've seen last year in the.

Beth Gaspich: And do you think some of the macro-related weakness we saw last year in delaying business decisions is behind us? Yeah, so let me take the macro-related comments first, please. I think with respect to the macro, I talked about it a little bit. You know, we have usage from our customers that we see on a daily basis, so we have a lot of visibility into looking at what their utilization looks like, and how seasonality is playing out in real time. And so, you know, I highlighted earlier that since, you know, the fourth quarter, we're now towards the end of February, and it has given us the confidence to say that we've seen stabilization in the macro and the impact of that, you know, on the full year. And that's our expectation.

Delaying business decisions.

Hi.

Mmm, Yeah. So let let me let me take the the macro related comment first please I think with respect to the macro I I talked about it a little bit you know we have usage from our customers that we see on a daily basis. So we we have a lot of visibility and too.

Looking at what their utilization looks like how seasonality is playing out in real time, and so you know I highlighted earlier that says you know fourth quarter, where now towards the end of February it has given us the confidence to say that we've seen stabilization and the macro.

And the impact of that you know in in the full year and that's our expectation of course, none of us have a crystal ball and you know I think that means there's always a possibility that the macro could have other impact but it also equally implies that we have opportunity with the macro further.

Beth Gaspich: Of course, none of us have a crystal ball, and, you know, I think that means there's always a possibility that the macro could have other impacts. But it also equally implies that we have an opportunity with the macro further improving that gives us a possible upside to the guidance that we've provided as well in terms of cloud expectations. So again, based on the data that we've seen and that we track very, very closely, we feel confident with that 18% that, you know, we've given as an expectation for cloud revenue. Of course, that's exclusive of LiveOx, and that that will play out pretty evenly during the course of the year with, you know, the upside possibility.

Improving that gives US you know possible upside to the guidance that we've we've provided as well in terms of the cloud expectations. So again, we fail based on the data that we've seen in that we track very very closely that we feel confident with that 18% that you know we've given as an expectation for the cloud.

Revenue of course, that's exclusive of <unk> and that that will play out pretty evenly during the course of the year with with you know the upside possibility and with that Barack I'll I'll. Let you know if there's anything else you want to add to the other question part of the question.

Beth Gaspich: And with that, Barack, I'll let you know if there's anything else you want to add to the other question, part of the question. No, I think that, you know, you answered that question. You and I are good, unless Chris has other questions, you know. We're good. Thank you. No, that's fine. Thank you. Thanks a lot. Thanks. Thank you. Thank you. At this time, I would like to turn the floor back over to Mr. Eyal for closing comments. Thank you and thank you everyone for joining us today. We're excited about 2024, and we look forward to updating you on the next quarter.

No I <unk> I think that you know you you answered the <unk> the other questions.

We're good thank you.

No that's fine. Thank you. Thanks, a lot. Thanks, Thank you <unk>.

Thank you at this time I would like to turn the floor back over to Mister <unk> for closing comments.

Thank you and thank everyone for joining us today were excited about 23 full and we look forward to update you on the next moment. Thank you.

Shaul Eyal: Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your line to log off the webcast at this time and enjoy the rest of your day.

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Operator: ,....

Mmm.