AudioCodes Ltd. (AUDC) on Q3 2024 Results - Earnings Call Transcript
Operator: Greetings. Welcome to the AudioCodes Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Roger Chuchen, Vice President of Investor Relations. You may begin.
Roger Chuchen: Thank you, operator. Hosting the call today are Shabtai Adlersberg, President and Chief Executive Officer, and Niran Baruch, Vice President of Finance and Chief Financial Officer. Before we begin, I'd like to remind you that the information provided during this call may contain forward-looking statements relating to AudioCodes business outlook, future economic performance, product introductions, plans, and objectives related thereto, and statements concerning assumptions made or expectations as to any future events, conditions, performance, or other matters are forward-looking statements, as the term is defined under U.S. Federal Securities Law. Forward-looking statements are subject to various risks and uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties, and factors include, but are not limited to, the effect of global economic conditions in general and conditions in AudioCodes, industry, and target markets in particular, shifts in supply and demand, market acceptance of new products and the demand for existing products, the impacts of competitive products and pricing on AudioCodes and as customers' products and markets, timely product and technology development upgrades, and the ability to manage changes in market conditions as needed, possible need for additional financing, the ability to satisfy covenants in the company's loan agreements, possible disruptions from acquisitions, the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes business, possible adverse impact of the COVID-19 pandemic on our business and result of operations. The effects of the current terrorist attacks by Hamas and the war in hostilities between Israel and Hamas and Israel and Hezbollah, as well as the possibility that this could develop into a broader regional conflict involving Israel with other parties may affect our operations and may limit our ability to produce and sell our solutions. Any disruption in our operations by the obligations of our personnel to perform military service as a result of current or future military actions involving Israel and other factors detailed in AudioCodes filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update this information. In addition, during the call, AudioCodes will refer to non-GAAP net income and net income per share. AudioCodes has provided full reconciliation of the non-GAAP net income and net income per share to its net income and net income per share according to GAAP in the press release that is posted on its website. Before I turn the call over to management, I'd like to remind everyone that this call is being recorded and archived webcasts will be made available on the Invest Relations section of the company's website at the conclusion of the call. With all that said, I'd like to turn the call over to Shabtai. Shabtai, please go ahead.
Shabtai Adlersberg: Thank you, Roger. Good morning and good afternoon, everybody. I would like to welcome all to our third quarter 2024 conference call. With me this morning is Niran Baruch, Chief Financial Officer and Vice President of Finance of AudioCodes. Niran will start off by presenting a financial overview of the quarter. I will then review the business highlights and summary for the quarter and discuss trends and developments in our business and industry. We will then turn it into the Q&A session. Niran?
Niran Baruch: Thank you, Shabtai and hello, everyone. Before I start my formal remarks, I would like to remind everyone that in conjunction with our earnings release this morning, we will post shortly on our Investor Relations website an earnings supplemental deck. On today's call, we will be referring to both GAAP and non-GAAP financial results. The earnings press release that we issued earlier this morning contains a reconciliation of the supplemental non-GAAP financial information that I will be discussing on this call. We will be comparing our third quarter 2024 results to the prior quarter as we believe it provides a better gauge of our financial performance. Revenues for the third quarter were $60.2 million, a decrease of 0.1% over the $60.3 million reported in the second quarter of the current year. Services revenues for the third quarter were $32.5 million, an increase of 1.7% over the $32 million reported in the second quarter of the current year. Services revenues in the third quarter accounted for 54% of total revenues. The amount of deferred revenues as of September 30, 2024 was $78.6 million compared to $80 million as of June 30, 2024. Revenues by geographical region for the quarter were split as follows: North America 47%, EMEA 33%, Asia-Pacific 13%, and Central and Latin America 7%. Our top 15 customers represented an aggregate of 56% of our revenues in the third quarter of which 39% was attributed to our 10 largest distributors. GAAP results are as follows: Gross margin for the quarter was 65.2% compared to 65.5% in Q2 2024. Operating income for the third quarter was $4.9 million or 8.1% of revenues compared to operating income of $4.9 million or 8.2% of revenues in Q2 2024. EBITDA for the quarter was $5.9 million compared to EBITDA of $6.2 million for Q2 2024. Net income for the quarter was $2.7 million or $0.09 per diluted share compared to net income of $3.8 million or $0.12 per diluted share for Q2 2024. Non-GAAP results are as follows: Non-GAAP gross margin for the quarter was 65.6% compared to 65.8% in Q2 2024. Non-GAAP operating income for the third quarter was $7 million or 11.7% of revenues compared to $7.2 million or 11.9% of