Operator: Thank you very much. Your next question is coming from Greg Burns of Sidoti & Company. Greg, your line is live.
Greg Burns: Thanks. So, just to follow-up again on the leverage for next year. So, just looking at the guidance, there’s not much earnings leverage, so it’s about low single or mid-single-digit revenue growth, mid-single-digit EPS growth. So, is the expectation here that margins build throughout the year? Do you have an expectation of where margins will be at the end of the year versus at the beginning of the year?
Niran Baruch: Yes. So, first, with regard to the gross margin, we ended 2022 at 65.4%. Our long-term target is 67% to 70%. I would assume, and this is our estimation for the model estimation that we will be at the low end of this long-term target or even less, I would take 66% of gross margin. OpEx, I told you we will be somewhere at 35% on average. All-in-all, with regards to operating margin, we ended 2022 at 17.1%. Even if we will be at the low end of our revenues, which is $286 million, we believe that the operating margin should be at 17% at this level, and that’s how we come to the $1.35 low EPS guidance. So, all-in-all, for 2023, we will be somewhere between 17% to 19% of operating margin. As Shabtai said, at the first quarter, we will be at the low end of this range and during the second half of 2023, we believe we will be at the high end.
Greg Burns: Okay. And then for the CX business, what percent is that OEM-related revenue that I guess is declining now?
Niran Baruch: This quarter, it was declined to 10% of total CX revenues compared to 20% a year ago.
Greg Burns: Okay. And then the mix of Microsoft sales between kind of the CapEx model and the new live model, how has that been trending? Are you seeing more customers gravitate towards live?
Niran Baruch: Most of the revenues also at the Teams and actually total logic got revenues is CapEx deals. With regards to the fourth quarter, if we see the Teams — the Live Teams versus the CapEx deals, it’s about one-third Live and two-third CapEx deals.
Greg Burns: And the kind of the trajectory of that mix? Is it moving more towards Live? Or is it just kind of, I guess, staying at those ranges?
Niran Baruch: No, it’s moving more to Live, and we are very focused on this transition.
Greg Burns: Okay.
Shabtai Adlersberg: Let me just add — Greg, just let me add that on a year-by-year basis, Live Teams grew 35%, while CapEx Teams grew only 8.9%. So, the trend is definitely to the Live Teams.
Greg Burns: Yes, perfect. Thank you.
Shabtai Adlersberg: Sure.
Operator: Thank you very much. Your next question is coming from Ryan Koontz of Needham & Company. Ryan, your line is live.
Ryan Koontz: Thanks for the question. I want to ask about CX and certainly understand the OEM decline there. And I want to understand what sort of market motions and partners you have there to shore up that growth? It seems that the CCaaS, the cloud-based contact center players, whether it’s nice in Contact or Five9 have some pretty durable growth. And how do you attach yourselves to those sorts of companies a little closer? And what’s the competitive landscape there? How do you view your share, I guess, in the cloud contact center is, I guess, the big question? Thanks.
Shabtai Adlersberg: Sure. Well, regarding OEM, this is really an old business related mainly to 911 services and NexGen 911, so that is declining. Those are the majority is SBC sales. And so that is coming down. As far as contact center is concerned, I mean we all know about the trend of moving from on-prem to cloud. However, one needs to realize that it’s pretty complex to do that large company may take four to five years just to implement that transition. Now, you need to understand that within that period of time, one needs to implement and operate two different solutions at the same time, that provides a lot of complexity. Also the fact that you need to deploy new technologies such as WebRTC and Managed SBC. And on top of that, there’s disruption coming from.
So, think about the disruption coming from call automation and self-service. Once the vendors, such as Genesys announced end of develop for the on-prem solution. It means that those customers with hundreds and thousands of agents really lack this type of solution, right? Because the vendor will not offer them. Obviously, we’ve got an opportunity in this area. So, mainly focusing on the migration from the on-prem solution to the cloud for a vendor that moves to a different vendor, cloud environment and the application of self-service solution, all that represents big opportunities for us. And we definitely see momentum in this sale.
