Sapiens International Corp NV

Ladies and gentlemen, thank you for standing by. Welcome to the Sapiens International Corporation's first quarter 2024 financial results conference call. Sapiens issued a press release before the market opened this morning and it has been posted on the company's website at www.sapiens.com. All participants are presently in listen-only mode. Following management's formal presentations, instructions will be given for the question and answer session. I would now like to hand the call to Ms. Yaffa Cohen, Sapien's Chief Marketing Officer and Head of Investor Relations. Yaffa, would you like to begin?

Thank you, Operator. I would like to welcome all of you to Sapien's conference call to review our first quarter 2024 results. With me on the call today are Mr. Ronnie Aldor, President and CEO, Mr. Ronnie Gilody, CFO, and Mr. Alex Zuckerman, Chief Strategy Officer. Following the summary of the results, we will be available to answer any questions. Before we start, I would like to remind everyone that this conference call may contain projections or other forward-looking statements. The safe harbor provision in the press release issued today also apply to the content of the call. Sapiens expressly disclaim any obligation to update or revise any of these forward-looking statements whether because of future events, new information, a change in its view or expectations, or otherwise. On today's call, we will refer to non-GAAP financial measures. A reconciliation of GAAP to non-GAAP results has been provided in our press release issue before the market opened this morning. A replay of this call will be available after the call on the investor relations section of the company website or via the website link which is available in the earning release we published today. I will turn the call over to Roni Aldor, President and CEO of Sapiens.

