Sapiens International Corporation N.V. (NASDAQ:SPNS) Q1 2024 Earnings Call Transcript

Sapiens International Corporation N.V. (NASDAQ:SPNS) Q1 2024 Earnings Call Transcript May 8, 2024

Sapiens International Corporation N.V. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: 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, Sapiens’ Chief Marketing Officer and Head of Investor Relations. Yaffa, would you like to begin?

Yaffa Cohen-Ifrah: Thank you, operator. I would like to welcome all of you to Sapiens’ conference call to review our first quarter 2024 results. With me on the call today are Mr. Roni Al-Dor, President and CEO; Mr. Roni Giladi, CFO; and Mr. Alex Zukerman, 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 disclaims 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 issued 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 earnings release we published today. I will turn the call over to Roni Al-Dor, President and CEO of Sapiens. Roni?

Roni Al-Dor: 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 agents. 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 earnings calls, I stated that our 2024 priorities are: First, on transition our solution to SaaS 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 second SaaS Insurance platform is the next generation in the evolution of our insurance solutions. The platform harmonize the aspect of core business processing, digital engagement, data-driven decision-making, Gen AI and machine learning capabilities, and large ecosystem of complementary capabilities into a coherent prepackage and pre-configured platform. This provides out of the box solution focusing on the unique requirements of each business vertical or domain. From the customer perspective, the Sentence platform accelerates innovation, improve time to market using low code and no 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 Sapiens 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 create a compelling proposition to new and existing customer and provide our customer with a 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 customer to the SaaS model in a way that manage and minimize 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 benefit for our customer 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 integrated 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 we see in its own delivery system and processes, improving our performance and streamline our product development. This enable 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 increased 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 life solution has proven highly successful and in the first quarter we had a few go live across our life 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 Sapiens 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 delivering value to our investors. Moving to EMEA and Rest of the World, with a few successful go live with our IDITSuite, TierSuite, SkipSuite and Reinsurance Master this quarter.

I would like to highlight two of our go lives. In the DACH region, a priority territory for Sapiens in Europe with successful go live with German tech insurance brand, Clairos with the set and skip suite to accelerate their underwriting digital sales and go-to-market process. We provide Clarios 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 growth. The goal live in Q1 was OPES, digital insurance, the leading digital insurance in Vietnam was watched closely by our prospects in the region. The success of go live help us build customer referrals in APAC. OpEx adapts Sapiens’ IDITSuite for property and casualty, coupled with Sapiens’ intelligent to modernize its core P&C insurance process.

Overall, the demand continued to be strong for P&C platform solution in EMEA and rest of the world. There is an increase trend in the P&C claims platform solution and the appetite for platform in SaaS model continue 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 enable us to offer insurance carrier digital over existing legacy as a Phase 1 and then Phase 2 to effectively replace the underlying legacy system utilizing the already established digital front end. Moving to product recognition, in the first quarter, we received 2 Celent Luminary Awards. Segment was named as a 2024 Luminary in EMEA and APAC for our P&C claim solution.

We also received the Celent Luminary Awards for our claim pro in North America. I’m proud that Sapiens has maintained its leading position in 10 consecutive Celent report. Celent recognition reinforce our position as a leading claims 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 Binah.ai, the number one health and wellness check software provider that aim 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 care and provide effective way for us for leveraging their cutting-edge solutions. Coming out 2023, we discuss collaborating with Sapiens 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 build to support this initiative. In North America, Sapiens continue to strengthen its Deloitte America relationship with the 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 license annuity market. We continue to expand our relationship with LTIMindtree from a P&C course with focus to add capabilities for Sapiens Rental 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 Open AI. This partnership is central to Sapiens AI strategy and important to our customer as we view these as a low risk innovation. The Microsoft global and strategic partnership spends across multiple domain. 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 solution to our customer 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 Roni Giladi, our CFO. Roni?

Roni Giladi: Thank you, Roni. 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 currency 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 postproduction 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 postproduction 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 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 call, we have made 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 Sapiens shareholder for the first quarter of 2024 was $20 million, up 18.4% from $17 million in Q1 of 2023. Earnings 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 and 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 first 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 targets. 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 million and 18.1% to 18.5% respectively. I will turn now the call back to Roni Al-Dor. Roni?

Roni Al-Dor: 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 prepared remarks and open the call for questions. Operator, we are ready to open the call for questions.

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Q&A Session

Operator: [Operator Instructions]. The first question is from Mayank Tandon of Needham & Company. Please go ahead.

Mayank Tandon: 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, just any seasonality, any things that will affect one quarter or two quarters? Just want to get a better sense of the trajectory of both growth and margins over the course of 2024?

Roni Giladi: Hi, Mayank. This is Roni. 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 in order 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%.

