31% Increase in Cloud Revenue
Record Operating Cash Flow of $182 Million,
Increase of 33%
Company Increases Guidance for Full-Year
2019 Earnings Per Share
NICE (NASDAQ: NICE) today announced results for the first
quarter ended March 31, 2019.
First Quarter 2019 Financial Highlights
GAAP Non-GAAP Revenue of $377 million, growth
of 12% year-over-year Revenue of $378 million, growth of 12%
year-over-year Cloud revenue of $136 million, growth of 31%
year-over-year Cloud revenue of $137 million, growth of 30%
year-over-year Gross margin of 65.2% compared to 64.7% last year
Gross margin of 70.5% compared to 70.4% last year Operating
income of $52 million compared to $34 million last year, an
increase of 52% Operating income of $97 million compared to
$79 million last year, an increase of 23% Operating margin of 13.8%
compared to 10.2% last year Operating margin of 25.7%
compared to 23.4% last year Diluted EPS of $0.58 versus $0.37 last
year, 57% growth year-over-year Diluted EPS of $1.18 versus
$0.97 last year, 22% growth year-over-year Record cash flow from
operations of $182 million, 33% growth year-over-year
“The first quarter marked a very strong start to the year as we
reported accelerated growth with double-digit increases in all key
metrics, including total revenues, cloud revenues, operating income
and earnings per share. Moreover, we continued to benefit from the
leverage in our operating model as reflected in the significant
expansion in our operating margin,” said Barak Eilam, CEO,
NICE.
Mr. Eilam continued, “The strong start to the year was driven by
the more than 30% increase in cloud revenue with our CXone platform
as the underpinning of that growth. We are now taking the next step
in the evolution of CXone by ushering in a new era in CX with the
introduction of smart digital conversations. This builds on our
CXone platform strategy with an additional market leading
innovation that enables our customers to accelerate their
transition in managing digital experiences. This innovation is
augmented by the acquisition of Brand Embassy, announced earlier
today.”
GAAP Financial Highlights for the First Quarter and Full Year
Ended March 31:
Revenues: First quarter 2019 total revenues increased
12.4% to $377.0 million compared to $335.4 million for the first
quarter of 2018.
Gross Profit: First quarter 2019 gross profit and gross
margin increased to $246.0 million and 65.2%, respectively, from
$216.9 million and 64.7%, respectively, for the first quarter of
2018.
Operating Income: First quarter 2019 operating income and
operating margin increased to $51.9 million and 13.8%,
respectively, compared to $34.2 million and 10.2%, respectively,
for the first quarter of 2018.
Net Income: First quarter 2019 net income and net income
margin were $37.1 million and 9.8%, respectively, compared to $23.5
million and 7.0%, respectively, for the first quarter of 2018.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the first quarter of 2019 increased 56.8% to $0.58,
compared to $0.37 in the first quarter of 2018.
Operating Cash Flow and Cash Balance: First quarter 2019
operating cash flow was $182.4 million. In the first quarter $10.1
million was used for share repurchases. As of March 31, 2019, total
cash and cash equivalents, short term investments and marketable
securities were $890.9 million, and total debt was $458.2
million.
Non-GAAP Financial Highlights for the First Quarter and Full
Year Ended March 31:
Revenues: First quarter 2019 non-GAAP total revenues
increased to $377.9 million, up 11.9% from $337.6 million for the
first quarter of 2018.
Gross Profit: First quarter 2019 non-GAAP gross profit
and non-GAAP gross margin increased to $266.5 million and 70.5%,
respectively, from $237.7 million and 70.4%, respectively, for the
first quarter of 2018.
Operating Income: First quarter 2019 non-GAAP operating
income and non-GAAP operating margin increased to $97.0 million and
25.7%, respectively, from $78.9 million and 23.4%, respectively,
for the first quarter of 2018.
Net Income: First quarter 2019 non-GAAP net income and
non-GAAP net income margin increased to $75.5 million and 20.0%,
respectively, from $60.7 million and 18.0%, respectively, for the
first quarter of 2018.
Fully Diluted Earnings Per Share: First quarter 2019
non-GAAP fully diluted earnings per share increased 21.6% to $1.18,
compared to $0.97 for the first quarter of 2018.
