Double-Digit Growth in Operating Income and
Earnings Per Share Company Raises Full Year Revenue and EPS
Guidance
NICE (NASDAQ: NICE) today announced results for the second
quarter ended June 30, 2019.
Second Quarter 2019 Financial Highlights
GAAP
Non-GAAP
Revenue
of $380 million, growth of 11% year-over-year
Revenue
of $381 million, growth of 11% year-over-year
Cloud
revenue of $142 million, growth of 31% year-over-year
Cloud
revenue of $143 million, growth of 30% year-over-year
Gross
margin of 65.6% compared to 65.3% last year
Gross
margin of 70.9% compared to 70.5% last year
Operating income of $53 million compared to
$46 million last year, an increase of 15%
Operating income of $101 million compared to
$89 million last year, an increase of 14%
Operating margin of 14.1% compared to 13.6%
last year
Operating margin of 26.6% compared to 25.8%
last year
Diluted
EPS of $0.65 versus $0.54 last year, 20% growth
year-over-year
Diluted
EPS of $1.25 versus $1.10 last year, 14% growth
year-over-year
“We are very pleased with the
strong results we reported for the second quarter of 2019,
including double digit growth in all key financial metrics,” said
Barak Eilam, CEO of NICE. “What continues to stand out is the rapid
growth we are seeing in the cloud, driven by the penetration of our
two profoundly market differentiating cloud platforms – CXone for
Customer Engagement and X-Sight for Financial Crime and Compliance
– into all segments of the market, including large enterprises,
where we have witnessed robust demand and strong
growth.”
Mr. Eilam continued, “Our
strong performance has been supported by our partner ecosystem,
which continues to expand globally. We now have 135 engaged
partners in our CXone DEVone program. The recently announced
X-Sight marketplace is gaining rapid traction with more than 20
partners signing in a very short time frame. Furthermore, earlier
this week we announced a significant partnership with Atos, in
which its large global presence will help bring CXone to new
customers around the globe.”
GAAP Financial Highlights for the Second Quarter Ended June
30:
Revenues: Second quarter 2019 total revenues increased
11.2% to $380.4 million compared to $342.0 million for the second
quarter of 2018.
Gross Profit: Second quarter 2019 gross profit and gross
margin increased to $249.6 million and 65.6%, respectively, from
$223.4 million and 65.3%, respectively, for the second quarter of
2018.
Operating Income: Second quarter 2019 operating income
and operating margin increased to $53.5 million and 14.1%,
respectively, compared to $46.4 million and 13.6%, respectively,
for the second quarter of 2018.
Net Income: Second quarter 2019 net income and net income
margin increased to $42.1 million and 11.1%, respectively, compared
to $34.2 million and 10.0%, respectively, for the second quarter of
2018.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the second quarter of 2019 increased 20.4% to $0.65,
compared to $0.54 in the second quarter of 2018.
Operating Cash Flow and Cash Balance: Second quarter 2019
operating cash flow was $18.0 million. In the second quarter $4.6
million was used for share repurchases. As of June 30, 2019, total
cash and cash equivalents, short term investments and marketable
securities were $867.4 million, and total debt was $460.3
million.
Non-GAAP Financial Highlights for the Second Quarter Ended
June 30:
Revenues: Second quarter 2019 non-GAAP total revenues
increased to $381.4 million, up 10.9% from $343.7 million for the
second quarter of 2018.
Gross Profit: Second quarter 2019 non-GAAP gross profit
and non-GAAP gross margin increased to $270.5 million and 70.9%,
respectively, from $242.3 million and 70.5%, respectively, for the
second quarter of 2018.
Operating Income: Second quarter 2019 non-GAAP operating
income and non-GAAP operating margin increased to $101.3 million
and 26.6%, respectively, from $88.7 million and 25.8%,
respectively, for the second quarter of 2018.
Net Income: Second quarter 2019 non-GAAP net income and
non-GAAP net income margin increased to $80.9 million and 21.2%,
respectively, from $69.3 million and 20.2%, respectively, for the
second quarter of 2018.
Fully Diluted Earnings Per Share: Second quarter 2019
non-GAAP fully diluted earnings per share increased 13.6% to $1.25,
compared to $1.10 for the second quarter of 2018.
