Welcome to the NICE conference call discussing second quarter 2023 results, and thank you all for holding. All participants at the present are in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded August seventeenth, 2023. I would now like to turn this call over to Mr. Marty Cohen, Vice President, Investor Relations at NICE. Please go ahead. 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, 1995, please be advised that the company's actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the 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 30th, 2023. During today's call, we will present a more detailed discussion of second quarter 2023 results and the company's guidance for the third quarter and full year 2023. You can find our press release, as well as PDFs of our financial results, on NICE's Investor Relations website. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations, which differ in certain respects from generally accepted accounting principles, as 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 adjustments. 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 Barak. Thank you, Marty, and welcome everyone. Our momentum continued into Q2, as evidenced by another strong quarter, highlighted by another double-digit growth across all key financial metrics. Total revenue increased 10% to $581 million, driven by continued strong growth in the cloud, which grew 23% year-over-year, outpacing the rest of the industry and at a much larger scale. In addition, our industry-leading superior profitability was once again reinforced in Q2, and it has become an unrelenting financial competitive advantage. Cloud gross margin continued to increase to 70.3%. Operating income increased 10% to $170 million, and our operating margin grew to 29.2%, up 20 basis points year-over-year. EPS came in at $2.13, representing an increase of 15%. Those strong results demonstrate the rapid progress we're making as we expand our total addressable market and leadership from core customer service to the broader CX category. This broader expansion encompasses digital engagement and conversational AI, where we are rapidly capturing market share. NICE is strategically positioned for complete coverage of all customer service interactions, digital and voice, agent-assisted and consumer-led. Furthermore, our state-of-the-art platform, CXone, combined with our clear leadership in all segments of the market, particularly large enterprises, allows us to greatly expand our TAM and market share while driving industry-best profitable growth. Let me start by describing how digital engagement drove the success of our business in Q2. We delivered a 70% increase in new digital bookings, with much of the deals coming from large enterprises, and the share of new digital bookings doubled year-over-year. Many of those deals were displacements of legacy point solution vendors that are failing to deliver on the holistic digital approach required by large enterprises. In addition, we are winning many of these deals due to the native cloud architecture of CXone, the only platform in the market that seamlessly integrates digital and voice CX solutions. In Q2, we signed an 8-digit deal with one of the largest entertainment companies in the world. Not only did this large enterprise want to consolidate onto a cloud platform with a single vendor, but they also wanted to partner with a vendor that can take them into the future digitally as they are expanding their self-service and IVA capabilities on CXone, replacing legacy digital point solution providers. We signed a 7-digit deal with one of the largest hotel chains in the world, replacing the incumbent gen one digital solution. With CXone's AI-driven knowledge management capabilities, this company can now provide more advanced digital self-service for its customers. We signed a 7-digit deal with a large global payment processor, as they are consolidating on our CXone digital platform to future-proof their digital needs. The emergence of AI, coupled with generative AI, is the most significant TAM expansion opportunity for NICE in all of our markets, and in the CX space in particular. The investments we made in building Enlighten over the last few years as an embedded AI foundation of CXone, with hundreds of CX-specific models, is now emerging as a concrete material differentiation and revenue growth opportunity, and this is underscored by a record quarter of Enlighten bookings. Moreover, all of our $1 million plus ACV deals in the quarter included AI. We signed a 7-digit AI deal with a major communications company, which is looking to expand its capabilities around proactive conversational AI, and our advanced innovation was the only one that provided smart self-service. We signed a 7-digit deal with a large energy company, replacing the incumbent CX provider, who could not meet the requirements, as they're aiming to fully transform to AI-powered self-service. This customer is looking to greatly expand its digital interactions volume to trusted conversational AI and selected CXone for its AI precision and scalability. A very large consumer electronics company signed a 7-digit AI deal as they want to consolidate their self-service experience for sales and service, replacing their legacy bots with CXone AI. Enlighten AI ingests all voice and digital interactions, continuously identifies opportunities for automation, and then fully executes interaction flows to self-service. We had many other large enterprise Enlighten deals, including one of the largest banks in the world and a Fortune 500 fintech company. From these deals and the ongoing momentum we are seeing with AI, we expect to generate significant future revenue resulting from the consumption-based pricing model of AI, which is tightly linked to the fast-growing volume of self-service interactions. Customer demand for Enlighten has been strong ever since we began delivering to the market. During our extremely successful Interactions customer conference back in June, we announced three new groundbreaking solutions, leveraging the powerful combination of Enlighten and generative AI. Enlighten Copilot, turbocharging customer service employees, Enlighten Autopilot, the next-generation conversational AI, and Enlighten Actions, a whole new paradigm to manage CX. Subsequently, the Enlighten pipeline has rapidly accelerated. In fact, Enlighten bookings in Q2 were greater than the previous five quarters combined. We continue to win the cloudification cycle in our market across all segments