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NICE Ltd. (NICE) Q2 2019 Earnings Call Transcript

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NICE, Ltd. (NASDAQ: NICE)
Q2 2019 Earnings Call
August 8, 2019 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the NICE conference call discussing second-quarter 2019 results, and thank you all for holding. All participants are at present in a listen-only mode. Following management's formal presentation, and instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded, August 8, 2019. I would now like to turn this call over to Mr. Marty Cohen, VP Investor Relations at NICE; please go ahead.

Marty Cohen -- Vice President of Investor Relations

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 the performance of the company to differ materially is contained in the section titled "Risk Factors" in Item 3 of the company's 2018 annual report on Form 20F, as filed with the Securities and Exchange Commission on April 5, 2019. During today's call, we will present a more detailed discussion of second quarter 2019 results and the company's guidance for the third quarter and full-year 2019. 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, and I'll now turn the call over to Barak.

Barak Eilam -- Chief Executive Officer

Thank you, Marty, and welcome everyone. I'm glad to be on the call with you today. We are pleased to report another strong quarter across the board, including all key financial metrics. Total revenue increased 11% to $381 million, driven by another strong quarter, both product and cloud revenue. Product revenue increased 25%, and cloud revenue grew 30% in Q2. The strong top-end results led to further increase in profitability. Operating income is $101 million, which was an increase of 14% compared to Q2 last year, and operating margins increased 74 basis points 26.6% compared to the same period last year. The strong operating results led to a 14% increase in earnings-per-share to $1.25.

Our success continues to be driven by an acceleration in cloud analytics and AI. The cloud growth was very strong in both Customer Engagement and Financial Crime and Compliance and is being fueled by penetration into all segments of the market including large enterprises where we have witnessed robust demand and strong growth. Meanwhile, we're seeing significant expansion of our partnerships around the globe and at the same time, maintaining an acute focus on product innovation. CXone continues to drive the success of our club business. CXone is unique in that it is the first and only true native cloud platform that seamlessly incorporates the market-leading Omnichannel routing WFO customization and analytics into a single platform.

Last quarter, we announced the acquisition of Brand Embassy, which provides a significant expansion to CXone and makes it the most comprehensive platform for digital transformation in customer service. The new offering has already been launched to the market. We continue to sign many new cloud customers across multiple segments of the market, including some very large enterprises. The deals included in eight-digit ACV deal with a financial services company which was an end to end replacement of several on-premise providers.

We also signed multiple CXone seven-digit ACV deals. For example, we closed a deal with a brokerage and investment invite three company, which is a new customer and a competitive replacement. We signed a deal with one of the largest retailers in the world as they continue to expand their relationship with NICE. There was another deal with an energy company, also in a customer and a competitive replacement as well as an expansion deal with a state government agency where we replaced incumbent.

X-Sight drove meaningful cloud growth for Financial Crime and Compliance, allows just in the quarter for our Essentials Cloud-Based Solutions included a global digital bank, a Canadian-based credit union, UA-based bank specializing in small business lending and a leading online brokerage firm. Augmenting the success of our cloud growth is a significant expansion of our ecosystem of partners, which is being fueled by our extensive portfolio of solutions and a large increasing total adjustable market in which we operate.

One example is our CXone powerful ecosystem to our DEVone and NCX exchange program. We now have 135 partners building on the platform. This extensive network provides our customers with endless solutions options. At the same time, it offers our partners the means to significantly expand their go-to-market and provides us an excellent vehicle for M&A similar to our conditional Bread Embassy, which was a DEVone partner. We also have many successful go to market partnerships with various [inaudible] and other resellers that allows us to cover this fast-growing market.

This network continues to constantly expand, and we are now further augmenting our partnerships strategy with the written announcement of a partnership with Atos, a global leader in digital transformation with over 110,000 employees in 73 countries. Atos is making CXone, a preferred solution for contact centers of service and bringing CXone to the company's install base of hundreds of thousands of contact center agents across the globe as well as to new customers.

