Welcome to NICE Systems Conference Call discussing the Third Quarter 2014 Results and thank you all for holding. (Operator Instructions). I would now like to turn this call over to Mr. Marty Cohen, Vice President, Investor Relations at NICE. Please go ahead, sir.

Thank you operator. With me on the call today are Barak Eilam, Chief Executive Officer; Dafna Gruber, Chief Financial Officer and Eran Liron, Executive Vice President, Marketing and Corporate Development. Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company’s actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or the performance of the company to differ materially is contained in the section entitled Risks Factors in Item 3 of the company’s 2013 Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 26, 2014. During today’s call, we will present a more detailed discussion of third quarter 2014 results and the company’s guidance for the fourth quarter and full year 2014. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations which differ in certain respects from Generally Accepted Accounting Principles as reflected mainly in accounting for acquisition-related revenues and expenses, amortization of intangible assets and accounting for stock-based compensation. The difference between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today’s press release. I will now turn the call over to Barak.

Thank you Marty. Welcome everyone. I'm glad to be on the call with you today. I'm happy to report a strong performance for the third quarter, revenues were $250 million for the third quarter which gave in above our guidance and represented 9% organic growth compared to Q3 last year. Earnings were also strong at $0.70 per share which was also above our guidance and represented 13% growth compared to the third quarter of last year. These results reflect the initial impact of the plan we begin to execute in the second quarter of this year. These planned focuses on improving execution, stream lining the business and increasing profitability. Some of the measures we have taken so include optimizing our go to market, eliminating non-productive activities and disciplined expense managements. We had another strong quarter of bookings and the pipeline is robust as we head into the final quarter of the year. As we previously mentioned and as you can see from Q3 results our year continues to be second half weighted. Analytics of the driving force of goals across our businesses. We continue to develop additional use cases for analytics which is generating demand from customers and increasing our addressable markets. Furthermore our analytics of creating a significant competitive advantage for NICE which is leading to further penetration within our customer base as well as gaining new customers. Few example of these use cases can be found in the recent product we have released to the market. NICE Engage which we announced earlier in July is building momentum and we have already signed deals with number of leading companies. We have now added more capabilities integrated into NICE Engage with the introduction of Insight Amplifier which is our next generation interaction analytics. Later on I will talk about additional…

Thank you Barak. I'm pleased to provide you with an analysis of our financial results and business performance for the third quarter of 2014 and our outlook for the first quarter and full year. Revenue for the third quarter was $250 million, up 9% organically from $230 million in Q3 last year. Customer interaction revenue were $150 million in the quarter up 7% from Q3 last year. Financial Crime & Compliance reached $42 million up 6% from Q3, 2013 which was then a very strong quarter with 3% year-over-year growth. Security revenue grew 17% year-over-year to $58 million. Moving to the regional breakdown, third quarter revenues in the Americas were $164 million up 15% from Q3, 2013. Revenues in EMEA increased 9% from last year to $60 million. Revenues for Asia-Pacific region were 26 million. For the quarter the Americas accounted for 66% of total revenues, EMEA 24% and APAC 10%. Looking at revenues by business line, product revenue accounted for [Technical Difficulty] 37% [ph] of total revenue in Q3, maintenance revenue is accounted for 40% and professional services including cloud accounted for the remaining 23% of revenues. As we mentioned last quarter we have been focusing on our operational model to identify areas for operational efficiencies in both the short and long term. During the past six months and the in planning for 2015 we’re looking carefully at our spending, we’re optimizing our operation and prioritizing activities. We can already see the results in this quarter's improved operating margin. Sequentially while our revenue grew we kept our operating costs relatively flat, bringing sequential leverage to 24%. We continue to focus on our long term plan to improve our operating margin and leverage. During September we closed a tax audit in Israel at an amount lower than anticipated. This led…

(Operator Instructions). Please standby for your first question which comes from the line of Shyam Patil at Wedbush Securities. Please go ahead, Shyam.