revenues in Q2 2024. Non-GAAP EBITDA for the quarter was $7.9 million compared to non-GAAP EBITDA of $8.3 million for Q2 2024. Non-GAAP net income for the third quarter was $4.9 million or $0.16 per diluted share compared to $5.5 million or $0.18 per diluted share in Q2 2024. At the end of September 2024, Cash, cash equivalents, bank deposits, markable securities and financial investments totaled $88.4 million. Net cash provided by operating activities was $7.9 million for the third quarter of 2024. Days sales outstanding as of September 30 2024 were 112 days. In July 2024, we received court approval in Israel to purchase up to an aggregate amount of $20 million of additional ordinary shares. The court approval also permits us to declare a dividend of any part of this amount. The approval is valid through January 1, 2025. On July 30, 2024, we declared a cash dividend of $0.18 per share. The aggregate amount of the dividend was approximately $5.4 million. The dividend was paid on August 29, 2024 to our shareholders of record at the close of trading of August 15, 2024. During the quarter, we acquired 333,000 of our ordinary shares for a total consideration of approximately $3.6 million. We reiterate our guidance for revenues for 2024 to be in the range of $240 million to $250 million and non-GAAP EBITDA in the range of $33 million to $39 million. I will now turn the call back over to Shabtai.
Shabtai Adlersberg: Thank you, Niran. I'm pleased to report successful execution against our strategic priorities in the quarter as we continue our journey to transform the company to a UCaaS and CCaaS cloud software and services company. We performed as expected on our key business operations related to VoIP networking and connectivity, and we're able to make substantial progress on our efforts to advance our main growth engine, the conversational AI business. In our key business area, third quarter Microsoft business grew 8% sequentially, highlighted by steady growth in North America and in the DACH region. Microsoft Teams business in the third quarter was up 9.2% sequentially. Our services business kept evolving in the third quarter. Third quarter services revenue grew 6.4% year-over-year and accounted for 54% of revenues, the highest on record for us. Fueling the strength of our services revenue stream is our primary growth engine were live managed services and conversational AI. Specifically, Live Teams business grew 21% year-over-year and accounted for 44% of total Microsoft business compared to just 37% a year ago. Also, our success in building live managed services and recurring revenue stream has translated to strong year-over-year annual recurring revenue growth of 40%, ending third quarter at $60 million annual recurring revenue, up from $48 million exiting 2023. This success is owed to the trust we have built throughout the years with partners and enterprise customers in the voice services space. There's no better proof than our long-term standing multiyear partnership with AT&T in North America, leveraging our expertise in providing secure voice connectivity to help their business customers onboard to Microsoft Teams. This fruitful partnership has contributed multimillion of annual recurring revenues over the last several years. And then, underscoring growth in our live business is the growth of backlog of the contracts signed. We ended third quarter '24 with a live and managed services backlog at $67 million as compared to just $27 million in the year ago quarter. This represents close to 150 year-over-year growth, which bodes well for a strong stream of revenues in coming years. As such, once we combine the growth in backlog of live services with the reported recognized revenue for the third quarter, we get a very positive result for the quarter and outlook going forward. On conversational AI, third quarter dollar value of contracts signed increased roughly 50% versus the year ago period. Speaking of conversational AI, strong operational momentum continues, driven by long-term tailwind of infusing AI into UC and CX workflows in customers' growing demand to drive ongoing productivity gains. Accordingly, we have seen significant pickup in pipeline activities across our entire conversational AI suite, including Voca CIC, our AI-first CX solution for Microsoft Teams, SaaS recording solutions such as Meeting Insights and interaction recording and Voice AI Connect. Just as we did in 2023, we are investing in 2024 in this new growth engine for us. This year, revenue will grow above 30%, 40% and will cross for the first time the $10 million level. As we are in an investment mode in this conversational AI business, we are incurring losses in that specific line, about $9 million in 2023 and around the same figure in 2024. Glad to say that the investments are already showing good potential and results and substantial growth of number of business voice projects and application for the UCaaS and CCaaS markets emerge. Overall, we delivered on our business priorities in the quarter with the strength in our live business reinforcing the healthy overall pipeline for our major practice such as Microsoft Business, CX and conversational AI. We believe that this bodes well for seeing improved top line growth performance as we head into 2025 and beyond. Let me discuss some of the notable wins in the quarter. The first one relates to a multinational bank that had both our connectivity gear over the last several years to deliver UC and CX to their over 30 country operations. Operating with a tight budget, and managing complex IT infrastructure, coupled with the need to meet service level expectations, the company preferred to move with us to shared subscription service model in lay of capital spending. We are