With Atos largest global presence, we're excited about the potential to bring CXone to new customers around the globe, especially in Europe where Atos has a very large customer base. This is a great opportunity to execute on our strategy of growing CXone in international markets. We also recently announced an expanded collaboration with Microsoft. We introduce new integration for Microsoft Teams, which is further enabling organizations to effortlessly collaborate with the contact center.

Similar to the CXone marketplace, we announced the X-Sight marketplace, the industry's first Financial Crime Management focused marketplace. The X-Sight marketplace initial solutions category includes high diversification, ultimate beneficial ownership, value-added data and advert media, watchlist, divisive identification, and user authentication and fraud. Since the announcement of the new Ex-Sight marketplace less than two months ago, more than 20 solution providers have already signed up, including a specialist in cybersecurity, a provider of unique live streaming technology for biometrics onboarding, and a provider known for its AI-powered risk management content solutions. Along with partnering, we also continued to accelerate innovation, especially around analytics and AI.

In RPA where we are seeing strong growth in very fast-growing markets, we recently released a new version of RPA. This latest version incorporates deeper AI capabilities for extended automation discovery and real-time monitoring intelligence. In fact, NICE RPA was named leader in average group speak metrics for the second consecutive year, scoring high on both visioning capability and market impacts. The most recent release of CXone had end-to-end artificial intelligence capabilities, included our new AI self-service bot option, new AI-infused focusing in scheduling options, and AI part interaction analytics.

We have also added predictive behavioral routing for CXone. Moreover, CXone now provides additional depth and breadth of CRM integration for delivering a more personalized customer experience. Another example of innovation includes the introduction of optimized CDDX, which modernizes KYC and CDD programs with advanced analytics and the power of AI. Ninth optimized CDDX leverages optimized approach to applying machine learning to enhance the accuracy of risk rating using the collective intelligence of previous outcomes. Significant reduction in operational costs are realized for the innovative use of visualization and purpose-built intelligence automation to streamline customer a few times by up to 70%.

In Q2, we continued several seven-digit deals incorporating cutting edge analytics, including two large deals with healthcare companies that included our analytics start compliance sensor solutions. These deals, including many others during the quarter, were competitive replacements. We also signed a seven-digit deal with a major card processor for a portfolio of our Financial Crime and Compliance Solutions and a seven-digit deal with a major lead insurance and health solutions company for interaction analytics. This company is already a CXone customer, and this deal demonstrates the value of our customer's ability to expand on our platforms. We also signed a seven-digit analytics deal with one of the largest cruise lines in the world.

In closing, we have the market-leading technologies driven by ongoing innovation, to profoundly market differentiating cloud platforms with CXone and X-Sight in a robust go to market fueled by an enterprise cloud direct sales force and strong and expanding partnerships. We are only just beginning as these assets position us very well to capture the many growth opportunities ahead in an aggressive market of $7 billion, growing to over $12 billion over the next few years. I will now turn the call over to Beth, who will review our financial results.

Beth Gaspich -- Chief Financial Officer

Thank you, Barak and good day everyone. I'm pleased to provide the analysis of our financial results and business performance in the second quarter of 2019 as well as our outlook for the third quarter and full-year 2019. Total revenue for the second quarter increased 11% to $381 million compared to $344 million in the same period of last year. Our total revenue growth was driven by further growth in the cloud with 30% cloud growth in the second quarter of 2019 as well as an increase of 25% in product revenue. Our high percentage of recurring revenue continued to increase to 72% of total revenue, reflecting our strong cloud momentum.

As we highlighted last quarter, a recurring revenue has grown to become a much larger portion of our total revenue. Therefore, we expect both our revenue and our profitability to be more evenly distributed among the quarters this year. We also witnessed double-digit growth in both of our businesses. Customer Engagement revenue for the second quarter increased 11% to $313 million and represented 82% of our total revenues. Financial Crimes and Compliance revenue increased 10% to $68 million and represented 18% of total revenue.