Roni? Thank you, Yaffa. Thank you for joining us today. Let's take a high-level look at the first quarter results. After, I will walk you through the exciting new step we are taking to launch our future-proof AI-based open and integrated sapiens insurance platform. Then I will touch on the progress related to our 2024 objective with the highlights of recent success in key regions. Starting with Q1 highlights, our revenue totaled $134 million, an increase of 7.6% compared to last year. And operating profit was $24 million and 18.1% of total revenue. We experienced year-over-year growth in all of our key regions. Recall that on our last earning calls, I stated that our 2024 priorities are, first, on transition our solution to SAS model with Sapiens Insurance Platform, and second, leverage our investment to drive performance in all of our key regions, North America, EMEA, and APAC. Let's start with Sapiens Insurance Platform Update. The Sapiens Insurance Platform is designed and built to accelerate innovation, deliver sustained value, and empower insurers to grow and remain competitive. The Sapiens SaaS insurance platform is the next generation in the evolution of our insurance solutions. The platform harmonizes the aspects of core business processing, digital engagement, data-driven decision-making, gen-AI, and machine learning capabilities. A large ecosystem of complementary capabilities into a coherent prepackaged and preconfigured platform. These provide out-of-the-box solution, focusing on the unique requirements of each business vertical or domain. From the customer perspective, the Sapiens platform accelerates innovation, improve time to market using low-code and low-code approach. We provide our customer with consistent user experience while reducing their total cost of ownership and increase their efficiency. leveraging the rich prepackage offering and the unified set of operating tools. The platform is offered in SaaS subscription-based model. From September's perspective, the platform offering is geared to increase the wallet share of each deal, enhance the potential of cross-sell via the pre-integrated architecture that creates a compelling proposition to new and existing customers and provide our customers with strong innovation capabilities and future readiness. All new deals are being structured and priced to be delivered as a service, and our goal is to transition over time our existing customers to the SaaS model in a way that manages and minimizes the near-term impact on our revenue. Moving to AI, We view AI machine learning and generative AI models like ChatGPT as an evolution step. Sapiens is leveraging AI to improve both of our solution and our internal process. Today, Sapiens is a library of out-of-the-box machine learning models, including predictive models for productivity improvement like renewal prediction and cross-selling, and risk mitigation like fraud protection and loss reserving, to name a few. These tools can create significant benefits for our customers in the form of increasing premium revenue, better loss ratio, and improved expenses ratios, thereby further increasing the value that our platform provides. In the domain of generative AI and following the release of our decision model AI capabilities last year, we announced in quarter one, 2024, the launch of integrated AI, the next in line capabilities from Sapiens Decision. Integrating machine learning models into a business friendly decision model workbench, Sapiens Decision user can integrate machine learning model as another component of their decision model diagram. In addition, as a part of larger development plan for Sapiens platform, we are releasing our new generative AI models in the next coming months, supporting various aspects of the insurance value change and providing strong efficiency and support enhancement to our customer. Sapiens is also beginning to use AI within its own delivery system and processes, improving our performance and streamline our product development. This enables us to offer cutting-edge and customer application differentiation and benefits. Our second priority this year is to leverage our ongoing investment to drive performance in all of our key regions, North America, EMEA, and APAC. We increase our teams in our top focus regions with additional headcount across sales, marketing, and product marketing, as we look to maximize the momentum we are building in these key regions. In North America, our investment in the live solution has proven highly successful, and in the first quarter, we had a few go live across our live solution, Illustration Pro and Underwriting Pro. In the workers' compensation space throughout the first quarter, our workers' compensation team has demonstrated progress in the implementation of the three key projects that were signed in 2023. As I said in our previous call, this market represents a significant opportunity for savings in U.S. and Canada in the coming years. This quarter, we made additional investment in our Canadian operation. Sapiens has been successful serving leading insurance in Canada for more than 15 years. With this additional resource, we will be able to elevate the level of services we provide to our customers in Canada. Over the past few months, we strategically prioritized our presence at the key trade shows across North America, including LIMRA, AHOU, BBC, and insurance innovators. This aligns with our commitment to expanding market reach and cultivating valuable connection within the insurance industry. Our participation in these events has provided invaluable opportunity to showcase our innovation solution to diverse audience of prospects, generating significant interest and potential leads. As we continue to invest in this engagement, we anticipate further strengthening our position in North America market, driving growth and delivery value to our investors. Moving to EMEA and rest of the world, we had a few successful go-lives with our Edit Suite, TIA Suite, Skip Suite, and Rensurance Master this quarter. I would like to highlight two of our go-lives. In the DACH region, a priority territory for Sapiens in Europe, we had successful goal life with a German pet insurance brand, Cleos, with the Sapiens Skip Suite to accelerate their underwriting digital sales and go-to-market process. We provide Cleos with a competitive edge in a niche market with our low-code insurance platform, enabling them to develop and sell new products quickly to our digital channel. APAC is another region where we had focus on accelerate our goals. The goal live in Q1 was Opus Digital Insurance, the leading digital insurance in Vietnam, was watched closely by our prospects in the region. The successful goal live helped us build customer referrals in APACs. Opus adapts Sapiens EBIT Suite for property and casualty coupled with Sapiens Intelligent to modernize its core PNC insurance process. Overall, the demand continues to be strong for PNC platform solution in EMEA and the rest of the world. There is an increased trend in the PNC claims platform solution, and the appetite for platform in SAS model continues to be very strong across all solution lines. The demand for the life and pension platform is also steady across EMEA and APAC. In addition, digital over legacy is a strong theme for Sapiens. This enables us to offer insurance carrier digital over existing legacy as a phase one, and then phase two to effectively replace the underlying legacy system utilizing the already established digital front end. Moving to product recognition. In the first quarter, we received two CELENT luminary awards. Sapiens was named as a 2024 luminary in EMEA and APAC for our PNC claim solution. We also received the CELENT luminary awards for our claim pool in North America. I'm proud that Sapiens has maintained its leading position in ten consecutive CELENT reports. Silent recognition reinforce our position as a leading claim solution and underscores our strong regional presence across multiple line of business for local and multinational carriers. Our ecosystem of partners continue to evolve, further supporting our customer solution. In Q1, we announced a strategic partnership with DataCrest, a pioneer in innovative insurance solutions. to transform the application process and drive premium growth for P&C insurers. We also announced a partnership with Bina AI, the number one health and wellness check software provider that aims to empower more insurance companies worldwide to use client-provided health data for improved risk management and value-add services and reduce costs. Strategic partnership between Sapiens and leading insurtech play an important role in future achievement of insurance carriers and provide effective way for us for leveraging their cutting-edge solutions. Coming out 2023, we discuss collaborating with System Integrator to expand our reach and accelerate growth. I would like to update you regarding the progress we have made thanks to the work of the new team we built to support this initiative. In North America, Sapiens continues to strengthen its Deloitte America relationship with a recent expansion into Canada and the Caribbean. Sapiens has recently entered into a joint business relationship with PwC in the U.S., which will focus primarily in the lifetime annuity market. We continue to expand our relationship with LTI MindTree from a PNC course with focus to add capabilities for Sapiens Ransurance Master. In addition, we are engaging more with partners in Europe, mainly for higher tier to increase our chance of winning. Another major strategic alliance is our partnership with Microsoft. Sapiens is one of the few selected vendor to collaborating strategically with Microsoft on OpenAI. This partnership is central to Sapiens AI strategy and important to our customer, as we view this as a low-risk innovation. The Microsoft global and strategic partnership spans across multiple domains. This collaboration is key to our SaaS architecture and all the activities around the ongoing development of our SaaS platform and our cloud operation, ensuring that we are using the most advanced capabilities in that aspect. In conclusion, we had a good start to 2024. We are pleased with our global progress, particularly in our key regions, EMEA and North America. Our ongoing investment in our solution and partnership with Microsoft reflect our commitment to innovation and ongoing enhancement. Providing innovating solutions to our customers remains a top priority. We are confident that our efforts will foster additional growth and generate substantial value for our stakeholders. Now I would like to turn the call to Ronny Gilady, our CFO. Ronny.