one of the many RFP respondent issued 12 months ago. Among these were some of -- several of the world's largest global system integrators. I won't mention names. We won mainly due to our longstanding relationship and goodwill built with the customer as well as the trust in the quality of our solutions. The master contract signed with total contract value in the low seven figures range over multiple years for voice infrastructure management. This win demonstrates our success in transitioning from point product solution player to a trusted vendor of mission-critical services on the UCCX connectivity and leveraging that to successfully cross-sell our conversational AI portfolio. In another opportunity, we signed a 36-month contract with a multinational industrial equipment dealer, providing Live Pro managed gateway and device as a service in North America and U.K. as initial phase of a broader multi-core global Teams voice rollout. Third win, we signed a contract with the foreign government, putting Voca CIC to be in the pole position to be the de-facto Teams-based CCaaS platform as the legacy CX contracts of various government agencies came up for renewal. These examples are a testimonial to the success of our land and expand strategy, where we follow suit on our connectivity services business with our new growing portfolio of business voice application powered by Gen AI and AI capabilities. The potential for upselling the same account has big potential for further business growth. Before turning to detailed business line discussion, let's quickly shift to the third quarter profitability metrics. Our non-GAAP gross margin in the quarter came at 65.6%, within the 65% to 68% long-term range planned for the business and compared to last quarter levels of 65.8%. Third quarter non-GAAP OpEx was $32.5 million, in line with second quarter levels and higher than our initial budget planning for the year. Key factor in maintaining a larger budget relates to the initial success we enjoy in our evolving conversational AI business and the need to support larger investment and growing number of projects in this space. On top of our current conversational AI activity, which I'll cover in the following, we intend to announce two new solutions in coming weeks and months. Regarding headcount, we ended the second quarter with headcount of 935 full-time employees, down from 940 employees in the second quarter and compared to 938 employees in the third quarter of 2023. Third quarter adjusted EBITDA of $7.9 million or 13.1% margin compares to last quarter levels of $8.3 million or 13.8%. Again, all as a result of higher investment in growing our conversational AI business, which should present nice return on investment already in 2025. Net cash provided by operating activities was $7.9 million, which alludes to our healthy nature of the business. Now to our Microsoft business. Our third quarter Microsoft business grew 8% sequentially, highlighted by steady growth in North America and the DACH region. In terms of our strategic business line, Microsoft Teams business in the third quarter was up 9.2% sequentially, well in line with our planning. Recurring Teams Live business grew 21.4% year-over-year, accounting now to 45% of the Teams business compared to just 37% in the year ago quarter. Live managed services and recurring revenue stream has translated to strong year-over-year annual recurring revenue growth of 40%, ending third quarter at $60 million ARR, up from $48 million exiting 2023. At the same time, CapEx-based Teams business was down 12.7% in the quarter, accounting now for 56% of Teams business, again, as compared to over 63% in the year ago quarter. So, with the continued focus on Live Teams recurring business and declining CapEx Teams business, we expect to see a return to growth of double-digit Microsoft business in coming years. Importantly, our pipeline of creators opportunity remains robust, up 12% sequentially and 90% year-over-year, which bodes well for continued growth in this Microsoft ecosystem. With just over 20 million Teams Phone PSTN users, a fraction of over 320 million Teams monthly active users today, we believe there is long runway for Teams voice adoption in our Live business ahead of us. What could further spur adoption of Teams Phone in coming years is the recent incorporation of Microsoft Copilot and Gen AI features supporting Microsoft Teams Phone system and as a result, a rising demand for the live business. Another important trend in the UCaaS market and in the Microsoft Teams Phone space is the emerging search for a business voice application that may provide added value. These applications include, among others, contact center applications, recording applications, analytics application and CRM integration, all representing upsell opportunities for us. According to a study published by research firm, the demand for value-added services is bound to grow substantially in coming years, which will further support our land and expand strategy for the Microsoft Teams segment. Now moving to CX. Third quarter 2024 CX business grew 4.4%, helped by continued steady growth in North America and ongoing strength in Live CX. In terms of booking for Live CX, we grew above 100% from 2022 to 2023, and now we expect to grow another 30% to 40% in '24 compared to '23. The strong momentum in Live CX is driven by a secular trend of large enterprises embarking on their cloud migration journey. Given the complexity associated with migrating from legacy system and the mission-critical nature of the contact center infrastructure, these enterprises are increasingly turning to trust managed service provider like AudioCodes to support them in this endeavor. Historically, a large majority of our Live