Product revenue accounted for 16% of total revenue in the second quarter. Cloud revenue accounted for 38% of total revenue for the second quarter, which represents an increase from 32% in Q2 last year. And services revenue accounted for the remaining 46% of total revenue in the second quarter of 2019. Looking at geography, Americas reached $307 million in the second quarter, EMEA $48 million, and APAC $26 million in the second quarter of 2019.

And now to profitability. Gross profit increased 12% to $271 million in the second quarter. Gross profit margin improved to 70.9% compared to 70.5% last year. The expansion in gross margin is a result of product mix. Cloud gross margin increased to 61.4% from 59.8% in Q1 2019. Operating income increased 14% to $101 million in the second quarter. Operating margin increased significantly to 26.6% compared to 25.8% in the same period of last year. The strong operating income and margin demonstrates the leverage our model and our commitment to continue to expand profitability over time. Earnings-per-share for the second quarter increased 14% to $1.25 compared to $1.10 in the second quarter of last year. Total cash and financial investments were $867 million at the end of June 2019, and total debt was $460 million net of issuance cost and the equity component associated with our convertible debt.

I will conclude my remarks with our guidance. For the third quarter of 2019, we expect total revenue to be in the range of $380 million-$390 million. We expect third-quarter 2019 fully diluted earnings-per-share to be in the range of $1.23 to $1.33. We are increasing full-year 2019 revenue to be an expected range of $1,563,000,000-$1,583,000,000. We are increasing full-year 2019 fully diluted earnings-per-share to be an expected range of $5.13 to $5.33. I will now turn the call over to the operator for questions. Operator?

Questions and Answers:

Operator

Thank you. For everyone wishing to ask any questions, it is now *1 on your phone and the first question we have from the line of Shaul Eyal from Oppenheimer and Co. Thank you, Shaul, you're live in the call.

Shaul Eyal -- Oppenheimer -- Analyst

Thank you so much. Good afternoon guys, congrats on the performance and the outlook. Barak, the number of seven- and eight-digit transactions keep showing healthy momentum, but it's actually coming also from cloud-related transactions. So, I think that it would appear that the prior view of a couple of years back was that cloud contracts are probably on the smaller scale, but you're actually showing us the opposite and is not only on CXone but on Ex-Sight as well. So, help us reconcile this view, is it rapid cloud adoption? Is it that enterprises are showing increased readiness about tax solutions? Is it improved TCO? And I have a follow-up.

Barak Eilam -- Chief Executive Officer

So, thanks for the question. Indeed, I think that you can see a growing trend in our last few quarters in this quarter is even more so about both the number as well as the magnitude in terms of size of our cloud users. I spoke about an eight-figure ACV deal in multiples, a seven-figure ACV deal in the cloud, and I think that the reason for that is a few reasons. First of all, the market adoption at the higher into the market for cloud is growing dramatically, and we believe that we are taking a big share of that. So, we are the first one to see absorption. The second thing we say is a combination of a few things.

First of all, the fact that we are selling much more portfolio deals. NICE's portfolios very complete with both CXone and X-Sight, it gives us an opportunity to send much larger deals with much more components and we believe that the market is buying into our vision and strategy, that it makes much more sense to go after the integrated set of solutions that we have given the steps that you've taken as a company. The second thing is that a fact that it is a platform, it's much easier to consume it and people are investing into the platform, and as a result of that we see much larger deals and much stronger long-term and larger commitments from customers.

And third, I think that there is much more or better realization of customers that the power solution is true native, real native cloud solution versus some of what our competitors came out with a semi-cloud hosted solution and other things that they are defining cloudlike or semi-cloud both under financials, as well as the market and the market just, doesn't buy it. I think that you can see it in the multiples competitive replacement that I mentioned in the previous remarks.

