Welcome ladies and gentlemen to the NICE conference discussing Fourth Quarter and Full Year 2016 Results, and thank you for holding. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded, February 16, 2017. I would like now to turn the call over to Mr. Marty Cohen, Vice President Investor Relations at NICE. Please go ahead.

Thank you, operator. With me on the call today are Barak Eilam, Chief Executive Officer; Beth Gaspich, 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 performance of the company to differ is contained in the section entitled Risk Factors in Item 3 of the company's 2005 annual report on Form 20-F as filed with the Securities and Exchange Commission on March 23, 2016. During today's call, we will present a more detailed discussion of fourth quarter 2016 results and the company's guidance for the first quarter and full-year of 2017. 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 differences 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, and welcome, everyone. I’m glad to be on the call with you today. We are pleased to close the year on a high note as we reported fourth quarter revenues of $329 million, representing 20% growth over Q4 2015. The growth reflects across the board strength in each of our business segments, healthy end markets, and further growth in analytics, which represented 65% of new bookings in Q4. We were also pleased to see continued strong leverage in our operating model. Operating income for Q4 was $94 million, representing 16% growth compared to Q4 of last year. The operating margin was 28.6% and earnings per share was $1.18 for Q4. Two years ago, at the beginning of 2014, we identified certain trends that were taking place in our markets, including the increasing demand for analytics and the initial adoption of the cloud. We had a vision to position NICE operationally, structurally, and with the right assets to capitalize on these growing trends and the eventual disruption in our markets that would come about as the results. This vision culminated in the NICE 2020 strategic plan. While we could not publically provide a complete map of the plan ahead of time for most competitive reasons, we did provide ongoing updates as the plan unfolded. The first step in NICE 2020 was to better position NICE operationally. We realigned internal processes from R&D to sales putting place a more effective go-to-market strategy, strength and innovation both product faster to the market and streamlined our overall operations. The next step was to structurally realign NICE to fully transform into a true enterprise software company, and we accomplished through the successful divestiture of our defense business. At the same time, through rapid innovation we grew our portfolio began injecting analytics into…

Thank you Barak and good day everyone. I am pleased to provide you with an analysis of our financial results and business performance for the fourth quarter and full year of 2016, as well as our outlook for the first quarter and full year of 2017. Before I begin, please note that the financial results include the inContact acquisition for the period from the closing of the acquisition until the end of the year. Also the financial results represent continued operations and excludes the divested businesses for Q4 2016 and the comparative numbers for 2015. These two businesses are presented as discontinued operations. However, the cash flow statement includes the results of both divestitures. And now, I will review the results. Revenue for the fourth quarter was $329 million, which represents an increase of 20% from $274 million in the same period of last year. Excluding the impact of currency exchange rates revenue growth was 22%. Revenue for the full year 2016 increased 11% to $1.30 billion. Excluding the impact the currency exchange rate, revenue growth was 12%. Similar to previous year, 2016 was a backend loaded year and we expect this seasonality to continue in 2017 as well. Customer interaction interactions revenues for the fourth quarter of 2016 grew 21% to $240 million, and financial crime and compliance revenues grew 18% to $89 million on top of the strong growth of 16% in Q4 2015. For the full year of 2016, customer interactions revenues were $768 million, an increase of 12%; and financial crime and compliance revenues were $262 million, an increase of 10%, compared to the same period of last year. On a regional breakdown, revenues in the Americas were $253 million in the fourth quarter and $734 million for the full year of 2016, compared to $178…

Thank you. [Operator Instructions] Your first question comes from Shaul Eyal from Oppenheimer. Please go ahead.

Thank you. Good afternoon guys, congrats on a solid end to a very successful and busy year. Barak, industry is clearly going through a rapid change on the one hand, and on the other hand industry is also experiencing a rapid pace of consolidation, as it relates to NICE where do you see a competitive advantage and how does it impact the industry and I have a follow-up.