and geographies, especially at the higher end of the market. Our high win rate is also leading to our unmatched profitable growth. The investments that we have made in building CXone as a native cloud platform with a suite of more than 45 applications, have resulted in record adoption of incremental applications by our customers, leading to continuous growth in the average revenue per user, per user throughout our entire customer base. The architecture of CXone, with limitless scalability, continues to fuel the expansion of our gross margin with every new deal. In Q2, we continued to win market share with large portfolio deals, reflecting the leading architecture, completeness, and innovative end-to-end approach, including purpose-built analytics and AI of CXone. We signed an 8-digit deal with one of the largest car manufacturers in the world, replacing two large legacy incumbents, on-premise vendors, both with cloud solutions that could not provide a complete suite and seamless integration experience of CXone. We signed a 7-digit deal with a very large cruise ship operator, replacing the incumbent on-premise provider. We won the deal for our fully integrated suite of applications on a single cloud platform, covering both digital and voice, with a seamless and unified user experience. We signed a 7-digit deal with a very large retailer, which is a new Fortune 100 customer for NICE, that has standardized on CXone. Following a competitive process, NICE was selected due to the clear leadership of CXone and our ability to serve all current and future transformational needs of this customer. Other large cloud deals in the quarter included eight-digit deals with 2 major US banks and a seven-digit deal with the West Coast state government. The momentum that we are seeing at the high end of the market, combined with the adoption of our fast-growing portfolio by our very large customer base, will continue to fuel our profitability going forward. In summary, the CX cloudification cycle is rapidly expanding into the large enterprise market, with AI approaching faster than many probably had expected. These dynamics are clearly favorable for NICE, as we've been smartly investing over the past 6 years, winning the market and strategically preparing for this moment. In addition, we have an industry-best capital structure that allows us to further expand our market leadership at this crucial pivotal point in the CX market. Moreover, our extremely profitable position allows us to continue to invest and innovate at a breakneck speed while delivering strong top and bottom line results. I'll now turn over the call to Beth. Thank you, Barak, and good day, everyone. I am pleased to provide an analysis of our financial results and business performance for the second quarter of 2023, and our outlook for the third quarter and full year 2023. Our financial results in the second quarter grew double digits on both the top and bottom lines, as our total revenue came in at the high end of our guidance range, and EPS exceeded the high end of our guidance range. Total revenue for the second quarter was a record $581 million, up 10% year-over-year, driven by the strength of our cloud business, which now represents a record 66% of our total revenue, compared to 59% last year. Cloud revenue increased 23% to a record of $382 million in the second quarter, as we continue to see increasing adoption of our CXone platform by large enterprises. The year-over-year growth in our cloud revenue resulted from a healthy mix in three key areas: expansion of our vast install base through upsells, cross-sell adoption of our rich portfolio of applications, and new customer additions. Services revenue, which represented 27% of total revenue, was $159 million, a decrease of 5% year-over-year. Product revenue, which represented 7% of total revenue in the quarter, compared to 10% of total revenue last year, decreased 23% to $40 million. This shift in the mix of our revenue is expected and is part of our cloud-first strategy, as our customers increasingly transition from on-premise to cloud. Our recurring revenue further increased to a record 86% of total revenue in the second quarter, compared to 83% last year. Recurring revenue is comprised primarily of a combination of cloud and maintenance revenue. From a geographic breakdown, the Americas region, which represented 83% of total revenue, grew 9% year-over-year. The EMEA region, which represented 11% of our total revenue, increased 14% year-over-year and 13% in constant currency. The APAC region, which represented 6% of total revenue, increased 7% year-over-year and 9% in constant currency. The foreign exchange headwinds in APAC and tailwinds in EMEA offset each other, such that the net currency exchange impact on total revenue was negligible. Moving to our business unit breakdown. Customer engagement revenues, which represented 83% of our total revenue in Q2, were $481 million, a 12% increase. CXone, the most advanced digital and AI market-leading customer experience interactions cloud platform, is the continuous primary growth driver in customer engagement. Our emergence as an AI and digital leader in this space was evident in the new bookings in the quarter, with a 70% increase year-over-year in digital bookings, and will be a clear revenue growth driver of our business looking forward. Revenues from financial crime and compliance, which represented 17% of our total revenue in Q2 and totaled $100 million, delivered as expected, a decrease of 2% year-over-year. Similar to customer engagement, our strategy to cloudify this segment of the market is gaining momentum through adoption of our cloud platforms, X- and iCXeed. We are progressing well on the cloudification of the financial crime and compliance customer base, with a significant revenue uplift from every customer that has been converted. We expect to see this growth further accumulate in the financial crime and compliance revenue stream in future periods. Now to profitability. Our gross profit grew 7% year-over-year to $416 million. Total gross margin in Q2 was 71.6%, compared to 73.3% in Q2 last year. The decrease in total gross margin is attributed to the decrease in product gross margin as a result of a change in the product revenue mix. Cloud gross margin increased 20 basis points year-over-year to 70.3% in Q2. We expect our cloud gross margin to continue to expand over time as our financial crime and compliance, public safety, and CXone international expansion gain sales. gain scale. We