Good day, ladies and gentlemen. Thank you for standing by, and welcome to Verint Systems' fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press the star then the 1 key on your touch-tone telephone. If you require operator assistance, please press star then zero. I would now like to turn the conference over to your speaker host, Matthew Frankel, Investor Relations and Corporate Development at Verint. Please go ahead. Thank you, operator, and good afternoon, and thank you for joining our conference call today. I'm here with Dan Bodner, Verint's CEO, Doug Robinson, Verint's CFO, and Alan Roden, Verint's Chief Corporate Development Officer. Before getting started, I'd like to mention that accompanying our call today is a Webex slides. If you'd like to view these slides in real time during the call, please visit the IR section of our website at verint.com. Click on the Investor Relations tab, then click on the Webcast link and select today's conference call. I'd also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions in the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call except as required by law. Verint assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements. For more detailed discussion about these and other risks and uncertainties that could cause Verint's actual results to differ materially from those indicated in these forward-looking statements, please see our Form 10-K for the fiscal year ended January 31, 2022 when filed and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures, as we believe investors focus on those measures in comparing results between periods and among our peer companies. Please see today's Webex slides, our earnings release in the investor relations section of our website at verint.com for a reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information, but is included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes. These non-GAAP measures, financial measures the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Dan. Dan? Thank you, Matt. I'm pleased to report the cloud momentum we experienced throughout the year continued in our fourth quarter, and we finished the year strong across all key financial and cloud metrics. Here are some highlights of our Q4 performance. Non-GAAP revenue came in significantly ahead of our guidance. We delivered strong cloud revenue growth. Our booking mix continued to shift to the cloud, with 61% of new PLE bookings coming from SaaS. Non-GAAP diluted EPS also came in ahead of our guidance. Looking ahead, we expect our momentum to continue and are raising our guidance for the current year for revenue, cloud revenue growth and diluted earnings per share. We believe our results and improved outlook reflect the strength of our open cloud platform and AI differentiation, as well as our strong execution following the spin-off of our security business last year. At the time of the spin-off, we outlined a 3-year plan targeting a 30% cloud revenue CAGR and targeting revenue growth to increase each year. I'm pleased that we performed ahead of this plan in fiscal 2022, which was year 1 of the plan. I'm also pleased that we are tracking ahead of our targets for years 2 and 3. We're targeting revenue growth accelerating to 7% this year and to 10% next year, driven by faster cloud growth. Let me start our Q4 review by discussing our bookings momentum and our many customer wins. Throughout the year, we added many new logos and expanded our footprint with existing customers. We're seeing strong market adoption for cloud in the SMB segment and increasingly also with larger enterprises. We won many large deals. For the year, we landed approximately 100 cloud deals over $1 million TCV, up nearly 25% year-over-year. In Q4 specifically, our $1 million cloud orders included some of the leading brands in the world across different industries, such as Avis, Farmers Group, and Goldman Sachs. Regarding new logos, in Q4, we added more than 100 new logos, including Chipotle, Gerber, Rolex, and Wayfair. This brings the total number of new logos Verint added in the full year to more than 400. Overall, we finished the year with strong bookings across existing and new customers, and we believe our booking momentum is driven by both our open AI-powered cloud platform, as well as by the strength of our partnerships. Our open cloud platform is designed to help brands close the engagement capacity gap. The platform includes a broad set of applications across workforce engagement, digital first engagement, and experience management. The ingredients brands need to close the engagement capacity gap across the enterprise. At the core of our cloud platform is Verint Da Vinci, our differentiated AI functionality that is specifically designed to automate customer engagement business processes. Verint Da Vinci infuses AI-powered automation across all business applications running in our cloud platform, and is a key driver in helping brands reduce their operating costs while elevating the customer experience across the enterprise. Because our platform is designed with an open architecture, our