Good day ladies and gentlemen, and welcome to NICE Systems Conference Call discussing First Quarter 2014 Results. And thank you all for holding. All participants are at present in a 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 on May 8, 2014. I would now like to turn this call over to Mr. Marty Cohen, VP Investor Relations at NICE. Please go ahead.

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 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 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 the first quarter 2014 results and the company's guidance for the second 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. Before I turn it over, I’d like to remind you that we are hosting an Analyst Day on May 19 and 20 in conjunction with our Annual User Conference at the Cosmopolitan Hotel in Las Vegas. The special program that we are having for analysts and investors will include meetings with Nice executives, presentations from customers, product and technology sessions and access to the solutions showcased. If you haven’t registered and would like to do so, please email us at ir@nice.com. I will now turn the call over to Barak.

Thank you, Marty and welcome everyone. I am excited to be talking to you today for the first time since I transitioned to the CEO role in early April. In my many years at Nice, I have been fortunate to experience different roles within the company, such as product development, sales and marketing, and services. I started 15 years ago in R&D in our customer interaction business. Then, moved to product management and after that, I managed the compliance solutions for the financial services industry. I later built and led the interaction analytics business unit, which was the unit that was the foundation for the company’s entry into developing and selling analytics-based advanced applications. Finally, I expended five years in the U.S., first, as the Head of Sales for the Americas and then, as Head of the Americas Region. This period in the Americas provided me with a lot of exposure to our top customers significantly broadening my perspectives on our market opportunities in areas of future growth. I want to take this opportunity to thank Zeevi for his leadership over the past years, a period during which the company evolved in many areas that today serves as the foundation for the future. I believe what set us apart is the combination of the great assets we bring to the table, namely, the established and ongoing relationships we have with our thousands of customers including numerous leading global brands, our industry-leading products and technologies, our world-class go-to-market organization, our winning culture, our domain expertise and our strong financial position that enables to invest in the company’s future growth. Together with the management team, I look forward to leveraging these great assets and navigating Nice to exciting new heights of success. Being very close to the field and to our customers…

Thank you, Barak. I am pleased to provide you with an analysis of our financial results and business performance for the first quarter of 2014 and our outlook for the second quarter and full year. Revenues for the first quarter were $229 million, up 2% from $225 million in Q1 last year. Customer interactions revenues were $139 million in the quarter, up 1% from Q1, 2013. Financial crime and compliance entered another very strong growing 24% year-on-year to $43 million, security revenues were $47 million down 11% from Q1, 2013. This business continues to be very lumpy. Q1 last year was a very strong quarter with 17% growth year-over-year from the year before. Moving to the regional breakdown, first quarter revenues in the Americas were $148 million increasing 2% from Q1 2013. Revenues in Europe, Middle East and Africa increased 7% from last year to $53 million. Revenues from the Asia-Pacific region decreased 6% from the first quarter of last year to $28 million. For the quarter, the Americas accounted for 65% of total revenues, EMEA 23% and APAC 12%. Looking at revenues by business line, product revenue accounted for 34% of total revenues in Q1, maintenance revenues accounted for 41% and professional services, including cloud accounted for the remaining 25%. Gross margin in Q1 was down to 65.4%, resulting from the business mix and comprise of higher proportion of service revenue. This resulted in a decline in operating margin to 18.2% of revenues, although operating expenses remained largely unchanged year-over-year. During 2014, we expect product revenues to resume growth and lead to higher growth in operating margin and we are targeting an increase in operating margin in 2014 compared to 2013. Tax rate in the quarter was 18%, up significantly from 16% in Q1 2013. As a result of…

Thank you. (Operator Instructions) And your first question comes from the line of Daniel Ives from FBR. Please proceed. Daniel, you are live in the call. Daniel Ives – FBR: Yes, hey guys. Congrats on CEO and your first call. Could you sort of compare where we were a year ago, in terms of that 1Q versus this 1Q? I mean, obviously outlook is pretty similar for the year, numbers were three months ago. But maybe you could just talk about coming into the year with a slightly soft revenue, but obviously a good backlog and maybe compare and contrast where we were last year, obviously finished the year strong with second half numbers?

