Welcome to the NICE Conference Call discussing Fourth Quarter and Full Year 2020 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 February 18, 2020. I would now like to turn this call over to Mr. Marty Cohen, Vice President of 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 materially is contained in the section entitled Risk Factors in Item 3 of the company's 2019 annual report on Form 20-F as filed with the Securities and Exchange Commission on April 6, 2020. During today's call, we will present a more detailed discussion of fourth quarter and full year 2020 results and the company's guidance for the first quarter and full year 2021. 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'll now turn the call over to Barak.

Thank you, Marty, and welcome, everyone. Over the past several years, we have successfully built NICE into a company that is able to quickly transform. That was no doubt put to the test as the result of the events that took place last year. We more than just passed the test. We broke barriers turning 2020 into another groundbreaking year for NICE. Our strategy in the past few years has been to transform our markets with cloud digital platforms that embed artificial intelligence. It was proven to be successful in catalyze our growth. 2020 was an eye opener for organizations of all sizes realizing that the only viable choice to keep up is to fully embrace cloud, digital and artificial intelligence. The result is that cloud, digital and AI adoption has now leaped several years forward. As we are now the clear market leader in all these domains, we're extremely well positioned to be the platform of choice. 2020 was a standout year for NICE in cloud. We've taken a wide industry lead, as we suppress the mark of nearly 50% of our total revenue coming from the cloud. We exited 2020 with a cloud annual revenue run rate exceeding $900 million. At the same time, we delivered nearly 400 basis point improvement in cloud gross margin in 2020, compared to 2019, which drove a 90 basis point increase in the operating margin over the same period. Our cloud leadership was driven by accelerating cloud revenue growth throughout 2020. And we ended the full year 2020 with 31% cloud revenue growth compared to 2019. We owe our strength in the cloud to continued product innovation, and strong competitive advantages provided by our cloud platforms, namely CXone in Customer Engagement, X-Sight and Xceed in Financial Crime and Compliance and Evidencentral in…

Thank you, Barak, and good day everyone. I'm pleased to provide the analysis of our financial results and business performance for the fourth quarter and full year of 2020 as well as our outlook for the first quarter and full year 2021. Total revenue for the fourth quarter reached a record of $438 million, compared to $431 million in the same period of last year. Full year revenue was also a record and totaled $1.657 billion an increase of 5% compared to 2019. Total revenue growth was again driven by our impressive cloud revenue, which grew 33% in Q4, and 31% for the full year, and we exited 2020 with an annual cloud revenue run rate of more than $900 million. As a result of our ongoing transition to the cloud, we continue to experience an expected shift to an increasing concentration of cloud revenue as a percentage of our total revenue. We expect this trend to continue in 2021. In the fourth quarter, cloud revenue reached 51% of total revenue compared to 39% last year. As a result, recurring revenue increased to 81% of total revenue compared to 71% last year. For full year 2020, cloud revenue reached 47% of total revenue compared to 38% last year and recurring revenue was 79% of total revenue, compared to 72% for 2019. Product revenue accounted for 9% of total revenue in the fourth quarter, and 11% in 2020. And services revenues accounted for the remaining 40% of total revenue in the fourth quarter and 42% for full year 2020. Moving to our business breakdown, Customer Engagement revenues were $361 million for the fourth quarter and $1.349 billion for 2020 and 8% and 6% increase respectively. Financial Crime and Compliance revenues were $78 million for the fourth quarter and $308 million for…

Thank you and at this time we will be conducting a question-and-answer session. [Operator Instructions] And our first question is from Samad Samana with Jefferies. Please proceed with your question.

Hi, good morning. Thanks for taking my questions and nice to see the strong cloud revenue results. Beth maybe one for you on the guidance, so if I think about 1Q revenue, it is guided to go up sequentially, normally revenue comes down. Can you just help us maybe for modeling purposes think about how we should think about cloud revenue versus product revenue in the first quarter just given the atypical seasonality in the revenue guidance and then just even stepping back for full year 2021 just any update on what we should expect that cloud revenue run rate to look like exiting '21 given the outperformance in 2020?

