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NICE Reports 27% Growth in Cloud Revenue For the First Quarter of 2020

Double Digit Growth in Operating Income and Earnings Per Share

NICE (NASDAQ: NICE) today announced results for the first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

GAAP

Non-GAAP

Revenue of $410 million, growth of 9% year-over-year

Revenue of $411 million, growth of 9% year-over-year

Cloud revenue of $173 million, growth of 27% year-over-year

Cloud revenue of $173 million, growth of 27% year-over-year

Gross margin of 65.9% compared to 65.2% last year

Gross margin of 70.9% compared to 70.5% last year

Operating income of $59 million compared to $52 million last year, growth of 13%

Operating income of $111 million compared to $97 million last year, growth of 14%

Operating margin of 14.3% compared to 13.8% last year

Operating margin of 26.9% compared to 25.7% last year

Diluted EPS of $0.71 versus $0.58 last year, growth of 22%

Diluted EPS of $1.34 versus $1.18 last year, growth of 14%

"We are pleased to report strong first quarter results driven by an accelerated 27% growth in cloud revenue. We also delivered double-digit growth in operating income and earnings per share with further expansion of our operating margin," said Barak Eilam, CEO NICE. "In light of the current environment, these strong results demonstrate the mission critical nature of our solutions and the strength of our cloud business driven by our three market leading cloud platforms, CXone for Customer Experience, X-Sight for Financial Crime and Compliance, and NICE Investigate for Public Safety."

Mr. Eilam continued, "At the onset of COVID-19, we took immediate action, responding with solutions to provide customers the help they needed to quickly overcome the challenges they faced in this new environment, specifically their ability to move rapidly to the cloud and transform to digital. In fact, we signed up dozens of customers with thousands of agents for our CXone@home offering aimed at helping these customers shift their agents to work from home. I am pleased to see that we have witnessed great response to our offerings across all our business segments that provided the agility these organizations needed.

"At the same time, these organizations are preparing for the next phase - the transformation to cloud and digital. Furthermore, their ability to respond very rapidly in the last few months and manage changes that they thought would take years instead of days is giving them confidence that they have the ability to transform quickly. While we are faced with some unpredictability in the short term due to the economic environment, we continue to experience strong growth in our cloud business. As the clear leader in both cloud and digital in our markets, along with a strong balance sheet, strong cash generation and a keen focus on execution and profitability, we are clearly in the best competitive position to provide the platforms that these organizations need to transform their operations."

GAAP Financial Highlights for the First Quarter Ended March 31:

Revenues: First quarter 2020 total revenues increased 8.9% to $410.4 million compared to $377.0 million for the first quarter of 2019.

Gross Profit: First quarter 2020 gross profit and gross margin increased to $270.3 million and 65.9%, respectively, compared to $246.0 million and 65.2%, respectively, for the first quarter of 2019.

Operating Income: First quarter 2020 operating income and operating margin increased to $58.8 million and 14.3%, respectively, compared to $51.9 million and 13.8%, respectively, for the first quarter of 2019.

Net Income: First quarter 2020 net income and net income margin increased to $46.1 million and 11.2%, respectively, compared to $37.1 million and 9.8%, respectively, for the first quarter of 2019.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the First quarter of 2020 increased 22.4% to $0.71, compared to $0.58 in the first quarter of 2019.

Operating Cash Flow and Cash Balance: First quarter 2020 operating cash flow was $154.8 million. In the first quarter, $24.1 million was used for share repurchases. As of March 31, 2020, total cash and cash equivalents, short and long term investments were $1,035.4 million, and total debt was $467.2 million.

Non-GAAP Financial Highlights for the First Quarter Ended March 31:

Revenues: First quarter 2020 Non-GAAP total revenues increased 8.8% to $411.2 million compared to $377.9 million for the first quarter of 2019.

Gross Profit: First quarter 2020 Non-GAAP gross profit and gross margin increased to $291.6 million and 70.9%, respectively, compared to $266.5 million and 70.5%, respectively, for the first quarter of 2019.

Operating Income: First quarter 2020 Non-GAAP operating income and Non-GAAP operating margin increased to $110.5 million and 26.9%, respectively, compared to $97.0 million and 25.7%, respectively, for the first quarter of 2019.

Net Income: First quarter 2020 Non-GAAP net income and Non-GAAP net income margin increased to $87.9 million and 21.4%, respectively, from $75.5 million and 20.0%, respectively, for the first quarter of 2019.

Fully Diluted Earnings Per Share: First quarter 2020 Non-GAAP fully diluted earnings per share increased 13.6% to $1.34, compared to $1.18 for the first quarter of 2019.