Thank you, Ronny. I will begin my commentary by reviewing the first quarter of 2024 non-GAAP result, followed by comments on the balance sheet and cash flow. I will wrap up with our guidance for 2024. Revenue in the first quarter of 2024 was $134 million, an increase of 7.6% compared to $125 million in the first quarter of 2023, and higher than $131 million in previous quarter. On a constant KMC basis, our revenue grew by 6.6%. We will now analyze the revenue from three different perspectives. Analyzed recurring revenue, or ARR numbers, for Q1 of 2024 totaled $168 million. While total revenue grew by 7.6%, our ARR revenue grew by 12.7% from Q1 of 2023. Revenue mix. Revenue from recurring software product and reoccurring post-production services totaled $94 million compared to $82 million in the same quarter of last year. A $12 million increase or 15.2% growth from Q1 of 2023. We continue our journey of transitioning the reoccurring post-production services into subscription and ARR revenue. and we are pleased with our momentum. Geographic breakdown. Revenue in North America was $55 million compared to $50 million in the year-ago quarter, an increase of 9.5% or $5 million. Revenue in Europe was $69 million, a year-over-year increase of 6.4% compared to $65 million. I want to remind you that Revenue in Q1 of 2023 were higher than normal, mainly due to catch-up from previous quarter, and therefore we only grew by 6.4% quarter-over-quarter. Revenue in rest of world, which includes South Africa and APAC, was $10 million, an increase of 5.4% compared to prior year quarter. Gross margin. Gross margin this quarter reached 45.4%, compared to 45.2% in Q1 of 2023, an increase of 20 basis points. This increase is mainly due to higher ratio of reoccurring and reoccurring revenues versus one-time revenue from implementation. Profitability. Operating profit and margin in the first quarter of 2024 was $24 million and 18.1% of total revenue. respectively, compared with $23 million and 18% in Q1 of 2023. As we discussed in previous investor calls, we have made a strategic decision to continue our transition to SaaS and increase our sales and marketing investment to further accelerate growth into 2025 and beyond. To achieve that, we mentioned our profitability margin will stay at the same level as 2023 in the range of 18.1% to 18.5%. And our absolute operating profit should grow year over year. As you can see, in Q1, our operating margin was in our target range and operating profit grew by 7.8%. During the quarter, we had net financial income of $1.1 million. coming mainly from interest income from bank deposit of $1.7 million, which was partially offset by debenture interest. This compared to net financial expenses of $1.2 million in Q1 of 2023. Net income attributed to SAP and shareholders for the first quarter of 2024 was $20 million, up 18.4% from $17 million in Q1 of 2023. Earning per diluted share was $0.36 for the first quarter of 2024, up 16.1% from $0.31 of the first quarter of 2023. Turning to our balance sheet. As of March 31, 2024, we had cash-in-cash equivalents and short-term deposits totaling $196 million and debt of $40 million. Adjusted free cash flow. For the first quarter of 2024, we generated adjusted free cash flow of $17 million compared to $20 million in the third quarter of 2023. Our adjusted free cash flow in the first quarter of 2024 was 83.5% of our non-GAAP net income and in line with our target. During the quarter, we declared a cash dividend of $16 million or $0.28 per share. for the second half of 2023. The dividend was paid to our shareholder on April 18, 2024. Today, we are reiterating our 2024 guidance. We expect non-GAAP revenue and operating margin in the range of 550 million to 555 and 18.1% to 18.5% respectively. I will turn now the call back to Roni Eldor. Roni?

Thank you, Roni. We delivered a strong first quarter. We remain committed to delivering results that align with the expectation we set early this year. I want to close our preparing mass and open the call for questions. Operator, we are ready to open the call for questions.