Sure, Samad. Thank you for the question. So let me first address the growth that you mentioned coming out of Q4 and looking ahead to Q1. I think, first of all, it's important to note that actually, we've been seeing a trend now as we look on the last few years, which is that both with our revenue as well as our profitability, given the further shift to the cloud, we see more and more of a concentration of recurring revenue. And so as a result of that it shifts more of the growth earlier during the course of the year, and that revenue is more evenly distributed. So you're seeing that both in our 2020 results and we're expecting that dynamic to continue to play out in 2021 as well. I mentioned in my comments or remarks, also that we've seen a significant shift in the mix of cloud. Cloud in the last two quarters has been more than 50% of our overall revenue. And we also expect that shift to continue as well, where cloud will continue to be the primary growth driver. And we'll see that becoming a larger portion of our overall total revenue in 2021.

Samad, maybe just to - it's Barak, just to add, the strong guidance for Q1 reflect the very strong Q4 booking that we had. I talked about the many deals that we had in the quarter and we're entering into the year with a very healthy backlog.

Great and Barak that brings me to a follow up question, appreciated all the color on the call around new deal activity, but maybe as we think about the pipeline, if you could comment on how the new deal pipeline looks for CXone, especially as we lap 2020, which is a very strong year? Are we entering with more deals in the pipeline that are larger, maybe anything you can give either quantitatively or qualitatively around the forward pipeline for CXone deals I think would be helpful as well?

Yeah, we continue to see healthy, healthy momentum in terms of the pipeline and the activity in the market across the board. It's true for CXone. It's true for all our domains and markets. And it's both on the larger - the higher end of the market, as well as the smaller - the lower segment of the market. And I think you also heard me on the call are starting to see very healthy dynamics on the international market, you will see them in the revenues. But they are going to kick in obviously its cloud, but you won a lot of deals on the international one. And the deals are getting just bigger and bigger. And the other thing that we see I talked in my earlier remarks about multiple beachheads that we have landed full of 2020, but also in Q4. And we believe that this is also an opportunity for a lot of expansions moving forward. So we are stepping into the year with a strong feeling that this momentum will continue.

Great, I'll turn it over to the next analyst. But thanks again for taking my questions and on the strong cloud revenue growth.

Thank you.

And our next question is from Sanjit Singh with Morgan Stanley. Please proceed with your question.

Thank you for taking the questions. Congrats, the team on a 30% growth year in cloud. It's very, very impressive. I wanted to understand a couple of dimensions in the model around growth going into next year. On the product side, it was down 48% year-over-year in Q4, maintenance is down year-over-year. What are sort of the key factors that's going on there? Is that a function of more transitioning like the WFO base to cloud? Is that an impact of macro? Is it just changes in customer buying patterns? If you could sort of parse out the different variables that are going on, on the maintenance side. And then I had a follow up question.

Yeah, I'll take it and Beth feel free to chime in. So indeed obviously, our strategy as we share with you is to transition the business of the cloud. This is where we put our main emphasis both winning a lot of new ground with cloud as well as transitioning existing customers. Most of the cloud growth so far came from brand new business for us. But we do have some transition of existing customers to the cloud. We like those transitions because they provide a significant boost to the revenue because we see much more revenue from a customer they move to the cloud. Indeed 2020 was the lighter year on the product. It's the combination of what I said on the cloud as well as COVID did have impact on the product decline. We believe that moving forward the growth will come from the cloud. And we'll see fluctuation in the product. Q4, specifically, I think was a bit of an anomaly in terms of how sharp the product decline was. And we don't expect to see exactly that number moving, moving forward.

That's very helpful, Barak. And then just a higher-level question on what's now three or four major platforms, you have RPA, you have Xceed, you have X-Sight, you have Investigate to compliment CXone. If I look at the contribution outside of CXone, does that become 10%, 20%, 30% of the business in a couple of years, as you look out over the next two or three years, how big can the non-CXone on cloud portfolio contribute to the overall business?