Sure. No problem. Indeed our industry - the customer service industry is going through certain changes. I believe that the reason for those changes is the dynamics that we see in the buying behavior and the need for certain change in solution from customers those that I talked before in my previous comment, the market is looking for dramatic solution in the area of omnichannel cloud and analytics, as I have described before. And I believe that the changes we see in the competitive landscape is a result of few different competitors, some that are missing some of the assets, and some, some time the same that are also struggling financially due to a significant debt and we are all here to different views on different players in this market. With respect to NICE, we believe that all the activity that we have done in the last three years and even more so in 2016 well positioning us to offer what the customer needs this day, which is a full suite of solution, allowing them to face the omnichannel opportunities with high sophistication of analytics and offering all of that in a through cloud solution that is fully multi-tenant and elastic given the recent and strategic activities that we have done, and it’s definitely well positioning us vis-a-vis the competition.

Got it. And you know my follow-up, for those of us who have been following the name for about getting close to two decades now, knowing how NICE tends to forecast its annual guidance initially, are you again taking a more conservative stand of seeing how the year unfolds and then reassessing guidance as we move forward, is that a fair view Barak?

I would say that the guidance is what we believe is the right to view at the beginning of the year. Just beginning of the year, we have done two major acquisitions one of them was just late in 2016, bring it all together, I will handle full of work, very good work with a lot of opportunities in our hand, but this is just the beginning of the year and we are - this is what we see to begin with.

Got it. Thank you very much. Congrats.

Thank you.

Thank you. Your next question comes from Dan Bergstrom from RBC Capital Markets. Please go ahead.

Yes, thanks for taking my questions. So with analytics 65% of new bookings this quarter, it is up year-over-year and quarter-over-quarter sort of EMEA points to strong demand from the inContact customers, could you maybe talk to the reception from inContact for your analytics solutions?

Sure, no problem. First of all, we did see for many quarters now and we are reporting almost every quarter about the growth that we see in the demand for our analytics solution and it is across the board, across the two industries. As you look at NICE in all the domains where we operate, those things I have talked about, analytics is one of them, is one of our strongest assets and one of our strongest capabilities and today as you can see the majority of our new business come from that area. So, first of all we see the demand across the board. Furthermore, as we started to integrate inContact there are many, many different assets that NICE has to offer and are already offering to either the existing customers of inContact and also the ones that we are on boarding as we speak and the prospects that we are looking to add. And also the other direction, by the way, many assets of inContact that are very applicable to the NICE customer base. So we're very, very happy with the traction that we get both from customers, partners, and also the market overall and not less important also for our employees which are very excited about the joining forces together with inContact.

Great. Then maybe a bigger picture type question, with the deal close you’ve got additional disclosure around recurring revenue, I was wondering if we should be thinking about the financial model any differently or keeping anything in mind, should we be more focused on deferred revenue or billings, I guess any thoughts about how you are thinking about the financial model versus previously with more than 50% in recurring revenue now? Thanks.

Sure. Thanks for the question. So starting in 2017, we do expect to provide more metrics around the cloud base for our business and to be able to provide more visibility into the recurring revenue portion of our business. So, we’ve already seen a trend really starting right away in Q4 with increasing the amount of recurring revenue as a percent of our total and we expect that obviously to continue as we enter into Q1. So, we will be able to provide metrics starting with the first quarter of 2017 information and results.

Perfect. Thanks.

Thank you.

Thank you for your question. Your next question comes from Jonathan Ho from William Blair. Please go ahead.

Hi good morning and congratulations on the strong results. I just wanted to start out on - with a question in terms of the number or percentages of new customers that are electing SaaS and if could you could just give us any color in terms of the trend there?

As I said before, cloud represents a great opportunity for us and we started our cloud journey as a company several years back and all of the solution, all of the new solution that we developed in the last few years we have managed to offer both with cloud and some of them on premise, as well as the existing solutions that we have started to upgrade into cloud fashion. Obviously, both Nexidia and inContact are fully cloud companies with inContact offering a complete cloud offering. What we seen the market is a gradual, but very nice and fast adoption that is going at market. Historically, NICE did not play in the midmarket itself and for us it presents a significant opportunity because it allows us to take our overall portfolio and thanks to inContact now offering it to market that is doubling basically the size of our market. Similarly in the financial crime and compliance business, historically we have been playing and doing almost all our business at the higher end of the market, as you heard in my previous comments besides going adjacent market, we are also with the cloud can now go to the mid-market, which by itself is a very large market for financial services and with the essential offering of financial crime and compliance, we have seen a greater adoption in that segment of the market. So the answer is that we do see a greater adoption, midmarket going up, and for us it’s a great opportunity as it allows us to address both markets and also market segments in terms of offering that we didn't play in before.