continue to see further enterprise adoption of the CXone platform, as well as increasing volume-based usage from both digital and AI. The ongoing growth in our cloud revenue, combined with the expanding cloud, cloud gross margin, will also lead to an expansion of our overall gross margin. In Q2, operating income increased by 10% year-over-year to $170 million, and our industry-leading operating margin increased 20 basis points to 29.2%, compared to 29% last year. EBITDA increased by 10% year-over-year to $187 million in the second quarter. Our best-in-class EBITDA margin in the second quarter increased to 32.1%, increasing slightly compared to last year. Earnings per share for the second quarter total record $2.13, a double-digit increase of 15% compared to Q2 last year. Our financial and other income was $11 million, resulting from interest income earned from our healthy cash and investment portfolio, and the foreign exchange revaluation of our balance sheet. Cash flow from operations in Q2 increased fourfold to $65 million compared to the prior year as a result of our strong billings and collections. Over the past four quarters, we have generated more than $500 million in cash flow from operations. The strength of our cash flows provide us with significant flexibility in capital allocation priorities of M&A and share buybacks. Accordingly, we continue to execute on the accelerated $250 million share repurchase program to be completed by the end of this year. In Q2, we repurchased shares in the amount of $65 million and executed 53% of that plan as of the end of June. Total cash and investments at the end of June totaled $1.662 billion. Our debt, net of a hedge instrument, was $543 million, resulting in net cash and investments exceeding $1.1 billion. In closing, we are pleased with our strong Q2 and first half 2023 financial results. In the first half of this year, we continued to demonstrate the strength of our business with notable growth in our overall revenue, cloud revenue, profitability, and cash flow generation. Our consistent approach to drive a healthy mix of both top and bottom line growth is evident, and we remain committed to this excellence looking ahead to the second half of this year. Now, before I hand it over to the operator, I will conclude my remarks with guidance. For the third quarter of 2023, we expect total revenue to be in the range of $590 million-$600 million, representing 7% year-over-year growth at the midpoint. We expect the third quarter 2023 fully diluted earnings per share to be in a range of $2.10-$2.20, representing 12% year-over-year growth at the midpoint. We are raising our full year 2023 total revenue and EPS guidance. We now expect total revenue to be in the range of $2,353 million-$2,373 million, representing 8% growth at the midpoint compared to full year 2022. We now expect full year 2023 fully diluted earnings per share to be in a range of $8.40-$8.60, representing 12% growth at the midpoint compared to full year 2022. This includes our expectation that operating income will continue to achieve double-digit growth. I will now turn the call over to the operator for questions. Operator? Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Samad Samana with Jefferies. Please proceed with your question. Hi, good morning. Thanks for taking my question. Maybe first, Barak, one for you. You know, Interactions was at a very interesting time. The, it was kind of the, the height of the AI commentary. I'm curious maybe what customer conversations following the conference have been like, particularly around some of the new products that you mentioned, and how we should think about maybe the pipeline that's built out of Interactions this year versus prior years, given the interest levels around AI. Thanks for the question, Samad. Yeah, we had a very exciting Interactions. Many of you attended it, and it was well attended beyond our expectations. We actually had, you know, many, many hundreds of people, more than we expected, but I'm glad we could have accommodated everyone. The content, of course, was great, both what we have provided, but also what many customers presented in the different breakout sessions. First I'll say, I mentioned it in my earlier remarks, it created a very significant positive momentum into our pipeline. A lot of opportunities we have now in the pipeline that are progressing nicely, started at the event, and many that existed before the event, either matured further or even allowed us actually to win some deals in the quarter itself and even more so in July and Q3. That's that's about that. Specifically, there was a very big interest and a lot of conversation with respect to the introduction of the new models of Enlighten, Enlighten Copilot, Autopilot, and Actions. Needless to say that, you know, earlier this year, there is a lot of, call it, hype about generative AI. Things are starting to sink in, and enterprises are starting to realize that the right way for them to adopt it, adopt generative AI, is not taking something generic that is not necessarily 100% precise or well-secured or well connected to the platform. And they need a lot of domain expertise and, and, and Enlighten in order to introduce it into their CX environment. As a result, we indeed see the success, as I mentioned on the call, with Enlighten record booking in Q2, you know, 5 Q2 booking of Enlighten equal or actually more than the previous 5 quarter together, and we see the momentum continues in the pipeline. All in all, very successful interaction, and we're very happy, way more successful than previous event, that they, they were successful by themselves as well. Great. Maybe a follow-up for you, Beth. Just looking at the cloud revenue number, growth slowed a little bit, in terms of dollars added sequentially, it was a bit more modest than you've seen from 1Q to 2Q in the last couple of years. I just wanted to maybe understand how we should think about cloud growth and if there's anything in the quarter that maybe muted that normal seasonality, and just how we should think about the rest of the year for cloud revenue, specifically. Yeah, thank you for the question, Samad. You know, we came in with 23% cloud revenue for the quarter. It was completely aligned with our expectations, and we're very pleased with that result. In fact, if you look at kind of the competitive environment and near some of the other competitors in our space, our growth rate in our cloud is, is, you know, far exceeding what you're seeing from some of the