Second Quarter and Full Year 2020 Guidance:

NICE’s guidance is based on current market conditions and expectations. The guidance is subject to various cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.

Second Quarter 2020: Second quarter 2020 Non-GAAP total revenues are expected to be in a range of $387 million to $397 million. Second quarter 2020 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.28 to $1.38.

Given uncertainties related to the COVID-19 pandemic and the rapidly changing global economic environment, the company is withdrawing its previously issued full-year 2020 guidance provided February 13, 2020.

Quarterly Results Conference Call

NICE management will host its earnings conference call today May 14th, 2020 at 8:30 AM ET, 13:30 GMT, 15:30 Israel, to discuss the results and the company's outlook. To participate in the call, please dial into the following numbers: United States 1-866-804-8688 or +1-718-354-1175, International +44(0)1296-480-100, United Kingdom 0-800-783-0906, Israel 1-809-344-364. The Passcode is 975 313 67. Additional access numbers can be found at http://www.btconferencing.com/globalaccess/?bid=54_attended. The call will be webcast live on the Company’s website at https://www.nice.com/investor-relations/upcoming-event. An online replay will also be available approximately two hours following the call. A telephone replay of the call will be available for 7 days after the live broadcast and may be accessed by dialing: United States 1-877-482-6144, International +44(0)20-7136-9233, United Kingdom 0-800-032-9687. The Passcode for the replay is 706 733 80.

Non-GAAP financial measures are included in this press release. Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude share-based compensation, amortization of acquired intangible assets, acquisition related expenses, amortization of discount on long term debt and the tax effect of the Non-GAAP adjustments. Business combination accounting rules require the recognition of a legal performance obligation related to a revenue arrangement of an acquired entity as a liability. The amount assigned to such liability should be based on its fair value at the date of acquisition. The Non-GAAP adjustment for a revenue arrangement is intended to reflect the full amount of such revenue. The Company believes that these Non-GAAP financial measures, used in conjunction with the corresponding GAAP measures, provide investors with useful supplemental information about the financial performance of our business. We believe Non-GAAP financial measures are useful to investors as a measure of the ongoing performance of our business. Our management regularly uses our supplemental Non-GAAP financial measures internally to understand, manage and evaluate our business and to make financial, strategic and operating decisions. These Non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Our Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. The Company provides guidance only on a Non-GAAP basis. A reconciliation of guidance from a GAAP to Non-GAAP basis is not available due to the unpredictability and uncertainty associated with future events that would be reported in GAAP results and would require adjustments between GAAP and Non-GAAP financial measures, including the impact of future possible business acquisitions. Accordingly, a reconciliation of the guidance based on Non-GAAP financial measures to corresponding GAAP financial measures for future periods is not available without unreasonable effort.

About NICE
NICE (Nasdaq: NICE) is the worldwide leading provider of both cloud and on-premises enterprise software solutions that empower organizations to make smarter decisions based on advanced analytics of structured and unstructured data. NICE helps organizations of all sizes deliver better customer service, ensure compliance, combat fraud and safeguard citizens. Over 25,000 organizations in more than 150 countries, including over 85 of the Fortune 100 companies, are using NICE solutions. www.nice.com.

Trademark Note: NICE and the NICE logo are trademarks or registered trademarks of NICE. All other marks are trademarks of their respective owners. For a full list of NICE' marks, please see: http://www.nice.com/nice-trademarks .

Forward-Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements may be identified by words such as "believe," "expect," "seek," "may," "will," "intend," "should," "project," "anticipate," "plan," and similar expressions. Forward-looking statements are based on the current beliefs, expectations and assumptions of the Company’s management regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include guidance regarding the Company’s revenue and earnings and the growth of our cloud, analytics and artificial intelligence business.

Forward looking statements are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. The Company cautions that these statements are not guarantees of future performance, and investors should not place undue reliance on them. There are or will be important known and unknown factors and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These factors, include, but are not limited to, risks associated with changes in economic and business conditions, competition, successful execution of the Company’s growth strategy, success and growth of the Company’s cloud Software-as-a-Service business, difficulties in making additional acquisitions or effectively integrating acquired operations, products, technologies and personnel, the Company’s dependency on third-party cloud computing platform providers, hosting facilities and service partners, rapidly changing technology, cyber security attacks or other security breaches against the Company, privacy concerns and legislation impacting the Company’s business, changes in currency exchange rates and interest rates, the effects of additional tax liabilities resulting from our global operations and various other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the "SEC"). In addition, COVID-19 is contributing to a general slowdown in the global economy and may affect the Company’s business, results of operations, financial condition and our future strategic plans. At this time, the extent to which the COVID-19 may impact the Company’s financial condition or results of operations is uncertain. Furthermore, due to our subscription based business model, the effect of the COVID-19 may not be fully reflected in our results of operations until future periods, if at all. You are encouraged to carefully review the section entitled "Risk Factors" in our latest Annual Report on Form 20-F and our other filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance. The forward-looking statements contained in this presentation speak only as of the date hereof, and the Company undertakes no obligation to update or revise them, whether as a result of new information, future developments or otherwise, except as required by law.