Third Quarter and Full Year 2019 Guidance:
Third Quarter 2019: Third quarter 2019 non-GAAP total
revenues are expected to be in a range of $380 million to $390
million (2018 non-GAAP: $358.6 million). Third quarter 2019
non-GAAP fully diluted earnings per share are expected to be in a
range of $1.23 to $1.33 (2018 non-GAAP: $1.20).
Full Year 2019: The Company increased full year 2019
non-GAAP total revenues to be in an expected range of $1,563
million to $1,583 million (2018 non-GAAP: $1,453.4 million). The
Company increased full year 2019 non-GAAP fully diluted earnings
per share to be in an expected range of $5.13 to $5.33 (2018
non-GAAP: $4.75).
Quarterly Results Conference Call
NICE management will host its earnings conference call today,
August 8th, 2019 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 in to 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 850 810 90. 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 644 715
21.
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: amortization of acquired intangible assets,
share-based compensation, certain business combination accounting
entries, amortization of discount on long term debt, tax adjustment
re non-GAAP adjustments. The purpose of such adjustments is to give
an indication of our performance exclusive of non-cash charges and
other items that are considered by management to be outside of our
core operating results. 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. Our management regularly uses our supplemental non-GAAP
financial measures internally to understand, manage and evaluate
our business and make operating decisions. These non-GAAP measures
are among the primary factors management uses in planning for and
forecasting future periods. Business combination accounting rules
requires us to recognize a legal performance obligation related to
a revenue arrangement of an acquired entity. The amount assigned to
that liability should be based on its fair value at the date of
acquisition. The non-GAAP adjustment is intended to reflect the
full amount of such revenue. We believe this adjustment is useful
to investors as a measure of the ongoing performance of our
business. We believe these non-GAAP financial measures provide
consistent and comparable measures to help investors understand our
current and future operating cash flow performance. 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.
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 competition, success and growth of the Company’s
cloud Software-as-a-Service business, cyber security attacks or
other security breaches against the Company, privacy concerns and
legislation impacting the Company’s business, the Company’s
dependency on second-party cloud computing platform providers,
hosting facilities and service partners, changes in general
economic and business conditions, rapidly changing technology,
changes in currency exchange rates and interest rates, difficulties
in making additional acquisitions or effectively integrating
acquired operations, products, technologies and personnel,
successful execution of the Company’s growth strategy, the effects
of tax reforms and of newly enacted or modified laws, regulation or
standards on the Company and its products, and other factors and
uncertainties discussed in our filings with the U.S. Securities and
Exchange Commission (the “SEC”). 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
Year to date
June 30,
June 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Revenue: Product
$
62,018
$
49,397
$
132,049
$
110,767
Services
176,420
184,128
347,338
354,345
Cloud
141,976
108,517
278,054
212,372
Total revenue
380,414
342,042
757,441
677,484
Cost of revenue: Product
5,651
7,395
11,532
15,532
Services
54,619
57,153
109,742
115,538
Cloud
70,495
54,138
140,541
106,131
Total cost of revenue
130,765
118,686
261,815
237,201
Gross profit
249,649
223,356
495,626
440,283
Operating expenses: Research and development, net
46,456
43,455
93,022
89,322
Selling and marketing
94,878
89,820
196,945
179,746
General and administrative
44,029
33,116
78,743
69,488