other players. We're very pleased with that growth. With respect to kind of the, the change from quarter to quarter, first, if you look on the, the, the last couple of years, you'll see that that change between the first quarter and the second, in terms of the, the shift in the growth, is, is pretty typical. You know, I, I think, looking ahead, one of the things we know is Barak talked about both today and, and many of the past quarters, we are gaining more and more traction in the large enterprise, which we define as 750 or more agents in, in the contact center. We are taking on more and more market share with large enterprise. Of course, as it is typical in the software industry, it's typically that, you know, that you'll see it takes a bit longer as you go into those very large organizations to see that revenue materialize into the revenue stream. All in all, you know, we continue to be very pleased with our performance, both in the first half and, and are looking forward to the second half of the year as well. Got it. Thank you for taking my questions. Thank you. Our next question comes from the line of Tyler Radke with Citi. Please proceed with your question. Yeah, thanks so much for the question. Barak, you talked about how some of your conversations with respect to AI seem to be kind of happening faster than you expected, and I'm sure just the technology rollout has been faster than we all thought 90 days ago. Just as it relates to the core business and how your traditional sales cycles for CXone are progressing, you know, is the conversation around AI having any, you know, causing any delays in kind of core CXone? Can you just kind of talk about the puts and takes of, you know, the excitement around AI? Sure. I, I actually think it helped us in the win rates of winning CXone. And we see it happening. As I mentioned, 100% of our 7-digit and higher deals in the quarter, CXone deals included AI. Some of them was, were driven by AI, and some it was an add-on to the process. That's one thing. It also allows us to much expand the scope and help in getting the, both the funds and the support when it comes to adopting a CXone. It's no longer just, you know, the legacy, let's replace an Avaya, Genesys or something like that, or Five9, the, you know, voice only, but rather much broader, both digital engagement and taking over both the agent-assisted and the consumer-led conversations or interactions. As a result of that, the scope is much bigger, and it help us to compete vis-a-vis those competitors that do not have something equivalent to Enlighten. You can look at it both as a standalone business or, or driver for our growth, but also as something that and the core driver of our business, which is the cloudification cycle of the CX market, still with a very long runway to it. Okay, great. Just to follow up, Beth, on the full year, for cloud revenue, I think last quarter you talked about 22%-25%. It sounds like, you know, maybe you are seeing some sales cycles elongate at, at the large enterprise, which, you know, you're certainly not the only ones there. How, how should we think about full year cloud revenue growth? Would you steer us towards the lower end of that 22%-25%? Any, any way to kind of frame the, the glide path on the decelerating, the deceleration in, into the second half would be helpful. Thank you. Yeah, thanks for the question, Tyler. You know, we came into this year, talking about a range of 22%-25% expectation in our cloud revenue growth, and we remain committed, and that's the range we continue to expect. Of course, we're just coming out of the first half of this year. You know, we remain, as I said, optimistic about the pipeline, and the business momentum we're seeing. You know, at this point, we continue to stand behind the range, and obviously, as we come out of Q3, we'll provide additional color at that point. Great. Thank you. Thank you. Our next question comes from the line of Siti Panigrahi with Mizuho Securities. Please proceed with your question. Thank you. Thanks for taking my question. It's good to see some of the deals you highlighted with AI and digital. Barak, could you give some color around, like, your, your AI attach rates? How does it look like for the new logos, new customer? The deals you're signing, what kind of mix you're seeing in, in terms of, you know, expansion versus new, new customer? I'll, you know, I'll start at the bottom line, thanks for the question. The bottom line is that we see it all over. We see it both with new logos, we see it both in, in an expansion of AI within the very large customer base that we have. We also see customers that are just talking to us about AI, regardless of the infrastructure that we have, and our AI can be vendor agnostic. We compete on all of those categories with a great differentiation. It's, as I said, I believe our biggest TAM expansion opportunity. It's not just theoretical. These investments we have made in the past several years are now materializing into real business, and a significant opportunity. The other thing that we like about it is that regardless of how it starts, the expansion, the natural expansion opportunity is significant. Most of those deals, we price them on a consumption base, that consumption base is linearly attached to the how many interaction are ingested by Enlighten. As a result of that, something that's small at a certain size, if you think about it forward, it will continue to grow naturally as more and more interaction, digital interaction, voice interactions, agent assisted, complete self-service, all that are going through Enlighten. With every interaction that goes through that, first, there is more revenue, second, it become, you know, better and stronger. This is exactly what we wanted to see, the results in Q2 on that regard are, are phenomenal, it's more than just early indication. It's a real, and a significant, business. We, you know, the pipeline indicates that moving forward, we will, we'll continue to do, the same. That's a great color, Barak. A follow-up to Beth, it's impressive to see how you expand operating margin, despite, you know, gross margin going down. Could you help us understand a little bit on the gross margin dynamics, like, going forward, and how should we think about this margin expansion, and where is the operating leverage mostly going to come from? Sales and marketing? Yeah. Thank you for the question. You know, as you look at our cloud gross margin, and if you look at how we've expanded it over the last several