First question, the organic growth rate up nicely to 9% year-over-year, should we think of that as sort of the new baseline going forward particularly as you look out to the 2015 and Barak what's your sense as to when growth can reaccelerate organically back into the double digit range?

So yes we still a much better organic growth this quarter and as I mentioned before the pipeline is strong and the business is healthy. It's a trend we started to see already last quarter, and we believe that the future is bright whether this is the sustained mode or not. It's too early to say. We’re not providing right now guidance for 2015, we will provide them obviously at the end of the year with the results of the next quarter and then I will be able to provide this information.

And then a follow-up, in the past you’ve talked about M&A being an important component of this charge [ph] going forward. Just wondering if you could provide an update on your thoughts there and what you’re seeing for evaluations right now across the different business segments and geographies?

So we’re active on both fronts, obviously we’re acting as you saw from the results on improving the operation and boasting the organic growth and this is the focus on one hand. On the other hand we’re active on the M&A front. We’re building a pipeline for the right assets that fall into the align with the strategic model of the company. As I always said you need two for tango and obviously for the right valuation and these two makes sense. So fronts are relevant for us, we will continue to improve the company operation and the organic growth and at some point I believe that on the M&A front some of the opportunities will materialize.

The next question comes from the line of Shaul Eyal. Please go ahead.

Barak, can you provide us with actual changes that you guys have been taking operationally. I know you talk about streamlining and have seen some improvement but is it being actually more on top of the (indiscernible) people, top of the R&D and top of delivery. What is it exactly that has begun to change over the course of the past 5-6 months since you came on-board as the new CEO?

Yes, it's basically all the above but I will be a bit more specific. We’re attaching all of the areas that you talked about. On one hand with the leading forces in the company which is product and innovation, on the front we accelerated a lot of the plans and focused on some of the release plans of some of our products which I talked about in the call focusing a lot about analytical capabilities, changing priorities and I think you can see that from the releases that we have done in the last few months starting from NICE Engage and the Insight Amplifier, the additional capabilities for the customer engagement analytics, the suspect search on the security side and on the Financial Crime & Compliance, the partnership with Alacra with the breakthrough of a new platform that we have released over there. So this is on one front and we see a good fraction to all of the things that I’ve mentioned and we will continue to focus on the right innovation and accelerate the release to the market and being way ahead of the curve, leveraging the great technology we have. On the other side, on the go to market, aligning some of the things we’re doing in some of our regions and some of our go to market elements making them much more of a global practice. Making them much more focused, and that’s on the front. The third layer if you would like is the operational elements of the company and this is looking on things a bit more holistically consolidating different function, looking on expenses and prioritize them correctly and I think that on end you can see the results already in the operating margin and the operating income which improved actually stayed relatively flat. The expenses while the revenue grew hence the leverage of the company -- leverage not the company, leverage of our revenues is higher than we have experienced before. We will continue in all of those fronts that I’ve mentioned before and some additional acceleration on some fronts and I hope to further improve the execution as a result.

Just another question, I don’t know whether you or Dafna want to take it. So, Barak, 5-6 months now, I know you have been on the next point or the next focus area could be taking a fresh look at capital allocation. Are you happy with the way the balance sheet, the cash flow was currently allocated or do you think there could be some potential room for improvement on that front as well given the capital or given how cheap capital is out there?

So just as a reminder, I think you know that and actually you can see it in the numbers of this quarter. We allocate most of the capital, most of the cash we generate on a quarterly basis, you saw it this quarter, the combination of the buyback and the dividend was actually even a bit higher than the cash generation this quarter and this is our current capital actual philosophy. We as I said before, we’re looking on variety of M&A opportunities which we do plan to use the capital that we have for that matter. If you know, we decide that this is not the right place for us to go we will look into the capital structure of the company but right now I think we do have the right balance between the money for investment and money or cash that goes back for buyback and for dividend.

Thank you. We have another question for you. This one is from the line of Tal Grant at UBS.

