Sapiens International Corporation N.V. (NASDAQ:SPNS) Q2 2023 Earnings Call Transcript

Sapiens International Corporation N.V. (NASDAQ:SPNS) Q2 2023 Earnings Call Transcript August 2, 2023

Sapiens International Corporation N.V. misses on earnings expectations. Reported EPS is $0.25 EPS, expectations were $0.33.

Operator: Welcome to Sapiens International Corporation’s 2023 Second Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded August 2, 2023. It is now my pleasure to introduce your host, Yaffa Cohen-Ifrah, Chief Marketing Officer and Head of Investor Relations. Thank you, Yaffa.

Yaffa Cohen-Ifrah: Thank you, operator. I would like to welcome all of you to the Sapiens conference call to review our second quarter results for 2023. With me on the call today are Mr. Roni Al-Dor, President and CEO; and Mr. Roni Giladi, CFO. Following the summary of 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 provisions in the press release issued today also apply to the content of the call. Second to expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our expectation or otherwise.

On the call today, we will refer to the 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 our Investor Relations section of the company website or via the website link, which is available in the earnings release we published today. I will now turn the call over to Roni Al-Dor, President and CEO of Sapiens, Roni?

Roni Al-Dor: Good morning, everyone, and thank you for joining us today for Sapiens Second Quarter 2023 Earnings Call. I’m pleased to share updates on our recent progress and achievements. Sapiens achieved a strong second quarter with 8.2% year-over-year revenue growth and 18.2% operating margin. Our strong quarter performance was driven by significant achievements across multiple lines of business and from diverse geographies. This quarter, our North America revenue year-over-year growth exceeded 8% and EMEA revenue increased by over 5%. Our P&C and Life businesses are experiencing global success, and we have established a robust pipeline of opportunity. Looking ahead, we are increasingly optimistic about our performance in the second half of the year.

Our results for the quarter are not only a reflection of our accomplishment, but are also a reflection of our dedication of execution, innovation and delivering outstanding solutions to our valued customers. Let’s dive into our performance in our 2 largest regions, North America and EMEA. In North America, our team remains dedicated to acquiring new clients and expanding our relationships with existing ones. These commitments result in impressing growth in the region during the second quarter. Our growth is across all of our lines of businesses, life and annuity, P&C, workers’ compensation and reinsurance. We are actively adding sales and marketing resource to support our future growth. Our investment in our life solutions has proven highly successful in this region.

This quarter, we signed several business application deals for live customers. These important wins in their own right, but they also put us in a strong position for expansion into digital and core administration opportunities with these accounts. In addition, we had exciting go-live implementations. In the P&C space, we had a major win for our reinsurance master solution. In Celent, 2023 seeded reinsurance solutions Global report, which was published in July, Sapiens Reinsurance Master was recognized as a luminary solution top-tier in Celent technical capability metrics for advanced technology and breath of functionality. Sapiens Reinsurance Pro was also recognized in the report as a functionality standout for breath of functionality. This recognition by Celent not only solidified our position as reinsurance market leader, but also reaffirm our ongoing commitment to provide exceptional technology solution for the insurance industry.

In the workers’ compensation space, the positive momentum continues. As I said in the previous call, this market represents a significant opportunity for Sapiens in U.S. and Canada this year and in the coming years. Moving to EMEA region. We are focused on U.K., Nordic, DAS, Iberia, South Africa and Central Europe. We are witnessing a growing interest in system replacement throughout this region, and our position is exceptionally strong to capture a large market share. The market trend of cloud migration and the demand for SaaS solutions align with our capabilities. Additionally, our multi-region presence and commitment to maintaining customer relationships through their entire life cycle, serve a competitor advantage that resonate with customers in this region.

Sapiens growing presence in EMEA region directively results from our strategic effort to invest in our product and establish a robust local foothold in this market through acquisitions. With a substantial customer base in our key market a robust feed to market product portfolio tailored to meet market demand and a large team of a local employee in the region, we are equipped with a significant competitive advantage, enabling us to expand further in this important region. This quarter, I want to emphasize our recent achievements in the APAC region, which have demonstrated consistent momentum and show our successful land-and-expand strategy. We firmly believe this region will be an additional growth catalyst for Sapiens. We are actively investing in the territory, and our efforts are yielding promising results.