years, we've expanded our cloud gross margin by over, you know, 600 basis points over a few years. It shows that we have a really strong muscle in scaling our cloud business. You know, currently we have a lot of our newer business segments that are kind of in the less mature stages of their cloud business. That includes our financial crime and compliance business, public safety, and some of the international expansion we've done with CXone. As those businesses continue to drive scale, we're confident that they are also going to be further accretive into the cloud gross margin. Of course, that's on top of the great expansion that we see in the core of our CXone business, both from strong attach rates that we have of the really deep set of applications across the CXone platform. Also, of course, the accretive nature that we see from our digital and AI applications on the cloud gross margin. A combination of all of those factors, we're confident, and we actually shared at our recent Investor Day that we see our cloud gross margin, and in fact, share that, you know, we're confident we'll see a 75% cloud gross margin in the future, and that will continue to drive the operating margin expansion as well. Thank you. Thank you. Our next question comes from line of Rishi Jaluria with RBC Capital Markets. Please proceed with your question. Hi, this is Rich Poland on for Rishi Jaluria. Thanks for taking my question. I guess first one is just, as we think about some of these new AI capabilities, between Copilot, Autopilot, and Actions, is there any one that stands out as kind of being maybe a more immediate revenue driver versus a long term? Then I guess just second aspect of that question, do we have any, like, sense for the adoption curve of, of the consumption element and just kind of, you know, how long does it take the customer to start to ramp up some of those volumes? If we have any early proof points, just kind of around that? Sure. Let me, let me address the first one. Great questions. In terms of the pipeline, we see, you know, to start differently, customers, when they speak to us about AI, and they hear about Enlighten and they want to learn more, they want to see all of it because they see the value of how Copilot augments their existing users. They see the Autopilot allow them to really go into self-service in the right way. Action is a completely new paradigm on how managing CX, and it changes dramatically, the way they, they think and see CX. In terms of what we've, we've seen, customers are starting with, many are starting with Copilot because they want to take the technology first to existing processes with the agents. It's also putting it, you know, with the agents versus first with the customer, and this is kind of the, the safest way to go. But it also allows them to move quickly from Copilot to Autopilot, because if something works extremely well with the agent and you can automate it very, relatively easy, you can migrate it into the Autopilot. That's what we see more often than not, starting with the Copilots, moving into Autopilot. That, that's about that and, and the adoption. As, as we continue, of course, we'll update about the specific adoptions that we see for the three solutions of Enlighten. In terms of the adoption curve and the, and the usage, I think it's still early, early days to say. We do see customers that deployed Enlighten and are deploying Enlighten, starting to ingest a lot of information through that. There is a understanding of our customers and general understanding that, you know, generative AI is good up to a certain point, and the reason why they go to Enlighten versus using something generic is that eventually an enterprise needs something different. They need it to be precise, at 100% with no hallucinations, and for that, you need a lot of data. You need it to be extremely secured. They cannot take something proprietary into the public domain. They need to be connected to all the backend system. CXone is the best platform for that when it comes to CX. Of course, they need it to be aligned with the brand. It's nothing... They don't want a generic answers to their consumers or to the agent. You add all of, all of that together and the amount of data going through that, I believe that, we'll see a significant expansion, but it's still, I think, too early to say what is the exact rate of expansion. Thank you. That's very helpful. Then just one for, for Beth. You talked a little bit about the accretion from digital and AI. Can you maybe, I guess, peel that back a little bit and tell us kind of what you're seeing on the gross margin front from some of those solutions and how you think about that versus, let's say, like, the core CCaaS business? Yeah, thank you. What we're seeing, again, as Barak said, it's early days on the consumption side, but certainly with, you know, core of our AI offerings, these were, Enlighten is a solution that was organically developed, is native here at NICE, and we have very attractive margins. We can see that as the customers see those use cases playing out in the organization, it drives expanded adoption throughout those organizations. As that happens, we're seeing that, as I mentioned, being accretive further to the margins. That is something that we're already starting to see out. Of course, both in terms of our revenue streams and our margins, we see both digital and AI continuing to be nice growth drivers in both respects. Thank you. Thank you. Our next question comes from line of James Fish with Piper Sandler. Please proceed with your question. Hey, guys. Wanted to build off Samad's first question. Was there a pickup in more desire for term deals on the financial crimes side this quarter that didn't translate to cloud revenue? You know, Beth, I, I think every investor asked this to, to at least us: Is there any way to understand how much of that financial crimes business is, is now cloud? Yeah, thank you for the question, James. I, I highlighted earlier on the call that we are seeing momentum in our financial crime and compliance business segments with both their Exceed and Excite cloud platforms that are addressing all of the financial institutions, both mid-size and large. You know, we, we are seeing really even greater momentum than we had originally anticipated with success in the cloud. What you're seeing in the results of the financial crime and compliance business is, is exactly that this year. The current year revenue is, is expanding in terms of the contribution from the