Amortization of acquired intangible assets
10,795
10,586
21,496
21,171
Total operating expenses
196,158
176,977
390,206
359,727
Operating income
53,491
46,379
105,420
80,556
Finance and other expense, net
724
2,937
4,142
6,905
Income before tax
52,767
43,442
101,278
73,651
Taxes on income
10,709
9,207
22,156
15,890
Net income
$
42,058
$
34,235
$
79,122
$
57,761
Earnings per share: Basic
$
0.68
$
0.56
$
1.28
$
0.94
Diluted
$
0.65
$
0.54
$
1.23
$
0.92
Weighted average shares outstanding: Basic
62,116
61,212
61,980
61,133
Diluted
64,650
63,031
64,205
62,904
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,
2019
2018
2019
2018
GAAP revenues
$
380,414
$
342,042
$
757,441
$
677,484
Valuation adjustment on acquired deferred product revenue
-
70
15
85
Valuation adjustment on acquired deferred services revenue
-
200
2
506
Valuation adjustment on acquired deferred cloud revenue
953
1,416
1,825
3,302
Non-GAAP revenues
$
381,367
$
343,728
$
759,283
$
681,377
GAAP cost of revenue
$
130,765
$
118,686
$
261,815
$
237,201
Amortization of acquired intangible assets on cost of product
(979)
(1,336)
(1,849)
(3,925)
Amortization of acquired intangible assets on cost of services
(1,534)
(987)
(3,069)
(1,810)
Amortization of acquired intangible assets on cost of cloud
(15,043)
(12,705)
(29,848)
(25,460)
Valuation adjustment on acquired deferred cost of cloud
632
324
1,318
660
Cost of product revenue adjustment (1)
(102)
-
(207)
(188)
Cost of services revenue adjustment (1)
(2,001)
(1,896)
(4,145)
(3,649)
Cost of cloud revenue adjustment (1)
(877)
(645)
(1,784)
(1,414)
Non-GAAP cost of revenue
$
110,861
$
101,441
$
222,231
$
201,415
GAAP gross profit
$
249,649
$
223,356
$
495,626
$
440,283
Gross profit adjustments
20,857
18,931
41,426
39,679
Non-GAAP gross profit
$
270,506
$
242,287
$
537,052
$
479,962
GAAP operating expenses
$
196,158
$
176,977
$
390,206
$
359,727
Research and development (1,2)
(1,587)
(1,795)
(3,149)
(4,139)
Sales and marketing (1,2)
(5,798)
(6,851)
(11,474)
(13,154)
General and administrative (1,2)
(8,806)
(4,168)
(15,416)
(8,950)
Amortization of acquired intangible assets
(10,794)
(10,586)
(21,496)
(21,171)
Valuation adjustment on acquired deferred commission
76
-
169
-
Non-GAAP operating expenses
$
169,249
$
153,577
$
338,840
$
312,313
GAAP finance & other expense (income), net
$
724
$
2,937
$
4,142
$
6,905
Amortization of discount on long-term debt
(2,162)
(2,094)
(4,470)
(4,257)
Non-GAAP finance & other expense (income), net
$
(1,438)
$
843
$
(328)
$
2,648
GAAP taxes on income
$
10,709
$
9,207
$
22,156
$
15,890
Tax adjustments re non-GAAP adjustments
11,052
9,316
19,934
19,091
Non-GAAP taxes on income
$
21,761
$
18,523
$
42,090
$
34,981
GAAP net income
$
42,058
$
34,235
$
79,122
$
57,761
Valuation adjustment on acquired deferred revenue
953
1,686
1,842
3,893
Valuation adjustment on acquired deferred cost of cloud revenue
(632)
(324)
(1,318)
(660)
Amortization of acquired intangible assets
28,350
25,614
56,262
52,366
Valuation adjustment on acquired deferred commission
(76)
-
(169)
-
Share-based compensation (1)
18,328
15,355
35,332
31,494
Acquisition related expenses (2)
843
-
843
-
Amortization of discount on long term debt
2,162
2,094
4,470
4,257
Tax adjustments re non-GAAP adjustments
(11,052)
(9,316)
(19,934)
(19,091)
Non-GAAP net income
$
80,934
$
69,344
$
156,450
$
130,020
GAAP diluted earnings per share
$
0.65
$
0.54
$
1.23
$
0.92
Non-GAAP diluted earnings per share
$
1.25
$
1.10
$
2.44
$
2.07
Shares used in computing GAAP diluted earnings per share
64,650
63,031
64,205
62,904
Shares used in computing non-GAAP diluted earnings per share
64,650
63,031
64,205
62,904
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,
2019
2018
2019
2018
Cost of product revenue
$
(102)
$
-
$
(207)
$
(188)
Cost of services revenue
(2,001)
(1,896)
(4,145)
(3,649)
Cost of cloud revenue
(877)
(645)
(1,784)
(1,414)
Research and development
(1,582)
(1,795)
(3,144)
(4,139)
Sales and marketing
(5,768)
(6,851)
(11,444)
(13,154)
General and administrative
(7,998)
(4,168)
(14,608)
(8,950)
$
(18,328)
$
(15,355)
$
(35,332)
$
(31,494)
(2)
Acquisition related expenses
Quarter ended
Year to date
