Strong Growth in Both Cloud and Product
Revenue
Regulatory News:
NICE (NASDAQ:NICE) today announced results for the second
quarter 2017 ended June 30, 2017.
Second Quarter 2017 Financial
Highlights
GAAP Non-GAAP Revenue growth of 36%
year-over-year Revenue growth of 34% year-over-year
Gross profit increased 35% year-over-year to $198 million
Gross profit increased 34% year-over-year to $222 million
Gross margin of 63.5% compared to 63.9% last year
Gross margin of 70.5% compared to 70.4% last year Operating income
of $26 million, up 10% year-over-year Operating
income of $72 million, up 27% year-over-year Effective tax rate was
8.9% compared to 4.1% last year Effective tax rate
was 20.8% compared to 19.5% last year Diluted EPS from continuing
operations of $0.33 versus $0.42 last year Diluted
EPS from continuing operations of $0.90 versus $0.79 last year Cash
flow from operations increased 131% year-over-year to $69 million
“Our financial performance over the past few years has been
highlighted by consistent growth and improvement in profitability,
and Q2 added to that momentum with another strong result on both
the top and bottom lines. We were also pleased to see significant
growth in cloud revenue along with an increase in profitability.
Furthermore, our solid execution translated to over 200 million
dollars in net cash flow from operations for the first half of
2017,” said Barak Eilam, CEO of NICE. “The foundation of our
strength has been our ability to fully execute on the strategic
plans we put in place during this period.
“These strategic plans have led to the development of our four
strategic pillars of cloud, omni-channel, analytics and artificial
intelligence, which are the underpinning of our growth
opportunities going forward. These four pillars are also the basis
for our new CXone platform, which represents a giant leap forward
for NICE and our industry. CXone, which is a unified, true open
cloud foundation, along with a developing ecosystem of customers
and partners to build and develop world class customer experience
solutions, represents a substantial competitive differentiation for
NICE, and exemplifies our expanding market leadership.”
GAAP Financial Highlights for the Second Quarter Ended June
30:
The following GAAP financial data, excluding cash flow and cash
balance, are from continuing operations, which exclude the results
of the Intelligence and the Physical Security divisions for both
2017 and 2016.
Revenues: Second quarter 2017 total revenues increased
36.3% to $311.5 million compared to $228.5 million for the second
quarter of 2016.
Gross Profit: Second quarter 2017 gross profit increased
to $197.9 million compared to $146.1 million for the second quarter
of 2016, and gross margin was 63.5% compared to 63.9% for the
second quarter of 2016.
Operating Income: Second quarter 2017 operating income
increased to $25.8 million compared to $23.5 million for the second
quarter of 2016, and operating margin was 8.3% compared to 10.3%
for the second quarter of 2016.
Net Income from Continuing Operations: Second quarter
2017 net income and net margin were $20.4 million and 6.6%,
respectively, compared to $25.4 million and 11.1%, respectively,
for the second quarter of 2016.
Fully Diluted Earnings Per Share from Continuing
Operations: Fully diluted earnings per share for the second
quarter of 2017 were $0.33, compared to $0.42 in the second quarter
of 2016.
Operating Cash Flow and Cash Balance: Second quarter 2017
operating cash flow was $68.7 million. In the second quarter, $7.6
million was used for share repurchases. As of June 30, 2017, total
cash and cash equivalents, short term investments and marketable
securities were $439.9 million, and total debt was $443.5 million
net of issuance costs and the equity component associated with our
convertible debt.
Non-GAAP Financial Highlights for the Second Quarter Ended
June 30:
The following non-GAAP financial data are from continuing
operations, which exclude the results of the Intelligence and the
Physical Security divisions for both 2017 and 2016.
Revenues: Second quarter 2017 non-GAAP total revenues
were $315.3 million, up 33.9% from $235.4 million for the second
quarter of 2016.
Gross Profit: Second quarter 2017 non-GAAP gross profit
increased to $222.3 million compared to $165.8 million for the
second quarter of 2016, and non-GAAP gross margin increased to
70.5%, compared to 70.4% for the second quarter of 2016.
Operating Income: Second quarter 2017 non-GAAP operating
income increased to $72.0 million compared to $56.6 million for the
second quarter of 2016, and non-GAAP operating margin was 22.8%
compared to 24.0% for the second quarter of 2016.
Net Income from Continuing Operations: Second quarter
2017 non-GAAP net income increased to $56.0 million compared to
$47.9 million for the second quarter of 2016, and non-GAAP net
income margin was 17.8% compared to 20.4% for the second quarter of
2016.