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Please ask your question in a loud and clear voice. Your questions will be polled in the order that they are received. Please stand by while we poll for your questions. The first question is from Mayanak Tandon of Needham & Company. Please go ahead.

Thank you. Hi, Ronnie and Ronnie. Congrats on the start to the year. Great quarter.

Thank you.

To start with, the first question is around just the guidance, maybe the framework for the next three quarters. If you could just talk about what we should expect in terms of trajectory, in terms of revenue, and also on the margin front, any seasonality, any things that will affect one or two quarters. Just want to get a better sense of the trajectory of both growth and margins over the course of 2024.

Hi, Mayank. This is Rony. So as we mentioned, we are reiterating our yearly guidance. We start the revenue in-plan and we continue growing consecutively quarter over quarter to reach the full year guidance in terms of revenue. In terms of profitability, we reiterate also the margin between 18.1 and 18.5. This we are balancing between a few factors. The first one is the pace of transition to SaaS. Obviously, if we accelerate this, it can affect also profitability. And the second one is the investment in sales and marketing or to build a pipeline for better growth for the coming years, 2025 and going onwards. With that, we are balancing of profitability. So the range will remain 18.1 to 18.5.

Okay, so it should be fairly linear over the next three quarters, I think. Yeah.

Correct, correct. In terms of revenue, in terms of profitability, we leave the range to balance between what I mentioned, the three factors. Got it.

Then just as a quick follow-up, I wanted to ask about the SaaS conversion. So are you pushing this with your clients or are your clients coming to you and saying that we want to move over to the SaaS platform and can you help us out? Just what's driving that, and then also what are the financial implications of that longer term, both in terms of growth and profitability as you move more to the SaaS model?

So from a new prospect, I can say to you that some prospects insist on subscription, and this is our favor. As a matter of fact, we have only one proposal today, SaaS solution, and this is what we are offering to our customers. In terms of existing customer, I would say that we are more on the pushing side. When they are doing upgrade, we are offering full solution, SaaS, cloud. All of that is bundled together with their solution moving to the cloud. In terms of implication of the financial, we mentioned beginning of the year. Obviously, transition to SaaS have implication on revenue and profitability. We believe that this transition can affect around 1% of our organic growth. So basically have a headwind on that and then on profitability about 50 basis points. Got it. And this is a factor in the guide.

Okay. Appreciate all the color. Thanks, Ronnie and Ronnie.

Thank you.

Thank you.

The next question is from Kevin Kumar. Sorry, Dylan Becker of William Blair. Please go ahead.

Hey, everyone. Appreciate you taking the questions here. Maybe Ronnie, both Ronnie, sticking with some of the points on the push versus pull side. I know we're early in this transition, but you do have about a quarter of the customers that are kind of along this journey. I wonder if If there's anything that those customers are pointing to resonating with that initial value proposition, the efficiency that those customers are seeing, that's showing up more so in those kind of migration conversations that you are having to kind of validate the value proposition, and that can kind of help support some of that pipeline momentum from a conversion perspective.

Hi, Dylan. This is Alex Zuckerman speaking. So we definitely see how the market resonates with our strategy and our value offering. By packaging it all on the platform and be able to provide a 10-key solution, looking after the major aspects of all the business of the customers in a very comprehensive and cohesive manner, we see the interest. And we see the interest of more and more large customers to work with a small number of vendors that can provide them a full proposition rather than split it to a large number of vendors and many, many smaller interactions. And the comprehensive of the solution and the fact that we bring an out-of-the-box approach that covers the entire business end-to-end, we definitely see how it resonates into the pipeline. And so this is one part. What comes together with it is the increase of the wallet share of the deals because we move gradually. And we already see it over the past couple of years, but this is growing constantly. Deals are larger because we provide more value and more capabilities. And also the cloud aspect and the SaaS aspect definitely drive this forward.

Okay, that makes sense. Thanks, Alex. And maybe switching over to Ronnie, too, nice to see the encouraging momentum and strength in North America and kind of the additional investment in go-to-market in Canada. I guess what's the right way of thinking about some of the drivers there? Is it a function of platform maturity and the content that you guys are able to deliver? Is it, again, obviously go-to-market capacity, supporting that pipeline? Is it more work with DSIs, all of the above? I guess any kind of additional color and what's feeling the momentum there? Thanks.