Customers in this market are showing keen interest in our offering, and we are attracting attention from various stakeholders. In the second quarter, we announced that Vietnam’s digital insurance, OPES chose Sapiens for the modernization, its core P&C insurance system, Sapiens depute for P&C coupled with Sapiens intelligence will provide OPES a turnkey solution for expanding its businesses. Sapiens already had growing presence in another country in APAC region, Thailand, following the selection of Sapiens by Bangkok Insurance, BKI for digital core transformation, BKI is one of Thailand’s leading P&C insurers and they’re implementing, including more than 90 products across personal and commercial lines, integrating more than 50 third-party system and transforming underwriting claims, channels, accounting and reinsurance process.

It was noting that the APAC region is large enough to offer us opportunity for expansion. These markets are opening up to us, and we have made significant headway in countries such as Hong Kong, Singapore, Australia and in the past 2 years in Thailand and Vietnam. Let’s turn to our product platform. This quarter, I would like to highlight our life businesses. Our core life businesses globally is growing. We delivered strong growth year-to-date, signed major deals in EMEA and North America and are experiencing an acceleration in our revenue from this product line. This quarter, we expanded our partnership with LocalTapiola Life, the fourth largest life insurance company in Finland. The expanded agreement will now include Sapiens cloud services for a 10-year period.

Additionally, as we reported previously, we closed 2 substantial deal in North America during quarter 4 2022 and quarter 1 2023. Given our strong momentum over the recent quarter, we anticipate continued growth in this area, which could positively impact our overall performance. Looking ahead, we have a strong pipeline and the momentum continues to build. We see a strong growth opportunity for us in the life market, leveraging the unique global capabilities of Core Life platform and our leadership and competitive position. Our investment in our Core Life platform and business application product has yield positive outcomes, and we are proud to say that Sapiens has established a significant presence in the life insurance vertical. Last month, Sapiens CoreSuite for Life and pensions on the 2023 CelentXCelent Awards in the EMEA region.

Sapiens CoreSuite was recognized as a luminary policy administration solution, the top tier in Celent technical capability matrix for advanced technology and breadth of functionality in EMEA. And in another Celent report, Sapien’sCoreSuite for Life platform was also named as a luminary policy administration solution by Celent in North America. On the partnership front, this quarter, we announced groundbreaking collaboration with Microsoft. Sapiens will integrate Microsoft Azure Open NI and Azure Power virtual agent to provide generative AI solution for the insurance companies, allowing customers to easily navigate complex documents such as policies, terms and condition and more using neutral large language AI model. We see a potential for what generative AI can do for the next generation of insurance solution.

And Sapiens integration of Azure Open AI will allow us to explore and define the right solution for insurance worldwide. And lastly, in May, Sapiens hosted its largest international current conference in Barcelona. This year’s client conference theme was explore the possibilities, focusing on key trends and innovation driving our industry. We enjoy significant participation from our customer prospects and industry experts with over 300 participants in attendance, representatives from Microsoft, Celent and various participants from Sapiens insurtech ecosystem gave insightful presentation and participated in expert panels. Our feedback from our customers and partners was positive and a strong focus on leveraging the latest technology to enhance our solution was well received.

In conclusion, we are delighted with our global progress, especially in our largest region, EMEA, North America and our success in APAC. Our strong performance in the Life businesses, ongoing achievements in P&C and collaboration with SmartCore, a direct outcome of our dedication to innovation and continue us improvement. Delivering innovation solution to our customers remain a top priority for us, and we have confidence that our efforts will drive further growth and create significant value for our stakeholders. Thank you again for joining us today, and I look forward to sharing more updates in the future. Now I will turn it over to our CFO to provide more details on our financial performance.

Roni Giladi: Thank you, Roni. I will begin my commentary with a review of our strong second quarter 2023 non-GAAP results, followed by comments on the balance sheet and cash flow. I will wrap up with a review of our guidance, which will include an increase in our outlook for 2023 revenue and profit. Revenue in the second quarter of 2023 was $128.4 million, an increase of 8.2% compared to $118.6 million in the second quarter of 2022. During the quarter, we faced a small currency headwind and on a constant currency basis, revenue increased by 8.4% compared to Q2 of previous year. Revenue in North America was $52.1 million compared to $48.2 million in the comparable quarter, an increase of 8.2% and $4 million. The increase in revenue resulted from growth across most of our line of business and reflects the momentum in this region.