CX contract wins arose from direct sales contribution. We have been working diligently to develop this channel to help us better scale in Live CX. I'm glad to report that these efforts are paying off. For example, over the past several years, we have been working closely with a partner in the CALA region on multiple projects totaling over $1 million in contract signing. We're now in a process to add additional partners in the near future. Now to conversational AI. Conversational AI third quarter dollar value of contract signings increased roughly 50% versus the year ago period. The strong operational momentum is attributable to the long-term tailwind of infusing AI into UCCX workflows and customers' rising demand to drive ongoing productivity gains as enterprises increasingly look to do more with the finite amount of resources. As disclosed last quarter, we expect conversational AI to be our second major long-term growth pillar, meriting the disproportionate amount of R&D resources we are now investing into this business line. Let me walk you through some highlights of the individual business line with conversational AI portfolio. First, to Voca CIC, representing this -- the fruits of this R&D investment is Voca CIC, our AI-first TIM-certified contact center platform, leveraging our Teams voice dominance in the UC world, amidst the secular trend of UCCX convergence. Just to give you some idea about the growth we are experiencing, when looking at the combined revenue for the first three quarters in the year, we grew above 50% in 2024 compared to 2023, growing substantially in number of bookings. With regards to our activities in the Voca CIC activity in the third quarter, we won a contract with a government office in West Europe, replacing an on-prem leading legacy on-prem vendor. Voca CIC was selected as the go-to CCaaS solution for the entire group of the government offices of the country. Following the onboarding of University of Central Florida, the second largest university in the U.S., in 2023, we continue to show good momentum in the education North America space with six universities signed in total, out of which four signed during 2024 so far. So, we see some -- a very nice growing pipeline. We see growth of north of 130% year-over-year in the number of created opportunities, and we saw close to 200 growth in pipeline total dollar amount. With the release of the callback capability for that product, Voca CIC have reached full feature parity with virtually any fully fledged contact center solution that is centered around voice. We believe that with the feature parity around voice, combined with our capability in the conversational AI and omnichannel situation, that place us in the leading pack of the Team CCaaS space in the Microsoft environment. Moving on to Meeting Insights. We have now a mature and stable product. The product has been launched in March of this year. We have deployed the product in seven countries so far and now adding in the fourth quarter, another three countries. Sales operations are already active in Israel, U.S. and U.K., and we have launched Mia in Europe in September of this year with four countries: Germany, France, Italy and Netherlands. In October, we launched support for Zoom meetings in addition to the support for the Microsoft Teams meetings. We intend to make the application UCaaS agnostic and support all of the major UCaaS applications, including Cisco Webex and Google Meet Now. More than -- we have now in the -- running more than 100 proof-of-concepts about a third already paying customers and planning to onboard a few more accounts in fourth quarter '24. Just to give you some highlights in the third quarter, we grew -- in terms of number of meetings, we grew 50% sequentially. So that represents huge growth, mainly due to the fact that we're using generative AI in a major way to provide value to our customers. Same with active users, we have grown substantially in number of users, more than 40% among others. So, to wrap up my presentation, we have made good progress in the quarter on our long-term objective to transform into a cloud software and services company with increasing mix of recurring revenues through fostering growth of our two primary engines, our Live family of managed services and conversational AI. With the progress we are making in increasing our recurring revenues and with Live nearing half of Microsoft Teams bookings, we believe we have laid the foundation to support sustainable and healthy top line and margin expansion over the long-term. I'll turn the call now back to the operator. Thank you.
Operator: Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question for today is from Ryan MacWilliams with Barclays.
Unidentified Analyst: This is Damian Cogen [ph] on for Ryan MacWilliams. Thanks for the question. Just curious how your customers are thinking about AI investments for next year? And are budgets for next year generally getting healthier in your conversations?
Shabtai Adlersberg: Yeah. Well, as I mentioned in my presentation, we see increased interest and demand. We have now -- actually, we have two go-to-markets, one, which is SaaS application, including Voca CIC, Meeting Insights. We have SmartApp, which is a compliance recorder. We will announce a very interesting new product in coming weeks. And on the other side, we have projects because in the AI space, when you're talking about implementing a solution, usually you face increasing demand for customization, connectors to our project management, applications, connectors to CRM and a few more. And as such, we definitely see huge uptick in many areas. One area that's very active is the government space. So, yes, there's a lot of interest in a solution for that space.
