Significant Expansion in Both Gross and
Operating Margins
Company Raises Both Revenue and EPS Guidance
for Full Year 2022
NICE (NASDAQ: NICE) today announced results for the
second quarter ended June 30, 2022.
Second Quarter 2022 Financial Highlights
GAAP
Non-GAAP
Total revenue of $530.6 million, growth of
16.1% year-over-year
Total revenue of $530.6 million, growth of
15.6% year-over-year
Cloud revenue of $311.4 million, growth of
27.9% year-over-year
Cloud revenue of $311.4 million, growth of
26.8% year-over-year
Cloud gross margin of 63.6% compared to
59.3% last year
Cloud gross margin of 70.1% compared to
67.7% last year
Total gross margin of 68.9% compared to
67.1% last year
Total gross margin of 73.3% compared to
72.2% last year
Operating income of $84.7 million compared
to $64.8 million last year, growth of 30.7% year-over-year
Operating income of $154.0 million
compared to $129.6 million last year, growth of 18.8%
year-over-year
Operating margin of 16.0% compared to
14.2% last year
Operating margin of 29.0%, compared to
28.2% last year
Diluted EPS of $0.99 versus $0.68 last
year, growth of 45.6%
Diluted EPS of $1.86 versus $1.57 last
year, growth of 18.5%
“It was an outstanding quarter at NICE, as we continued to drive
mid-teens double-digit growth in both the top and bottom lines,”
said Barak Eilam, CEO of NICE. “Our strong performance with 83%
recurring revenue driven by our growing cloud business at scale and
industry-leading profitability clearly distinguishes NICE among our
competitors in a rapidly evolving industry. Our rock-solid balance
sheet gives us the fuel to seize additional growth opportunities
that will further extend our leadership.”
Mr. Eilam continued, “For many years now, we have successfully
employed a bulls-eye strategy around cloud, platform and next-gen
digital. The harmonization of these three elements is what the
market is now experiencing more than ever, and we are at the center
of it. CXone embodies the industry’s broadest and deepest suite of
fully integrated solutions on a native cloud platform, and
enterprises of all sizes, especially at the high end of the market,
are coming to NICE to replace their on-premise, point solutions and
obsolete digital products with CXone.”
GAAP Financial Highlights for the
Second Quarter Ended June 30:
Revenues: Second quarter 2022 total revenues increased
16.1% to $530.6 million compared to $456.8 million for the second
quarter of 2021.
Gross Profit: Second quarter 2022 gross profit was $365.7
million compared to $306.3 million for the second quarter of 2021.
Second quarter 2022 gross margin was 68.9% compared to 67.1% for
the second quarter of 2021.
Operating Income: Second quarter 2022 operating income
was $84.7 million compared to $64.8 million for the second quarter
of 2021. Second quarter 2022 operating margin was 16.0% compared to
14.2% for the second quarter of 2021.
Net Income: Second quarter 2022 net income was $65.6
million compared to $45.2 million for the second quarter of 2021.
Second quarter 2022 net income margin was 12.4% compared to 9.9%
for the second quarter of 2021.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the second quarter of 2022 increased 45.6% to $0.99
compared to $0.68 in the second quarter of 2021.
Operating Cash Flow and Cash Balance: Second quarter 2022
operating cash flow was $16.0 million.
In the second quarter, $34.1 million was used for share
repurchases. As of June 30, 2022, total cash and cash equivalents,
and short-term investments were $1,434.6 million. Our debt, net of
a hedge instrument, was $540.1 million, resulting in net cash and
investments of $894.5 million.
Non-GAAP Financial Highlights for the
Second Quarter Ended June 30:
Revenues: Second quarter 2022 total revenues increased
15.6% to $530.6 million compared to $458.9 million for the second
quarter of 2021.
Gross Profit: Second quarter 2022 Non-GAAP gross profit
increased to $388.9 million compared to $331.5 million for the
second quarter of 2021. Second quarter 2022 Non-GAAP gross margin
was 73.3% compared to 72.2% for the second quarter of 2021.
Operating Income: Second quarter 2022 Non-GAAP operating
income increased to $154.0 million compared to $129.6 million for
the second quarter of 2021. Second quarter 2022 Non-GAAP operating
margin was 29.0% compared to 28.2% for the second quarter of
2021.
Net Income: Second quarter 2022 Non-GAAP net income
increased to $123.2 million compared to $104.3 million for the
second quarter of 2021. Second quarter 2022 Non-GAAP net income
margin totaled 23.2% compared to 22.7% for the second quarter of
2021.