Shaul Eyal -- Oppenheimer -- Analyst

Understood, understood. And I have a follow-up, Barak, maybe also if Eran Liron would like to comment on it. So, last night we both read about the acquisition of ClickSoftware by Salesforce, most of you know the inside out of Click, we know it, it's history. We also know the people at Francisco Partners, some of which come with a strong, nice loop. And I'm not suggesting Click is a competitor to you guys, but it has been playing in some adjacencies in the work optimization front. My question is what you think is happening strategically in this place? Is it that the big CRM guys are beginning to wake up and realize the benefits of work optimization cloud-related capabilities?

Beth Gaspich -- Chief Financial Officer

Eran Liron -- Executive Vice President, Marketing and Corporate Development

Yeah, we saw we saw the news similarly to you. While personally, we know the company ClickSoftware from the past there in a very remote area to what we're doing. As far as I know, from the past three months more of the work optimization for field support, which is really different than what we're doing. We are not competing and not cooperating with them. So, I don't think it has an implication on our specific domain. There is some synergies I think between CRM and ClickSoftware since they even had partnerships in place, so it makes sense for Salesforce. But it's hard for me to totally relate to that because it is remote to what we are doing as a company.

Shaul Eyal -- Oppenheimer -- Analyst

Thank you very much. Good luck.

Operator

Thank you and your next question comes is now from John DiFucci from Jefferies. Thank you, John, your line.

John DiFucci -- Jefferies -- Analyst

Thank you, I have a question. I think the first was for Barak and Beth and then maybe a follow-up for Beth. So, the product was strong again this quarter, and I know that you're just gonna say we shouldn't -- that'll move around a lot from quarter to quarter. But, I assume, that maintenance was also strong again this quarter, and I just want to verify and if so, I think that implies that Pro Services was relatively weak in the quarter? At least weaker than what we were looking for. And if that's the case, was it simply a difficult comp, which was, or Barak mentioned as Shaul said, all those large deals but also in the press release mentioned Atos, and I think he might've said in the prepared remarks. Should we perhaps expect more of this going forward as you move Pro Services more to partners if that's what's happening?

Beth Gaspich -- Chief Financial Officer

So, John, I'll take this, to begin with. I think I'll highlight a few of the comments that you made. First, starting with the product growth, as you highlighted, I have mentioned on several occasions that we should expect to see a variability in the product revenue and, of course, we're very pleased with the revenue growth we've seen in our product revenue in the first half of this year, 25% the most recent quarter. And I think it's further evidence that really as we've said all along, the cloud revenue that we're bringing is really incremental to our business and so you will continue to see strong growth quarters, but at the same time have some variability.

As you look on the services for the specific quarter, our maintenance is consistent, and we have a healthy retention of our maintenance business and if you look specifically on Q2 of last year, you'll see that we actually experienced a 13% growth in the second quarter of 2018 and that was related to our Professional Services where we had specific milestones we were able to recognize during that quarter. So, it was difficult in comparison.

John DiFucci -- Jefferies -- Analyst

Okay, OK, great. Thank you, Beth. Maybe Barak? Should we start to see -- you did mention the Atos partnership in the press release. Should we start to see perhaps more of that Professional Services going to partners?

Barak Eilam -- Chief Executive Officer

I don't think that will have any meaningful impact on Professional Services, for us it's different partnership we're assigning like the one with Atos which I believe is a very strategic one for us; is first of all very much of an incremental business. And even with that, they will be required to have our Professional Services. Already today in our business, there is also partners doing services, so it's not necessarily taking what we are doing in services. So, I don't see a change to the model as a result of that. The reason why we are assigning those partnerships is that the market is growing very, very fast in multiple segments we would like to be able to extend our go to market, and we can do it by ourselves to a certain pace, if you would like, but definitely partnerships are helping us to have much better coverage in the market.