I think, we are starting – we started this year with a greater backlog compared to last year and also if I look at the situation right now at our pipeline, now compared to the pipeline that we had at this period a year before, we are in a better position in terms of both pipeline and backlog. Daniel Ives – FBR: Okay, and maybe now, I mean obviously, with the new leadership, talk about your philosophy in terms of acquisitions. Obviously, you specifically mentioned about organic and inorganic, maybe just from a high level, talk to us about your philosophy with acquisitions. How you are thinking about it, I mean, obviously not specific course, but maybe philosophically, how we should think about the new Nice with you as CEO?

Hi, Dan, it’s Barak. Thank you for the question and very nice meeting you. So, first of all, as I mentioned before, we are definitely going to look more aggressively into acquisitions. We believe that there are some great opportunities out there and we have some interesting pipeline of acquisition that we plan to try and capitalize on. In terms of the different demand without obviously being very specific, we definitely see potential synergies in the different directions that we have and different analytics based solutions and there are many opportunities that can augment our offering. That’s one part and second, as a part of our offering moving more and more into the cloud, we will look to accelerate on that front via acquisitions. Daniel Ives – FBR: Okay, real helpful. Thanks.

Thank you.

Thank you for your question. Your next question comes from the line of Shaul Eyal from Oppenheimer. Please go ahead. Shaul Eyal – Oppenheimer: Thank you, hi, good afternoon guys. Barak, congrats and welcome on board. Product revenues coming below our estimate and Dafna, I am absolutely kind of getting your commentary and qualitative direction about it. But how should we be thinking about it for the second quarter and the remainder of the year. I know, you said it’s about to resume growth. Is it going to be similar to what we have seen in the second or third quarter of the last year in terms of absolute number? Then also, is that a reflection of the growth you are seeing on a SaaS and application front that are recorded under the service line?

Hi, Shaul and thank you for the questions. So I’ll answer the first part first. So, first of all, yes, absolutely similarly to what we sell last year and as we believe that the trend would be the more pronounced this year, bigger chunk of the revenue will come on the second half of the year and the pipeline that we see, definitely supports it. And it’s a combination of several things and you mentioned the cloud. Cloud is definitely one of them. Large application projects is the second part, it takes more time to recognize this revenue and deliver the project and obviously the large project that we see on the security front and if you take all of it together, we definitely see the trends shifting more and more of our revenue into the second half of the year. Shaul Eyal – Oppenheimer: Got it. Dafna, from a foreign exchange perspective with the U.S. dollar continuing its slide versus the Israeli shekel and a sizable Israeli operations, how are you hedged going forward?

Yes, well, it’s a good question, I don’t know if all listeners will decide that there is a continuous deterioration of the dollar against the Israeli shekel and that on the long-term has any impact on our activity and mainly focus to look for lower cost alternatives and that our policy is to hedge all the time six months on average in advance. So we would not be caught by surprise in the next quarter by the shekel and the shekel dollar. But often time if the current low rate of the dollar force us to take some steps and move into lower cost earlier. Shaul Eyal – Oppenheimer: One final question if I may. I know, Dan has already asked about Barak’s M&A philosophy. Maybe from a broader perspective, this quarter coming below expectations, revenue guidance for the year EPS slightly below. Barak, should we be treating this quarter as what it’s being called a kitchen sink quarter or in other words a new field steps in getting the opportunity to kind of slightly reset the outlook while beginning to convey its own message, implement its own strategy going forward? What’s the thinking along these lines?

