Strong Growth in Operating Income with
Greater Than 200% Year-Over-Year Growth in Cash Flow from
Operations
NICE (NASDAQ: NICE) today announced results for the second
quarter ended June 30, 2020.
Second Quarter 2020 Financial Highlights
GAAP
Non-GAAP
Cloud
revenue of $184 million, growth of 30% year-over-year
Cloud
revenue of $186 million, growth of 30% year-over-year
Total
revenue of $393 million, growth of 3% year-over-year
Total
revenue of $395 million, growth of 4% year-over-year
Gross
margin of 65.5% compared to 65.6% last year
Gross
margin of 71.0% compared to 70.9% last year
Cloud
gross margin of 56.2% compared to 50.3% last year
Cloud
gross margin of 65.7% compared to 61.4% last year
Operating income of $56 million compared to
$53 million last year, an increase of 5%
Operating income of $111 million compared to
$101 million last year, an increase of 10%
Operating margin of 14.3% compared to 14.1%
last year
Operating margin of 28.2% compared to 26.6%
last year
Diluted
EPS of $0.68 versus $0.65 last year, 5% growth
year-over-year
Diluted
EPS of $1.37 versus $1.25 last year, 10% growth
year-over-year
Operating cash flow of $60 million compared
to $18 million last year
“We are pleased to report another quarter of strong and
accelerated cloud growth as cloud revenues grew 30% year-over-year,
combined with a continued substantial increase in profitability,”
said Barak Eilam, CEO of NICE. “The strong cloud performance
demonstrates how well we are positioned, as enterprises of all
sizes become intensely focused on extreme agility in a constantly
changing environment.”
Mr. Eilam continued, “Our recent business performance highlights
that: 1) our solutions are mission critical now more than ever, 2)
our cloud platforms are essential to enable a flexible
work-from-home mode of operation, and 3) cloud and digital
transformation, which are at the core of our business, are now
dramatically accelerating in the enterprise market.”
GAAP Financial Highlights for the Second Quarter Ended June
30:
Revenues: Second quarter 2020 total revenues increased
3.4% to $393.2 million compared to $380.4 million for the second
quarter of 2019.
Gross Profit: Second quarter 2020 gross profit increased
to $257.4 million from $249.6 million. Second quarter 2020 gross
margin was 65.5% compared to 65.6% for the second quarter of
2019.
Operating Income: Second quarter 2020 operating income
and operating margin increased to $56.1 million and 14.3%,
respectively, compared to $53.5 million and 14.1%, respectively,
for the second quarter of 2019.
Net Income: Second quarter 2020 net income and net income
margin increased to $44.6 million and 11.3%, respectively, compared
to $42.1 million and 11.1%, respectively, for the second quarter of
2019.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the second quarter of 2020 increased 4.6% to $0.68,
compared to $0.65 in the second quarter of 2019.
Operating Cash Flow and Cash Balance: Second quarter 2020
operating cash flow was $59.6 million. In the second quarter $3.5
million was used for share repurchases. As of June 30, 2020, total
cash and cash equivalents, short term investments were $1,103.0
million, and total debt was $469.6 million.
Non-GAAP Financial Highlights for the Second Quarter Ended
June 30:
Revenues: Second quarter 2020 non-GAAP total revenues
increased to $395.1 million, up 3.6% from $381.4 million for the
second quarter of 2019.
Gross Profit: Second quarter 2020 non-GAAP gross profit
and gross margin increased to $280.5 million and 71.0%,
respectively, from $270.5 million and 70.9%, respectively for the
second quarter of 2019.
Operating Income: Second quarter 2020 non-GAAP operating
income and non-GAAP operating margin increased to $111.4 million
and 28.2%, respectively, from $101.3 million and 26.6%,
respectively, for the second quarter of 2019.
Net Income: Second quarter 2020 non-GAAP net income and
non-GAAP net income margin increased to $89.9 million and 22.7%,
respectively, from $80.9 million and 21.2%, respectively, for the
second quarter of 2019.