Revenue in Europe was $63 million, a year-over-year increase from $59.9 million or growth of 5.2%. On a constant currency basis, revenue increased by 5.4% compared to Q2 of 2022. Revenue in Q2 of 2023 was slightly lower than Q1 of 2023 due to the revenue catch up in Q1 that we mentioned in the previous investor call. Revenue in rest of all, which includes South Africa and APAC increased by 25.5% compared to prior quarter of $10.6 million, mainly due to strong new deals we signed in the region in P&C and Life & Pension. Gross profit reached $58 million, an increase of $4.8 million from the comparable quarter, while gross margin improved 30 basis points to 45.2% compared to 44.9% last year. Operating expenses were $34.6 million, an increase of 6.5% compared to $32.5 million in Q2 of 2022.

The R&D investment was $17.4 million, up 8.4% compared to Q2 of 2022, representing 13.6% of our total revenue and reflecting increased investment in cloud and digital solutions. SG&A expenses were $17.2 million, up 4.6% compared to the second quarter of 2022, representing 13.4% of our total revenue. Operating profit and margin in the second quarter of 2023 were $23.4 million and 18.2%, respectively, an increase of $2.7 million or an additional 70 basis points compared to the same quarter of last year. The year-over-year increase in operating profit and margin was primarily due to higher gross margin and improved cost management in G&A. The higher gross margin is drive from, one, the higher ratio of product and postproduction services revenue out of total revenue, which imply higher quality revenue with better margin profile; two, increasing offshore ratio.

Financial expenses in this quarter totaled $560,000 compared to $2.5 million in the comparable quarter. The lower interest cost was mainly due to interest income on a bank deposit, which was offset by hedging transaction costs and interest on debenture. Net income attributable to Sapiens shareholders for the second quarter of 2023 was $18.6 million, up 24.2% from $50 million in Q2 of 2022. EPS was $0.33 per diluted share for the second quarter of 2023, an increase of 22.2% or $0.06 higher than Q2 of 2022. EBITDA increased by 12.4% to $24.4 million or 19% of revenue in the second quarter of 2023 compared to $21.7 million or 18.3% of revenue in Q2 of 2022. Starting in 2023, we are providing an additional breakdown of our revenue into 2 groups.

Software products and re-occurring postproduction services and preproduction implementation services and provide period-over-period comparison as each new period is reported. In Q2 2023, revenue from recurring software product and re-occurring postproduction services totaled $82.6 million compared to $72 million in Q2 of 2022. A $10.6 million increase or 14.7% growth. The gross margin for this group was 51.4% compared to 52.2% in Q2 of 2022. We want to reiterate that revenue can fluctuate between quarters. Still, we are confident that we will continue to grow revenue from re-occurring software products and re-occurring services on an early basis. The growth will come from the following main 3 initiatives: one, continue converting customers from the implementation phase to the post-production phase; two, shifting gradually to SaaS solution.

We have already started to offer SaaS solution for several products in North America, and we are starting to do so also in Europe. We intend to implement this gradually in order to maintain our revenue growth. Three, migrate existing customers to our cloud solution. Today, all of our new deals are on the cloud, yet most of our existing customers are not in the cloud, and we intend to migrate them to our cloud solution over the next few years, which will drive incremental recurring revenue stream with higher gross margin. Turning to our balance sheet and adjusted free cash flow. As of June 30, 2023, with cash and cash equivalents and short-term deposits totaling $179.4 million. Our outstanding dementia balance is $60 million and will be paid in 3 equal installments over 3 years.

During Q2 of 2023, we generated an adjusted free cash flow of $12.1 million compared to $4.2 million in Q2 of 2022. This quarter, we paid an incremental of $4.6 million to you say tax authorities due to new Section 174 for R&D expenses related to 2022. The additional payment is a temporary difference and does not have an effect on the P&L only on the cash flow. Due in H1 of 2023, we converted 89.4% of our non-GAAP net income to adjusted free cash flow. Moving to dividend. We announced today that the Board of Directors had approved the distribution of a cash dividend of $0.26 per share or $14.4 million in total for the first 6 months of 2023. The dividend is in line with Sapien’s dividend policy of this between on a semiannual basis up to 40% of its annual non-GAAP net income.