cloud. Of course, that is compared to a baseline one year ago that had a much larger, larger contribution of product and premise-based revenue. We're, we're seeing that transition, and we'll expect to continue to see that happen throughout the course of this year as that business continues to drive success in the cloud. This is a very transitional year for that FCC business. Of course, as we start to see more of the concentration of the revenue in the business be cloud, and you get to more of an apples to apples type comparison, then you will start to see that success coming through as the cloud revenue accumulates, and, and we see the growth once again being recognized when you're on kind of an apples to apples comparison. It is a transitional time, and we are excited about not only what we're seeing in the FCC business, but also early days of Evidence Central in our public safety business as well. With respects to the, the, the amount of contribution, it, it is continuing to increase. As we've said in years past, you know, overall, customer engagement still constitutes 83% of our total revenue today. By and large, it is still the, the key growth driver, but we will always consider potentially breaking out the, the cloud revenue contributions from non-CX revenue in the future. Maybe I'll just add, one more, one more thing to that, and this is that when we look now on the conversions of existing financial crime and compliance customers to the cloud, originally, we expected them to be in the magnitude of 2 to 2.5 times more revenue in the cloud on an annual basis versus on-prem. We actually see that we managed to cross a lot of capabilities right out of the gate in those conversion rates, and the last 20 deals analysis we've done was north of 3.5 times. That's one thing. The second, and the financial crime and compliance customers are actually even forcing us, in a positive way, to commit for the long run, and many of them signing those cloud deals with 5 to 7 years commitment. It's gonna be an extremely healthy cloud business as it continues to evolve in its conversion to the cloud. That's really helpful color from both of you. Maybe, Barak, just to follow up, you know, what are you seeing competitively in the CCaaS and WEM space, particularly any change around pricing and acceptance for more of that interaction space pricing? Any color commentary for how you're thinking about the second half pipeline for some of these 7, 8-figure size deals, particularly in your financial services vertical, that you guys are historically very strong with. Thanks, guys. Thank you. You know, what, what we see in the competitive landscape, it's somewhat similar to things I've hinted or talked about in previous conversation. For years, we've been preparing ourselves and going in the market from the bottom up in order to get to the point where the enterprises, the large enterprises, are gonna cloudify their CX environments. This is exactly the point that it's starting to happen in a more meaningful way. In this situation, a lot of the small players are having a hard time to either compete or to deliver, and we see ourselves both winning those deals, and in some cases, we see them when we are not winning the deal, those deals come back to the table 6 months or 8 months later, after the customer realized that they, they selected someone that cannot scale or not provide the level of complexity at scale that the other competitors provide. We also see some of our competitors struggling to take or taking decision based on their debt liabilities, and as a result of that, not doing necessarily the right thing for the long term of their success or the market success. We, of course, enjoy that situation. Last but not least, I think we're enjoying very much the fact that as, as both Beth and I said before, we have built CXone, in a, as a native cloud platform. We invested a lot in that, north of, you know, many, many thousands of man years that were invested in the platform with a lot of applications, and now we have expanded into digital and AI. We are the great convergence, doing the great convergence, if you like, of this market. As a result of that, the competitive landscape or the potential TAM is much bigger because we are taking a share out of the legacy digital engagement space and the new AI space. In that regard, CCaaS, the definition of CCaaS is, is much broader right now, and it allows us to compete better vis-a-vis the competitive landscape. Thank you. Operator? Yes. Our next question comes from the line of Patrick Walravens with JMP Securities. Please proceed with your question. Oh, great. Thank you. Barak, do you expect over time to see pressure on your seat count as people adopt your AI solutions? We don't see it yet. They, you know, only 20 some% of the CX market is in the cloud. For us, unlike some other companies that used to be the incumbent in the routing or the on-premise ACD paradigm, for us, every time we win a new cloud ACD or CCaaS, it's a brand new upside. It's not a conversion of an historical revenue. If I look on the next few years, the runway is very significant. With respect to general agent or seat count, if you would like, within the customer base, we don't see it shrinking as customers are adopting self-service solutions. Maybe not yet, maybe not ever, just because the demand, the general demand for service is growing so fast with more digital channels being introduced by both consumers and enterprises. A lot of the self-service effort is actually being used in order to avoid new agents to be added to the labor market and do that through through self-service. I don't expect it to happen anytime soon. If and when it will happen several years down the road, I believe that our business is going to be so robust on the self-service business, that it's actually going to be accretive to us. Because when we go and we, you know, migrate an agent, a labor TAM into technology, the potential revenue opportunity for us is way more than just the technology that supports an agent. That's really helpful. Thank you. Thank you. Our next question comes from line of Matt Stotler with William Blair. Please proceed with your question. Hey there. Thank you for taking the questions. Maybe just want to start off with, we'd love to get an update on what you're seeing with the conversion of the on-prem installed base and customer engagement to CXone, what that pace looks like, and how that's being impacted by some of your recent announcements around AI and the strength you're