Yes, I think that what we saw in Q1 is mainly the result of the transition of a CEO which is a natural. And when I see in months ago, I review thoroughly the business and I am taking a more cautious approach. And our guidance is taking that into account both for the second quarter and for the second half of the year, but believe that moving forward, we will not see further impact of this transition and the business remain very strong with the strong fundamentals. Shaul Eyal – Oppenheimer: Fair enough. Good luck and congrats again.

Thank you very much.

Thank you. Your next question comes from the line of Shyam Patil from Wedbush Securities. Please proceed. Shyam Patil – Wedbush Securities: Hi, good morning. Congrats Barak as well. Welcome onboard. First question is on the customer interactions business, because it came in a little bit, we think that that’s where the slight weakness was in the quarter. Just curious if it’s concentrated in any particular application areas, whether is recurring or was management analytics. Also if you could talk about just your bookings for the quarter overall for the company and your outlook for that particular segment? Thank you.

I think that if I look at compared to our previous expectation regarding the specific quarter, then I would say that we were missing several millions on the security side. As I’ve mentioned earlier, the financial crime and compliance had a very good quarter and on the security, we are showing some decline year-over-year. It takes a lot to do with the fluctuations in this business and I do expect the security business throughout the rest of the year to be much stronger but we will be missing several millions mainly on that front. Shyam Patil – Wedbush Securities: All right, and then in terms of linearity by quarter for the year, are you expecting more to come through the back half? How should we think about the third quarter versus the fourth quarter?

I believe we will see the same phenomena that we’ve seen in 2013 where there is a major increase in revenues in the fourth quarter of the year. Last year, we had the third quarter was slightly better than the second quarter and most of the increase came in the fourth quarter. Shyam Patil – Wedbush Securities: Great, thank you.

Thank you. Your next question comes from the line of Jonathan Ho from William Blair. Please proceed. Jonathan Ho – William Blair: Hello. Hey guys.

Yes, go ahead, we can hear you. Jonathan Ho – William Blair: Okay, just wanted to understand a little bit about the upgrade cycle that you mentioned regarding sort of the financial crime and compliance business. Could you give us a little bit more color on what you are seeing there and perhaps what we should be expecting in terms of the growth rate for the financial crime and compliance segments?

Yes, specifically, the management – we have a very large and stronger customer base in the financial industry using legacy anti-money laundering solutions and the combination of the changes in the regulatory environment in this specific domain as well as some technology update. It’s a great opportunity for an upgrade and product recycle in this particular market, plus obviously adding some capabilities and augmenting that with the other parts of our solutions. We believe that this business will continue to grow in a similar rate to what we’ve seen so far. Jonathan Ho – William Blair: Got it, and then can you talk a little bit about pipeline and the selling environment, just want to understand if there is any sort of change relative to the win rates or whether there has been any delays in terms of closing deals. Just want to get a sense from you what the overall environment looks at, especially as you start to look into the second quarter?

We don’t see any dramatic change or any significant change in any of the markets where we operate. Most of the trends, if not all of them are the same, there can always be another one or two deals slipping between one quarter to another because of buying decisions or certain compelling events, but all in all, not a big change in the trends which I believe all of them are very positive. Jonathan Ho – William Blair: Great, thank you.

Thank you. Your next question comes from the line of Paul Coster from JPMorgan. Please proceed. Paul Coster – JPMorgan: Yes, thanks for taking the questions. As you believe the business is going to be more back-end loaded than in the past, why is it that you are churning full year guidance?

I am sorry; can you repeat the last part? I didn’t hear. Paul Coster – JPMorgan: If you believe the business is more back-end loaded than in the past, why are you churning full year guidance?

