Greg Burns: Okay. And, Niran, the cash conversion for this year, do you expect it to be stronger than what has been the last two years?
Niran Baruch: Yes, you saw the operating cash flow at the fourth quarter, which was like close to $10 million and improved it from previous few quarters. And we believe the operating cash flow for 2024 will be better than in 2023.
Greg Burns: Okay, great. Thank you.
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. And nice quarter on the margins, particularly there, really great to see that. I hope we could circle back to Contact Center and your CX there. You talk about a really nice inflection to 40% growth. Can we drill in there? And what’s behind that? Is it product improvements? Is it focus on go-to-market? Is it some of your key partners seeing inflection on sales growth? Any of those would be helpful. And this quick follow-up, can you clarify what those wins were again? The audio was breaking up a little bit on the, I think, two CX wins you mentioned. Thank you.
Shabtai Adlersberg: Right. Thank you, Ryan. So on the CX space, as I’ve mentioned, there are two key activities, one which is supporting in deployment of voice networks. As, you know, the world of Contact Center is moving from on-prem to cloud. There’s a need to basically shift from the old networks to new networks, which are global in nature, different architecture. So we are providing usually SBC gear and managed services and more components in order to enable the transition from on-prem to CX. The large growth in CCaaS — in CX, I’m sorry, is related to participating in several such large deployments of large CX vendors. So take a leader in CX who now wins against an incumbent that’s kind of legacy and less powerful. When you move from an old supplier architecture that’s on-prem to a new cloud-based vendor, there’s a whole huge network.
You’re talking about hundreds of locations around the world. And in order to achieve that with high quality, you know, high security and efficiency, our SBCs and managed services like CX come into play. So that explains the success we enjoy. And the trend of moving from on-prem to cloud continues, I believe that we will continue to win such projects. And so the two wins I’ve mentioned. So the first one is, you know, a very large university in the U.S. who used our Voca-CIC in our compliance recording to replace incumbent solution at that time. That specific transaction was close to a million in booking. Second one with a large manufacturer who, you know, one of the S&P 500 companies who, again, chose to use our Voca-CIC and replace an incumbent certified solution in the markets of Teams space.
Ryan Koontz: All right, great. Thanks. That’s somewhat helpful. I mean, I guess, on-prem cloud is not really a new trend to be going up for many years. So any commentary on why you’re specifically seeing this inflection of growth for AudioCodes in terms of your efforts in that market, which has been humming along pretty healthy for years?
Shabtai Adlersberg: Yes, it’s definitely a healthy market, and we actually seen expansion in that segment. Actually, we just discussed prospect for the first quarter of 2024. It seems that it continues. I believe that with probably with more maturity and reliability of Contact Center operation from the cloud that may become an incentive for end users to move. Also, I would add that usually we’re talking about contracts that last several years. And usually when such a contract is becoming to an end, this is the time when transition from on-prem to cloud will occur. So that is an ongoing process. And as the world of CKS matures and becoming more successful, we believe that we’ll see more projects like this.
Ryan Koontz: Great. That’s real helpful. Just a quick follow-up. You have talked about Zoom phone in a while. Any quick commentary on Zoom in terms of their progress and with their phone products and your selling opportunity? Are you seeing much traction with Live there?
Shabtai Adlersberg: Well, we do continue to work with Zoom. We had enjoyed fewer opportunities. But at this stage, I would not say that we believe Zoom will become a growth engine for us in the UCaaS space.
Ryan Koontz: Fair. All right. I’ll pass it on. Thank you.
Shabtai Adlersberg: Sure.
Operator: Thank you very much. Your next question is coming from Samad Samana from Jefferies. Samad, your line is live.
Billy Fitzsimmons: Hey, guys, this is Billy Fitzsimmons on for Samad. Maybe backing up and taking a higher level view here. Can you guys remind us what you’re seeing on the macro front? How did things like lead times and close rates evolve over the course of 2023? And did they get better or worse in the fourth quarter? Any customer verticals looking particularly strong or weak at this point? And then I want to double click on what’s kind of assumed on macro in terms of the 2024 guide?
Shabtai Adlersberg: Right. Actually, it’s a great question for CEOs and CFOs. 2024 is still kind of foggy. We have not seen any dramatic change from the end of 2023. We’ve seen good pipeline as I’ve mentioned before. Q4 was strong. But it’s the last quarter in a year, so that’s kind of expected, so, no change. At this stage it’s hard to make a call as to, you know, whether 2024 will be substantially better or better than 2023. But all you know, I think for us as a company, while we have put aside the whole issue of service providers, which has impacted our operations early 2023, we’re glad to focus on contact center, which is growing conversational AI, which is very fast growing these days, other opportunities. And also, UCaaS, which again, we believe that conversational AI will contribute to the growth of our business, so all-in-all, we believe enterprise space will be good and no other indication at this stage.