As you mentioned, yes, yes, and yes. Coming from the investment that we did and we continue to do in front of the marketing, sales, customer, CEC, what we call managing the huge amount of customer base and the SI. As you know, for marketing and SI, it takes time. It's building the pipeline and so on. That's one. And second is the wide offering that we have. As you know, we are very strong. We closed three deals last year on the workers' comm. It gives us a huge amount of work and also a future and investing in the R&D there. Then we have the reinsurance part. Really the nice, very nice momentum on the life side based on the component and cost of it. Again, just to remind all the investors that a year and a half or two years ago, we decided to penetrate again to the U.S. with our CrossFit Life. We already signed two deals. Right now, we have a very strong pipeline. A few customers already selected us. We are in some kind of engagement process right now to close them. So that's the third point. A decision is stable, but we see a lot of momentum and also sapience. We are implementing our decision. Still, we have challenges on the PNC, very competitive situation, but we are believing our unique offering. So all in all, it's many things together is a good momentum.

Great. Thanks, Ronnie. Thanks, Alex.

Thanks. Thanks, Bill.

The next question is from Kevin Kuma of Goldman Sachs. Please go ahead. Hi, thanks for taking my question.

I wanted to touch on cloud migrations a bit more. Can you talk about the activity during the quarter? Was that in line with your expectations? And was there any material kind of negative impact or revenue recognition at all in the quarter? I know you're targeting about one point of impact for the year, but just curious kind of how the quarter played out. Thanks.

Hi, Kevin. This is Ronnie. So, obviously, with new customers, as we mentioned, all what we offer is on subscription. It's a solution, and we are starting this already in North America a year ago. So, there is no, and in Europe, we are partially and right now full on that. So we do not see any major impact or transition. Now, the migration for existing customers, this is a journey that will take several years. We are also doing this in a way that we do not want to hurt significantly the revenue, as we mentioned. We anticipate only 1%, and it's growing at a reasonable pace. So we are continually doing this. We transition some of the customers, but it will take a journey of several years. of our existing customers.

Got it, that's helpful. And then I wanted to ask about the partnership with Microsoft that was called out a few times. I guess, can you just talk a bit more about the generic capabilities that are being offered to carriers there and how they're leveraging those capabilities and maybe how that differentiates sapiens in the marketplace?

Hey, it's Alex. So, a few things about our Gen AI initiative. First of all, we have a strategic partnership with Microsoft and so we really join forces together to provide the next level of solutions to the industry and we work very closely with their Gen AI experts and labs and get a great support from them. This really helps us to to generate the right use cases. In terms of the actuals there, so our data platform includes several aspects of AI from a more machine learning, predictive analytics model. We currently, for example, deploy some of them with some of our customers, one customer in South Africa, one customer in Europe when we deploy those machine learning use cases. as a baseline. On top of that, we are developing a set of generative AI capabilities to support two areas of the business. One is across the external value chain, meaning providing a co-pilot and gen AI capabilities for the different roles and players in the insurance value chain, claim handlers, underwriters, customer service, et cetera, to provide them actually, let's say, ability to perform their role on steroids bringing operational efficiency, better accuracy and speed to their performance. The other part where we invest is on the, let's call it more the back office or the inbound of the platform ability to run automatic configuration from document to configure. We released first release of our decision model with the ability to automatically create configuration just by getting a scope document in Word or PDF from a customer and then automatically configure that. Now we are doing second stage. The vision is also to continue with this approach to our core systems. Today also we developed capabilities to run data migration using AI to map the different fields from source platform to target platform. and about how to create documents and letters within the platform. This is all today run on GenAI. So we have already deployed some cases, and moving forward with the roadmap to deploy additionals. The reaction of our customers is very strong. This is super interesting for them. The market is definitely looking for those capabilities, and we feel it is becoming a differentiator on our side. That's helpful. Thank you.

The next question is from Chris Raymer of Barclays. Please go ahead.

Hi, thanks for taking my questions and congratulations on the strong results. Actually, all the topics were mentioned already, but I was wondering if you could just comment on how you see the company positioned in terms of competition, especially in light of the move to the SAS model. And then just on those legacy customers, what are some of the challenges they're facing, if any, or is it just a matter of time before they do transition?