So just looking at your updated guidance for Q4, it looks like you’re now expecting a slighter softer Q4 than you were previously. Just wondering have some deal slipped into Q3 and is that why Q4 has come down a bit? On the flip side your upper end of Q4 guidance is still extremely high and implying unprecedented increases in revenues and earnings for Q4. Just wondering is there some optionality? Is there a large deal, a specific large deal or a couple of large deals that you may sign in the quarter and how they are going if so? Second question, I think you said in July that the product gross margin would improve in Q3, you might have meant Q4, but just wondering why is it weak a year-on-year, is that just more hardware sales or is pricing coming down or what's going on there? And finally on NICE Engage just to get an idea of the opportunity here, is it 25,000 seats that we will need to update to the new platform and how is pricing going there with the customers you’re talking to? Thank you.

I will take the third question and then Dafna will take the first and the second. So with respect I believe the third question with respect to NICE Engage and the potential, basically the platform of NICE Engage is applicable to all our customer base which is very significant. We don’t report the exact number of seats that we have out there but it's definitely a very significant. We see a business, there is a certain license fee that comes with that search and service element that comes with that and further uplift for the maintenance. The opportunity we believe is significant, it's not a matter of question, it's about execution, how fast we can approach all our customers and drive them to upgrade to NICE Engage. As I’ve mentioned before we launch it July and we saw this quarter several deals coming from leading customers. So we’re very positive about the trend that we can build over here. Dafna, about the first and the second?

I will start with the second, regarding gross margin, yes it is slightly below last year but significantly the result is there for product mix and I believe going forward in the first quarter and after we do target higher gross margin than 65%. Regarding the guidance we actually -- it's a combination, what you see in the guidance is a combination of what you’ve allude to. On one hand we’re expecting significant growth sequentially and this is based on the current pipeline, the healthy pipeline that we see in front of us. There is large amount of deals, some of them are large deals that we’re working on and because of that we do expect significant sequential increase. We gave for the first quarter at this point relatively a wide range because there is -- there are many deals to close but overall we do expect very strong fourth quarter.

Okay and about the bringing down the guidance for Q4? The midpoint anyway, is that because some deals were signed in Q3, and you still -- they will be signed in Q4?

Actually we didn’t have guidance for Q4 before--

We had full year guidance in Q3 so you kind of did.

But the average of the yearly guidance is now higher than what we had in the third quarter. We took slightly the up range, we took up the low range but on average -- the average of our guidance for the full year is higher than Q3 with more than the incremental revenues that we had in the third quarter. And above the current--

Not by much, I mean 500,000 where as you be the midpoint of your Q3 range by 6 million.

Yes but the overall average of the guidance is up.

Yes but not as much as Q3 be at the midpoint.

We gave the guidance for the fourth quarter based on what we see now, it's well within the yearly guidance and reflect a very strong sequential and year-over-year growth.

Just to make sure that the point is clear, on the annual guidance is up actually more than the overachievement it would like, we have in Q3, and we didn’t give guidance to Q4 before. What we see the range of Q4 is based on the strong pipeline that we have in front of us which elude the annual guidance that you see.

We have another question for you, this one is from the line of Daniel Ives of FBR Capital Markets. Please go ahead.

This is Jim in for Dan, great quarter. Can you just talk about the puts and takes geographically? It looks like the Americas had a really strong quarter. I know if you could just talk maybe other regions as well.

Yes, we saw a very nice and strong quarter in the Americas, also relatively healthy in EMEA. The somewhat weakness we see in Asia Pacific goes to the other comments about the security business. On one hand we saw a nice growth in this business; it's a lumpy business, not every quarter. We see the exact same growth and this time it impacted the results in Asia Pacific.

And then if you could just maybe also elaborate a little more on the opportunities that you’re seeing with the increased use cases around your analytics business?