Unidentified Analyst: Got it. Thanks, Shabtai. And then how should we think about growth of product and service revenue in 4Q and fiscal year '25? It seems like AudioCodes is making strides to become a cloud software and services company first. So, just curious how we should think about the revenue breakdown in the near term.
Shabtai Adlersberg: Right. So, I've been speaking mainly about growth in our key lines, which are live services and conversational AI. However, at the same time, we are facing two kind of, I would say, restraining factors. One is as we grow with live services, we witnessed drop in CapEx in perpetual sales of Teams. So that is kind of impacting or having some layer on top of our growth. So that has caused, I would say, the muted growth you're seeing right now. We believe that Live now is about 44% of revenues and CapEx is about 56%. So, as we move forward with another three, four quarters, all this picture will reverse. And therefore, Live has grown 20% in the quarter, meaning that as we cross that point in three or four quarters, you'll start to see nice growth. And actually, I expect in 2026 to see double-digit Microsoft business growth. So that's on that. The other factor that impacts revenues, but less this quarter actually is the decline of the legacy gateway and SBC business, which usually we face a drop mainly from the fourth quarter to the first one in a year. And then -- and this was the phenomenon also in the third quarter. Then during the year, we see slightly uptick in that business. So, just to give you some idea about moving from '22 to '23, we were hit by $15 million drop. I think we will end up '24 with another, I would say, $10 million, $11 million drop. I expect this figure again to be visible in '25, but now probably somewhere between $5 million and $10 million, which means that the impact of that decline of legacy will be substantially weaker. So those are the trends. On one hand, we have nicely growing business in Live and concessional AI, and we're still suffering from declining of some legacy business, both connectivity and Teams CapEx.
Unidentified Analyst: Thanks, guys.
Operator: Your next question for today is from Ryan Koontz with Needham & Company.
Ryan Koontz: Question here. With the kind of stall in top line, as you talked about here, this transformation from license to subscription, what KPIs are you using internally to track the continued momentum there in your subscription bookings -- subscription business? Are you looking at bookings? And can you reflect on those, or maybe RPO or ARR? Any other KPIs that you have an eye on that might shed a light on that subscription business? Thanks.
Niran Baruch: Right. So, yeah, actually, we have a few such KPIs as you have mentioned. The most important for us is the monthly recurring revenue and then the annual recurring revenue, which at the end of the day, translates into the revenue we recognize and report. So that's one KPI. The other one, by the way, which is, for me, even more important is the bookings, because obviously, if you just take an analogy from, let's say, the semiconductor business, talk about book-to-bill, our book-to-bill on booking versus recognition is substantially higher. So, we definitely track our bookings. As I've mentioned on the call, backlog now is at $67 million versus $27 million a year ago. So, we have a steady flow of bookings of about $15 million a quarter. And that's what really drives the business. I mean, all of the efforts are really pointing towards increasing bookings. And even in our compensation for our salesforce, booking is very meaningful side by side, of course, with meeting the revenue targets.
Ryan Koontz: Great. And the composition of that backlog, is it -- is that dominantly your subscription contracts? Or are there a substantial piece of license maintenance in that backlog?
Niran Baruch: Yeah. The majority of it relates to Microsoft Teams Managed Services, which is a very sound business. Actually, we see some acceleration. I mean, we all know that the UCaaS industry has been growing faster in previous years and now seems to take a lighter trend. But let's not forget that whenever we report about win, we basically -- when you're talking about large companies, thousands of seats or 10 thousands of seats, the usual contract -- initial contract is for hundreds or a few thousands. So, it means, as I've mentioned, right now, the Teams Paces is $320 million. Teams Phone is PSTN is just $20 million. So, there's a huge runway ahead of us. And therefore, I believe that we have a space that could range 10 and 20 years. It's a gradual move. Let's not forget that the soft spending in '23 and '24 due to the economical crisis. So, all-in-all, we're very optimistic that just we -- the growing live line outpacing the declining CapEx line, you'll see us growing in revenues.
Ryan Koontz: That's great. One follow-up, if I could, around what you're seeing in the CX market, maybe with renewals. Are you seeing any seat pressures in these renewals in terms of more productivity from agents around AI for your SBCs there at all?
Niran Baruch: No, no. I think we see a fairly stable and steady market for us. No, we don't see any kind of pressure at this stage.
Ryan Koontz: Got it. All right, thanks. That's all I've got.
Niran Baruch: Sure.
Operator: Your next question for today is from Samad Samana with Jefferies.