Got it. Got it. And then are you guys potentially impacted by the shift to ASC 606 and can you give us any color from that potential as well?

Yes. So, we do expect to be impacted, it’s something that we’re already looking at and we are essentially working now to be poised to be adopted in the 2018.

Great, thank you.

Thank you for your question. Your next question comes from Tal Grant from UBS. Please go ahead.

Hi thanks for taking the question and congratulations on a very strong quarter. In the financial crime and compliance division, just wondering related to that, there is obviously talk in the media about Trump taking down or removing some of the regulation in the banks, just wondering how is that going to impact your business if it’s all, will that impact current business or potentially demand going forward, I know you’re moving to different verticals, but how much of an impact could that potentially have? And then I was a little surprised you didn't break out inContact, are you are not planning to tell us the inContact revenues for Q4 or next year at all? And then I have a follow-up if possible.

Sure. So, we obviously like everyone addressing the different changes, different in every aspect with the new administration in the US, we haven't seen any changes to the dynamics of our business and you have seen that Q4 results in our financial crime and compliance business for example were very, very strong ending a very strong year in that business as well. And if you think about this business, the demand is driven not necessarily from the regulations themselves while there are many regulation in place. Some of them by the U.S.-based, some of them international and global regulations, but the demand that we see is coming from actually some very different aspects. The first one that I have mentioned in the AML space, AML is no longer just a matter of financial regulation, it’s other from different aspects of taxation, monitoring taxation, and also as I said fighting terrorism, and that’s only growing and it’s actually growing much further than just financial services, as I have mentioned to anyone that’s moving money. The other aspect that we see great adoption is indeed by financial services that are trying to save money and save cost and taking the many tens of thousands of people that each large bank adopted in order to meet different compliance and do those task in a more estimative way and this is where we see the majority of the investment go in our direction. So, we don't see any impact - the recent changes in regulation and right now we don't believe that the changes that may come or not in terms of the regulation we have an impact on that business. With respect to the second question on inContact, as we shared in our plan to begin with, we are basically integrating and integrated the products we are now offering those on a combined rate to our customers and this will serve the customer service market as a whole, and we don't plan to break it apart as it is one business from the first day of the integration.

Okay. And then thanks for that. I’m just wondering on the trade receivables, I think even if, obviously it goes up normally in Q4 a little bit, and plus you’ve got the inContact but it feels like you went up quite a lot from Q3 to Q4, I’m just wondering if there is a like-for-like number, you can share that or maybe not giving what you just said?

Sure. So, we do present them in a combined fashion and you highlighted that inContact the opening balance became part of our accounts receivable, but the primary thing to highlight is that, if you think about our age receivables and that also pertains to our cash flow is, if you look at the change kind of year-over-year in cash and accounts receivables, we continue to include cash that we collected for the divested businesses during the course of 2016. Whereas in 2016 there were actually cash outlays back to those divested businesses.

Got it. Thank you.

Thank you for your question. Your next question comes from Tavy Rosner from Barclays. Please go ahead.

Hi thanks for taking my question. You talked about extending to new markets, probably for financial crime and compliance, just to see and also regarding inContact's entering new geographies, do you expect sales and marketing expense to increase as a result of that?

No, we believe that we are well-positioned with the existing sales capacity that we have. One of the, obviously we have received greater sales force coming with inContact and also with Nexidia, and in the case of the financial crime and compliance we are actually expanding a lot, as a said the ecosystem that we have around us, so we bring the technology we bring the domain expertise in terms of the go to market, our sales people are now way more than before are working with consistent integrators that are bringing the expertise and the relationship in markets where we didn't operate before. So we feel very good of the current investment in sales and marketing and coming with the brand that we are, the stronger brand that we are we believe it’s okay, also don't forget that the adjacencies that we are growing after are very nearby adjacencies, where NICE and it’s different names are well known and it helps us very fast as we step into these markets to establish ourselves as a leader.