Yes, so we definitely -- of course of what we do is around analytics, this is our day to day is about -- we’ve variety of technologies in that domain and a lot of domain expertise in the market that we operate in and work very closely with our customers to find additional use cases. When we find such as a use case we usually work with a design partner of ours to further discover and further elaborate on this use case and develop the right product in context. When you look on the few use cases that I’ve mentioned previously on the call, one of them is customer engagement analytics, we announced it last year, very robust analytics platform, definitely for the high end market but also growing down market with that. We signed as I mentioned an 8-digit deal with the last third quarter, this quarter and this is proving to us that we’re in the right direction on that front. It opens up we believe a lot of additional use cases from the deployment and the dialogue with these customers. The other two example I’ve mentioned Suspect Search, classic example where we have a very strong presence in the relevant security markets. We come with such a capability that we heard about this need from customers and now we believe this can go both to our install base as well as to our new markets where we’re not present. And the other part of the analytics if you would like in our Financial Crime & Compliance business that by itself most of what we do in this market is based on a very strong analytics. Over there we have actually a unique combination of bringing data from variety of sources, interaction data and transactional data that’s the uniqueness of what we do and over there we see multiple use cases to our analytics and we release them in an even more frequent way than in the other markets. So all in all we have a lot of work to do materializing those use cases to our business and that’s our focus.

Thank you. We have another question for you. This one is from Greg McDowell at JMP Securities. Please go ahead.

Congratulations on the 8-digit Telco deal. I wanted to ask was any of the product revenue from that 8-digit deal recognized in Q3 or was it one of these situations where it's a big project where sort of the license sales are going to be recognized on delivery instead of, delivery of the project instead of delivery of licenses if you could just talk about sort of the revenue recognition of the deal that large. Thanks.

So the answer is yes, obviously some of the numbers that I’ve mentioned there is such a deal has a variety of elements. It has license element, it has services, it has maintenance. So some of the revenue already have been recognized and some within the on the following quarter. It also goes to the deals that I’ve mentioned, we have mentioned the last year at Q4 of last year, which we continue to see revenue from this deal in this quarter and in the following quarters as well.

And then one thing I’ve noticed on this earnings call maybe versus some previous earnings call. Is this just all the commentary on the multi-million deal that it definitely feels like there were more than usual and given that I was just wondering as you enter this Q4, compare to Q4 last year, do you feel like based on your backlog you’ve better visibility into the quarter this Q4 than last year? Thanks.

It's hard to say. What I can say is that we definitely have a very strong pipeline, this Q4 it is higher than the pipeline we had last year assuming our conversion rate and that goes to execution would be same or better than last year. We believe that the guidance that we gave that is very realistic and this is the reason so the range that we gave but definitely the pipeline is stronger.

And if I can slip in one more for Dafna, just the tax rate came down quite a bit in Q3 and I heard your explanation but how should we think about a tax rate for Q4. I may have missed that but if you can just give us a sense for whether we’re talking about a 12% non-GAAP tax rate or a 18% non-GAAP tax rate. Thanks.

Yes the tax rate going forward, our tax rate remains unchanged at 17% to 18% on a yearly basis. As always there might be some fluctuations in this quarter we had benefit from closing tax assessment as I’ve mentioned but we’re not changing the longer term or the overall tax rate for the company, longer term and for Q4.

We have another question for you, this one is from the line of Jeff Kessler at Imperial Capital. Please go ahead, Jeff.

You’ve mentioned a couple of obviously large telecom deals and I'm wondering have you beefed up your marketing efforts and go to market in that vertical. Is that vertical going to become and obviously it's going to come over the shorter term, a larger segment of your revenue base but is this targeted at being a larger segment of your revenue base and for what reason?