As I said before, when I stepped in and we had a slower Q1, when we look on the second half of the year, we believe that the business is solid and will come, what we don’t believe given the transition and everything that we can catch up on the gap that we have from Q1 giving the transition. But the all-in-all for the second half of the year, we remain very optimistic about our business. If you look on the amount and the change that we have done, basically taking account the slowness in Q1 and the guidance we give for Q2. Paul Coster – JPMorgan: So the other thing is not entirely on board with this argument that this is more seasonal now because, I know for instance, services were a record in this first quarter, right? $149 million, I think it was, million. Well, I mean, slightly down from the fourth quarter, but significantly up year-on-year and Dafna in the past just talked about bigger deals having a longer kind of revenue recognition cycle to the yields more visibility and smoothes out some of your revenues. So, I am not quite understanding why it is that you are suddenly becoming more seasonal when those trends including the instruction of SaaS-based business model now. I would be watching the opposite direction.

Yes, so let me try to explain. So, on the services business including cloud, you are absolutely right that we have a certain level of business, but when it comes to the products, and this is the place where we see the bigger trunk of becoming much more of a back-end loaded, because of the decision, the large a project, the time that it takes to recognize this project, this is where we see this is a seasonality mainly on that front. Paul Coster – JPMorgan: Okay, thank you.

Thank you.

Thank you for your question. Your next question comes from the line Tal Grant from UBS. Please proceed. Tal Grant – UBS: Hi there. Just a couple of questions from me. On the cloud revenues could you tell us what percentage of your revenues are from the cloud? Or if not, instead of giving a 10% wide range is there a 10% could you say 0% to 5% or 5% to 10% maybe? Second question is on the security business. I know it is the World Cup this year you did Sochi last year; did you get the contract for the World Cup? And finally, on dividends, are you planning to move to a sort of earnings-based payout ratio or will it continue like this $0.16 a quarter? Thanks.

Okay, so, on the first question regarding the SaaS business, the cloud business, it’s still a small portion of our revenues between 5% to 10%, but it’s growing very nicely quarter-over-quarter still from a low basis. Regarding the specific question on World Cup, I cannot give specific comments on that, but I can say that we are very focused and well focused in the fact as you mentioned on the Sochi games and this is a large sport event. So it is very much on our agenda. Regarding the dividend policy, we are looking into what should be – we just completed one year of dividend payment and we are looking at the right way to address it going forward there is no specific different decision on that at this point.

Maybe just to add and thank you for the question specifically on the second part – the second question on the World Cup, I cannot comment specifically on this one, but we believe that we have great offering for these large sporting events and we are very focused on that making sure that we are protecting every large sporting event globally. Tal Grant – UBS: Okay, thank you very much.

Thank you.

Thank you for your question. Your next question comes from Jeffrey Kessler from Imperial Capital. Please proceed. Jeffrey Kessler – Imperial Capital: Thank you. Could you explain a little bit about the nature of the backlog on some of these large projects that will basically turn up in the fourth quarter? Is that backlog going to – firstly, is the margin on the backlog inline, above, or below corporate? And number two, what is the nature of the size of projects in that backlog?

So, overall, compared to Q1 of last year, our backlog is stronger, that’s one thing I can say about the backlog. Second what we see over there is a combination of many large projects, it’s in the different areas of the business, many of them are analytics-based and advanced applications type of projects which are in deployment. And as a result, when the deployments will get over and be in production, then we can start recognizing the revenue and this is why we give this outlook for the rest of the year more leading towards the second half of the year. Jeffrey Kessler – Imperial Capital: Okay, could you also elaborate on what your comments regarding replacing some older anti-money laundering solution with an upgrade cycle, what’s your sense? What’s your ROI on this? What is the cost to do this? And what are you going to be getting? What’s the client going to be getting for the upgrade that you are putting in?

So, we see in the last, I would say 12 to 18 months, a change in the approach, both on the regulatory perspective and from organizations with respect to anti-money laundering, most if not all financial industries institution has a certain system in place. In many of them, they have our system, but it’s outdated in the sense of being in compliance to the changes in the regulation. So, the logic, the reason in the compelling events for all the upgrade cycle is to get into the latest and greatest and make sure that they comply with this regulation. For us obviously it’s a great opportunity to provide them with much more reach. Enterprise-wide approach and also the ability to provide them and integrate it with other solutions from our offerings on the enterprise level both on the compliance and the fraud side. Jeffrey Kessler – Imperial Capital: Okay, thank you very much.