John DiFucci -- Jefferies -- Analyst

Okay, great. And if I might, just a question for Beth. The results look really good, sounds like all the other anecdotal evidence sounds great. But one of the line items that I know I'm gonna get questions on his cash flow because that was materially below are estimates, and it was mainly due to underperformance the receivables and prepaid expenses and others. So, I just want to make sure I understand that. Given how your model works, and you build CXone monthly in arrears, and it sounds like you had a lot of big deals here, and Barak mentioned several of them; is it fair to assume those deals were backend loaded as large deals typically are? So, you got little revenue in the quarter, and it doesn't go to deferred revenue with that business, but you pay commissions upfront and even if you recognize commissions over time. So, I just want to -- because that makes sense to me, but if that's wrong, tell me and tell me what else is happening.

Beth Gaspich -- Chief Financial Officer

Sure, so, thanks, you actually highlighted several things which are true. I think if I just break it down. First of all, if you recall, we actually had a record cash flow from operations in the first quarter of $182 million, and so we decided to take advantage of that strong cash flow, and we entered into several agreements that were prepaid expenses where we can lock in discounts, and that will benefit us really going forward into the future. That combines with the comments you made, which is true that we do have commission on these deals that Barak referenced, where primarily revenue that you see looking forward and they do come with commissions that sometimes are paid in advance.

John DiFucci -- Jefferies -- Analyst

Great, great, thank you. Nice job.

Operator

Thank you and the next one now from Dan Ives with Wedbush Securities. Thank you, Dan, your line.

Dan Ives -- Wedbush Securities -- Analyst

Yeah, thanks. So, my question on the fraud detection, Actimize case, just talk about are you starting to see deal sizes more transformational or larger, just as the regulatory environment starts to change? Is that something or you may be saying and influxion on their area of the business?

Barak Eilam -- Chief Executive Officer

Yeah, thanks for the question. Yeah, we definitely see traction over there, and the market continues to be very attractive and with the launch two things, first of all X-Sight is growing to our addressable markets and through the platform we manage even those existing customers to extend our footprint and go beyond the traditional Fraud Solutions that we have in Fraud continues to evolve. That's one element. The second that I've mentioned is the cloud adoption, similarly to what we have started to see, let's say, about two years ago, two and a half years ago. So, on the Customer Engagement side with a strong demand that started to cloud we now see the Actimize front and our Financial Crime in Compliance business and we were preferred for that and you see the nice growth also on the cloud and that part of the business which allow us to bring innovation much faster into the market specifically around fraud as you had mentioned.

In the last part is, again, taking a very similar approach and we're very much in a positive way surprised with the traction, we launched X-Sight in the marketplace just two months ago and in the course of just two months we have an outstanding demand and we've managed in two months to sign up more than 20 partners and I believe this will continue to grow dramatically which will allow us to provide much more complete and holistic to our organization in the marketplace around fraud to this growing market with financial services.

Dan Ives -- Wedbush Securities -- Analyst

Thanks, great quarter.

Operator

Thank you, so your next one is from Rishi Jaluria, from D.A. Davidson. Thank you, Rishi.

Hanna Rudoff -- D.A. Davidson -- Analyst

Guys, this is Hanna on for Rishi, thank you for taking my questions today. Just first off it sounds like you're getting a lot of new customers on the CXone and X-Sight platform. I was wondering if you talk about will kind of traction you've seen in terms of converting some of your on-prem customers to the cloud?

Barak Eilam -- Chief Executive Officer

Sure. So, as you've heard from my comments and some of the deals I highlighted, many of those customers are new customers. Many of the new customers are competitive replacements. Some we are replacing a specific competitor and in some places giving that we are selling a pretty wide portfolio, our customers are actually replacing several competitors at the same time. So, that's many of the things that I've highlighted on the call. At the same time, we see an expansion, immigration to the cloud of our own customers. In some cases, they decide to have some of the solutions on-premises and some in the cloud, but in other cases, they migrate completely to the cloud. When they do that, we see a significant increase of the annual revenue from such customer, and I think that you can see from our results this quarter and last quarters well, that while the cloud is growing, product is also moving very nicely in the right direction.

