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.
###
NICE LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME U.S. dollars in thousands (except per share amounts)
Quarter ended March 31,
2020
2019
Unaudited Unaudited 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
Unaudited Unaudited
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
Unaudited Audited
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/
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
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