Yeah, so obviously, still the lion's share of our cloud business is CXone. And this is our main platform as we go into the Customer Engagement market. Actually it's the platform where we sell into Customer Engagement. As you said and as I highlighted earlier, we have two more cloud platform that are serving different markets. We have the Financial Crime and Compliance markets, where we cater to this market actually with two platform because of the high end and low end. This is X-Sight and Xceed. And we have relatively new platform called Evidencentral, which is allowing us to take the Public Safety market and expand it from center around policing to overall criminal justice. We believe that we can take the same playbook. We've done successfully in the past four or five years in Customer Engagement and use the same playbook in these markets. There's still the adoption and this market is still at its early phases. Actually, we're very happy with the booking and performances we've seen in Financial Crime and Compliance. Q4 was an outstanding booking quarter for this business, predominantly cloud. It's still small numbers, of course, compared to CXone, but it can start to grow nicely and kicking into revenue. In Evidencentral, 2020 was really a breakthrough year for this business. Still small numbers, but from a growth percentages, they're starting to look very nicely. So in the long run, we believe that they can start by themselves become an absolute number, healthy numbers. But needless to say, though main market today is the Customer Engagement and CXone is the platform for us in this market.

Appreciate the thoughts Barak.

And our next question is from Daniel Ives with Wedbush Securities. Please proceed with your question.

Thanks. So my question is more - in terms of cloud, obviously, the growth that you're having, is this something that you feel you can continue to do organically? In other words, do you start to get more aggressive even in talking M&A as we go into '21? Could you maybe just talk about that just in terms of any mindset changed on M&A?

So we continue to be active on the M&A front. As you know us, from a historic - historically, we have a good track record of acquiring companies and knowing how to get the right value. And the reason we believe that the reason for that is that M&A is or serving our strategy and not the opposite. We don't change our strategy because of an M&A opportunity. And right now, we believe we have many of the - all of the components that we need to fuel our growth. Our markets are very healthy. We have leading platforms, but we remain active on the M&A front. And if we see something that can further accelerate the execution on our strategy, or fuel our growth, as long as it is aligned with our strategy. We'll continue to do that because the muscle of integrating M&A is a healthy muscle at NICE. And of course we have the capital to go ahead and do that if we find something relevant.

Great and then just last, with cloud are you continuing to see the trend where just conversions and overall sales cycles to cloud clusters is continuing to shorten, do you continue to accelerate from where it was even a year ago?

Yeah, we - I mentioned kind of further reflect on 2020, one of the things that is clear is that all the key pillars where we operate in cloud, digital in AI, what happened in 2020 is they kind of leaped forward. 2020 created the kind of a leap forward in the adoption level of these solutions. Organizations realized as a result of the 2020 events that even if they had plans to adopt cloud, only several years down the road, it is now much more important, much more critical in order for them to continue and adapt to the changing environment. So we see that and it's a similar dynamics as we said before. In the smaller enterprises the adoption is rapid. In the larger enterprises we see much more kind of lend and expand where customers would like - they just - it's too complex for them to move everything in one day. So they will adopt it for one division or one side of the business and then expand from that beachhead. That's a trend that we have seen in 2020. And we believe it will continue this year and also moving forward.

Thanks.

And our next question is from Walter Pritchard with Citi. Please proceed with your question.

Thanks. Question on the FCC side with cloud where it seems like you've seen an uptick this quarter. Can you talk about what you think drove that? Was it sort of a kind of budget flush dynamic in Q4, where those customers were really looking to put money to work into the future? And then how do you think about that business proceeding from here? What types of financial institutions are you seeing move to cloud and which ones are lagging?

So great questions, first, the overall dynamic, this market is very healthy. The need to meet the regulations and fight financial crime is same as it was before. As I mentioned throughout 2020 and even more so in Q4, we had an outstanding booking year that will translate into revenue, but there are certain changing dynamics over there. One of them, as I've mentioned, is the shift to the cloud. This was the market that was slow to adopt cloud. And we're starting to see now this shift to the cloud. The second thing is that for us, we historically operated mainly in the higher end of the market with X-Sight and the introduction of Xceed earlier this year, got us an opportunity to actually cater to the entire market, including to the smallest financial services out there. And we didn't expect to be adopted to get to that so fast. But we're very happy to see that the adoption of succeed to the smaller customers that used to have kind of homegrown solution or very basic solutions. We now have the opportunity in this market. So that will allow us to transition this business also in the cloud. And I think what we see in the revenue is the classic phenomenon of shift to the cloud. It takes time for the revenue to realize, and we'll see that coming in. And we are very strong believer in that business in 2021 and also moving forward. The last one is that we see more and more partnerships in this business. We talked a lot about partnerships in this business and signing Finastra in Q4 will allow us to further expand our footprint and market reach.