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NICE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share amounts)
 
Quarter ended
March 31,

2020

2019

UnauditedUnaudited
 
Revenue:
Product

$ 64,608

$ 70,031

Services

173,192

170,918

Cloud

172,628

136,078

Total revenue

410,428

377,027

 
Cost of revenue:
Product

6,104

5,881

Services

53,513

55,123

Cloud

80,468

70,046

Total cost of revenue

140,085

131,050

 
Gross profit

270,343

245,977

 
Operating expenses:
Research and development, net

52,781

46,566

Selling and marketing

99,816

102,067

General and administrative

49,113

34,714

Amortization of acquired intangible assets

9,805

10,701

Total operating expenses

211,515

194,048

 
Operating income

58,828

51,929

 
Finance and other expense, net

1,650

3,418

 
Income before tax

57,178

48,511

Taxes on income

11,064

11,447

Net income

46,114

37,064

 
Less: net loss attributable to non-controlling interests

84

-

 
Net income attributable to Nice Ltd.'s shareholders

46,198

37,064

 
 
Earnings per share:
Basic

$ 0.74

$ 0.60

Diluted

$ 0.71

$ 0.58

 
Weighted average shares outstanding:
Basic

62,477

61,842

Diluted

65,335

63,759

NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
 
Quarter ended
March 31,

2020

2019

GAAP revenues

$ 410,428

$ 377,027

Valuation adjustment on acquired deferred product revenue

-

15

Valuation adjustment on acquired deferred services revenue

-

2

Valuation adjustment on acquired deferred cloud revenue

779

872

Non-GAAP revenues

$ 411,207

$ 377,916

 
 
GAAP cost of revenue

$ 140,085

$ 131,050

Amortization of acquired intangible assets on cost of product

(1,134)

(870)

Amortization of acquired intangible assets on cost of services

(1,522)

(1,535)

Amortization of acquired intangible assets on cost of cloud

(15,558)

(14,805)

Valuation adjustment on acquired deferred cost of cloud

293

686

Cost of product revenue adjustment (1)

(68)

(105)

Cost of services revenue adjustment (1)

(1,600)

(2,144)

Cost of cloud revenue adjustment (1,2)

(844)

(907)

Non-GAAP cost of revenue

$ 119,652

$ 111,370

 
 
GAAP gross profit

$ 270,343

$ 245,977

Gross profit adjustments

21,212

20,569

Non-GAAP gross profit

$ 291,555

$ 266,546

 
 
GAAP operating expenses

$ 211,515

$ 194,048

Research and development (1)

(2,615)

(1,562)

Sales and marketing (1,2)

(5,265)

(5,676)

General and administrative (1,2)

(12,834)

(6,610)

Amortization of acquired intangible assets

(9,805)

(10,702)

Valuation adjustment on acquired deferred commission

35

93

Non-GAAP operating expenses

$ 181,031

$ 169,591

 
 
GAAP finance & other expense (income), net

$ 1,650

$ 3,418

Amortization of discount on debt

(2,342)

(2,308)

Non-GAAP finance & other expense (income), net

$ (692)

$ 1,110

 
 
GAAP taxes on income

$ 11,064

$ 11,447

Tax adjustments re non-GAAP adjustments

12,291

8,882

Non-GAAP taxes on income

$ 23,355

$ 20,329

 
 
GAAP net income

$ 46,114

$ 37,064

Valuation adjustment on acquired deferred revenue

779

889

Valuation adjustment on acquired deferred cost of cloud revenue

(293)

(686)

Amortization of acquired intangible assets

28,019

27,912

Valuation adjustment on acquired deferred commission

(35)

(93)

Share-based compensation (1)

21,645

17,004

Acquisition related expenses (2)

1,581

-

Amortization of discount on long term debt

2,342

2,308

Tax adjustments re non-GAAP adjustments

(12,291)

(8,882)

Non-GAAP net income

$ 87,861

$ 75,516

 
 