Fully Diluted Earnings Per Share: Second quarter 2020
non-GAAP fully diluted earnings per share increased 9.6% to $1.37,
compared to $1.25 for the second quarter of 2019.
Third Quarter 2020 Guidance:
Third quarter 2020 Non-GAAP total revenues are expected to be in
a range of $403 million to $413 million. Third quarter 2020
Non-GAAP fully diluted earnings per share are expected to be in a
range of $1.33 to $1.43.
Quarterly Results Conference Call
NICE management will host its earnings conference call today
August 6th, 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 608 059 84. 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 973 031
96.
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 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 CONDENSED CONSOLIDATED BALANCE
SHEETS U.S. dollars in thousands
June 30,
December 31,
2020
2019
Unaudited Audited
ASSETS CURRENT
ASSETS: Cash and cash equivalents
$
344,098
$
228,323
Short-term investments
758,918
210,772
Trade receivables
301,951
319,622
Prepaid expenses and other current assets
132,929
116,972
Total current assets
1,537,896
875,689
LONG-TERM ASSETS: Long-term investments
-
542,389
Property and equipment, net
142,999
141,647
Deferred tax assets
32,451
30,513
Other intangible assets, net
377,355
411,019
Operating lease right-of-use assets
100,891
106,196
Goodwill
1,428,097
1,378,418
Other long-term assets
142,219
124,034
Total long-term assets
2,224,012
2,734,216
TOTAL ASSETS
$
3,761,908
$
3,609,905
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Trade payables
$
27,731
$
30,376
Deferred revenues and advances from customers
276,772
245,792
Current maturities of operating leases
21,128
21,519
Exchangeable senior notes
255,610
251,583
Accrued expenses and other liabilities
372,132
391,685
Total current liabilities
953,373
940,955
LONG-TERM LIABILITIES: Deferred revenues and advances
from customers
29,336
26,045
Operating leases
97,333
103,490
Deferred tax liabilities
48,037
52,509
Loan
213,998
213,313
Other long-term liabilities
16,587
16,327
Total long-term liabilities
405,291
411,684
SHAREHOLDERS' EQUITY Nice Ltd's equity
2,378,525
2,257,266
Non-controlling interests
24,719
-
Total shareholders' equity
2,403,244
2,257,266
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
3,761,908
$
3,609,905
NICE LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME U.S. dollars in thousands (except per share amounts)
Quarter ended
Year to date
June 30,
June 30,
2020
2019
2020
2019
Unaudited Unaudited Unaudited Audited Revenue: Product
$
38,257
$
62,018
$
102,865
$
132,049
Services
170,979
176,420
344,171
347,338
Cloud
183,944
141,976
356,572
278,054
Total revenue
393,180
380,414
803,608
757,441
Cost of revenue: Product
5,173
5,651
11,277
11,532
Services
50,037
54,619
103,550
109,742
Cloud
80,523
70,495
160,991
140,541
Total cost of revenue
135,733
130,765
275,818
261,815
Gross profit
257,447
249,649
527,790
495,626
Operating expenses: Research and development, net
53,756
46,456
106,537
93,022
Selling and marketing
97,505
94,878
197,321
196,945
General and administrative
40,398
44,029
89,511
78,743
Amortization of acquired intangible assets
9,650
10,795
19,455
21,496
Total operating expenses
201,309
196,158
412,824
390,206
Operating income
56,138
53,491
114,966
105,420
Financial and other expense/(income), net
(423)
724
1,227
4,142
Income before tax
56,561
52,767
113,739
101,278
Taxes on income
11,956