The answer is absolutely yes. We’re historically operating in a variety of verticals in the enterprise sector for about 10 or 11 different verticals, historically our strongest vertical financial is still a very, very strong sector for us but we invested in the last few months significant go to market efforts in additional vertical. Telco is one of them and I truly believe that it will become very strong vertical for us. We see that the solution that we have are becoming even more applicable to Telco, it's also to ensure and help few other industries. I think that the reason for that besides the focus of the both market is the fact of the going back to the use case that I’ve talked about before. The need of those organization to take vast amount of customer data from multiple channels and process them in real time for a variety of use cases is definitely very appealing and high needs for telecom, for healthcare insurance and obviously financial services and we now bring these solutions to all of those verticals. So the answer is yes, I expect those verticals to become even more significant for us in the future.

Is there a margin mix that you would like to see, a business mix that is more optimum for increasing margin? I mean I could say it the other way, which of these have higher margins and lower margins but obviously you’re going to say you like the business to evolve but the question is how would you like to tier those businesses in terms of what you get so that you maximize your margin from them?

Yes I don’t think we see different margins between those verticals. This is not the driving force for us while going to additional verticals and we do operate in those verticals for many years. The reason is the addressable markets. We believe that the solution that we have are applicable to a variety of verticals. Historically as I’ve mentioned we had a lot of focus on financial services, we still have this focus but we expanded and segmented the go to market teams to specialize in a variety of verticals and we see the results. So there is driving forces in addressable market not necessarily the margins.

One final question, also noticing that the financial and compliance segment grew at 7%, which is -- actually it's been pretty consistent whereas security grew at 15% and as you’ve already said it's already going to be lumpier. Is security going to permanently be lumpier or because of the size of the projects or does it have to be? Does it have to grow to a certain size for it to be less for whatever you get involved with (indiscernible) programs and things like that, does it have to be larger for that lumpiness to go away or is it going to be always 1% up one quarter and 15% up another quarter?

Yes so for the short term we might experience some lumpiness in this business, important focus for us for the long run and we believe that we can bring this business to a much more substantial growth and it goes to what you’ve hinted which is basically scaling up the business on one hand, on the other hand making sure we have enough of what I will call a run-rate business in this domain as well as those large projects and if you combine both of them we will have a much more substantial growth. So we’re doing some short term optimization to this business as you’ve witness this quarter and our long term plans both on go to markets, products, the places we operate in are definitely aiming -- we’re aiming to get it into a much more of a substantial growth business.

Are you able to describe in general terms, and the security programs? I realize you can't do it for some of them but a general description of those?

You mean specific deals or customers?

The types of business, the types of operations and functions you’re performing in security?

So our security business is actually, we’re exposed if you would like to very large aggressive market in the securities business. It's actually divided into a variety of market. There is the physical security market, the public safety market and the intelligence market. The commonality obviously is that brings analytics and similar technologies with different use cases to this market. I think that the beauty is that in all of those markets that I’ve mentioned we see strong demand and great potential with very large addressable market and we’re focusing our efforts in the places where we see the ability to go with the strategy that I’ve mentioned before. On one hand building a sustainable run-rate business, on the other hand obviously bringing those large projects wouldn’t get to this point, I do believe it will look much more similar to the rest of our business that has a very healthy ongoing recurring business as well as a mid and large size projects.

Thank you. We another question for you. This one is from Dan Bergstrom from RBC Capital Markets. Please go ahead, Dan.

Any comments or trends in cloud demand in the quarter?

Yes, I didn’t get -- thank you for the question. Yes we do see an increasing demand for cloud and it continues to grow for us in double digits. I think as I’ve mentioned in previous call we go about it very smartly. On one hand we manage our transformation to the cloud, some of our products are very much applicable to that and going for this transformation relatively quickly. And in other products we’re managing it much more carefully. But overall definitely the growth and the demand continue to be a strong. I think we have mentioned in the previous call and that’s an important point to mention, if you take our cloud business and you do what we like to call the perpetual equivalent, actually our organic growth rate would have been a bit higher in few percentages than what you see right now applying that in the future we can benefit from the growth that we see in the cloud business.

Thank you for your question. We will now return to Barak Eilam for closing remarks. Please go ahead.

Thank you everyone for joining us on this call. Looking forward to speak to you shortly again. Thank you.