Mayank Tandon: So, it should be fairly linear over the next three quarters, I think

Roni Giladi: In fact, in terms of revenue, in terms of profitability, we leave the range to balance between what I mentioned, the three factors.

Mayank Tandon: And 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?

Roni Giladi: So, from a new prospect, I can say to you that some prospect insists 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 banded 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 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. And this is factored in the guidance.

Operator: The next question is from Dylan Becker of William Blair. Please go ahead.

Dylan Becker: Maybe Roni, both Roni 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 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 that kind of validate the value proposition and that can kind of help support some of that pipeline momentum from a conversion perspective?

Alex Zukerman: This is Alex Zukerman 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 turnkey 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 aspects definitely drive this forward.

Dylan Becker: And maybe switching over to Roni too, nice to see the encouraging momentum and strength in North America and some 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 in 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 the SIs, all the above? I guess any kind of additional color on what’s fueling the momentum there?

Roni Al-Dor: As you mentioned is yes, yes and yes. Is coming from the investment that we did and we continue to do in front of the marketing, sales, customer, see what we call managing the huge amount of customer base and the SI. As you know for marketing and the sites take 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 have very strong we closed three deals last year on the workers’ comp. It give us huge amount of work and also a future and investing in the R&D there. Then we have the reinsurance part. The really the nice, very nice momentum on the life side based on the component and cost suite. Again, just to remind all the investors that we a year and half or two years ago we decide to penetrate again to U.S. with our CoreSuite Life.

We already signed two deals. Right now, we have very strong pipeline. We are few customers already select us. We are in some kind of engagement process right now to close them. So that’s the third point. Decision is stable but we see a lot of momentum and also Sapiens we are implementing our decision. There still we have challenges on the P&C very competitive situation but we are a believer in our unique offering. So, all in all, it’s many things together is a good momentum.

Operator: The next question is from Kevin Kumar of Goldman Sachs. Please go ahead.

Kevin Kumar: Thanks for taking my question. I wanted to touch on cloud migrations a bit more. Just 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 to 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?

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

Kevin Kumar: And then, I wanted to ask about the partnership with Microsoft that was called out few times. I guess, can you just talk a bit more about the generate capabilities that are being offered to carriers there and kind of how they’re leveraging those capabilities and maybe how that differentiates Sapiens in the marketplace?

Alex Zukerman: So, few things about our Gen AI initiatives. 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 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, where 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 Copilot 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 for the 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 develop capabilities to run data migration using AI to map the different fields from source to, from source platform to target platform and about how to create documents and letters within the platform, this is all today run on Gen AI. 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.

Operator: The next question is from Chris Reimer of Barclays. Please go ahead.

Chris Reimer: 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 SaaS 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?

Alex Zukerman: So, when we look at our competition, Sapiens is a unique company in the fact that we play in both P&C 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 our leading competitors are SaaS. 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 P&C 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 P&C 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 my favor. When we look so this is on the P&C side. When we look at the workers’ compensation side, we are, 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 functionality definitely puts us in a strong leading position in the market compared to all our competitors. Similarly, when we look in 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 IAP, 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 rich nets really put us in a driving position with the life in Europe and in APAC. P&C, 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 P&C side. And when we look in APAC, and I think we also talked about before, we see large opportunity for us in APAC. Definitely see ourselves as the leading position in Southeast Asia, both on Life and P&C and we intend to leverage this strong position.

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

Roni Giladi: Hi, this is Roni. There aren’t any technical issues, is a matter of investment from the customer and obviously from Sapiens doing this transition to them. They are not technically, we did almost across all the product this transition and we’ll continue with the pace of the customer.

Operator: The next question is from Alexei Gogolev of JPMorgan. Please go ahead.

Unidentified Analyst: Hi. This is [indiscernible] 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?

Roni Giladi: Obviously, the impact on the European the entire impact is coming to the European as 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 high-single-digits. So, the entire impact of currency this quarter was on the European market, but without the catch up that I mentioned, European market will grow high-single-digits.

Unidentified Analyst: Goy 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 at weaker collection quarters here?

Roni Giladi: Yes. Overall, the cash collection was with our range between 80% to 85% of non-GAAP net 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.

Unidentified Analyst: Got it. Thank you, so much.

Operator: 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 is scheduled to begin in two hours. In the U.S. please call 1888-269-0005. In Israel, please 03-9255-938. And internationally, please call 9723-9255-938. Ms. Yaffa, would you like to go ahead with your concluding statement?

Yaffa Cohen-Ifrah: 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 & Consumer Conference next week in New York, May 14 and May 15. We will also be at the Jefferies Software Conference on May 29 and May 30 and the William Blair Growth Conference on June 5. We’ll be happy to meet with you if you attend. We are always happy to answer follow-up questions, so feel free to contact us after this call. Thank you.

Operator: 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.