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On Wednesday, Verint Systems, Inc. (NASDAQ:VRNT) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Shaul Eyal – Oppenheimer: Couple of quick questions on my end. Dan, can you provide us with little bit of color with respect to bookings this quarter and what’s the overall backlog, qualitatively what does it look like right now?
Dan Bodner – Corporate Officer, President, CEO and Director: Shaul, as you know, we are not disclosing booking and backlog is not a meaningful metric for us, but, generally as we look at the business activity in the first half of the year, we feel that we’re looking at what we expected a pretty strong business activity in the backdrop of global environment that is not great, but as we were starting the year, we didn’t expect the environment to be great. So, I think that the first half of Q1 was strong and Q2 was stronger than we expected overall and as we look forward we are starting to see some changes in EMEA, which is causing us to be more cautious. So, EMEA, if we look at the EMEA overall and again I am not discussing booking, but I am giving you revenue over time, revenue booking are equal. So, EMEA last year had a 13% year-over-year growth and EMEA in Q1 had a 7% year-over-year growth, so in Q1 we still felt that what other companies are reporting about EMEA, didn’t catch up with Verint, but as we look at EMEA Q2 and as Doug mentioned, EMEA Q2 for us is $50 million, and that’s down from $53 million last year. Actually, as we look deeper into these numbers, under constant currency, EMEA would have been $54 million this quarter. So, it would be actually $1 million up as opposed to the actual results of $3 million down, but overall, what we see that EMEA situation has caught up with Verint, and while we are projecting overall for EMEA for the year still may grow slightly, flat towards low single digit growth, this is certainly below what we had seen last year and what we’ve seen in Q1. I think this gives you a little bit of kind of an explanation of what has been changing for Verint since the beginning of the year.
Shaul Eyal – Oppenheimer: While we are on the EMEA region, when we look at kind of the third and maybe the second half ’12 guidance, any product, whether it’s the Enterprise or Video, which is kind of slightly more impacted or it’s basically kind of softness across the board?
Dan Bodner – Corporate Officer, President, CEO and Director: Well, it looks like in EMEA right now in certain countries, and certainly not across the entire region, but in certain countries government budgets have been affected more than enterprise budgets. I have to say that government overall has performed very well for Verint in the first half. We had three orders that are in excess of $10 million and we have lot of excitement about some of the products that we have introduced this year, but certainly if I look at EMEA certain countries was in EMEA. Government budget has been affected and we believe that it’s not sustainable, we believe governments will need to invest in the technology that will help them to collect and analyze data so they can fight crime and terror, but for now and for the rest of the year we’ll think we will have some impact from government customers in EMEA.
Douglas E. Robinson – Corporate Officer and CFO: So that impact the Security side a little bit more than the Enterprise side we’d say.
Shaul Eyal – Oppenheimer: Maybe one final maybe Dan, big picture question for you. You mentioned during your prepared remarks initially kind of the big data driver. Do you think, and all of us know about Splunk and about Click and their products and kind of what they do. Do you think that maybe Verint could be positioned or maybe invested should be starting to think also on Verint more in the sense of a big data play down the road?
Dan Bodner – Corporate Officer, President, CEO and Director: What I mentioned is that our solutions are making big data actionable and this is not something that we have started to do now, it’s actually what we have been doing for many, many years. We’re helping our customers to not just collect information and store information, but analyze it for the very specific business applications or security applications. So, Verint has been participating in helping customers collect very large data sets with structured and structured data and making sense of them and applying them in a way that creates an ROI. What I see from a macro industry that a lot of the investment in big data now is around IT infrastructure and typically applications are lagging and they tend to start to accelerate once the IT infrastructure has been already dealt with. So, we’ve seen a lot of growth for Verint that is driven by actionable intelligence and making big data actionable, but we certainly believe that this is an early-stage industry where the potential for companies to really leverage the content and the insight from big data is just at the very beginning. I’ll just give one example that one of the orders that we mentioned that we got this year, we’re helping this customer to collect huge amount of information. One of our customers is collecting a billion products per day and this is government customer that needs to collect information that includes phone calls and emails and web pages that suspects are visiting. So, you can imagine that this is a huge amount of information, 1 billion products per day, this requires storage of multiple petabytes and a lot of sophisticated analytics to really understand the content and help drive investigation and create evidence that helps fight crime and (indiscernible). So, we surely are already participating in the big data and I think relative to where the industry is, we are certainly focused on applications not on infrastructure and we will continue to focus on business applications.
The Big Data Factor
Daniel Meron – RBC Capital Markets: Dan and Doug congrats on the ongoing execution even despite the tough backdrop. Just following on Shaul’s question, big data, as you look at the growth rates that you have now, I think that the macro noise is somewhat of blurring the picture. You did have great first half. What do you think when net out the FX noise, the macro noise, et cetera, your underlying growth this year, and maybe as you look historically what it was last two to three years and as big data moves into more applicable of actionable data as you term it, how do you thing that that growth rate may play out in the enterprise realm or the security realm?
Dan Bodner – Corporate Officer, President, CEO and Director: I do think that the recognition of big data as an important factor for enterprise and governments is certainly going to help Verint’s growth in the future. When we started delivering actionable intelligence solutions, we did a lot of market educations and there was lot of skepticism of whether there is really content that creates value for customers. I think now people are much more recognizing that you can really extract value from the information kiosk and big data is creating a big information kiosk. I think that the fact that companies are investing in big data infrastructure whether it’s more storage or more processing power that’s an infrastructure that can support the application such as Verint is deploying. We’ve seen in the past customers are concerned about deploying our solutions because they felt the infrastructure was not ready and was not – could not support the bandwidth of our solutions, so all that infrastructure investment is going to be helpful. In a normalized economy we certainly are going to continue to invest in accelerating growth.
Daniel Meron – RBC Capital Markets: Is there a way to quantify what growth would have been this year absent FX noise and the economy?
Dan Bodner – Corporate Officer, President, CEO and Director: I think we quantified the FX for EMEA in Q2 which was about $4 million in EMEA. I think the overall FX effect on revenue in Q2 is $6 million, so it’s mostly EMEA, but there were some other small adjustments in other emerging countries. FX is not something we like to predict, so we can only report the impact so far. We certainly are dialing this into how we think about the future, but as we look forward I think that FX and what we see in EMEA is what causing us to be more cautious short-term.
Daniel Meron – RBC Capital Markets: Just last question from me. You talk about FX headwinds on the top line, are there headwinds or benefits on the bottom line?
Douglas E. Robinson – Corporate Officer and CFO: Yes, there is some natural hedging from the expense side. So, to the extent we’re profitable that’s exposure to us. So, the earnings are shielded a little bit more. However, we do hedge some of the expenses in certain currencies where we have expense and no revenue, so that doesn’t give us the pick-up. So, net, net as the dollar strengthens will hurt the earnings, but hurt even more so to the top line.
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