Fully Diluted Earnings Per Share: Second quarter 2022
Non-GAAP fully diluted earnings per share increased 18.5% to $1.86
compared to $1.57 for the second quarter of 2021.
Third Quarter and Full Year 2022
Guidance:
Third Quarter 2022:
Third quarter 2022 Non-GAAP total revenues are expected to be in
a range of $543 million to $553 million.
Third quarter 2022 Non-GAAP fully diluted earnings per share are
expected to be in a range of $1.82 to $1.92.
Raising Full Year 2022 Guidance:
The Company increased full year 2022 Non-GAAP total revenues,
which are expected to be in a range of $2,168 million to $2,188
million (compared to previous guidance range of $2,160 million to
$2,180 million).
The Company increased full year 2022 Non-GAAP fully diluted
earnings per share, which are expected to be in a range of $7.33 to
$7.53 (compared to previous guidance range of $7.25 to $7.45).
Quarterly Results Conference Call
NICE management will host its earnings conference call today
August 18, 2022, 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
1-877-407-4018 or +1-201-689-8471, United Kingdom 0-800-756-3429,
Israel 1-809-406-247.
The call will be webcast live on the Company’s website at
https://www.nice.com/investor-relations/upcoming-event.
Explanation of Non-GAAP measures
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 debt and loss from extinguishment of
debt and the tax effect of the Non-GAAP adjustments. FASB issued an
accounting update, ASU2021-08, Business Combinations, in the fourth
quarter of 2021. The amendments in ASU 2021-08 require acquiring
entities to apply Topic 606 to recognize and measure contract
assets and contract liabilities in a business combination. Before
this guidance and through December 31, 2020, business combination
accounting rules required recognizing a legal performance
obligation related to a revenue arrangement of an acquired entity
as a liability. The amount assigned to such liability was based on
its fair value at the date of acquisition. Effective January 1,
2021, the Company early adopted the new guidance retroactively to
the start of the year. The Company has applied the new guidance
retrospectively to all business combinations for which the
acquisition date occurred on or after January 1, 2021, and
therefore comparative financials for periods during 2021 have been
adjusted accordingly to recognize the full amount of revenue
associated with acquisitions.
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, uncertainty
related to COVID-19 and various 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 press release 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,
2022
2021
Unaudited
Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$ 382,219
$ 378,656
Short-term investments
1,052,391
1,046,095
Trade receivables
459,743
395,583
Debt hedge option
122,805
292,940
Prepaid expenses and other current
assets
206,291
184,604
Total current assets
2,223,449
2,297,878
LONG-TERM ASSETS:
Property and equipment, net
153,894
145,654
Deferred tax assets
73,590
55,246
Other intangible assets, net
238,912
295,378
Operating lease right-of-use assets
108,714
85,055
Goodwill
1,589,729
1,606,756
Prepaid expenses and other long-term
assets
234,475
224,445
Total long-term assets
2,399,314
2,412,534
TOTAL ASSETS
$ 4,622,763
$ 4,710,412
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Trade payables
$ 60,436
$ 36,121
Deferred revenues and advances from
customers
371,303
330,459
Current maturities of operating leases
15,866
19,514
Debt
208,355
395,946
Accrued expenses and other liabilities
458,810
487,547
Total current liabilities
1,114,770
1,269,587
LONG-TERM LIABILITIES:
Deferred revenues and advances from
customers
55,874
66,606
Operating leases
104,368
81,185
Deferred tax liabilities
5,544
7,429
Debt
454,528
429,267
Other long-term liabilities
17,161
18,379
Total long-term liabilities
637,475
602,866
SHAREHOLDERS' EQUITY
Nice Ltd's equity