Second Quarter and Full Year 2019 Guidance:
Second Quarter 2019: Second quarter 2019 non-GAAP total
revenues are expected to be in a range of $373 million to $383
million (2018 non-GAAP: $343.7 million). Second quarter 2019
non-GAAP fully diluted earnings per share are expected to be in a
range of $1.16 to $1.26 (2018 non-GAAP: $1.10).
Full Year 2019: Full year 2019 non-GAAP total revenues
are expected to be in a range of $1,558 million to $1,582 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 $5.11 to $5.31 (2018 non-GAAP: $4.75).
Quarterly Results Conference Call
NICE management will host its earnings conference call today,
May 16th, 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 635 296 09. 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
http://www.nice.com/news-and-events/ir-events. 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 667 515 36.
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 and tax reform. 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 NICENICE (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 StatementsThis 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 first-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
March 31,
2019 2018 Unaudited Unaudited Revenue: Product
$ 70,031 $ 61,370 Services 170,918 170,217 Cloud 136,078
103,855 Total revenue 377,027 335,442
Cost of revenue: Product 5,881 8,137 Services 55,123 58,385 Cloud
70,046 51,993 Total cost of revenue 131,050
118,515 Gross profit 245,977 216,927 Operating
expenses: Research and development, net 46,566 45,867 Selling and
marketing 102,067 89,926 General and administrative 34,714 36,372
Amortization of acquired intangible assets 10,701
10,585 Total operating expenses 194,048 182,750
Operating income 51,929 34,177 Finance and other
expense, net 3,418 3,968 Income before tax
48,511 30,209 Taxes on income 11,447 6,683 Net income
$ 37,064 $ 23,526 Earnings per share: Basic $ 0.60 $ 0.39
Diluted $ 0.58 $ 0.37
Weighted average shares outstanding: Basic 61,842 61,054 Diluted
63,759 62,776
NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS U.S. dollars in
thousands (except per share amounts)
Quarter
ended March 31, 2019
2018 GAAP revenues $ 377,027 $ 335,442 Valuation
adjustment on acquired deferred product revenue 15 15 Valuation
adjustment on acquired deferred services revenue 2 306 Valuation
adjustment on acquired deferred cloud revenue 872
1,886 Non-GAAP revenues $ 377,916 $ 337,649
GAAP cost of revenue $ 131,050 $ 118,515
Amortization of acquired intangible assets on cost of product (870
) (2,589 ) Amortization of acquired intangible assets on cost of
services (1,535 ) (823 ) Amortization of acquired intangible assets
on cost of cloud (14,805 ) (12,755 ) Valuation adjustment on
acquired deferred cost of cloud 686 336 Cost of product revenue
adjustment (1) (105 ) (188 ) Cost of services revenue adjustment
(1) (2,144 ) (1,753 ) Cost of cloud revenue adjustment (1)
(907 ) (769 ) Non-GAAP cost of revenue $ 111,370 $
99,974 GAAP gross profit $ 245,977 $ 216,927
Gross profit adjustments 20,569 20,748
Non-GAAP gross profit $ 266,546 $ 237,675
GAAP operating expenses $ 194,048 $ 182,750 Research and
development (1) (1,562 ) (2,344 ) Sales and marketing (1) (5,676 )
(6,303 ) General and administrative (1) (6,610 ) (4,782 )
Amortization of acquired intangible assets (10,702 ) (10,585 )
Valuation adjustment on acquired deferred commission 93
- Non-GAAP operating expenses $ 169,591
$ 158,736 GAAP finance & other expense
(income), net $ 3,418 $ 3,968 Amortization of discount on long-term
debt (2,308 ) (2,163 ) Non-GAAP finance & other
expense (income), net $ 1,110 $ 1,805
GAAP taxes on income (tax benefits) $ 11,447 $ 6,683 Tax
adjustments re non-GAAP adjustments 8,882
9,775 Non-GAAP taxes on income $ 20,329 $ 16,458
GAAP net income $ 37,064 $ 23,526 Valuation
adjustment on acquired deferred revenue 889 2,207 Valuation
adjustment on acquired deferred cost of cloud revenue (686 ) (336 )
Amortization of acquired intangible assets 27,912 26,752 Valuation
adjustment on acquired deferred commission (93 ) - Share-based
compensation (1) 17,004 16,139 Amortization of discount on long