seeing in digital? Thanks for the question, Matt. I think we provided in the past several updates on that. I'll give a bit more color, but if I'm not wrong, Beth, at the recent, Investor Day, actually provided a great examples of what happened when those customers, convert. But if you look at our customer base, our historical, what we call WEM, customer base, that was predominantly at the higher end of the market, very few of those customers migrated to the cloud. That's a great opportunity for us because when they do migrate to the cloud, if they migrate just for like for like, meaning WEM to WEM in the cloud, we see about 2.5 to even 3x conversion in terms of the revenue. Many of those actually, adopt a much broader portfolio from us, and in many cases, we win the entire OCR. In these cases, the conversion goes all the way up to 6x, and sometimes we have example, up to 9x on the maintenance. We're still in the early days of this conversion. If you look at our cloud business altogether, most of it was a pure upside for NICE, not a result of any conversion. Only now we're starting to convert the base, including winning of we continue to win brand-new business for the company. Got it. It's helpful. Then a follow-up maybe on what you're seeing, internationally and specifically in Europe. I know over the, at some point in the quarter, you had an announcement that CXone is now in EU Sovereign Cloud platform, obviously, you're seeing, faster than, corporate average growth in that geography. I'd love to just get an update on, you know, the adoption trends you're seeing, specific to EMEA and, any key investment, priorities there to drive further adoption. Thanks for that. International is not new for us. We've always operated in international markets, prime international markets. With CXone introduction several years back, we realized that at some point, we were gonna franchise and expand from the US to other territories. We've done this investment in a variety of geographies, and started to do it one at a time. First of all, most of the investment is behind us. We invested both in terms of the infrastructure and in terms of the go-to-market and building the right partnerships. Beth talked about it before with respect to our growth margin, that a lot of that is the investment is behind us, and now we're gonna leverage on that investment. As a result, we're gonna see expansion of the, of the growth margin. We're seeing great success in some of those territories, and that's one, that's one of the reasons that led us to decide to have actually a cloud environment that is in EU Sovereign in order to further support the EU. The pipeline in a variety of international territories, all the way from Asia Pacific, Europe, Latin America, is very promising. Got it. Thanks again. Thank you. Our next question comes from the line of Chris Reimer with Barclays. Please proceed with your question. Hi. Most of my questions have been answer- asked already, but maybe just 2 quick housekeeping ones for Beth. Looking at the product's gross margin, it's coming in a little lower than historically. Is, is this the new level as this segment kind of drops out? Regarding financial income, is, is this an appropriate level considering where rates are right now and, and your cash balance? Yeah, thank you for the questions, Chris. First, with respect to the product gross margin, you will see, of course, that our product gross margin will vary from quarter to quarter based on the mix of the products that we're, we're selling during the quarter. A lot of our products have now, we see the customers buying that in the cloud. The mix of what you saw in this quarter is probably a bit more typical of what you would typically see. However, it is a bit more deflated than what you would expect looking ahead. This quarter, in addition to the product mix, we also had some a bit of one-time kind of non-recurring cost in the quarter as well. If you look back on the last couple of quarters in terms of product gross margin, that's probably more typical of what you would expect to see. Again, I'll caveat that by saying, you know, it is dependent on the product mix, but that's probably much more likely as a typical product gross margin in our business. With respect to the financial income that we demonstrated this quarter, of course, we have a healthy cash and investment portfolio. A couple of things to highlight. I, I would say here, while it was quite healthy during the quarter, it was a bit inflated. First, we have a revaluation of our non-U.S. denominated receivables and balance sheet accounts at the end of each quarter. So this quarter we did receive a benefit that's being demonstrated in that financial income that makes it a little bit higher than we would typically expect by more than, you know, somewhere in the range of about $1.5 million. So you would have to kind of assume that that will not be likely to reoccur. Of course, sometimes that can go in the opposite direction for us, and so we always, of course, keep that in mind as well as we look forward. Then additionally, of course, as you look at the portfolio that we have, our investment policy generally looks for us to hold our positions until maturity. The bulk of our positions were invested at a time where the interest rates were, were much, much lower. So that also needs to be considered as, as you're looking at the overall financial income. Those are the two key areas to keep in mind. Excellent. Thank you. That's very helpful. That's it for me. Thank you. Our next question comes from the line of Tim Horan with Oppenheimer & Co. Please proceed with your question. Thanks, guys. Can you just touch on the 2 or 3 maybe key technologies you used in AI to roll out these new products? Can you just talk about how much better the AI products are now, maybe versus, you know, where they, where they were 1 year ago? If you can give something, you know, quantitative in terms of, you know, maybe success rates with digital interactivity or something like that would be great. I know it's early days, but any color? Sure. you know, we use First and foremost, you know, it's important to understand that one of the most important thing with AI, no disrespect to the algorithms or specific product, is the data that you have in order to train and build your AI. That's the real key differentiator. you know, algorithms can, of course, improve it, but having the data, having the relevant data, having a clean data, is really what make an AI solution a superior one. We have