2,857,895
2,825,085
Non-controlling interests
12,623
12,874
Total shareholders' equity
2,870,518
2,837,959
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$ 4,622,763
$ 4,710,412
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,
2022
2021
2022
2021
Unaudited
Unaudited
Unaudited
Unaudited
Revenue:
Cloud
$ 311,394
$ 243,520
$ 605,986
$ 471,601
Services
166,733
167,133
323,707
328,924
Product
52,454
46,174
128,317
111,323
Total revenue
530,581
456,827
1,058,010
911,848
Cost of revenue:
Cloud
113,441
99,172
226,790
192,754
Services
44,994
46,882
91,902
95,816
Product
6,489
4,453
13,234
9,799
Total cost of revenue
164,924
150,507
331,926
298,369
Gross profit
365,657
306,320
726,084
613,479
Operating expenses:
Research and development, net
73,482
62,218
150,060
121,373
Selling and marketing
150,410
126,195
303,028
254,754
General and administrative
57,075
53,133
115,942
106,105
Total operating expenses
280,967
241,546
569,030
482,232
Operating income
84,690
64,774
157,054
131,247
Financial and other expense/(income),
net
50
9,062
(436)
12,456
Income before tax
84,640
55,712
157,490
118,791
Taxes on income
19,068
10,515
33,977
21,383
Net income
$ 65,572
$ 45,197
$ 123,513
$ 97,408
Earnings per share:
Basic
$ 1.03
$ 0.72
$ 1.94
$ 1.54
Diluted
$ 0.99
$ 0.68
$ 1.86
$ 1.46
Weighted average shares outstanding:
Basic
63,806
63,108
63,775
63,096
Diluted
66,274
66,512
66,563
66,618
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW
STATEMENTS
U.S. dollars in thousands
Quarter ended
Year to date
June 30,
June 30,
2022
2021
2022
2021
Unaudited
Unaudited
Unaudited
Unaudited
Operating
Activities
Net income
$ 65,572
$ 45,197
$ 123,513
$ 97,408
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
42,202
45,911
86,483
90,835
Stock based compensation
43,109
30,979
91,293
62,434
Amortization of premium and discount and
accrued interest on marketable securities
1,254
2,066
5,072
5,997
Deferred taxes, net
(10,248)
(16,207)
(12,044)
(17,065)
Changes in operating assets and
liabilities:
Trade Receivables
(49,596)
(2,783)
(70,855)
(22,467)
Prepaid expenses and other assets
(11,479)
(14,103)
(40,410)
(24,963)
Trade payables
15,354
(4,912)
24,432
4,792
Accrued expenses and other current
liabilities
(63,560)
(11,064)
(34,331)
(12,429)
Operating lease right-of-use assets
3,941
4,442
7,883
8,923
Deferred revenue
(15,718)
(4,638)
36,631
47,265
Operating lease liabilities
(6,997)
(4,778)
(11,994)
(10,475)
Amortization of discount on debt
1,151
3,513
2,288
7,612
Loss from extinguishment of debt
113
7,298
1,205
7,298
Other
933
519
(424)
515
Net cash provided by operating
activities
16,031
81,440
208,742
245,680
Investing
Activities
Purchase of property and equipment
(5,301)
(10,631)
(14,885)
(12,960)
Purchase of Investments
(123,536)
(70,442)
(221,802)
(223,748)
Proceeds from Investments
79,924
112,527
181,590
167,104
Capitalization of software development
costs
(13,073)
(11,159)
(23,744)
(21,275)
Other
276
-
276
444
Payments for business and asset
acquisitions, net of cash acquired
-
(129,306)
-
(129,306)
Net cash used in investing activities
(61,710)
(109,011)
(78,565)
(219,741)
Financing
Activities
Proceeds from issuance of shares upon
exercise of share options
198
2,083
273
2,375
Purchase of treasury shares
(34,070)
(340)
(97,912)
(44,562)
Dividends paid to noncontrolling
interest
(376)
(801)
(376)
(801)
Repayment of debt
(2,017)
(82,814)
(20,110)
(82,814)
Net cash provided by/(used in) financing
activities
(36,265)
(81,872)
(118,125)
(125,802)
Effect of exchange rates on cash and cash
equivalents
(5,702)
1,767
(6,639)
1,048
Net change in cash, cash equivalents and
restricted cash
(87,646)
(107,676)
5,413
(98,815)
Cash, cash equivalents and restricted
cash, beginning of period
$ 471,715
$ 451,128
$ 378,656
$ 442,267
Cash, cash equivalents and restricted
cash, end of period
$ 384,069
$ 343,452
$ 384,069
$ 343,452
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,
2022