That's helpful and on the two acquisitions you made this year, are they cost cutting that you can implement, and are those already baked into your guidance for 2017?

Yes, so when we announced, for example the acquisition of inContact, we talked about several synergies that exist between the two companies just to remind, one of them was the fact that we combine together two public companies; the other one is that there are a lot of corporate activities MIF [ph] Systems, IT et cetera that inContact is a smaller company just started to invest in and all of a sudden being part of NICE, they can enjoy those platform and infrastructure from NICE. And lastly, the fact that inContact did not have a major W4 offering by themselves and now they have the one that is a market leader for NICE and they don't need to take other solutions and pay royalties for that, altogether there are synergies opportunity, we have baked that into our model for 2017, as we realize those synergies during the year, some may come immediately, but some will realize as the year ago by, and we expect to realize some of those synergies later in the year.

Thank you, Barak.

Thank you.

Thank you for your question. Your next question comes from Gabriela Borges from Goldman Sachs. Please go ahead.

Hi good afternoon, thank you for taking the question. Barak may be on the NICE To Be plan; I was hoping you could share some more assumptions with us and how you are thinking about getting to that revenue level? How shall we be thinking about timeline specifically, and now that string factors two or three big string factors that could determine what sort of trend line that happens on? And then Beth, if you could just comment on, at that sort of scale what type of margin profile you think is qualitatively the company might be able to achieve? Thank you.

Thank you for the question. So, as I described NICE To Be is our strategic plan at the moment. Two years ago we came with NICE 2020, back then we got a lot of questions and I believe during those three years we have - every time that we did another move, we provided more and more information of the progress. There is a very detailed plan for us behind NICE To Be we have the line of sight to this goal. We believe this is important for us as a company to aim high, and this is what we are doing. We are not sharing our internal module and when exactly we're planning to be there, but differently we have a line of sight for it and we are looking for it to get there.

Yes, and with respect to the question around the margins, obviously, we have seen a lot of margin expansion for NICE in the last few years and as I mentioned with the acquisition of inContact, we will see some short-term declines as a result of lower margins as part of their business. However, Barak talked about this synergy that we expect that we start to realize during the course of 2017. So, we do expect to see a continued gradual improvement of our operating margins over time back to the relative ranges that we were prior to the acquisition.

That's helpful thank you. Please go ahead.

And also in 2017, we expect the operating profit to continue to and go in double-digit.

That's helpful thank you. As a follow-up, if I could, on the earlier commentary on inContact and some of the cost synergies that you are able to realize, could you give us some perspective on how the buying cycle of the customers work between contact center infrastructure and the cloud and across workforce engagement or customer engagement solutions, do you find that the buying cycle often coincide and as [indiscernible] people work on the organization that are making those type of decisions adopt contract center and for customer engagement? Thank you.

Yes, absolutely, and I believe that this is one of the reason why we have decided to acquire inContact. Two of the years we have been operating in the customer engagement and the WFO space actually for the last two decades. And up until the cloud era, while it was the same people making the decision those decision were sequential, sometime made the same time, but in many cases they were done one after the other. The cloud changes, this paradigm and we definitely see that now is the cloud those decisions are made together as someone decides to move to the cloud and they do have an inflow for the routing and ACD and smart - smart routing and smart omnichannel, in many cases we will take the WFO decision at the same time. And then, we obviously saw the opportunity not just to increase the tax rate, but also to enjoy the growth on both sides of this market segment. So, to sum up, it’s the same people in those, in enterprises that take the decision for the customer engagement WFO analytics and the routing and the infrastructure of the contact center, and the cloud now makes this decision in many cases at the same time.

I appreciate the perspectives. Thank you very much.

Thank you.

Thank you for your question. Your next question comes from the line of Paul Coster from JPMorgan. Please go ahead.

Yes, thanks for taking the question. The revenue guidance for 2017, looks a little light to me, if you assume that inContact was approaching a $300 million run rate for the year than in size very low single-digit growth for the legacy business, even if you do that back a bit, it is difficult for me to sort of understand, so perhaps you can talk to me about the revenue guidance, it looks very conservative.