partners are able to leverage our platform ecosystem to further innovate and create value for customers. The combination of an open platform design and a partner friendly strategy drive the ongoing expansion of our partner ecosystem, and is resonating well with our customers around the world. I would like to discuss three examples of wins that demonstrate our strengths and competitive differentiation. The first order for $4 million was a competitive displacement and an extension order from a leading transportation company. An existing customer, the company decided to expand its relationship with Verint in several geographies by purchasing additional products across our platform. A platform approach, open partnership strategy, and differentiated AI were key reasons we won this opportunity. The second order for $2 million was from a customer in the healthcare industry. This customer is a new logo for Verint. After putting out an RFP, the customer decided to award Verint and replace a legacy vendor with the Verint cloud platform. This competitive win across several parts of our platform came against multiple point solution vendors. Aside from our platform approach, the key drivers of the win included Verint Da Vinci AI and analytics, and our open partnership strategy. The third one for $2 million was also from a new customer that is one of the world's leading e-tailers. This win was also a competitive displacement and was due to our platform approach, our ability to demonstrate how our leading AI technology delivers significant ROI, as well as the open and scalable architecture of the platform. Looking back at the full year fiscal 2022, we're very pleased with the execution of our cloud strategy, as evidenced by our cloud metrics coming in strong across the board. New booking growth on a PLE basis came in at 17% compared to our initial guidance of 10%. We saw booking strength in both our direct and indirect business and in both existing customer expansions and new logos. Non-GAAP cloud revenue growth came in at 37% compared to our initial guidance of 30%. We saw strength in both customers buying new cloud solutions, as well as our maintenance customers converting to the cloud. New SaaS ACV bookings growth came in strong at 42%, and we delivered $881 million of revenue and $2.28 of diluted earnings per share, both on a non-GAAP basis. During last year, we raised guidance multiple times and ended the year significantly ahead of our initial guidance. We're entering fiscal 2023 with cloud momentum and improved visibility. Next, I would like to discuss our outlook. We are raising our annual guidance for fiscal 2023 across key financial and cloud metrics. Doug will discuss our new guidance later in more detail. Let me just share that behind our increased guidance is improved visibility driven by several factors. First, we finished fiscal 2022 with Q4 non-GAAP cloud revenue of $119 million and record backlog, providing a strong starting point for fiscal 2023. Second, we have a strong pipeline. Our partnerships are growing, and we're targeting another year of double-digit new PLE bookings growth. Third, our platform is making it easier for maintenance customers to convert to the cloud and add new cloud applications. During fiscal 2022, we had close to $250 million of maintenance revenue and expect conversions to continue and to contribute to cloud growth in fiscal 2023 and beyond. In summary, looking back at fiscal 2022, I believe our strategy is resonating well with customers and partners. The spin-off of our security business 14 months ago drove a greater focus on a single market and is contributing to our improved execution. Today, we are a pure-play customer engagement company 100% focused on helping brands close the engagement capacity gap. Last year, we raised our cloud revenue growth multiple times throughout the year, and we are pleased to be increasing our outlook for fiscal 2023 as well. We expect our revenue growth to accelerate over the next few years as we benefit from the tailwinds associated with crossing the midpoint of our cloud transition as cloud is becoming the bigger piece of our total revenue. Long term, we have a significant growth opportunity as we are uniquely positioned to help brands close the engagement capacity gap with our AI-powered platform. Now, let me turn the call over to Doug to discuss our financial results in more detail. Doug? Yeah, thanks, Dan. Good afternoon, everyone. Our discussion today will include non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available, as Matt mentioned, in our earnings release and in the IR section of our website. Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions, including fair value revenue adjustments, amortization of acquisition-related intangibles, certain other acquisition-related expenses, stock-based compensation expenses, separation-related expenses, accelerated lease costs, as well as certain other items that can vary significantly in amount and frequency from period to period. For certain metrics, it also includes adjustments related to foreign exchange rates. As Dan mentioned, the momentum we experienced throughout the year continued in Q4, and we finished the year strong. Q4 non-GAAP revenue came in at $236 million, up 4% year-over-year. For the full year, we generated non-GAAP revenue of $881 million, up 5% for the prior year. The percentage of our software revenue that was recurring continued to increase and came in at 83% in Q4 and 82% for the year. Our non-GAAP cloud revenue increased 35% year-over-year in Q4 and 37% for the year. Of the 37% cloud growth, the majority or nearly two-thirds came from new orders and close to one-third came from maintenance revenue converting to cloud revenue. New PLE bookings increased 13% in Q4 and 17% for the full year. In Q4, 61% of our new PLE bookings came in as SaaS, compared to less than 50% in the fourth quarter of last year. non-GAAP diluted EPS came in at $0.57 for Q4 and $2.28 for the full year. Overall, we are pleased with our Q4 overachievement, which was driven by the success of our open cloud platform, differentiated AI, and analytics capabilities. Now turning to the balance sheet. We ended the year with $360 million of cash and $415 million of debt, comprised of our $100 million term loan and $315 million convertible notes. Regarding our stock buyback, I'd like to mention that we already completed our existing $75 million program, and I'm pleased to announce that we plan to buy back an additional $25 million, which is the maximum we are permitted to repurchase this year due to the tax-free nature of the spin-off. I'd now like to discuss our guidance for the current year, ending January 31, 2023. Let me start with three key metrics. We expect $940 million of revenue ±2%, reflecting 7% growth year-over-year, up from our prior guidance of $935 million. We now expect cloud revenue growth of 30%-32%, up from our prior guidance of 30%. We expect non-GAAP diluted EPS of $2.50, reflecting 10% year-over-year growth. I'd also like to provide you with some additional information for modeling purposes. Starting with bookings, we expect double-digit new PLE bookings growth in the range of 10%-12%, with approximately 65% coming from SaaS. With respect to perpetual revenue, as we transition to the cloud, we expect it to continue to decline to around $120 million compared to $138 million last year. With respect to margins, we expect some modest gross margin and operating margin expansion for the full year. Now, let's discuss some below-the-line assumptions. We expect around $1.5 million per quarter of interest and other expense. We expect about $300,000 per quarter of net income from a non-controlling interest we have in a small joint venture. We expect an 11.5% cash tax rate for each quarter and for the year. We expect around 76 million of fully diluted shares, flat with this year, reflecting the effect of our stock buyback program. Let me also discuss how we see the year progressing. For modeling purposes, we assume approximately $215 million of revenue, representing 6.5% growth in Q1. We expect OpEx to sequentially drop a couple million from Q4 levels, driving approximately $0.46 of EPS in Q1. For the rest of the year, we expect sequential revenue growth, with Q2 and Q3 increasing sequentially between $10 million and $15 million each quarter and finishing the year with our typically strong Q4. I'd now like to take a minute to review our multi-year cloud journey. The percentage of our revenue coming from the cloud has steadily increased. In fiscal 2021, 34% of our total non-GAAP revenue came from the cloud. In fiscal 2022, it increased to 45%, while in Q4, it comprised half of our revenue. For the current year, we are expecting around 55%, and we're targeting around 65% in fiscal 2024. As we previously pointed out, last year we crossed the midpoint of our cloud transition on a bookings basis, and this year we expect to cross it on a revenue basis with cloud revenue in excess of $500 million. We have clearly achieved scale in our cloud offerings and are seeing strong market adoption. Shifting our revenue mix to the cloud has had many benefits for Verint, including more recurring revenue, better visibility, and improved economics over the customer lifetime. In summary, we are very pleased with our strong cloud momentum, and we are tracking ahead of the three-year plan we laid out at the beginning of last year. Our revenue growth is accelerating. We expect our margins to gradually expand, and we have a strong balance sheet and strong cash generation. Most importantly, we believe our cloud and AI differentiation positions us well for long-term growth. Before taking Q&A, I'd like to mention that we will be discussing our AI differentiation at our annual investor day, which will take place in early June. Details will be announced at a later date. With that operator, let's open up the line for questions. Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star then the one key on your touchtone telephone. To withdraw your question, you may press the pound key. Please stand by while we compile the Q&A roster. Now, first question coming from the line of Peter Levine with Evercore. Your line is open. Great. Thank you for taking my question. You know, cloud momentum seems like to be in full force, you know, record number of million-dollar cloud signings. Maybe can you dissect, I think, the cloud guide of 31% at the midpoint? Like, what are the assumptions behind that guide? I think with everything you're saying, you know, you're now well above the midpoint of the transition. Net new customer growth is strong. Pipelines seem healthy. You know, your on-prem transitions are picking up. Why does 6% decel in the cloud growth? Like, what has to happen for us to see cloud growth, call it north of 35% again this year? Thanks. Yeah. So we guided, you know, last year when we did a 3-year plan, we guided to CAGR 30%, and this was our initial guidance also for fiscal 2022 last year. As you recall, as we moved through the year, we got some good traction, and we ended up with, you know, 37% versus the 30% guidance. We're taking the same approach. We're starting the year with, you know, based on our ARR Q4. Based on what we see right now, we can definitely increase our guidance. Last quarter we gave, for this year, we gave, 30% guidance. Now we are moving our guidance up to between 30% and 32%. You know, as we continue to see cloud adoption accelerating, we will hopefully be able to raise guidance again, and we're still early in the year. That's kind of the logic behind, you know, how we give guidance. In terms of what we see in the market, I think it's interesting because we did report that in the SMB segment there is already cloud adoption. We definitely saw in the second half of last year that the enterprise segment is also moving to the cloud. We are now engaged with many customers that are discussing their timeline. You know, some of the larger customers are planning ahead a year or two or even three years ahead, but we're having discussions with customers about when they think they will be ready and what they need from Verint to help them to be ready. We're happy to be engaged because obviously, you know, we wanna help our customers do that in a very smooth way. Another very encouraging data point here is that, you know, we reported that we have some very large customers that actually told us that they don't wanna move to the cloud. We see some breaking news also with these customers are now saying, "You know, maybe we should." You know, some customers are encouraged by the fact that they have IT shortage of people. They have supply chain issues to buy, you know, components for the data centers, and they feel like, you know, getting to the cloud will be faster with a cloud company rather than themselves. Nevertheless, whatever their reasons are, we definitely see a change in that direction. In Q4, as you know, 61% of our new booking on a yearly basis came from cloud, which is a big acceleration. What we see from our pipeline, same for the year. If all goes well and we continue to see this momentum, I hope we'll continue to be in a position to raise cloud revenue guidance. This is one of the key metrics for us. When you look at, you know, how it's broken down. About a third of our cloud revenue, third of the 37% growth came from maintenance contracts conversion, converting to the cloud. The rest, about, you know, more than 20% growth came actually from new logos and expansions, which is good. If we have the same dynamic this year, obviously, we'll be able to accelerate cloud revenue growth as well because we see the maintenance. We know I spoke about, you know, we have $250 million of maintenance conversion. Right now we're not assuming acceleration of conversion. Obviously any acceleration of conversion, of maintenance conversion will contribute to cloud growth, and we have great momentum with new customers as well. This is kind of where we are and how we think about the outlook for the year. No, that's insightful. Maybe I would choose one more just on the macro side. I think a concern for investors as it relates to software is just any risk of deteriorating or economic downturn in Europe, you know, the geopolitical environment we unfortunately see ourselves in. Can you let us know what your exposure is in EMEA, Europe specifically, and kind of what kind of assumptions are baked into the guide when looking at your European segment, you know, longer sales cycle, sales disruption, any churn? Any color would be great. Thank you. Yes. Yes, happy to. When we look at our EMEA business, I'll make separate comments for EMEA and for Russia. We generated $4 million of revenue from Russia last year. We do not expect to generate any new sales from Russia at this point, and that's already baked in our guidance. We raised the guidance to $940 million, and that doesn't include any new sales to Russia. For the rest of EMEA, we don't see any change right now in terms of activity and demand. You know, we have about 20% of our business is Europe, give or take, depends how you define Europe. It's, you know, more heavily concentrated into the U.K. than the rest of Europe. At this point, we don't see any disruption as a result