10,709
23,020
22,156
Net income
44,605
42,058
$
90,719
79,122
Less: net loss attributable to non-controlling interests
182
-
266
-
Net income attributable to Nice Ltd.'s shareholders
44,787
42,058
90,985
79,122
Earnings per share: Basic
$
0.71
$
0.68
$
1.45
$
1.28
Diluted
$
0.68
$
0.65
$
1.39
$
1.23
Weighted average shares outstanding: Basic
62,638
62,116
62,557
61,980
Diluted
65,633
64,650
65,484
64,205
NICE LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP TO
NON-GAAP RESULTS U.S. dollars in thousands (except per share
amounts)
Quarter ended
Year to date
June 30,
June 30,
2020
2019
2020
2019
GAAP revenues
$
393,180
$
380,414
$
803,608
$
757,441
Valuation adjustment on acquired deferred product revenue
-
-
-
15
Valuation adjustment on acquired deferred services revenue
-
-
-
2
Valuation adjustment on acquired deferred cloud revenue
1,950
953
2,729
1,825
Non-GAAP revenues
$
395,130
$
381,367
$
806,337
$
759,283
GAAP cost of revenue
$
135,733
$
130,765
$
275,818
$
261,815
Amortization of acquired intangible assets on cost of product
(1,125)
(979)
(2,259)
(1,849)
Amortization of acquired intangible assets on cost of services
(1,497)
(1,534)
(3,019)
(3,069)
Amortization of acquired intangible assets on cost of cloud
(16,064)
(15,043)
(31,622)
(29,848)
Valuation adjustment on acquired deferred cost of cloud
244
632
537
1,318
Cost of product revenue adjustment (1)
(68)
(102)
(136)
(207)
Cost of services revenue adjustment (1)
(1,680)
(2,001)
(3,280)
(4,145)
Cost of cloud revenue adjustment (1,2)
(948)
(877)
(1,792)
(1,784)
Non-GAAP cost of revenue
$
114,595
$
110,861
$
234,247
$
222,231
GAAP gross profit
$
257,447
$
249,649
$
527,790
$
495,626
Gross profit adjustments
23,088
20,857
44,300
41,426
Non-GAAP gross profit
$
280,535
$
270,506
$
572,090
$
537,052
GAAP operating expenses
$
201,309
$
196,158
$
412,824
$
390,206
Research and development (1,2)
(2,373)
(1,587)
(4,988)
(3,149)
Sales and marketing (1,2)
(8,797)
(5,798)
(14,062)
(11,474)
General and administrative (1,2)
(11,340)
(8,806)
(24,174)
(15,416)
Amortization of acquired intangible assets
(9,650)
(10,794)
(19,455)
(21,496)
Valuation adjustment on acquired deferred commission
36
76
71
169
Non-GAAP operating expenses
$
169,185
$
169,249
$
350,216
$
338,840
GAAP financial and other expense/(income), net
$
(423)
$
724
$
1,227
$
4,142
Amortization of discount on debt
(2,532)
(2,162)
(4,874)
(4,470)
Non-GAAP financial and other expense, net
$
(2,955)
$
(1,438)
$
(3,647)
$
(328)
GAAP taxes on income
$
11,956
$
10,709
$
23,020
$
22,156
Tax adjustments re non-GAAP adjustments
12,499
11,052
24,790
19,934
Non-GAAP taxes on income
$
24,455
$
21,761
$
47,810
$
42,090
GAAP net income
$
44,605
$
42,058
$
90,719
$
79,122
Valuation adjustment on acquired deferred revenue
1,950
953
2,729
1,842
Valuation adjustment on acquired deferred cost of cloud revenue
(244)
(632)
(537)
(1,318)
Amortization of acquired intangible assets
28,336
28,350
56,355
56,262
Valuation adjustment on acquired deferred commission
(36)
(76)
(71)
(169)
Share-based compensation (1)
25,206
18,328
46,851
35,332
Acquisition related expenses (2)
-
843
1,581
843
Amortization of discount on long term debt
2,532
2,162
4,874
4,470
Tax adjustments re non-GAAP adjustments
(12,499)
(11,052)
(24,790)
(19,934)
Non-GAAP net income
$
89,850
$
80,934
$
177,711
$
156,450
GAAP diluted earnings per share
$
0.68
$
0.65
$
1.39
$
1.23
Non-GAAP diluted earnings per share
$
1.37