Okay, so it's Alex speaking. So when we look at our competition, you know, Sapiens is a unique company in the fact that we play in both PNC Life, North America, Europe, and APAC. So when we talk about competition, it's quite fragmented. So let me split the answer to several aspects. In North America market, the SaaS itself is not a differentiator to our favor. All the leading players and leading competitors are SaaS, so we are on peer with them. And we match the standards of the market as all are expected to run a SaaS capability. So on the PNC side, we feel we are on the same level as our competitors in terms of the cloud maturity. In some cases, we see a strong advantage to our PNC platform in terms of the upgradability. This is one of the largest challenges for SaaS companies in our business to go to a seamless and rapid upgrade process. This is where we excel. So this is a small differentiator to our favor. So this is on the P&C side. When we look at the workers' compensation side, our analysis shows that we are in a very leading position. Our win rate is very strong. The combination of the technical capabilities of the platform and the richness of the functionality definitely puts us in a strong leading position in the market compared to all our competitors. Similarly, when we look at the life side, Of course, we have competition in the market, but I think that we are positioned very well compared to them, both from the technical perspective, the maturity of our cloud proposition on life, the usage of automation tools, of Gen AI within the platform. And on top of that, the fact that we bring to the market the combination of a core suite, together with the life components of illustration, underwriting, and EAP, which as a standalone, they are very powerful products. Combined with our core, we feel there is an unprecedented proposition to the market, a strong differentiator. And we start to see that reflecting in the pipeline. So that's the North America market. I think when we look at the European and APAC market, we see the same story on the life side. so very similar to what we see in North America. The combination of strong technical architecture, cloud maturity, and functional richness really puts us in a driving position with the life in Europe and in APAC. PNC, we are considered by all analysts and by the market as it's a two-horse race on the big guys. It's us and Guidewire leading the market on the PNC side. And when we look in APAC, and I think we also talked about it before, we see a large opportunity for us in APAC. Definitely see ourselves as the leading position in Southeast Asia, both on life and PNC, and we intend to leverage this strong position.

Thanks, that's great, Keller. And just if you could touch on, you mentioned that the transition for your current customers would take years ahead. I was just wondering what were the contributing factors to that? Is it just a matter of time or is it internal decisions or are there some technical challenges?

Hi, this is Rony. There aren't any technical issues. It's a matter of investment from the customer and obviously from SAP doing this transition to them. There are no technically. We did almost across all the product this transition. It will continue with the pace of the customer.

Got it. All right. Thanks for that. That's it for me.

Thanks. Thank you. Thank you. The next question is from Alexei Gogolev of JP Morgan. Please go ahead.

Hi, this is Elise Kanner on for Alexei Gogolev. My first question was, I saw you broke out organic constant currency growth for total revenue. Did you happen to break that out for European revenue as well?

Obviously the impact on the European, the entire impact is coming to the European as our North America do not have impact on currency headwind. I would like to reiterate what I mentioned earlier that in Q1 of 2023 we had catch-up revenue in European market. We said it in Q1 2023 in the conference call and even right now. And if we eliminate this catch-up, the company would grow almost a high single digit. So the entire impact of currency this quarter was on the European market. But without the catch-up that I mentioned, the European market will grow a high single digit.

Got it. Thank you. And then my other question is, why was the cash conversion in this quarter worse than we saw last year? Because typically we see 2Q and 3Q as weaker collection quarters here.

Yes. Overall, the cash collection was with our range between 80% to 85% of non-GapNet income. This is an overall perspective. If you compare Q1 to Q1, What we saw in Q4 of 2023, we have very significant cash collection that obviously have impact on the Q1. And also different approach in Q4 of 2023. So as you know, cash is almost balanced. It's not P&L. This is the main impact between the two. So we are without range. And Q4 of 2023 was much higher than Q4 of 2022.

Got it. Thank you so much.

Thank you.

There are no further questions at this time. Before I ask Ms. Yaffa Cohen to go ahead with her closing statement, I would like to remind all participants that a replay of this call will be scheduled to begin in two hours. In the U.S., please call 1-888-269-0005. In Israel, please call And internationally, please call 972-3925-5938. Yaffa, would you like to make your closing statement?

Yes, thank you. Thank you for joining the call today. Please note that Sapiens will be participating in three upcoming conferences. First, the Needham Technology, Media, and Consumer Conference next week. in New York, May 14th and 15th. We will also be at the Jefferies Software Conference on May 29th and May 30th, and the William Blair Growth Conference on June 5th. We'll be happy to meet with you if you attend. We're always happy to answer follow-up questions, so feel free to contact us after this call. Thank you.

Thank you. This concludes the Sapiens International Corporation first quarter 2024 results conference call. Thank you for your participation. You may now go ahead and disconnect.