of the Russian crisis. You know, Russia, and obviously, is not already baked into our guidance. Great. Thank you very much. Now our next question coming from the line of Ryan MacDonald from Needham & Company. Your line is open. Hi, Dan and Doug. Thanks for taking my questions and congrats on an excellent quarter. Dan, maybe starting with the competitive environment. You know, it was notable in a lot of the customers you highlighted and from the notable wins in the fourth quarter that a number of those were competitive replacements, whether they were new logos or just expansions of your business within the existing logos. Just curious if you're seeing any changes here that's creating sort of incremental displacement opportunities, whether it's with new customers or within the existing base. Thanks. Yeah. Yeah. I think very, very important question. This is about, you know, the Verint differentiation and what we see currently and the long term. Let me kind of address it completely. First, we, you know, where is our differentiation today? It's clearly that our, you know, cloud platform strategy is resonating well with the market, and it's evidenced by all the momentum we have both with existing and new logos. I think what's behind it is, I believe, focus is very important right now. We are laser-focused on one mission, which is helping brands close the engagement capacity gap. I know I mentioned that several times before, but this is a big thing. The capacity gap is big, and it's a growing issue. It's a growing issue for our customers. We see more and more customers looking for solutions that can effectively address it. You know, as you know, we have the most iconic brands in the world as our customers for many years. We let them guide our strategy. We just ask them, and they told us three things. They told us that the workforce is being disrupted and brands already spend $2 trillion in labor costs, and they cannot spend more on hiring. They told us that consumer expectations are rapidly increasing, and they must elevate the customer experience. They also told us that customer engagement must be an enterprise-wide mission, and the contact center can no longer remain a silo as it used to be for many years. We listened to our customers and we launched the Verint Cloud platform, and it's an AI-powered platform. We have Da Vinci, Verint Da Vinci is at the core of the platform, which is specifically designed to help brands close the engagement capacity gap. As I mentioned before, this is a focus, and this has been behind many of these competitive win because it's really a great differentiation. We have a great differentiation today, but also we're asking ourselves, what about the future? Where is this going? We believe we can continue to differentiate because many customers are only starting now to realize that this engagement capacity gap is a strategic challenge, and they have to address it. This is because, you know, digital transformation is quite recent, and this is what's creating this capacity gap and making it wider. You know, it's widening because more digital interactions creates more disconnected customer journeys and more customer demands for you know, elevating the experience. Brands feel like they have to address this more and more. In fact, we are engaged with more and more customers that says, "Hey, you know, we need to start to take action. We cannot operate in silos the way we did before. We need automation across the enterprise, and we need to make the workforce more efficient and elevate customer experience." You know, I can say that we have early adopters like in any market. For example, it's across many industries. In retail, for example, Costco is one of our customer that is deploying across the enterprise Verint solutions. In healthcare, we have Humana deploying Verint across the enterprise, in a number of different solutions and all in one platform, all connected in one platform. We have many customers that already realized that and you know they used to connect the Verint platform to CCaaS, but also to UCaaS, and also to collaboration solutions. Different communication infrastructure across the enterprise. Why? Because they need applications that can bring automation and workflows to the silos and they need that to be you know implemented holistically across all infrastructure. We believe that you know we can continue to win based on this very simple strategy to be laser focused on helping brands close the engagement capacity gap. We do this quite well today and we think it's an early stage problem that was created by the recent market shift to digital. As more and more customers look to solve the gap, we are very, very strong offering for that. Excellent. Thanks for the color on that. Maybe just one more follow-up question. You know, last week, we had attended Enterprise Connect, and it sounded like, you know, at the event that there was a lot of, I guess, AI enhanced IVA and agent assist functionality was really in demand with a lot of the customers and vendors at the event. You know, you had launched the real-time agent