Billy Fitzsimmons: This is actually Billy Fitzsimmons on for Samad. Shabtai, you expressed confidence in the Microsoft business returning to double-digit growth next year. Just to double-click on that, can you expand on what gives you confidence there and kind of what you're seeing in your pipeline? It sounds like the pipeline there for kind of the biggest opportunities, if I'm understanding correctly, is up 12% sequentially and 19% year-over-year. Can you just break down who those customers are, maybe how we should think about pipeline versus maybe what occurred in the third quarter?
Shabtai Adlersberg: Yeah. So well, we actually -- in the live business, we really to the U.S. largest enterprises. We cannot quote names. Some are public. I mean, I've mentioned for the CX space, I've mentioned University of Florida that was close to $1 million value contract. We have several such -- the thing is as follows, and maybe I should repeat the numbers. Live is now 44% of business, but growing 21%. CapEx is now 56%, but declining 12%. So those trends will continue. And we'll just cross over and growing Live will take over. That is the source of confidence in our ability to come back to double-digit growth. I'm not sure that that's going to be seen already in '25, but A, you'll see the continued improvement. And I'm confident that in '26, we definitely will see double-digit growth in Microsoft business.
Billy Fitzsimmons: Got it. That's helpful. And then if I can ask another one. We talked about this a little bit during the prepared remarks. But can you just give us some anecdotes of customer wins with conversational AI? What do customers like about your product? And for what reason are they purchasing your product there over competitors?
Shabtai Adlersberg: Okay. Well, great. So, our solution is quite unique in the sense that it is an organizational solution. Now there are a few note takers in the market. You know names. You can take Author [ph], you can take Avama [ph], you can take Firefly, a few more names, all are personal productivity note takers. So, a person would use the application for himself, but that's about it. Our product really touches an enterprise. Let me give you AudioCodes as an example. We have close to 1,000 employees. We have daily 400 of those employees using Meeting Insights for meetings. And the use is for various reasons. Take Fomo [ph]. We all heard about fear of missing out, right? But with Meeting Insight, there's no Fomo anymore because any meeting that you have missed, you have full access to it. You can listen to the call. You can identify exactly what was said, who said what, it's being summarized. It can be shared, okay? I just give you an example, last week, Thursday, I had a call with a large European system integrator and with just one salesperson on the line. As we completed the call in order to get -- and person I talked to was interested in moving on in the discussion. I did forward that meeting to five of my colleagues, in the sales department, one in the business, one in the partners. And they all now could understand exactly what was the essence of my discussion with that system integrator manager. So that's just one example. Think about knowledge retention. One of your best employees unfortunately tells you he's living. Now in order to replace him in order to get somebody into his shoes, that's hard. Not if you would have had Meeting Insights as a tool that use daily. And all of this guy calls and meetings were recorded throughout the past two, three years. So, any new guy coming on the job is capable of fully get up quickly to the knowledge and experience that the other guy had before him. And I can give you now a list of 20 different applications. So, it's being used in municipalities. It's being used in health organization. It's being used in defense organization. Our belief that in two years from today, most of the companies we know will use it. I mean, it's just like -- just as you use Outlook for messages and you don't read them all, but you get to that message you need when you need it. The same would be with the customer and a project and a product, okay? Yes, all those meetings are going to be recorded. They're going to be placed into a repository within the company. And whenever you -- I suppose we have now a new project with, let's say, Siemens. So, all I need to do is, we have a natural language read an application, which will allow us to identify those meetings in the past three or six months or 12 months that occurred with Siemens being mentioned. And the group of managers that have to deal with the subject and provide a solution, they will immediately be able to query using either Copilot or any other chatbot and get responses. So, plenty of use cases. And we are, at this stage, probably one of the best organizational. That's the main difference between us and the other guys. And even when you compare it to Cisco -- I'm sorry -- to Microsoft Teams freemium, that's exactly the case. We all -- they all do code summarization, but not much beyond that. We do all of the organizational work that helps you get the most relevant information.
Billy Fitzsimmons: Helpful. Thank you very much.
Shabtai Adlersberg: Sure.
Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Shabtai for closing remarks.
End of Q&A:
Shabtai Adlersberg: Okay. Thank you, operator. I would like to thank everyone who attended our conference call today. With continued good business momentum in our enterprise operation and good underlying market growth trend in UCaaS, CCaaS and CI, we believe we are transitioning the business towards growth and growing profitability in coming years. We look forward to your participation in our next quarterly conference call. Thank you all. Have a nice day.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