term debt 2,308 2,163 Tax adjustments re non-GAAP adjustments and
tax reform (8,882 ) (9,775 ) Non-GAAP net income $
75,516 $ 60,676 GAAP diluted earnings
per share $ 0.58 $ 0.37 Non-GAAP diluted
earnings per share $ 1.18 $ 0.97 Shares used
in computing GAAP diluted earnings per share 63,759 62,776
Shares used in computing non-GAAP diluted earnings per share 63,759
62,776
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, 2019
2018 Cost of product revenue $ (105 ) $
(188 ) Cost of services revenue (2,144 ) (1,753 ) Cost of cloud
revenue (907 ) (769 ) Research and development (1,562 ) (2,344 )
Sales and marketing (5,676 ) (6,303 ) General and administrative
(6,610 ) (4,782 ) $ (17,004 ) $ (16,139 )
NICE LTD. AND SUBSIDIARIES CONSOLIDATED
CASH FLOW STATEMENTS U.S. dollars in thousands
Quarter ended March 31, 2019 2018 Unaudited Unaudited
Operating
Activities
Net income $ 37,064 $ 23,526 Depreciation and amortization
41,808 37,937 Stock based compensation 17,004 16,139 Amortization
of premium and discount and accrued interest on marketable
securities (341) (298) Deferred taxes, net (7,858) (9,667) Changes
in operating assets and liabilities: Trade Receivables 30,723
(16,154) Prepaid expenses and other assets (20,582) (12,419) Trade
payables (825) (5,501) Accrued expenses and other current
liabilities 32,438 (4,420)
Operating lease right-of-use assets,
net
4,117 - Deferred revenue 53,407 106,117 Long term liabilities 123
(383)
Operating lease liabilities
(5,505) - Amortization of discount on long term debt 2,307 2,163
Other (1,468) (183) Net cash provided by operating
activities 182,412 136,857
Investing
Activities
Purchase of property and equipment (8,416) (5,316) Purchase
of Investments (191,308) (135,645) Proceeds from Investments 76,950
19,017 Capitalization of software development costs (8,494)
(7,804) Net cash used in investing activities
(131,268) (129,748)
Financing
Activities
Proceeds from issuance of shares upon exercise of share
options 1,617 3,244 Purchase of treasury shares (10,100) (4,252)
Capital Lease payments (253) - Net cash used in
financing activities (8,736) (1,008) Effect of
exchange rates on cash and cash equivalents 189 58
Net change in cash and cash equivalents
42,597 6,159 Cash and cash equivalents, beginning of period $
242,099 $ 328,302 Cash and cash equivalents, end of period $
284,696 $ 334,461
NICE LTD. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S.
dollars in thousands
March 31, December 31,
2019 2018 Unaudited Audited
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 284,696 $
242,099 Short-term investments 286,205 243,729 Trade receivables
258,888 287,963 Prepaid expenses and other current assets
102,157 87,450 Total current assets 931,946
861,241
LONG-TERM ASSETS: Long-term
investments 319,988 244,998 Property and equipment, net 139,701
140,338 Deferred tax assets 10,511 12,309 Other intangible assets,
net 480,286 508,232 Operating lease right-of-use assets 116,656 -
Goodwill 1,368,733 1,366,206 Other long-term assets 81,090
74,042 Total long-term assets 2,516,965
2,346,125
TOTAL ASSETS $ 3,448,911 $ 3,207,366
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Trade payables $ 25,901 $ 29,617 Deferred revenues
and advances from customers 273,572 221,387 Current maturities of
operating leases 17,078 - Accrued expenses and other liabilities
396,009 373,908 Total current liabilities
712,560 624,912
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers 38,012 35,112
Operating leases 116,737 - Deferred tax liabilities 34,759 44,140
Long-term debt 458,211 455,985 Other long-term liabilities
16,114 30,604 Total long-term liabilities
663,833 565,841
SHAREHOLDERS' EQUITY
2,072,518 2,016,613
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,448,911 $ 3,207,366
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version on businesswire.com: https://www.businesswire.com/news/home/20190516005358/en/
NiceInvestorsMarty Cohen, +1 551 256 5354,
ETir@nice.com
Yisca Erez, +972 9 775-3798, CETir@nice.com
Media ContactChris Irwin-Dudek, +1 (551)
256-5140Chris.Irwin-Dudek@nice.com
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