assist in late 2021. Just be curious, you know, how that solution's resonating in the market given sort of this increased level of demand, at least from buyers and, you know, how that positions you well heading into next year. Thanks. Yes. I think there is strong demand in the market for AI, but more importantly is that our customers are looking for AI that is infused into workflows and into business processes so they can actually use that in real life. So this is not about, you know, having the best bot, because a bot is more of a generic AI. It kind of, you know, understand what you say. But what's more important is to make the bot intelligent, is to give the bot the answers, not just the way, you know, the means to understand the question, but also the intelligence to respond contextually and elevate customer experience. What we do is with IVAs and so on, we connect IVAs with knowledge management, so we can infuse contextual knowledge, so we can understand how to help the agent while they are working on an interaction. This is not trivial because agents are busy. They need to focus on customers, and they cannot be distracted by bots trying to help them. I think where Verint is really doing well is in our ability to understand the whole workflow because we've been in workforce engagement for many years and how we infuse the AI into helping the agent in real time, and making it part of their normal operation in a way that really helps them. I think it's an early stage market. This whole real-time agent assist is very early stage. In my mind, penetration is you know, few percentages. Low penetration into the workforce today. This is one of the areas that is required in order to make the workforce more efficient, reduce cost, and also give customers better answers to elevate the experience. Excellent. Congrats again on a great quarter. Our next question coming from the line of Samad Samana with Jefferies. Your line is open. Hi, this is Mason Marion on for Samad. Thanks for taking our questions. SaaS revenue is nicely re-accelerated in the quarter. Can you elaborate perhaps on some of the drivers? Maybe discuss the factors in unbundled and in bundled SaaS. Yes, sure. Our cloud business grew 37%. It is including SaaS and managed services. Our managed services growth, as we indicated now for a couple years, is expected to be low. Managed services should grow around 10%, give or take. That's what happened last year, and we expect it to be this year. Our SaaS business actually grew more than 40%, with the cloud overall 37%. Within SaaS, as we indicated, we have two types of SaaS offering. One that allows the customer to host anywhere, so they can host with any cloud of their choice, any partner. In that case, we do not provide any hosting services. That's what we call unbundled or hosted by somebody else. There is the bundle, which is Verint hosted, where we get an order for the SaaS software and the hosting services bundled into a single order. That's how we report the revenues and obviously the accounting is different for each stream. It's basically you know a customer choice how they prefer to deploy and which environment. We support multi-cloud, so they can deploy it you know on any public cloud or on private clouds. Okay. Thank you. You added 100 new logos in the quarter, I think 400 for the full year. If we think about the drivers behind this new logo growth, is it being driven by more of a direct sales effort or these deals coming through partners? Yeah, I would say the majority of the new logos are driven by partners. We have several hundred partners around the world. Most of the smaller opportunities are driven by partners. When it's larger, it's either direct or it's a combination of our sales force working with the partner. Then, you know, there are many opportunities that start small and grow over time. There are companies like Wayfair, which is a new logo for Verint, which the company is growing very quickly, and we hope we'll grow with the company. We are in particular very excited about any new logos, but we wanna help companies to scale. One of the differentiations that I did mention before is, you know, Verint is capable of supporting customers in the cloud globally because we have cloud centers around the world, and we also are able to scale quickly. Customers have the peace of mind. If they grow quickly, they can grow with the Verint solution. We have one of the—we probably have the largest customers in the world in customer engagement as Verint customers, so we know our solutions can scale. We also support customers that have many different type of customer engagements, whether it's in the store or branch, right? Whether on the website or e-commerce platform, which is important to retailer, as well as in the contact center, as well as any, you know, in mobile apps. The ability to have customer engagement solutions across all these different customer touchpoints is another, you know, important points to many of our new logos. You know, we have direct sales force that is, you know, hunting for new logos, and we have many partners