The dividend will be paid on August 30, 2023, to Sapiens shareholders of record as of August 16, 2023. The dividend is subject to the withholding of Israeli tax at source at the range of 25% of the dividend amount payable to Israel individual and non-Israeli shareholders off record. I want to turn now to our guidance for 2023. We are raising our full year 2020 non-GAAP revenue guidance from a range of $507 million to $512 million to a new range of $511 million to $516 million. On the non-GAAP operating margin, we are increasing the low range of our guidance from 17.8% to 18%. Our full year 2023 non-GAAP operating margin is now 18% to 18.2%. To summarize, our Q2 2023 was a very strong quarter for Sapiens. Our revenue grew 8.2%. Our software product and re-occurring postproduction services grew 14.7%, and we signed deals across all our key products in the period.

We witnessed improved momentum in North America. Our operating margin reached 18.2% with an EBITDA of $24.4 million or 19% of revenue. We converted our net profit to adjusted free cash flow at the rate of 89% in the first 6 months of 2023. And lastly, we continue to distribute cash dividend to our shareholders and announced dividend in the amount of $14.4 million for the first 6 months of 2023. We remain committed to growth while improving our profit. I will now turn the call back to Roni Al-Dor. Roni?

Roni Al-Dor: Thank you, Roni. We delivered a strong second quarter and first half in 2023, given the great success across our businesses, both geographically and by product line. Importantly, we have a robust pipeline for new opportunity with highly competitive portfolio of offerings that position us for continued success. Operator, we are ready to open the call for Q&A.

Q&A Session

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

Unidentified Analyst: This is actually Sam on for Mayank today. Nice results. It seems like the demand environment is getting a bit better here. Could you guys give us some more color into how customer conversations have changed from last quarter and maybe parse that out between North America and Europe?

Roni Al-Dor: This is Roni Al-Dor. We are continue to see interest in North America as well in Europe. In North America, we really have very strong in several 5 areas, as I mentioned in the workers area in the P&C area, in the reinsurance area, in the life business, those types but we still have the same demand in Europe also in our life on the P&C and reinsurance. So overall, and as you know, we are very diverse. So also in terms of our product. What we also see the demand of our digital, data and cloud. So the majority of our new business is coming with at least 1, 2, 3 pieces from what I mentioned

Unidentified Analyst: And then could you guys just talk a little bit more about what is driving the improved margin outlook? And just what exactly you guys are doing here that gives you that confidence going into the back half?

Roni Giladi: Sam, this is Roni G. On the margin outlook, we only increased the lower range of the guidance from 17.8% to 18%. So the new range is 18% to 18.2%. Several factors are allowing us to do so and improve profitability while we are growing. And number one is the mix of recurring product and reoccurring services, which is increasing with higher margin. The second one is increased offshore ratio that allow us to improve profitability. That being said, we are doing some saving items on the overhead cost by and also increasing the sales. So this is natural. All of these 3 levels allowed us to improve profitability while we are going.

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

Dylan Becker: Maybe kind of sticking with the first question, asking it a little bit of a different way. Roni A, for you, how are carriers adapting kind of to the current landscape, right? We’re seeing that they’re under a lot of cost pressure. They’re emphasizing data, they’re starting to take rates. I guess, how are they thinking about kind of prioritizing their internal resources in this current environment?

Roni Al-Dor: Again, as I mentioned, we are — the carrier, as you know, the majority of sales still using legacy system. And for them, also one of their high priority is efficiency versus growth in the past. And I think the system that we are serving can improve their efficiency. Yes, it’s starting with the investments first, but all the automation and the analytics and so that’s about the efficiency. In terms of their customer, I think the digital part become more and more important because this is, again, it starts heavily in the COVID. But now everything customers expect to talk with their clients on digital. So again, it’s also — they need to make sure the core system support the digital and sometimes they’re also buying from us. So even they have their challenges, but I think this is what we are seeing. We are seeing more and more RFPs coming because there is still a big demand.