June 30,
June 30,
2019
2018
2019
2018
Research and development
$
(5)
$
-
$
(5)
$
-
Sales and marketing
(30)
-
(30)
-
General and administrative
(808)
-
(808)
-
$
(843)
$
-
$
(843)
$
-
NICE LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW
STATEMENTS U.S. dollars in thousands
Quarter ended
Year to date
June 30,
June 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Operating Activities Net
income
$
42,058
$
34,235
$
79,122
$
57,761
Depreciation and amortization
43,012
36,920
84,820
74,857
Stock based compensation
18,312
15,355
35,316
31,494
Amortization of premium and discount and accrued interest on
marketable securities
(233)
(9)
(574)
(307)
Deferred taxes, net
(10,764)
(10,245)
(18,622)
(19,912)
Changes in operating assets and liabilities: Trade Receivables
(10,611)
18,842
20,112
2,688
Prepaid expenses and other assets
(51,949)
(15,809)
(72,531)
(28,228)
Trade payables
4,543
7,833
3,718
2,332
Accrued expenses and other current liabilities
(22,822)
(6,044)
9,616
(10,464)
Operating lease right-of-use assets, net
3,379
-
7,496
-
Deferred revenue
5,462
(19,011)
58,869
87,106
Long term liabilities
(403)
(404)
(280)
(787)
Operating lease liabilities
(3,654)
-
(9,159)
-
Amortization of discount on long term debt
2,162
2,094
4,469
4,257
Other
(516)
56
(1,984)
(127)
Net cash provided by operating activities
17,976
63,813
200,388
200,670
Investing Activities
Purchase of property and equipment
(6,566)
(8,248)
(14,982)
(13,564)
Purchase of Investments
(114,834)
(52,278)
(306,142)
(187,923)
Proceeds from Investments
93,558
40,692
170,508
59,709
Capitalization of software development costs
(8,897)
(7,672)
(17,391)
(15,476)
Payments for business and asset acquisitions, net of cash acquired
(25,788)
-
(25,788)
-
Net cash used in investing activities
(62,527)
(27,506)
(193,795)
(157,254)
Financing Activities
Proceeds from issuance of shares upon exercise of share options
1,401
4,199
3,018
7,443
Purchase of treasury shares
(4,615)
(6,361)
(14,715)
(10,613)
Capital Lease payments
(187)
-
(440)
-
Net cash used in financing activities
(3,401)
(2,162)
(12,137)
(3,170)
Effect of exchange rates on cash and cash equivalents
(433)
(3,790)
(244)
(3,732)
Net change in cash and cash equivalents
(48,385)
30,355
(5,788)
36,514
Cash and cash equivalents, beginning of period
$
284,696
$
334,461
$
242,099
$
328,302
Cash and cash equivalents, end of period
$
236,311
$
364,816
$
236,311
$
364,816
NICE LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS U.S. dollars in thousands
June 30,
December 31,
2019
2018
Unaudited
Audited
ASSETS CURRENT ASSETS: Cash and cash
equivalents
$
236,311
$
242,099
Short-term investments
272,968
243,729
Trade receivables
268,993
287,963
Prepaid expenses and other current assets
121,619
87,450
Total current assets
899,891
861,241
LONG-TERM ASSETS: Long-term investments
358,151
244,998
Property and equipment, net
140,957
140,338
Deferred tax assets
12,532
12,309
Other intangible assets, net
467,495
508,232
Operating lease right-of-use assets
117,030
-
Goodwill
1,380,751
1,366,206
Other long-term assets
114,317
74,042
Total long-term assets
2,591,233
2,346,125
TOTAL ASSETS
$
3,491,124
$
3,207,366
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Trade payables
$
30,862
$
29,617
Deferred revenues and advances from customers
280,601
221,387
Current maturities of operating leases
17,348
-
Accrued expenses and other liabilities
374,171
373,908
Total current liabilities
702,982
624,912
LONG-TERM LIABILITIES: Deferred revenues and advances
from customers
35,762
35,112
Operating leases
116,549
-
Deferred tax liabilities
29,057
44,140
Long-term debt
460,291
455,985
Other long-term liabilities
15,974
30,604
Total long-term liabilities
657,633
565,841
SHAREHOLDERS' EQUITY
2,130,509
2,016,613
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
3,491,124
$
3,207,366
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190808005317/en/
Investors Marty Cohen, +1 551 256 5354, ET, ir@nice.com
Yisca Erez, +972 9 775-3798, CET, ir@nice.com
Media Chris Irwin-Dudek, +1 (551) 256-5140,
Chris.Irwin-Dudek@nice.com
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