Operator: Our next question comes from the line of Matt Stotler with William Blair.
Matt Stotler : I just want to start off with I’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.
Barak Eilam : Thanks for the question, Matt. So 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 Analyst Day actually provided great examples of what happen 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. And 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. But 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. So 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. And only now we’re starting to convert the base, including win — continue to win brand-new business for the company.
Matt Stotler : Got it. That’s helpful. And then a follow-up maybe on what you’re seeing internationally specifically in Europe. I know over the — at some point in the quarter, you had an announcement that CXone is now an EU sovereign cloud platform. And obviously, you’re seeing faster than corporate average growth in that geography. So I’d love to just get an update on the adoption trends you’re seeing specific to EMEA and any key investment priorities there to drive further adoption?
Barak Eilam : Thanks for that. So international is not new for us. We’ve been always operating in international markets, prime international markets. But with CXone introduction several years back, we realized that at some point, we are going to franchise and expand from the U.S. to other territories. And we’ve done this investment in a variety of geographies and started to do it one at a time. So 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 gross margin that a lot of that investment is behind us. And now we’re going to leverage on that investment. As a result, we are going to see expansion of the gross margin.
We are seeing great success in those territories. And that’s one of the reasons that led us to decide to have actually a cloud environment that is an EU sovereign in order to further support the EU and the pipeline in a variety of international territories all the way from Asia Pacific, Europe, Latin America is very promising.
Operator: Our next question comes from the line of Chris Reimer with Barclays.
Chris Reimer : Most of my questions have been answered — asked already, but maybe just 2 quick housekeeping ones for Beth. Looking at the product gross margin, it’s coming in a little lower than historically. Is this the new level as this segment kind of drops out? And regarding financial income, is this an appropriate level considering where rates are right now and your cash balance?