Fully Diluted Earnings Per Share from Continuing
Operations: Second quarter 2017 non-GAAP fully diluted earnings
per share increased 13.9% to $0.90, compared to $0.79 for the
second quarter of 2016.
Third Quarter and Full Year 2017 Guidance:
Third Quarter 2017: Third quarter 2017 non-GAAP total
revenues are expected to be in a range of $315 million to $325
million. Third quarter 2017 non-GAAP fully diluted earnings per
share are expected to be in a range of $0.89 to $0.95.
Full Year 2017: Full year 2017 non-GAAP total revenues
are expected to be in the range of $1,330 million to $1,354
million. Full year 2017 non-GAAP fully diluted earnings per share
is increased to an expected range of $3.90 to $4.10.
Quarterly Results Conference Call
NICE management will host its earnings conference call today,
August 3rd, 2017 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 372 736 22. 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 811 001 49.
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: amortization of acquired intangible assets,
re-organization expenses, share-based compensation, and certain
business combination accounting entries, amortization of discount
on long term debt and 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 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. Such forward-looking
statements, including the statements by Mr. Eilam, are based on the
current beliefs, expectations and assumptions of the management of
NICE Ltd. (the Company). In some cases, such forward-looking
statements can be identified by terms such as believe, expect, may,
will, intend, project, plan, estimate or similar words.
Forward-looking statements are subject to a number of risks and
uncertainties that could cause the actual results or performance of
the Company to differ materially from those described herein,
including but not limited to the impact of the global economic
environment on the Company’s customer base (particularly financial
services firms) potentially impacting our business and financial
condition; competition; changes in technology and market
requirements; decline in demand for the Company's products;
inability to timely develop and introduce new technologies,
products and applications; difficulties or delays in absorbing and
integrating acquired operations, products, technologies and
personnel; loss of market share; an inability to maintain certain
marketing and distribution arrangements; the effect of newly
enacted or modified laws, regulation or standards on the Company
and our products, and the risk that we will not be able to
successfully execute on the Company’s cloud business strategy and
generate profitability. For a more detailed description of the risk
factors and uncertainties affecting the company, refer to the
Company's reports filed from time to time with the Securities and
Exchange Commission, including the Company’s Annual Report on Form
20-F. The forward-looking statements contained in this press
release are made as of the date of this press release, and the
Company undertakes no obligation to update or revise them, 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, 2017 2016 2017
2016 Unaudited Unaudited Unaudited Unaudited Revenue:
Product $ 68,736 $ 61,544 $ 137,193 $ 126,660 Services 158,236
154,359 316,652 303,697 Cloud 84,568 12,625
163,317 24,138 Total revenue 311,540 228,528
617,162 454,495 Cost of revenue: Product
13,513 14,237 26,724 27,971 Services 54,558 63,265 113,274 120,290
Cloud 45,533 4,936 89,340 8,646 Total
cost of revenue 113,604 82,438 229,338
156,907 Gross profit 197,936 146,090 387,824 297,588
Operating Expenses: Research and development, net 42,886 34,519
85,840 67,040 Selling and marketing 87,694 58,705 166,895 114,488
General and administrative 31,334 24,579 60,561 47,771 Amortization
of acquired intangible assets 10,188 4,750
20,753 7,257 Total operating expenses 172,102
122,553 334,049 236,556 Operating income
25,834 23,537 53,775 61,032 Finance and other income
(expense), net (3,388) 2,933 (12,378)
6,697 Income from continuing operations before tax 22,446
26,470 41,397 67,729 Taxes on income 2,005 1,090
3,667 7,093 Net income from continuing operations
20,441 25,380 37,730 60,636 Discontinued operations Loss
from discontinued operations - - - (116) Taxes on income -
- - - Net loss from discontinued operations -
- - (116) Net income $ 20,441 $ 25,380 $ 37,730 $ 60,520