that are, by definition, you know, focusing on customer base that they have close relationship with. Thank you. Our next question coming from the line of Dan Bergstrom with RBC Capital. Your line is open. Thank you for taking my questions. Dan, could you talk to some of the spending trends across some of those larger verticals in the quarter? Anything worth pointing out across, say, financial services, government, transportation, telecom? Yeah. Well, transportation is coming back. That's obvious. We do see, we mentioned Avis. Avis before is one of the large deals. We see airlines coming back. We have many airlines as customers, so definitely not surprising given the COVID pandemic that now they're coming back. I think there is strong spending going on in healthcare. Financial services continue to spend money. In addition to elevating the customer experience, they are looking for compliance. And there's always new compliance policies that, you know, they wanna be able to using automation. Again, AI is very important for compliance because, you know, you have your workforce talking to customers all day long, how do you know that they're saying the right things? You can't just listen to conversations because that would be a small sample. Having your AI listen to all these conversation, ensuring they are compliant is a great way to automate the entire compliance process. That's strong with financial services. But I think that there is strength across the industries. Retail continues to show strength. They're more focused on the e-commerce side, on online retailing. Generally, I think the market is spending on technology and customer engagement because otherwise they'll have to spend on labor, and that will be, you know, 30 times more. The market is spending $65 billion on technology and $2 trillion on labor. Obviously, if they find something that can, you know, be extra spend on technology but save 30 times more on labor, that's a no-brainer and it's huge ROI. Thanks, Dan. Maybe for Doug. Doug, you've done a really good job with presenting us with a transition plan and then, you know, updating us often. You're raising guidance again here. I guess, you know, with a lot of software companies, this earnings cycle kind of investing more into the opportunity. Sounds like you still feel good here about the level of investment and providing some leverage in the model, correct? Yeah. I mean, it's all trade-offs, right? Finding that right level of sharing with the shareholders and investing back for our future growth. Clearly, we've invested a lot in the cloud platform as we've gone through this transition, but we feel very good about where we're at, investing a lot in analytics and AI. So there's always things to do. But as you can see, we run kind of like 13% of sales as R&D level and kinda use that and prioritize within that, and then invest kinda on top of that and around it in terms of OpEx, et cetera. It's you know trying to drive efficiencies you know get more efficient so we can invest in the areas that are gonna you know produce the future growth for us. Yeah, but- Thank you. Bottom line, our guidance is for margin expansion and EPS growth of 10%. Thank you. Sure. Our next question coming from the line of Brian Essex with Goldman Sachs. Your line is open. Hi, good afternoon. Thank you for taking the question. Dan, just a question. You know, I understand that, you know, Da Vinci is kind of infused into your applications, and I understand how you're kind of using that capability to drive better adoption on the SaaS side. With partners now able to develop on top of Da Vinci or, you know, develop on Da Vinci and offering Da Vinci as a service, are you getting any traction there? Maybe if you could tell us what the go-to-market motion is for, you know, Da Vinci as a service, so to speak, in your outlook for, you know, the next couple of years on that. Yeah. I'd be happy to talk about it. You know, we're gonna have an investor day in June, and that's gonna be our focus. We're gonna bring it to life and discuss exactly, you know, where is Da Vinci and where are we gonna go with Da Vinci because it is at the core of the platform. Again, not because AI on its own is the secret sauce. It's really the automation, right? That customers are looking for automation, automating processes, and AI is an ingredient. Da Vinci is available to all the various applications running in the platform and that's how we designed it at the core. As you mentioned, that's a recent development that I announced last quarter. We started to open Da Vinci to partners so they can leverage those AI models and develop their own applications. The reason is that, you know, we see partners looking also to add value. They don't want just to resell SaaS because that's not enough value for partners to create. We give them APIs and Da Vinci API services so they can develop their own. We have now about 150 partners that have developed something around our ecosystem and put it in our marketplace. That's a big push for us this year to expand the marketplace and provide customers as well, but