Great and then just question on - if we look at the growth rate in cloud Q3 versus Q4, Q3, obviously higher. Is there anything that you can help us understand that was the driver in Q3 in cloud overall that did not continue into Q4? I mean, obviously, we understand the numbers are getting bigger as well, but just curious sort of the internals of the cloud revenue. And we've been in an environment that's been changing pretty quickly, so wanted to see if there was any more detail there.

Yeah, thanks for the question Walter. I think in general like any revenue line there will be some slight fluctuations from quarter-to-quarter occasionally that happen. In general, we're quite pleased with the overall growth rate, higher than 30% growth for the full year of 2020. And we remain confident looking forward in terms of cloud, our cloud platforms, and more particularly CXone continuing to be the driver of that strong growth going into next year as well.

Great, thank you.

And our next question is from Rishi Jaluria with D.A. Davidson. Please proceed with your question?

Hi, everyone. Thanks for taking my questions, nice to see a continued strength in the business. Why don't you first start philosophically by thinking about how you're looking at a post-pandemic future, right, and the sustainability on both the top line and so by that the acceleration of digital transformation and accelerating stuff to the cloud, how are you thinking about the sustainability of that post-pandemic? And then on the on the cost side, I'm sure you've gotten a lot of cost savings, as a result of just not having any effectively zero TV budgets and not having a physical conference. As we have the ability to go back to business travel, let's say, optimistically in the back half of this year, how are you thinking about some of those costs which are going to be coming back, which are going to be permanent cost savings? And then I've got a follow up.

Okay, thanks for the question. I'll start with the first part and Beth will take the cost element. So I think we saw it in the past and we definitely see that at the end of the day the pandemic itself, accelerated certain trends, starting with the adoption of cloud, the shift to digital, and the adoption of AI. And we don't think it's temporary. We think it's a bit - the aftermath of the pandemic, those three things as well as others, but those three things will remain with us well, after COVID will be out of the headlines. And that tells you for our business as a sales organization with all sizes had a trauma if you'd like from the early days of the pandemic, and their ability to be agile in their response to different dynamics. And in this aftermath, they're realizing that they need to shift faster than they thought before in the adoption. So philosophically, or high level, all of those three domains, which are the pillars to everything that we do cloud, digital in AI, are only going to be stronger and accelerate further. About the cost, I'll hand it over to Beth.

Yeah, thanks Barak. I think Rishi, on the cost side of the house clearly, our primary focus is around our top line growth and furthering our overall cloud growth and in order to do that we're also very focused in how we spend as an organization. So our eyes are really focused on continuing to fuel that growth through further innovation and doing that through further investment in our R&D, as well as really our go-to-market machine. And so that's the focus in terms of how we spend internally. We'll continue in those two areas. And as we look at the overall makeup of our profitability, we have always been keenly focused on running a very well optimized organization with a lot of leverage. And so as you look at the ongoing picture, we still remain fully confident in our ability to continue to drive profitability while fueling the cloud growth as well.

But just to add to that - Rishi, just to add to that on your question about whether it's the savings are one time or they will continue? We didn't have ton of saving from the pandemic. In our officers we continue to pay our lease. So there isn't much saving there. The only savings we had is a bit on - not a bit but on travel. And it will - it's interesting to see what will happen with travel moving forward, how much of this organization will need. We don't think that will have any material impact on our profitability moving forward. On the flip side, we think that post-pandemic, the mode of operation, I believe the work from home would actually help us to drive some savings on the real estate. And so we don't think that the quote unquote the saving that we've seen this year are going to disappear.

Got it, that's helpful. And then Beth I wanted to drill a little bit more into 2021 guidance and pop on some earlier questions. But as we look at the numbers, right, you're talking about the midpoint 9% growth in Q1 and probably close to 8% through the remaining three quarters, if I look at the midpoint of four-year guidance. I guess, why shouldn't growth - overall growth accelerate post Q1, especially because the costs get a lot easier, especially in Q2 and Q4 and you have a more favorable cloud mix that actually ate that maybe help us understand the assumptions baked into that? Thanks.