Hanna Rudoff -- D.A. Davidson -- Analyst

Great, it's really helpful. And then second, I was interested to see you guys were recently ranked fourth in terms of RPA revenue by Gartner. I was wondering if you talk about if you're seeing any changes on the competitive front there?

Barak Eilam -- Chief Executive Officer

Thank you, I think I've mentioned in my remarks we see this market as a very interesting market. A lot of activity in this market. It's a highly for the segmented market with a dozen if not more than that of buyers and we're very happy to be rated among the few leaders in this market. We believe that we have a very robust technology that allows us to serve not just the classic attended RPA of the market but much more so and much more so physically interesting the unattended part of the market. The attended and solid part of the market which we believe will be the future of this market is heading, and indeed we see multiple opportunities when you come for attended or robotics automation, win rate is going significantly up and I think this market, while it is a very interesting market, it still is in its infancy and there's a tremendous opportunity for us and this market.

Hanna Rudoff -- D.A. Davidson -- Analyst

Great, thank you.

Operator

Okay, thank you and your next question now from Paul Coster, J.P. Morgan. Thank you, Paul.

Paul Coster -- JP Morgan -- Analyst

Yeah, thank you. Thanks for taking my question. Barak, a couple of strategic questions. One is if you look at the geographic mix for a company this been around a long time, really does feel very heavily skewed toward the Americas. I'm just wondering why is that and what you think -- do you feel like there is more growth accessible to you in AMER and APAC and when you start ramping up your organization to go after those regions? Any comments on that geographic mix would be helpful, thanks.

Barak Eilam -- Chief Executive Officer

Sure, as you can see from our financials that that didn't change dramatically. We are very US-centric in a good way. We are a very strong believer that in our market, the US market presents great opportunity both historically and also into the future. Yes, the international market provide tremendous opportunity as well, and indeed, we have started to invest more in very specific areas of international markets. The announcement of Atos relationship, by the way, is part of that strategy. Atos widely operates globally, their biggest presence, and where they have the majority of their customer base and their go-to-market efforts and the different assets that they have are in Europe. So, that's just one example. And I believe that you will see in the near future more and more of the announcements and activities that we are doing internationally which will eventually, we believe, will allow us to further fuel our growth in international markets.

Paul Coster -- JP Morgan -- Analyst

Got it. It makes sense. The other question is that I think historically the firm has really sort of appealed to the line of business buyers and it seems to me though that you're assembling a lot of component technologies, robotic process automation, analytics, and so on; that might start to appeal more broadly in the enterprise IT context. So, I guess, the question is, are you seeing any change in the mix, the demographics of your buyers? Are you starting to appeal to enterprise IT directly?

Barak Eilam -- Chief Executive Officer

Yeah, so, first of all, we operate different solutions, but we very well find in large markets we have a variety of buyers to our solutions. I think you characterized it correctly. Our buyers are historically more on the operational side, but as we evolved throughout the years with much more analytics, AI, and much broader platform which is coming more strategically, we find ourselves more often than not sending to first borders and just those buyers both most strategic IT and strategic business, but also going much more off the chain, it's becoming now almost a daily habit or weekly habit of our sales team, of myself, our senior leadership to have a casual conversation and business conversation with skill level executives among the largest Fortune 500 companies out there.

I think that the evolution of the company and especially the thing that we've done infusing a lot of analytics and AI into our platform and with the purity of our cloud solution, I think position as well to sell much higher in those cloud enterprises.

Paul Coster -- JP Morgan -- Analyst

All right, thank you.

Operator

Thank you, and your next question from Sanjit Singh from Morgan Stanley. Thank you, Sanjit.

Sanjit Singh -- Morgan Stanley -- Analyst

Thank you, thank you for taking the question. Barak, I wanted to revisit some of the themes around Analyst Day and particularly the five-year target around cloud. When I look at the great progress this year, you're at 38% of revenue from cloud when the product revenue is also growing really strong. I think that the mixes up about six points year on year. So, I just wanted to get a sense, it seems like cloud is progressing a lot faster and so do you think that we're going to cross that 50% threshold earlier than you expected and what you think that would imply in terms of the overall growth rate of the company? Thank you.