billions and tens of billions of historical interactions, both current and historical, completely labeled, completely clean, verticalized, for specific use cases, and that's what makes Enlighten so relevant and so unique in the CX space. Actually, I don't remember if we demonstrated that during Interactions. If not, we'll be happy to do it in the upcoming or the next analyst visit that we have and at the next Investor Day, is to show you, what happened when you run certain scenarios through Enlighten versus any kind of generic AI solution, and the difference is night and day. Our customers, many of them already try to deploy generic AI in their environment, and this is exactly the point that they encounter: the issue of precision, but precision in context. That's the reason why they are selecting Enlighten. This is, this is what we're doing. Of course, we are augmenting technologies, different generic, generative AI technologies, and using them as a layer, if you would like, within Enlighten, in order to make it more accessible in terms of the, the, what I call consumable responses of the AI. The mix of the two together is the winning combination. Thank you. Any color on how much better, how much of an improvement you've seen in the product, or is it hard to say? We, we see, you know, the past 12 months, we've seen a, a dramatic improvement. Needless to say, the more deployments we have with customer, the more use cases, we have. I, I think we're seeing what is, is typical from a new, domain or technology, that the early days of it, of, of initial deployment, and it's actually more than initial deployment, the, improvement is, is exponential. We have customers using Enlighten in a variety of scenarios and, and got to level of precisions that are beyond their, expectations and are extremely applicable to what they need. Thank you. Our next question comes from the line of Meta Marshall with Morgan Stanley. Please proceed with your question. Mentioned predominantly consumption. Just wanted to get a sense of, you know, does that does the pricing increase if there's comp, you know, as completion rates increase? Just how dynamic is that pricing? You know, do you feel like it's still dynamic from your part and that you guys are still figuring it out just as it ramps? Maybe as a first question. I apologize. We, we missed the first part of the question, but if, if I think I got it, the question was about the, the, the pricing, the consumption-based pricing of Enlighten, and you know, how stable it is and what we kind of see in terms of dynamics. Has that been the, that was the question? Yeah. Just is it, you know, are you guys still trying to figure out the pricing? Do you feel like there's opportunities as completion rates increase to kind of increase the pricing that you're seeing on a consumption basis? We have a pricing out with customers, and it is right now, we're received very well by enterprises and customers. The reason that I believe it is accepted by customers right now is because of the tremendous ROI it has. I'll remind us again that a cost of a service, a representative in a typical CX environment is roughly 50-60, $50,000-$60,000 a year, and this is just the labor, not the technology. All the technology that's supporting that agent, usually or roughly $5,000-$6,000. 90% of the cost in CX still goes or the investment still goes into labor. Can we... When we replace or augment certain tasks or make those agents much more efficient or completely take them out of the equation, we tap into this significant labor can. Hence, that's the way we look at it, and we can, we can get 25% of those savings. It's a tremendous uplift for our revenue moving forward. Right now, it is accepted by customers, and we see the potential. I believe there will be certain dynamics up and down, but we are in early days, and the land grab situation here is the most important thing. Got it. Just as a follow-up question, you know, are people kind of taking the time, or, you know, elongating the time to implementation to really train systems with kind of their own data, or train kind of Enlighten with their own data? Or are they kind of leveraging your vertical specific expertise, you know, kind of out of the box initially? Yeah. What's, what's beautiful about Enlighten, that it has hundreds of CX specific models right out of the box because of what I've mentioned before, the many, many billions of interactions we've trained Enlighten with. The second thing is that we as a company, we're not just a generic AI company. We are experts with domain expertise in customer service, and eventually enterprises are looking to partner with someone that has the solution, but also have the domain expertise. Right out of the box, Enlighten provides significant value to customers. Needless to say, that as the solution work in a certain customer environment, it continues to constantly further fine-tune it and improvement, and it also helps our general models that help other customers as well. The value is, is from day one, from the deployment. Great. Thank you so much. Thank you. Thank you. Our final question this morning comes from the line of Mike Funk with Bank of America. Please proceed with your question. Hi, great. This is Matt on for Mike Funk. Appreciate the question. We've seen some peers call out varying degrees of strength and weakness in prior quarters within verticals like consumer healthcare, financial services. Can you provide any incremental color on trends within the quarter and future expectations and whether or not certain verticals are more or less excited by AI potential? Thanks. We actually see strength across all verticals of our business. I think that you can see it in our growth. We grew 23% in the quarter at a much larger scale than our competition. I think you've seen it in our business in the past and today. Our business is well diversified. We operate across multiple verticals, and we have a tremendous win rate over the competition. We continue to see the strength in the business, and we believe we are winning market share. I'm familiar with some of those comments from the competition, and we're okay for them making those comments, and we will continue to win the market. Excellent. Thank you. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Eilam for any final comments. Thank you all for joining us today. Thank you very much for the questions and the partnership, and we look forward to speak to you again soon. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.