As I said, we made the acquisition in November. It’s the early days of the acquisition, obviously it takes a lot of bandwidth from both management of the companies as we build not just for the short-term, but also for the long term we are very busy with the product integration, you see a lot of product announcement coming from us that give was great opportunities for the road ahead, and we believe that it is the right thing for us to do, to come with this guidance, which we believe is very healthy, and allow us to execute well on our strategic plan.

Are you suggesting Barak that there is some product innovation that’s in the pipeline and the claims the customers are holding back a little bit, pending the release of that on SaaS platform?

No, I don't think it is related to that. That’s just a normal - the expectation that we have model of the minimum disruption in the beginning as we would like also to aim for the mid-term and not just for the short-term. In terms of the customers we are see actually great traction from customers that would like to start and adopting the combined solution, it’s the beginning of the year and this is the right range for us to start the deal, obviously as the year progresses we’ll assess how fast we are executing on the plan.

Got it. We used to get excited about 7-digit deals now, 8-digit deals are quite common for you, is there any difference in the timeline with which the revenues are subsequently recognized, is it shifting more towards a product business and less of a professional services business and therefore realized within 12 months for instance.

Not necessarily, I am trying to think if there is a big difference, I think that from revenue recognition it’s similar to what we have seen in 7-figure deal, maybe if there is a difference we are talking about few months not something substantial. The reason by the way that we see going size of the deal also if you look historically, I think you characterize it correctly, we used to get excited, we still by the way get excited by 7-figure deal, but we have bought large amount of 7-figure deals, and 8-figure deals, I think the reason for that is throughout the year and for sure in 2016 we have managed to grow our portfolio and our approach is that when possible we offer customers instead of taking a very stager approach taking the not - maybe the full suite or large amount of suite going up to larger deployment and that’s the reason that we see those larger and larger deals, which I think characterize companies with the growing portfolio.

Great, thank you.

Thank you.

Thank you for your question. Your next question comes from Greg McDowell from JMP Securities. Please go ahead.

Great, thank you very much. Just one question, Barak I was wondering if you could talk about some of the differences between the NICE 2020 plan and the NICE To Be plan, it certainly feels like the NICE 2020 plan has this balance of revenue growth and operating margin growth, but also consisted of - as you mentioned divestitures and some large acquisition, so as you think about some of the differences between the two plans, maybe if you could talk about, maybe where you are optimizing, what you're optimizing for the most in the NICE To Be plan? Thanks.

Sure, not a problem. So, if I look in retrospective on the NICE 2020 plan as we put in place two years ago, we were a very different company, obviously, two years with different set of assets playing in somewhat different markets from today. And the main things of that plan, that was a plan for a bit longer period and we have managed to move faster on this plan was to - as I said reorganize the company that’s the one thing, to focus the company and to start building both organically and in organically, assets that will put us in the right market and the right market sizes. And also to streamline the different infrastructure processes, teams, department in the company to be able to get to the next level and this is to start scaling up the company as we have done in the last few months, and as we plan to do further in the future. So that was the NICE 2020. The end, not exactly the end, but where we are today is in a place where we actually, very different from 2014, we play in a much larger addressable market. If you compare the set of addressable markets where we play in the beginning of 2014 to today, we are in significantly higher addressable markets and with the right assets. So the main theme, as I suggested in NICE To Be is actually to leverage on all the opportunities we have created for ourselves with the main themes of analytics, cloud, omnichannel and the combination of those as I have mentioned and now starting to capitalize on those many opportunities that we have created in much bigger addressable markets. With respect to the financial impact, the NICE 2020 created multiple opportunities both on the top line and the bottom line, and we expect similar opportunities also in the NICE To Be, we expect to have also a very nice go from the top line and at the same time have a very good leverage to the bottom line with the additional element also of more and more recurring revenues and changing mix of the recurring revenues, which happen obviously from more and more cloud solutions.

Thank you.

Thank you for your question. We currently have no further questions.

Thank you all very much for joining us today. Have a great day.