definitely partners opportunities to develop and to you know make those development available to everyone on the Verint marketplace. Building a greater ecosystem around our partner is part of our platform strategy. Specifically, you know, we so far exposed 4 Da Vinci services to be commercialized. In terms of revenue, it's minimal. I don't expect this to be a major revenue stream, but I think it is important overall to get platform adoption both by partners as well as end users because the greater ecosystem we develop around Da Vinci, the more value, not just Verint. You know, Doug mentioned we spend 13% of our revenue on R&D, but if we have partners spending some of their R&D developing value on top of our platform, that's obviously very good for our customer ecosystem. That's what's driving. Again, I don't want to take too much time here. In a couple of months in June, we will have a pretty long session on Da Vinci. Got it. Look forward to it. Thank you for that. Maybe for Doug, can we just understand a couple of puts and takes on the margin side, both for gross margins, operating margins? What are some of the primary drivers of that movement in the quarter? Seasonally, as we fine-tune our models for 2023, how should we think about, you know, some of the movement for both gross margins, operating margins kind of going forward? You can see that, you know, with our guidance, we're looking to expand margins a little bit and for both gross and operating in fiscal 2023 off of the 2022 levels. You know, in Q4, expenses popped a little bit, you know, just kind of some timing issues there. We're looking for, you know, efficiencies and driving some margin expansion on both sides, you know, gross and at the OpEx level. From a gross margin perspective, you know, it's. There's a mix there, right? It's the components. The cloud margins are very high. They're kind of in the high 70s%. The non-recurring business is only about 50%. You know, professional services kind of drags that down. As professional services become a smaller piece in the future, that'll help the overall, you know, gross margin. So it's kind of a mix shift that's occurring, you know, slowly. From that, we expect the gross margins to expand a little bit too as we go forward and more over time. Yeah. Right. If you want to develop your long-term model and gross margin, take the recurring revenue margin last year was 76%, and the non-recurring revenue margin was 49%. As recurring revenue, obviously with the cloud revenue growth, recurring revenue becomes a much bigger piece. Long term, this is where, you know, we're aiming at mid- to high-70s in gross margin. As Doug said, because where we are in the transition, we'll have modest gross margin improvement this year. Then, you know, it's gonna start to accelerate over the next 3 to 5 years. Very helpful. Thank you very much. Sure. As a reminder, to ask a question, please press star one. Our next question coming from the line of Tim Horan with Oppenheimer. Your line is open. Thanks, guys. Can you talk a little bit about the relationship with the major hyperscale cloud guys? Are they? Do you see them as partners? Are they competitors? Are they building a Da Vinci-like platform themselves? Or, you know, any thoughts around them because they do seem to be, you know, entering the CX market. I guess ultimately you kind of see them as competitors or partners. Thanks. Yeah. I think that, you know, the customer engagement market is a big opportunity and, you know, the market is looking for innovative solutions. It is positive. I think it's positive for the customer engagement industry that the new large software companies, the big tech, are joining the market, because they bring a more enterprise-wide approach to customer engagement. It's what the market needs. If we look at, you know, the three guys that you the cloud guys. Google is a Verint customer. They use our products internally and they're also a partner. Microsoft is a Verint customer and is also a partner. Amazon is a partner, hopefully also a Verint customer, but not at this point. All three are partners and I see more opportunities down the road for Verint to partner with the big tech companies as they show more interest in this market. Because I think together what they bring to the table and with their enterprise-wide capabilities and where we bring you know with this enterprise platform to close the capacity gap, I think together we can actually create more market adoption. We can accelerate the adoption of what we believe is the enterprise strategy. You know, we are very partner friendly and I think that if they get more seriously into the market, I think it will positively impact the growth of Verint. Thank you very much. Thank you. I'm showing no further questions at this time. I would now like to turn the call back over to Matthew Frankel. All right, thank you. Thank you everyone for joining us today. Please don't hesitate to reach out to me with any questions, and look forward to speaking to you again soon. Have a good night. Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.