Thank you.

Thank you. Your next question comes from the line of David Kaplan from Barclays. Please proceed. David Kaplan – Barclays: Hi, everyone, just a couple of questions on expenses. First of all, gross margin this quarter was a little bit weaker than we were looking for. Can you talk about what happened there? Was that specifics of the quarter? Or does that have to do with deals slipping like something that Barak mentioned earlier? Or has something changed in the business? And then the second question is on stock-based comp, is that 7% of OpEx this quarter in line with last quarter but much higher than previous? So has there been a change in the compensation policy for the employees and of that stock-based compensation, how much of it are grants and how much of it are options? Thanks.

Okay, so first of all regarding the gross margin, the gross margin is lower than we previously saw and also slightly below where we want to be. It’s the result of the mix and it’s mainly because the higher part of the gross margin is being contributed the most by the product revenues and that was slightly lower than what we have seen in previous quarter, while the service and especially the professional service including SaaS remained very strong. So, with the overall mix, it takes the margin down, we also had certain impact of a specific deals with lower gross margin on the product side and we had this as well. What we see in gross margin is not the indication for the future and we do expect some slight improvement in gross margin and to see gross margin which is similar to what we have seen last year. That’s on that part. Regarding the stock-based compensation there is no major change in our policy and we have a certain mixture of options and usually top management is being compensated by some combination. And it’s compensated by stock options and the rest of the team which is very small and very small portion of our employees are getting compensation by equity but the below top management it’s mostly in RSUs. But as I said, there is no major change in our policy. David Kaplan – Barclays: Okay, great. And you mentioned getting back to a more normalized gross margin. Do you mean in the near term or you are talking about longer-term? And I guess the other part of it. The other reason I could have thought that there would be a little bit of a change in the mix has to do with acquisitions and the – and squeezing out as much synergies there could be in those acquisitions. I am sure some are in the relatively still new and you are not yet fully accretive is that the right way for me to think about it? And then that’s’ it for me.

I think that in terms of impacts of acquisitions on gross margin it would be highly dependent on the type of acquisitions we are going to do. And my comment regarding the improvement, I believe that in the quarter and towards of the end of the rest of the year, we will see higher part of projects, revenues and that would drive gross margin even in the short-term slightly up. David Kaplan – Barclays: Okay, great. Thanks very much.

Thank you. Your next question comes from the line of Greg McDowell from JMP Securities. Please proceed. Greg McDowell – JMP Securities: Great, thank you. And I’m certainly looking forward to your User Conference in a few weeks. I just have one question, I would love to talk about your business on a geographic basis and specifically in Q1, what regions were disappointing for you or where did you see sort of that softness? And number two, as we think about the lowered full year guidance, has there been a change in any particular region or a geographic region and that has sort of led to the lower full year guidance? Thank you.

Yes, so with respect – first of all, thank you for the question. I’m looking forward to see you in the Analyst Day. Specifically, with regards to the geographies, we don’t see a major change in trend and I don’t believe that just based on Q1 we have seasonality of course, but I don’t think it drive a certain change in our view of the different geography. If you look on this particular quarter, actually EMEA had a very relatively strong quarter. We saw a – slightly decline in Asia and we saw flatness in the Americas. But overall, I think, it’s based on Q1, in one quarter when we look forward in our pipeline; we don’t see a major change in trends. Greg McDowell – JMP Securities: Thank you.

Thank you.

Thank you. That concludes the question and answer session. Now I would like to turn the call back to Barak Eilam. Please proceed.

Thank you very much all for joining us today on the call. We look forward to see you all very soon and we will talk again soon. Thank you very much. Have a great day.

Thank you. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining and have a very good day.