Basic earnings per share from continuing operations $ 0.34 $
0.43 $ 0.63 $ 1.02 Basic earnings (loss) per share from
discontinued operations $ - $ - $ - $ (0.00) Basic earnings per
share $ 0.34 $ 0.43 $ 0.63 $ 1.02 Diluted earnings per share
from continuing operations $ 0.33 $ 0.42 $ 0.61 $ 1.00 Diluted
earnings (loss) per share from discontinued operations $ - $ - $ -
$ (0.00) Diluted earnings per share $ 0.33 $ 0.42 $ 0.61 $ 1.00
Weighted average number of shares outstanding used to
compute: Basic earnings (loss) per share 60,277 59,490
60,203 59,461 Diluted earnings (loss) per share 61,962 60,817
61,857 60,834
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, 2017 2016 2017
2016 GAAP revenues $ 311,540 $ 228,528 $ 617,162 $
454,495 Valuation adjustment on acquired deferred product revenue
46 1,291 265 1,375 Valuation adjustment on acquired deferred
service revenue 2,094 2,375 3,091 2,432 Valuation adjustment on
acquired deferred cloud revenue 1,648 3,218
2,859 3,218 Non-GAAP revenues $ 315,328 $ 235,412 $ 623,377
$ 461,520 GAAP cost of revenue $ 113,604 $ 82,438 $
229,338 $ 156,907 Amortization of acquired intangible assets on
cost of product (6,056) (7,590) (12,414) (13,882) Amortization of
acquired intangible assets on cost of services (1,159) (3,472)
(4,367) (3,472) Amortization of acquired intangible assets on cost
of cloud (10,975) - (21,950) - Valuation adjustment on acquired
deferred cost of services 331 - 762 - Cost of product revenue
adjustment (1) (161) (69) (336) (190) Cost of services revenue
adjustment (1,2) (1,847) (1,666) (3,722) (3,208) Cost of cloud
revenue adjustment (1,2) (714) (61) (1,483)
(123) Non-GAAP cost of revenue $ 93,023 $ 69,580 $ 185,828 $
136,032 GAAP gross profit $ 197,936 $ 146,090 $
387,824 $ 297,588 Gross profit adjustments 24,369
19,742 49,725 27,900 Non-GAAP gross profit $ 222,305
$ 165,832 $ 437,549 $ 325,488 GAAP operating expenses
$ 172,102 $ 122,553 $ 334,049 $ 236,556 Research and development
(1,2,3) (2,236) (1,097) (4,447) (3,078) Sales and marketing (1,2,3)
(5,863) (3,724) (11,509) (7,070) General and administrative (1,2,3)
(3,501) (3,743) (5,387) (8,093) Amortization of acquired intangible
assets (10,188) (4,750) (20,753)
(7,257) Non-GAAP operating expenses $ 150,314 $ 109,239 $ 291,953 $
211,058 GAAP finance & other income (expense),
net $ (3,388) $ 2,933 $ (12,378) $ 6,697 Amortization of discount
on long term debt 2,094 - 9,259 -
Non-GAAP finance & other income (expense), net $ (1,294) $
2,933 $ (3,119) $ 6,697 GAAP taxes on income $ 2,005
$ 1,090 $ 3,667 $ 7,093 Tax adjustments re non-GAAP adjustments
12,696 10,516 27,687 16,525 Non-GAAP
taxes on income $ 14,701 $ 11,606 $ 31,354 $ 23,618
GAAP net income $ 20,441 $ 25,380 $ 37,730 $ 60,636 Valuation
adjustment on acquired deferred revenue 3,788 6,884 6,215 7,025
Valuation adjustment on acquired deferred cost of service of
revenue (331) - (762) - Amortization of acquired intangible assets
28,378 15,812 59,484 24,611 Share-based compensation (1) 14,322
9,896 26,884 16,256 Re-organization expenses (2) - 464 - 1,770
Acquisition related expenses (3) - - - 3,736 Amortization of
discount on long term debt 2,094 - 9,259 - Tax adjustments re
non-GAAP adjustments (12,696) (10,516)
(27,687) (16,525) Non-GAAP net income $ 55,996 $ 47,920 $
111,123 $ 97,509 GAAP diluted earnings per share $
0.33 $ 0.42 $ 0.61 $ 1.00 Non-GAAP diluted earnings per
share $ 0.90 $ 0.79 $ 1.80 $ 1.60 Shares used in computing
GAAP diluted earnings per share 61,962 60,817 61,857 60,834
Shares used in computing Non-GAAP diluted earnings per share 61,962
60,817 61,857 60,834
NICE SYSTEMS
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, 2017 2016 2017
2016 Cost of product revenue $ (161) $ (69) $ (336) $
(190) Cost of service revenue (1,847) (1,595) (3,722) (2,939) Cost
of cloud revenue (714) (85) (1,483) (147) Research and development
(2,236) (1,302) (4,447) (2,158) Sales and marketing (5,863) (3,574)
(11,509) (6,433) General and administrative (3,501)
(3,271) (5,387) (4,389) $ (14,322) $ (9,896) $
(26,884) $ (16,256)
(2)
Re-organization
expenses
Quarter ended Year to date June 30, June
30, 2017 2016 2017
2016 Cost of service revenue $ - $ (71) $ - $
(269) Cost of cloud revenue - 24 - 24 Research and development -
205 - (896) Sales and marketing - (150) - (150) General and
administrative - (472) - (479) $ - $
(464) $ - $ (1,770)
(3)
Acquisition