Barak Eilam -- Chief Executive Officer

Thanks for the question. We are very -- every time we try to give not just a quarterly result or not just a specific guidance for the year when we can, and it's a hard thing to do. We also provide some more visionary and more strategic growth. We did it back in 2014 with the NICE 2020 plan, and then we follow with the NICE 2D, and indeed in the Analyst Day, the latest Analyst Day we provided some very specific metrics and KPI of where we would like to be several years from now. It's been only I think a quarter since we announced it and things are progressing, we believe, quite well. So, we absolutely would be very happy to cross those KPIs much faster than the horizon or the time that we gave.

But I think it's too early for us to update those numbers. But rest assured, that we believe that we will -- our pace will increase, we will do that similarly by the way it was done after 2013 I think, it was done in 2016 when we came with NICE 2020, and we'd happy to after a couple of years that we believe that we are getting into those 2020 goals much faster than we thought. But also, I think it's too early to provide such an update.

Sanjit Singh -- Morgan Stanley -- Analyst

Understood, fair enough. And then sticking with some of the themes on Analyst Day, I think one of the initiatives you had is moving downmarket with WFO, taking WFO and analytics more down-market as well as using X-Sight to extend the reach into other market adjacencies. Can you just give us sort of a progress update on those initiatives as you see it thus far this year? What sort of early signs do you see with respect to both of those initiatives?

Barak Eilam -- Chief Executive Officer

So, I think that we are very happy with the progress of those two initiatives. I'll refer to each a bit separately. So, the first one is that we had a very strong and very healthy market share in WFO, and it goes to the need at the higher end of the market. Historically we did not play in the lower end of the market but since the introduction of CXone, which is actually providing under one platform a fully integrated Omnichannel routing analytics and WFO, what we see is a very, very, very high attachment rate between those three as we go to this segment of the market. In context, by the way, historically we are very strong and still are very strong. So, that is going very well, and we see that attachment rate increasing quite dramatically compared to the first day that we brought in context. So, for the first one which is, as you said, the down markets play for WFO, through CXone, it's going very well.

The second one, in X-Sight, I think you heard it from my earlier remarks. The essential element, the cloud element of X-Sight, the example that I gave of several customers that we've landed this quarter with X-Sight Essential, just in describing those customers, didn't give specific names, but you can see that this is not the classic very large high-end global banks, although we had some business with them as well. Actually, through X-Sight and Essential, we've managed to go much lower the market, by the way, lower, but still pretty solid with those financial services.

Sanjit Singh -- Morgan Stanley -- Analyst

Great, thank you, Barak.

Operator

Thank you and the next one now from Chris Reimer from Barclays. Thank you, Chris.

Chris Reimer -- Barclays -- Analyst

Hi, thank you for taking my questions. Could you give more detail on the partnership with Atos as to what products might be available to them and what could a customer base you think that will generate?

Barak Eilam -- Chief Executive Officer

Sure. So, the announcement that we have made and what we have signed with Atos is a partnership around the CXone. Atos is a very, very large customer base. Many of those customers, if not all of them, have customer service and a contact center operation. Today, they have a unified communication as well as Atos Legacy contact center on-premises solutions. And basically, the partnership is to go and offer those customers immigration to the cloud of those contact centers and customer service assets into CXone. Atos built that customer base for many years of solid execution, and we're talking about an opportunity of hundreds of thousands of contact center agents.

Most importantly, Atos has a very successful go-to-market vehicle for both of their partners, as well as, of course, their sales team. Atos is a very large corporation with 110,000 employees around the globe, and this is basically gonna serve as an extension, a very good extension to our own go-to-market penetrating markets where we have either light presence or no presence at all.

Chris Reimer -- Barclays -- Analyst

Understood, thank you. And Beth, just a technical question. Did you give the number of recurring revenues this quarter? Their percentage? I might've missed it in your comments.