Dylan Becker: And maybe you guys didn’t touch on kind of partnership with Microsoft. I don’t know if this is for Roni A or maybe Alex, to a certain extent, to a peso. But wondering again how maybe that AI tailwind can help kind of support some of those initiatives that you just called out, Roni. Does this kind of evolve the underwriting framework and maybe how the insurance model operates today? And does that drive incremental reliance maybe on insights built off of an intelligent core? Are you guys starting to see that in any capacity or think that that may be is how that plays out?

Roni Al-Dor: Yes. I will take the call because Alex is sick right now. So the agreement with Microsoft has just recently started — we are — so it’s relatively early stage, but both companies put a big investment. We started, as you mentioned, with underwriting area with Clemeria. But again, there is a lot of area that we can plan to integrate it in our system. So it’s — again, it’s still early stage, but we are seeing a lot of areas that we can use this.

Dylan Becker: And one last one, if I could. I didn’t want to leave Roni G hanging here. Roni, you mentioned the long runway for migration activity, get that, that’s likely something that plays out over a number of years. Is there any way to kind of contextualize or think about how that opportunity can look, maybe the mix of what the on-prem customer base is today, what a cloud uplift could look like? And how that kind of supports really the healthy post production momentum we saw this quarter?

Roni Giladi: Hi, Dylan, this is Roni. So as we continue to grow, we will see improved ratio in terms of postproduction services out of total revenue. There are several items or reason for that. The first one is shifting from preproduction to post production. The second one is what Roni A mentioned is a moving customer, existing customer to the cloud that we already started doing this, and this is a great additional recurring revenue piece with high margin profile. And the last one is also moving and selling also on SaaS solution, which will increase the recurring piece in also in the future. All of these factors, then will increase the ratio. We believe that we can pass the 70% ratio or even 75% ratio of total revenue in the next several years. And if you calculate the margin, we’ll see an ability to increase overall margin as we continue this trend, we believe up to 5%.

Operator: The next question is from Surinder Thind of Jefferies.

Surinder Thind: Can you please provide maybe a bit more color on the APAC opportunity here. It sounded like you were a bit more excited. There’s a number of wins there. Can you also talk about the fragmentation in the region. There’s a lot of different countries involved, different sales processes. And it’s a fairly small part of the business right now, but how are you thinking about that over the next 3 to 5 years?

Roni Al-Dor: Okay, this is Roni Al-Dor. At this moment, we are — the product that we are pushing on Asia is mainly our P&C platform and reinsurance. So — and we started with several countries like at the beginning in India, Hong Kong, Singapore. And then as we mentioned, we move now to Thailand and Vietnam. There is a few other countries for sure, Australia. But for sure, there is a few other countries. But as we believe in what we call land and expand. So we — as we just started in these 2 big countries like Thailand, Vietnam, so we believe after we complete the implementation for the first client, we are still discussing with many others that are looking for — to see the results on those clients. So this is one thing. The second thing is about our life solution, there is a big demand.

Our strategy right now is to look for this territory mainly in the future, and we also plan to do it together with the partners just because the other demand that we have from other areas. So I think from a long term, we see a very interesting region to play. We have the advantage that we have close to half of our employees are in India, so we can do all the support from them. And when we acquired this type of business from many years ago, they have many, many years of experience to work in this region also to represent Sapiens and others. So we have also many life, by the way, implementation from the past. So we have the knowledge, we have the experience. We have the people, we have the low cost, but we’re still looking for — also to work with partners as well.

Surinder Thind: And then in terms of a follow-up on the agreement with Microsoft and the integration of some of OpenEye technologies into the product suite. What does the road map look like for you to — you talked about it being early stages. So is that a year out before we start to see revenues? How should we think about that part of the agreement?

Roni Giladi: Hi Surinder, this is Roni G. I will follow up on what Roni mentioned. We just started the road map together with Microsoft. Both teams are in the lab working. When there will be a revenue stream, we’ll talk about this. Obviously, it will start as a small amount, and we hopefully will grow in the future. Currently, we do not want to emphasize the revenue level.

Surinder Thind: And then a question on the guidance change here, the update. Any color on what the FX assumption is? How much of this is an improvement in the fundamentals? And how much is FX as we’ve seen a material strengthening of the euro and the pound as well.