GAAP diluted earnings per share

$ 0.71

$ 0.58

 
Non-GAAP diluted earnings per share

$ 1.34

$ 1.18

 
Shares used in computing GAAP diluted earnings per share

65,335

63,759

 
Shares used in computing non-GAAP diluted earnings per share

65,335

63,759

NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
 
 
 
 

(1)

Share-based Compensation
Quarter ended
March 31,

2020

2019

 
Cost of product revenue

$ 68

$ 105

Cost of services revenue

1,600

2,144

Cost of cloud revenue

844

907

Research and development

2,615

1,562

Sales and marketing

5,177

5,676

General and administrative

11,341

6,610

$ 21,645

$ 17,004

 
 

(2)

Acquisition related expenses
Quarter ended
March 31,

2020

2019

 
Sales and marketing

$ 88

$ -

General and administrative

1,493

-

$ 1,581

$ -

NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter ended
March 31,

2020

2019

UnauditedUnaudited
 
Operating Activities
 
Net income

$ 46,114

37,064

Depreciation and amortization

44,050

41,808

Stock based compensation

21,568

17,004

Amortization of premium and discount and accrued interest on marketable securities

748

(341)

Deferred taxes, net

(9,192)

(7,858)

Changes in operating assets and liabilities:
Trade Receivables

659

30,723

Prepaid expenses and other assets

(14,091)

(20,582)

Trade payables

12,478

(825)

Accrued expenses and other current liabilities

11,897

32,438

Operating lease right-of-use assets, net

4,149

4,117

Deferred revenue

38,513

53,407

Long term liabilities

-

123

Operating lease liabilities

(5,557)

(5,505)

Amortization of discount on long term debt

2,343

2,307

Other

1,143

(1,468)

Net cash provided by operating activities

154,822

182,412

 
Investing Activities
 
Purchase of property and equipment

(9,633)

(8,416)

Purchase of Investments

(85,427)

(191,308)

Proceeds from Investments

85,885

76,950

Capitalization of software development costs

(9,287)

(8,494)

Payments for business acquisitions, net of cash acquired

(50,836)

-

Net cash used in investing activities

(69,298)

(131,268)

 
Financing Activities
 
Proceeds from issuance of shares upon exercise of share options

1,484

1,617

Purchase of treasury shares

(24,070)

(10,100)

Capital Lease payments

(162)

(253)

Net cash used in financing activities

(22,748)

(8,736)

 
Effect of exchange rates on cash and cash equivalents

(1,987)

189

 
Net change in cash and cash equivalents

60,789

42,597

Cash and cash equivalents, beginning of period

$ 228,323

$ 242,099

 
Cash and cash equivalents, end of period

$ 289,112

$ 284,696

 
NICE LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
March 31,December 31,

2020

2019

UnauditedAudited
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents

$ 289,112

$ 228,323

Short-term investments

192,525

210,772

Trade receivables

315,786

319,622

Prepaid expenses and other current assets

130,163

116,972

 
Total current assets

927,586

875,689

 
LONG-TERM ASSETS:
Long-term investments

553,732

542,389

Property and equipment, net

141,775

141,647

Deferred tax assets

30,626

30,513

Other intangible assets, net

405,710

411,019

Operating lease right-of-use assets

103,649

106,196

Goodwill

1,428,056

1,378,418

Other long-term assets

124,762

124,034

 
Total long-term assets

2,788,310

2,734,216

 
TOTAL ASSETS

$ 3,715,896

$ 3,609,905

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables

$ 40,979

$ 30,376

Deferred revenues and advances from customers

274,793

245,792

Current maturities of operating leases

21,200

21,519

Exchangeable senior notes

253,616

251,583

Accrued expenses and other liabilities

407,391

391,685

 
Total current liabilities

997,979

940,955

 
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers

31,199

26,045

Operating leases

99,780

103,490

Deferred tax liabilities

46,494

52,509

Loan

213,542

213,313

Other long-term liabilities

16,197

16,327

 
Total long-term liabilities

407,212

411,684

 
SHAREHOLDERS' EQUITY
Nice Ltd's equity

2,285,804

2,257,266

Non-controlling interests

24,901

-

 
Total shareholders' equity

2,310,705

2,257,266

 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 3,715,896

$ 3,609,905

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200514005369/en/

Contacts

Investors
Marty Cohen, +1 551 256 5354, ET
ir@nice.com

Yisca Erez +972 9 775 3798, CET
ir@nice.com

Media Contact
Chris Irwin-Dudek, +1 (551) 256-5140, Chris.Irwin-Dudek@nice.com