Yeah, thanks for the question. I think I'll add my views and then let Barak chime in if he has anything else, he would add. I think generally when we look on the growth and the distribution of that during the course of the year, first Barak mentioned, we had really strong Q4. We're coming to the year with a nice backlog. I mentioned also a dynamic of the fact that we're bringing more of the growth earlier in the year given that we're coming in with this strong base of cloud in our overall mix. As we look kind of on the product side of the house, I think you can expect 2021 will likely look more similar to what we had kind of pre-pandemic in terms of we were seeing some declines there. We don't expect to see unlikely that we'd see the same sharp declines that we experienced during the course of 2020. But it is likely that given the acceleration we see in the markets overall that that transformation is going to continue to drive the dynamic in the top line, which is the continued strong growth in the cloud and the continued transformation with product in on-premise becoming less of our business overall.

Wonderful, thank you.

Our next question is from Dan Bergstrom with RBC Capital Markets. Please proceed with your question.

Yeah, thanks for taking my question. Say to maybe to build on Rishi's, post-COVID question a bit. We talked about your working arrangements going forward. But what are you hearing from large customers as far as a vaccine potentially returning to work on-premise? I know much of the efforts over the last year were about making work from home just as effective as working from the office. Just curious what you're hearing about return to work or continuation of more of a hybrid work from home model?

Yeah, we obviously have a lot of those conversations with our customers. It's about, have small talk of every conversation without these days. I think the real answer is that no one really knows, everyone has certain estimates, some organizations are making some preparation, but it's a lot of guesstimation. On one hand, there is the understanding that there will be a change everyone talking about something that will be not temporary, but either change. There are several models out there some talking about a hybrid, some talking about enabling full work from home, and some even talking about work from anywhere, which has its challenges, if you would like. But the bottom line is no one really knows, even our customers, and what they want to have is the agility or the flexibility to change quickly to whatever come their way. That's what we hear from them. So when we talk - when we end a small talk and we talk about projects, what we want - what they want is the agility of that. And in the tech sector, I think you all - we all read the same headlines. And what we enabled our employees, we're very happy with how we operated this year. It's probably a combination of the spirit of NICE, but the engagement level at NICE remains very, very high actually higher in working from home. We're doing a lot of course to maintain that. Our productivity increased as you work from home. And we're waiting to see that we'll be able, obviously, the safety for employees is a top priority for us. And when things clear out, we'll take a decision how to operate moving forward. It will probably be a combination of everything I said before.

Thanks, makes sense. And then it sounds like Enlighten's had a really good quarter here with a number of deals, growing pipeline across verticals. Is it the behavioral modeling and predictive outcomes that's really driving the traction here? Could you drill down into the platform a bit, what's really resonating with customers?

Yeah, I think it's exactly that. We've been selling analytics to our customers for many, many years. And many of our customers are using our analytics solutions and adopted them. Enlighten with its AI capabilities is a direct continuation of our analytics and the understanding that we also have the data too if you'd like elevate the analytical capabilities to AI and the ability to put analytics on steroids using a light and if I can use this analogy. And we launched Enlighten earlier in 2020 and what we - the pipeline started to build, we expected few deals in Q4, but we didn't expect so many and from so many Fortune 100 and very more key brands as I provided in my earlier remarks. So we're very happy with the adoption and it's exactly that. It's the ability to provide prediction models and take decisions in real time if you'd like, and bring a real time decisioning based on those capabilities.

That's great. Thanks, Barak.

Our next question is from Paul Koster with JP Morgan. Please proceed with your question.

Yeah, thank you for taking my question. I just want to go back to the products and services, segments, again, for a moment, if you don't mind. I'm not quite sure how to think about this long term. You mentioned kind of looking back to 2019. But when I look back over the last few years, it's sort of been a little bit lumpy. Is this a sort of flattish kind - are these flattish kind of revenue lines for the foreseeable future is I guess my question?