related expenses
Quarter ended Year to date June 30,
June 30, 2017 2016
2017 2016 Research and development $ -
$ - $ - $ (24) Sales and marketing - - - (487) General and
administrative - - - (3,225) $ - $ - $
- $ (3,736)
NICE LTD. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
June 30, December 31, 2017
2016 Unaudited Unaudited
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 304,622 $
157,026 Short-term investments 55,556 30,287 Trade receivables
200,963 260,220 Prepaid expenses and other current assets 72,117
57,966 Current assets of discontinued operations 2,569
3,734 Total current assets 635,827
509,233
LONG-TERM ASSETS: Long-term investments
79,741 98,726 Property and equipment, net 108,325 87,678 Deferred
tax assets 14,841 14,093 Other intangible assets, net 559,619
618,735 Goodwill 1,288,718 1,284,710 Other long-term assets
20,710 18,701 Total long-term assets 2,071,954
2,122,643
TOTAL ASSETS $ 2,707,781 $ 2,631,876
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Current maturities of long term loan $
- $ 21,164 Trade payables 18,750 25,634 Current portion of deferred
revenues and advances from customers 202,608 149,801 Accrued
expenses and other liabilities 243,813 273,134 Current liabilities
of discontinued operations 647 3,077 Total
current liabilities 465,818 472,810
LONG-TERM LIABILITIES: Deferred revenues and advances from
customers 35,645 22,710 Deferred tax liabilities 116,331 146,952
Long-term debt 443,516 444,016 Other long-term liabilities
34,106 34,056 Total long-term liabilities
629,598 647,734
SHAREHOLDERS' EQUITY
1,612,365 1,511,332
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,707,781 $ 2,631,876
NICE LTD. AND SUBSIDIARIES CONSOLIDATED CASH FLOW
STATEMENTS U.S. dollars in thousands
Quarter
ended Year to date June 30, June 30, 2017
2016 2017 2016 Unaudited Unaudited Unaudited Unaudited
Operating
Activities
Net income $ 20,441 $ 25,380 $ 37,730 $ 60,520 Adjustments
to reconcile net income to net cash provided by operating
activities Depreciation and amortization 37,013 20,484 76,156
33,400 Stock based compensation 14,322 9,826 26,884 16,257
Amortization of premium and discount and accrued interest on
marketable securities (39) 672 151 1,641 Deferred taxes, net
(9,871) (9,111) (21,542) (12,697) Changes in operating assets and
liabilities: Trade Receivables 5,581 14,801 61,880 54,369 Prepaid
expenses and other current assets (1,200) (8,268) (7,987) 4,768
Trade payables (6,857) 4,428 (6,969) 5,289 Accrued expenses and
other current liabilities (4,302) (21,724) (35,601) (48,438)
Deferred revenue 12,852 (5,833) 63,516 29,855 Long term liabilities
(859) (145) (1,606) (71) Amortization of discount on long term debt
2,094 - 9,259 - Other (514) (790) (465)
(673) Net cash provided by operating activities 68,661
29,720 201,406 144,220
Investing
Activities
Purchase of property and equipment (12,332) (4,084) (22,746)
(11,143) Purchase of Investments (17,227) (19,269) (42,226)
(47,221) Proceeds from Investments 4,000 41,360 36,016 80,478
Capitalization of software development costs (7,156) (1,697)
(14,094) (2,758) Payments for business acquisitions, net of cash
acquired - (872) - (151,325) Net cash
provided by (used in) investing activities (32,715)
15,438 (43,050) (131,969)
Financing
Activities
Proceeds from issuance of shares upon exercise of share
options 8,642 5,655 12,375 13,169 Purchase of treasury shares
(7,618) (9,420) (16,047) (32,093) Dividends paid - (9,519) (9,637)
(19,036) Repayment of long term debt - - (260,000) - Proceeds from
issuance of exchangeable notes - - 260,842
- Net cash provided by (used in) financing activities
1,024 (13,284) (12,467) (37,960) Effect
of exchange rates on cash and cash equivalents 901
(580) 1,707 785 Net change in cash and cash
equivalents 37,871 31,294
147,596 (24,924) Cash and cash equivalents, beginning of period
266,751 269,713 157,026 325,931
Cash and cash equivalents, end of period $ 304,622 $ 301,007 $
304,622 $ 301,007 *Certain comparative figures have
been reclassified to conform to the current year presentation.
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version on businesswire.com: http://www.businesswire.com/news/home/20170803005468/en/
NICEInvestorsMarty Cohen, +1 551 256 5354,
ETir@nice.comYisca Erez, +972 9 775-3798, CETir@nice.comorMedia
ContactIlana Hart, +972 9 775-3818ilana.hart@nice.com
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