Roni Giladi: The impact on the FX is immaterial as of Q2 that was also minimal from 8.2% to 8.4%. So majority of the impact is coming from ongoing operational business.

Surinder Thind: I’m talking about the future guide.

Roni Giladi: Very small amount is coming from currency. The majority is coming from ongoing operational business.

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

Kevin Kumar: I wanted to ask about North America. Great to see the acceleration in growth in that segment this quarter. As you see more progress in that segment, how are you thinking about the level of investments in the sales and marketing and customer success teams required to adequately cover that market? Should we expect kind of a faster pace of sales and marketing moving forward?

Roni Al-Dor: Yes. Can you repeat your specific question. You asked about our sales and marketing and the CC effort is what you asked.

Kevin Kumar: Yes. The sales and marketing across your North American business, given the growth there and the success you’ve had, how are you thinking about the level of investment to kind of sustain that growth in that segment?

Roni Al-Dor: Yes. Okay. So we — quarter 4 last year, we start to do some reorganization in our sales and marketing, do some internal change, brought a new manager, new marketing. So a lot of changes also as a reorganization. And we hired a bunch of people for the client — what we call client CEC, client support and client relationship and for the new business. So definitely, we grow. Everything in our business takes time. Even we hire from the market, from competition, it takes time to learn also to build all the relationship with clients. So in terms of investment, we — the majority we already did. We have a few more, but the majority. Right now, it’s the time to implement it, make sure they are onboarding, and we can see the results. In the next few months, we have a big client conference, what we call Summit in October. So we start to see registration nice numbers at this moment. So it’s — so overall, we plan to increase the investment.

Roni Giladi: Kevin, if I need to add one more view on that. We do not see this investment coming also in Q2. As I mentioned earlier, we did some cost saving items on corporate that save some money and the increase in this investment came on top. So this is almost flat. Probably will see this effect of additional investment coming from Q3 onwards.

Kevin Kumar: And then maybe you can give an update on your view on M&A. And given valuations may have come down a bit and does that enable you to be a bit more aggressive there.

Roni Giladi: On the M&A, we see the same, as you mentioned, Kevin, valuation went down. We were engaged in several opportunities. We are engaged in several opportunities, some in early stages, some are more progressed. I can tell that some of the deals that we been involved went off because of valuation, some of them also because not fit. We have the intention to close hopefully this year, if not for sure, next year.

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

Chris Reimer: Most of my questions have been answered already, but I’d like to touch on the previous relating to the APAC region. I was wondering if there’s any challenges in that area versus other regions? Are there any prohibitions or regulatory aspects of activity there that might be unique to the area and different from where you already operate?

Roni Al-Dor: This is Roni A. We don’t see any issue on the regulation. Even most of the countries is very similar to U.K. So it’s mainly on the Life, on the P&C, we don’t see any issue. Every country that we enter, we call it country layer, so new countries, we demand some kind of investment for us, but that’s part of our plan. And I think the other challenge is mainly on the rate card. So — and the amount of money they’re able to buy from them to buy from us. So this is why it’s the solution that we have, that we have the Indian organization able to support almost end-to-end that can allow us to do business in this area. So no regulation, big challenges and not also on the rate.

Chris Reimer: And just touching on the gross margin. There was a bit of a decline in the software segment this quarter. I was wondering if you could touch on the contributing factors to that, what’s made up of the decline or in general?

Roni Giladi: This is Roni G. We started to introduce this view or report or analysis during 2023. We also mentioned that can be some fluctuation from one quarter to another. If we review on the accumulated basis for the last 6 months, we’ll see slight improvement and within the range that we mentioned, the gross margin over there should be between 52% to 56%, and we are in line to that. So fluctuation between quarters. If we look on the yearly basis, we’ll see improvement year-over-year.

Chris Reimer: So the general target area is 52% to 56%.

Roni Giladi: Correct

Operator: [Operator Instructions] There are no further questions at this time. Before I ask Mr. Al-Dor to go ahead with his closing statement, [Operator Instructions] Mr. Al-Dor, would you like to make your concluding statement?

Roni Al-Dor: Yes. Thank you for joining us today for the call.

Operator: This concludes the Sapiens International Corporation Second Quarter 2023 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.