Yeah, thanks for the question, Paul. So to just add some additional color there, I think, first of all, looking back to 2019, the analogy I was making there is from quarter-to-quarter a product will vary. And I think we should expect that all quarters in terms of product won't necessarily look alike and so what we're focused on is, of course, the longer-term trends when we look at our revenue lines, and how that mix will change over time, and then mix over time, we expected as I had highlighted, is to actually increase cloud. And so by default, as cloud increases over time, you're going to see that the product gradually declines as well. We are shifting the business, the market is shifting and accelerating and moving into the cloud. And so that is going to create a dynamic where over time you'll see a decline in product revenue. As I highlighted, again, you may see some variability or lumpiness on a quarter-to-quarter basis. So that's kind of the longer-term trend, you should expect. As you look on the services, services have a couple of components. There's the deployment or the professional services we're providing to actually deploy the on-prem solution. And of course, that kind of goes a little bit lockstep or hand-in-hand with the change in product. Of course, the much larger piece there is our maintenance stream. And on the maintenance stream this is a legacy of our WFM, customer base. And we also believe that over time, that is the maintenance that will ultimately also transform into the cloud. But of course, in the large enterprise, that's a very long tail, so that's not going to be a near term transition. That's going to take many years to actually see that shift. We do know, based on our customers that have already made that shift that we have a very nice lift when those customers are moving from our traditional on-prem customers and over to the cloud. So those are kind of some of the expectations around the different segmentation of the revenue line.

Beth that was very helpful. As we sort of look over the long-term as well, do you anticipate gradual diseconomies of scale or the synergies as those businesses kind of lagged the cloud or is everything fungible here, and resources, just simply get flipped over to the growth segments? This is on the OpEx side really.

As Beth I think said in the opening remarks, we continue to expect to further gradually improve our operating income and operating margin, and we are aiming at least 30%. We had a very nice improvement in the past few years and that actually was very nice improvement also in 2020. And this is driven by the fact that although the business is shifting to the cloud, our gross margin in the cloud is rapidly improving. And actually, it's getting closer to the mix of the business on the perpetual. We're already at 68 and it's very close to where we would like to be and we believe we can take it much higher as we scale and go to the enterprise. With respect to resources as you can imagine, in the past few years and also moving forward, we are shifting a lot of our resources from our on-premise business to the cloud.

Okay, thank you.

Thank you, Paul.

And our next question is from Pat Walravens with JMP Group. Please proceed with your question.

Great, thank you. Congratulations, you guys. And Barak, maybe this is for you, but I'm wondering if you can comment on sort of how the competitive environment is evolving? And in particular, one question I get is when investors look at the 2020 Magic Quadrant versus 2019, what they see is that Amazon Connect shows up as a new player Five9 actually moves backwards from a leader to a challenger and Genesys moves a lot closer to NICE in the leaders quadrant. So I'm just wondering is that reflective of what you're actually seeing in the market.

So first, we're very proud and happy to be the number one player on the multiple analysts' reports in all the markets we play in. We were the number one on the leading analyst on Financial Crime and Compliance and same goes of course, on the Customer Engagement. Gartner is one, but the others like Forrester, Frost & Sullivan, et cetera and in all of them we're the number one. It's a healthy market. It's a growing market. And when the TAM is growing, a lot of players would like to play both large players that want to get into the space, a lot of small startups, and also the existing ones. We're very confident in our strategy to lead the way. We've believed that putting together in the past few years' workforce optimization, analytics and in routing, with the addition of digital and AI was a step that no one else had and others still don't have and will have to work hard to get to where we were actually several years back, but to keep monitoring the competitive dynamics. It's hard for me to say whether those small fluctuations or changes one moving up or down is really representing what we see out there. I can tell you from the - out there in the market, there are ton of opportunities. Our participation rate is increasing rapidly. And our win rate is very, very high. That's what I can tell you from this field.

Okay, thank you. And then if I can add one more. So I appreciate your comment on no one really knows in terms of the work from home, but I'm wondering what you are planning on doing in terms of your policies at NICE? We're struggling with this too. But do you plan to be sort of a full remote company? Do you plan to be work from home company? What are you telling your own employees?

So I'll tell you what I've told to our employees so far. With your permission, I prefer to tell the employees first what is the next step before I share it with all. So I'm not going to kind of break - breaking news here to our employees. But so far - right now we're working from home, let's start with that, 100% 7000 people at the end of March last year overnight we moved to work from home. We adjusted to that very quickly with zero disruption in the business and it's working well for us. We need to remember two things as we are doing that all of those people that used to - that are working from home today or most of them used to work together in offices, so they know each other. And as there is new people are getting hired, there is a question of how do we keep them engaged? And how do we make sure they adjust to the NICE culture, that's number one. And the second thing was things like ideations and collaboration, which is still I believe in the - personally, I believe that in the virtual world are not the same as meeting people in person. So I don't think in reality, given where we stand with vaccine in different territories. Personally, I don't think it's going to change much between now and let's say the end of the year or the summer. A few months on the left to the right are not that different. So I think that for the foreseeable future, for us, that's going to continue to be the mode for operation. With respect to what happens after and things are safe and we can actually have the flexibility to choose, that's something we'll debating internally today. What's the best thing for us and for our employees? And we will announce it to our employees relatively soon and then I'll share it with you.