$
1.25
$
2.71
$
2.44
Shares used in computing GAAP diluted earnings per share
65,633
64,650
65,484
64,205
Shares used in computing non-GAAP diluted earnings per share
65,633
64,650
65,484
64,205
NICE LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP TO
NON-GAAP RESULTS (continued) U.S. dollars in thousands
(1)
Share-based Compensation
Quarter ended
Year to date
June 30,
June 30,
2020
2019
2020
2019
Cost of product revenue
$
68
$
102
$
136
$
207
Cost of services revenue
1,680
2,001
3,280
4,145
Cost of cloud revenue
948
877
1,792
1,784
Research and development
2,373
1,582
4,988
3,144
Sales and marketing
8,797
5,768
13,974
11,444
General and administrative
11,340
7,998
22,681
14,608
$
25,206
$
18,328
$
46,851
$
35,332
(2)
Acquisition related expenses
Quarter ended
Year to date
June 30,
June 30,
2020
2019
2020
2019
Research and development
$
-
$
5
$
-
$
5
Sales and marketing
-
30
88
30
General and administrative
-
808
1,493
808
$
-
$
843
$
1,581
$
843
NICE LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW
STATEMENTS U.S. dollars in thousands
Quarter ended
Year to date
June 30,
June 30,
2020
2019
2020
2019
Unaudited Unaudited Unaudited Audited
Operating Activities Net income
$
44,605
$
42,058
$
90,719
$
79,122
Depreciation and amortization
45,601
43,012
89,651
84,820
Stock based compensation
25,064
18,312
46,632
35,316
Amortization of premium and discount and accrued interest on
marketable securities
(3,618)
(233)
(2,870)
(574)
Deferred taxes, net
(678)
(10,764)
(9,870)
(18,622)
Changes in operating assets and liabilities: Trade Receivables
14,134
(10,611)
14,793
20,112
Prepaid expenses and other assets
(20,677)
(51,949)
(34,768)
(72,531)
Trade payables
(13,283)
4,543
(805)
3,718
Accrued expenses and other current liabilities
(33,357)
(22,822)
(21,460)
9,616
Operating lease right-of-use assets, net
4,363
3,379
8,512
7,496
Deferred revenue
(415)
5,462
38,098
58,869
Long term liabilities
-
(403)
-
(280)
Operating lease liabilities
(4,132)
(3,654)
(9,689)
(9,159)
Amortization of discount on long term debt
2,532
2,162
4,875
4,469
Other
(558)
(516)
585
(1,984)
Net cash provided by operating activities
59,581
17,976
214,403
200,388
Investing Activities
Purchase of property and equipment
(7,823)
(6,566)
(17,456)
(14,982)
Purchase of Investments
(69,061)
(114,834)
(154,488)
(306,142)
Proceeds from Investments
78,980
93,558
164,865
170,508
Capitalization of software development costs
(9,912)
(8,897)
(19,199)
(17,391)
Payments for business and asset acquisitions, net of cash acquired
-
(25,788)
(50,836)
(25,788)
Net cash used in investing activities
(7,816)
(62,527)
(77,114)
(193,795)
Financing Activities
Proceeds from issuance of shares upon exercise of share options
5,865
1,401
7,349
3,018
Purchase of treasury shares
(3,531)
(4,615)
(27,601)
(14,715)
Capital Lease payments
(15)
(187)
(177)
(440)
Net cash provided by/(used in) financing activities
2,319
(3,401)
(20,429)
(12,137)
Effect of exchange rates on cash and cash equivalents
902
(433)
(1,085)
(244)
Net change in cash and cash equivalents
54,986
(48,385)
#
115,775
(5,788)
Cash and cash equivalents, beginning of period
$
289,112
$
284,696
$
228,323
$
242,099
Cash and cash equivalents, end of period
$
344,098
$
236,311
$
344,098
$
236,311
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005412/en/
NICE 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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