2021
2022
2021
GAAP revenues
$ 530,581
$ 456,827
$ 1,058,010
$ 911,848
Valuation adjustment on acquired deferred
cloud revenue
-
1,978
-
3,800
Valuation adjustment on acquired deferred
services revenue
-
60
-
166
Non-GAAP revenues
$ 530,581
$ 458,865
$ 1,058,010
$ 915,814
GAAP cost of revenue
$ 164,924
$ 150,507
$ 331,926
$ 298,369
Amortization of acquired intangible assets
on cost of cloud
(18,623)
(18,211)
(37,287)
(35,726)
Amortization of acquired intangible assets
on cost of services
-
(1,226)
(377)
(2,451)
Amortization of acquired intangible assets
on cost of product
(258)
(287)
(534)
(570)
Valuation adjustment on acquired deferred
cost of cloud
13
26
28
51
Cost of cloud revenue adjustment (1)
(1,741)
(1,676)
(4,070)
(3,170)
Cost of services revenue adjustment
(1)
(2,519)
(1,646)
(5,486)
(4,081)
Cost of product revenue adjustment (1)
(134)
(126)
(266)
(251)
Non-GAAP cost of revenue
$ 141,662
$ 127,361
$ 283,934
$ 252,171
GAAP gross profit
$ 365,657
$ 306,320
$ 726,084
$ 613,479
Gross profit adjustments
23,262
25,184
47,992
50,164
Non-GAAP gross profit
$ 388,919
$ 331,504
$ 774,076
$ 663,643
GAAP operating expenses
$ 280,967
$ 241,546
$ 569,030
$ 482,232
Research and development (1)
(7,886)
(4,111)
(16,401)
(8,168)
Sales and marketing (1)
(13,129)
(6,911)
(29,398)
(17,819)
General and administrative (1)
(18,086)
(18,688)
(36,486)
(31,375)
Amortization of acquired intangible
assets
(6,963)
(9,952)
(15,774)
(19,660)
Valuation adjustment on acquired deferred
commission
52
55
105
108
Non-GAAP operating expenses
$ 234,955
$ 201,939
$ 471,076
$ 405,318
GAAP financial and other expense, net
$ 50
$ 9,062
$ (436)
$ 12,456
Amortization of discount on debt and loss
from extinguishment of debt
(1,264)
(10,813)
(3,493)
(14,937)
Non-GAAP financial and other income,
net
$ (1,214)
$ (1,751)
$ (3,929)
$ (2,481)
GAAP taxes on income
$ 19,068
$ 10,515
$ 33,977
$ 21,383
Tax adjustments re non-GAAP
adjustments
12,911
16,529
29,262
32,344
Non-GAAP taxes on income
$ 31,979
$ 27,044
$ 63,239
$ 53,727
GAAP net income
$ 65,572
$ 45,197
$ 123,513
$ 97,408
Valuation adjustment on acquired deferred
revenue
-
2,038
-
3,966
Valuation adjustment on acquired deferred
cost of cloud revenue
(13)
(26)
(28)
(51)
Amortization of acquired intangible
assets
25,844
29,676
53,972
58,407
Valuation adjustment on acquired deferred
commission
(52)
(55)
(105)
(108)
Share-based compensation (1)
43,495
31,251
92,107
62,957
Acquisition related expenses (2)
-
1,907
-
1,907
Amortization of discount on debt and loss
from extinguishment of debt
1,264
10,813
3,493
14,937
Tax adjustments re non-GAAP
adjustments
(12,911)
(16,529)
(29,262)
(32,344)
Non-GAAP net income
$ 123,199
$ 104,272
$ 243,690
$ 207,079
GAAP diluted earnings per share
$ 0.99
$ 0.68
$ 1.86
$ 1.46
Non-GAAP diluted earnings per share
$ 1.86
$ 1.57
$ 3.66
$ 3.11
Shares used in computing GAAP diluted
earnings per share
66,274
66,512
66,563
66,618
Shares used in computing non-GAAP diluted
earnings per share
66,274
66,512
66,563
66,618
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,
2022
2021
2022
2021
Cost of cloud revenue
$ 1,741
$ 1,676
$ 4,070
$ 3,170
Cost of services revenue
2,519
1,646
5,486
4,081
Cost of product revenue
134
126
266
251
Research and development
7,886
4,111
16,401
8,168
Sales and marketing
13,129
6,911
29,398
17,819
General and administrative
18,086
16,781
36,486
29,468
$ 43,495
$ 31,251
$ 92,107
$ 62,957
(2)
Acquisition
related expenses
Quarter ended
Year to date
June 30,
June 30,
2022
2021
2022
2021
Research and development
-
-
-
-
Sales and marketing
-
-
-
-
General and administrative
-
1,907
-
1,907
-
1,907
-
1,907
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220818005285/en/
Investors Marty Cohen, +1 551 256 5354, ET, ir@nice.com
Omri Arens, +972 3 763-0127, CET, ir@nice.com
Media Contact Chris Irwin-Dudek, +1 (551) 256-5140,
Chris.Irwin-Dudek@nice.com
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