Beth Gaspich -- Chief Financial Officer

Sure, thank you. Yes, we did give the recurring revenue and continued to increase, and this year in the second quarter it represents 72% of our total revenue.

Chris Reimer -- Barclays -- Analyst

Okay, thank you very much.

Operator

Thank you, and we now have Pat Walravens from JMP Securities. Thank you, Pat.

Mark -- JMP Securities -- Analyst

Yeah, Mark, four Pat. Thank you so much for taking my question. Just regarding competition, I just want to see if you see any changes, especially around [inaudible]? Thank you.

Barak Eilam -- Chief Executive Officer

No, I don't think we can report on any change in the competitive landscape. We believe that in both markets that we operate, these are very healthy markets. They are going very fast, and we believe, as you heard in our remarks, that we are taking a good share out of the market with a lot of competitive replacements. I prefer not to refer to any specific competitor, the one that you have mentioned; we don't see any change in the dynamics in the market.

Mark -- JMP Securities -- Analyst

Okay, thank you. Just one last one for me. So, just regarding RPA, so it's a relatively new technology. So, I was just wondering maybe where do you see the technology at most value to customers and maybe the technology tests what we did well and doesn't live up to the expectation? Anything you can share around their, thank you.

Barak Eilam -- Chief Executive Officer

Sure. So, obviously it's clearly valuable technology in the sense that enterprises they are looking on every possible opportunity to go to streamline the operation as well as reducing the costs and RPA is a classic way, and actually, the ultimate way to do that in a very cost-effective way. Basically, taking mundane tasks that do not necessarily need to be managed by human beings and take those micro-processes and sometimes macro processes or complete end-to-end processes and automate them in a very fast and rapid way. That's the basic premise of this technology. With the evolution we see in the market that it started with started as a moniker that we properly refer to as unattended RPA, meaning that the robot is operating by itself at the back, taking the process without intervention and that provides a certain list of opportunities in the markets. We believe this is very good and we play in this segment as well.

So, we see this market involving more and more so into two areas. The first one is what we refer to as attended automation is where you put together the man and the machine or the man in the robot and they exchange work together. Basically, the person is the one that outsources, if you would like, "work to the robot" and if you take the best out of those two individuals were two entities, the robot in the machine, these are more complex operation, and you need more complex technology. But when it talks and it walks, of course, it provides tremendous value, much more than just attended or unattended automation.

The second part is that we see, and we had a lot of AI capabilities into RPA. We have introduced about a year ago a platform called Automation Finder, which is a fully automated, powered by a vehicle that allows actually fine automation opportunity, map them, and deploy them. And that's something that we see that we are ahead of the market and others do not have this capability, and it gets a lot of traction and allows us to increase our win rate quite significantly. And I just mentioned the last one is the introduction NEVA, which is a virtual assist entity that allows us to filter and more easily integrate RPA technology into the workforce in large organizations.

Mark -- JMP Securities -- Analyst

Great, thank you so much.

Operator

Thank you, so that concludes the questions at present. I'll just send it back now to Barak. Thank you, Barak.

Barak Eilam -- Chief Executive Officer

Thank you all for joining us today and have a great week.

Operator

Okay, everyone thank you. That concludes your conference call for today; you may now disconnect. Thank you for joining and have a good day.

Duration: 48 minutes

Call participants:

Beth Gaspich -- Chief Financial Officer

Barak Eilam -- Chief Executive Officer

Beth Gaspich -- Chief Financial Officer

Eran Liron -- Executive Vice President, Marketing and Corporate Development

Shaul Eyal -- Oppenheimer -- Analyst

John DiFucci -- Jefferies -- Analyst

Dan Ives -- Wedbush Securities -- Analyst

Hanna Rudoff -- D.A. Davidson -- Analyst

Paul Coster -- JP Morgan -- Analyst

Sanjit Singh -- Morgan Stanley -- Analyst

Chris Reimer -- Barclays -- Analyst

Mark -- JMP Securities -- Analyst

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