All right, great, thank you.

Okay, thanks.

And our next question is from Ryan Koontz with Rosenblatt Securities. Please proceed with your question?

Hi, thanks for the question. Let's talk about your comments on AI and specifically, on the CXone. Can you touch on the use cases there? Is that more for coaching or are your digital engagement capabilities fully automated there with AI and how do you monetize that AI capability? Thank you.

Sure. Let's think for a second of what we do with CXone, we have 100s of 1000s of people come every morning who actually - they're not coming anymore they're working from home, but are opening their laptops and working on CXone and this is the main - if you'd like is the main operating system for customer service, whether it's digital or not. And that's all being done in the cloud for us. And as a result of that, we have a lot of data going through our platform. And our systems are smart to learn from every interaction that are going through our systems. And as we inject AI to the different corners of the CXone, we see more and more use cases starting to shape up, starting from the ability as you said to coach and guide in real time, the agent or the service providers, as they interact with customers, then go to engagement in a more sophisticated way on different digital channels, with different bots and chat bots and getting smarter and smarter every day. And a few other use cases can be on the compliance area, again, still in the customer services space. So the beauty is that as we inject AI to the different corners of CXone, we're learning new use cases. But actually, many of our customers are coming with use cases we never thought about before. Operator?

And our next question is from Scott Casher with Bank of America. Please proceed with your question.

Hey, thanks for taking the question. It seems like you've developed a very strong backlog in the quarter. Can you maybe talk about the time it takes to go from bookings to revenue for the cloud revenues and CXone specifically? In other words, have we seen the full benefit from the CCaaS market acceleration yet or does the recent acceleration take more time to show up in the top line? Thank you.

It's a great question and it's hard to give numbers here because it really depends on multiple dynamics. We have multiple with CXone there're small customers, there're big customers, the beauty in even more so in 2020, we can make customers up and running in 24 hours. And actually, we have great examples and use cases and case studies from the peak of the pandemic back in March where we actually had to bring customers up and running at scale in 24 hours and we've managed to do that. In most cases, actually, the issue is not the issue of getting up and running is not on our side, it's actually the level of readiness of our customers, and some of the need to do certain integration on their side, and other things and training and so on and so forth. So today, it really depends on the customer side. So in some cases, it can be immediate, like a matter of a few days and in some cases can go all the way to several months, like six or seven months. So there is a blend there have multiple things. We didn't see a dramatic change, if you'd like in the time on average, from booking to activation. A bit higher as it goes to the enterprise market, but it's a very similar to what we've 6seen before.

Thank you. That's very helpful. And then I guess one more for me. Can you talk a little bit about maybe the benefit you saw in 2020 from usage of the platform and cloud usage? Was there a benefit from usage in 2020 that may go away next year and create a headwind? And that's all for me, thank you.

We don't believe so. Obviously, we are very proud to take part. We were proud in 2020 to take part of the business related to - on the government or on the state and local related to the pandemic. At the beginning it was more about just being available on Q&A or information centers in the early days of March and April, then it kind of converted into big centers about testing, then it converted to big centers around contract tracing. And these days, it is a lot of our big centers around the vaccination, which we believe will stay through 2021 at least 2021. So that's on that segment. On the flip side on the commercial segment, which of course is our biggest business on CXone, we saw different ups and downs, but overall it's the - nothing that is just one off or one time. We actually believe that if things pick up the travel and tourism industry. We're starting to see the picking up as people are starting to schedule their vacations with a sense of optimism for the summer and for the second half of the year. Operator?

And we have reached the end of the question-and-answer session. And I will now turn the call over to Barak Eilam for closing remarks.

Thank you very much, everyone for joining us today and have a great day. Thank you.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.