- Double Digit Growth in Revenue, Operating Income and EPS
- Company Raises Full Year 2023 Guidance for Revenue and EPS
NICE (NASDAQ: NICE) today announced results for the
second quarter ended June 30, 2023, as compared to the
corresponding period of the previous year.
Second Quarter 2023 Financial Highlights
GAAP
Non-GAAP
Total revenue was $581.1 million and
increased 10%
Total revenue was $581.1 million and
increased 10%
Cloud revenue was $381.9 million and
increased 23%
Cloud revenue was $381.9 million and increased 23%
Cloud gross margin was 64.7% compared to
63.6% last year
Cloud gross margin was 70.3% compared to
70.1% last year
Operating income was $105.4 million and
increased 24%
Operating income was $169.6 million and
increased 10%
Operating margin was 18.1% compared to
16.0% last year
Operating margin was 29.2% compared to
29.0% last year
Diluted EPS was $1.31 and increased
33%
Diluted EPS was $2.13 and increased
15%
Operating cash flow was $65.3 million
“Our second quarter results were marked by a strong financial
performance across the board with 10% total revenue growth driven
by a 23% increase in cloud revenue. Additionally, our
industry-leading profitability continued unabated with further
expansion in our cloud gross margin along with double-digit growth
in operating income and earnings per share,” said Barak Eilam, CEO
of NICE.
Mr. Eilam continued, “The market is characterized by a
fast-moving transition to the cloud by large enterprises coupled
with strong demand to incorporate AI into their customer service
organizations. NICE is well positioned to leverage these dynamics
as we have been smartly investing over the past several years in
both the cloud and AI to deliver the industry-leading, AI powered
cloud platform in CXone. Supported by a robust capital structure
and industry-best profitability, our investments continue to
deliver results highlighted by 70% growth in digital bookings and a
record bookings quarter for Enlighten, our AI foundation, that
underlies the entire CXone platform.”
GAAP Financial Highlights for the
Second Quarter Ended June 30:
Revenues: Second quarter 2023 total revenues increased
10% to $581.1 million compared to $530.6 million for the second
quarter of 2022.
Gross Profit: Second quarter 2023 gross profit was $391.4
million compared to $365.7 million for the second quarter of 2022.
Second quarter 2023 gross margin was 67.4% compared to 68.9% for
the second quarter of 2022.
Operating Income: Second quarter 2023 operating income
increased 24% to $105.4 million compared to $84.7 million for the
second quarter of 2022. Second quarter 2023 operating margin was
18.1% compared to 16.0% for the second quarter of 2022.
Net Income: Second quarter 2023 net income increased 33%
to $87.4 million compared to $65.6 million for the second quarter
of 2022. Second quarter 2023 net income margin was 15.0% compared
to 12.4% for the second quarter of 2022.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the second quarter of 2023 increased 33% to $1.31
compared to $0.99 in the second quarter of 2022.
Operating Cash Flow and Cash Balance: Second quarter 2023
operating cash flow was $65.3 million. In the second quarter 2023,
$65.2 million was used for share repurchases. As of June 30, 2023,
total cash and cash equivalents, and short-term investments were
$1,662.4 million. Our debt, net of a hedge instrument, was $543.1
million, resulting in net cash and investments of $1,119.3
million.
Non-GAAP Financial Highlights for the
Second Quarter Ended June 30:
Revenues: Second quarter 2023 total revenues increased
10% to $581.1 million compared to $530.6 million for the second
quarter of 2022.
Gross Profit: Second quarter 2023 Non-GAAP gross profit
increased to $416.3 million compared to $388.9 million for the
second quarter of 2022. Second quarter 2023 Non-GAAP gross margin
was 71.6% compared to 73.3% for the second quarter of 2022.
Operating Income: Second quarter 2023 Non-GAAP operating
income increased 10% to $169.6 million compared to $154.0 million
for the second quarter of 2022. Second quarter 2023 Non-GAAP
operating margin was 29.2% compared to 29.0% for the second quarter
of 2022.
Net Income: Second quarter 2023 Non-GAAP net income
increased 15% to $141.5 million compared to $123.2 million for the
second quarter of 2022. Second quarter 2023 Non-GAAP net income
margin totaled 24.4% compared to 23.2% for the second quarter of
2022.
Fully Diluted Earnings Per Share: Second quarter 2023
Non-GAAP fully diluted earnings per share increased 15% to $2.13
compared to $1.86 for the second quarter of 2022.
Third Quarter and Full Year 2023
Guidance:
Third Quarter 2023: Third quarter 2023 Non-GAAP total
revenues are expected to be in a range of $590 million to $600
million, representing 7% growth year over year at the midpoint.
Third quarter 2023 Non-GAAP fully diluted earnings per share are
expected to be in a range of $2.10 to $2.20, representing 12%
growth year over year at the midpoint.
Raising Full Year 2023 Guidance: The Company increased
full-year 2023 Non-GAAP total revenues to an expected range of
$2,353 million to $2,373 million, representing 8% growth at the
midpoint compared to full year 2022.
The Company increased full-year 2023 Non-GAAP fully diluted
earnings per share to an expected range of $8.40 to $8.60,
representing 12% growth at the midpoint compared to full year
2022.
Quarterly Results Conference Call
NICE management will host its earnings conference call today
August 17, 2023, 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.
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, the effect of
unexpected events or geo-political conditions, such as the COVID-19
pandemic, that may disrupt our business and the global economy 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,
2023
2022
Unaudited
Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
598,079
$
529,596
Short-term investments
1,064,304
1,041,943
Trade receivables
513,881
518,517
Debt hedge option
133,517
122,323
Prepaid expenses and other current assets
204,080
204,754
Total current assets
2,513,861
2,417,133
LONG-TERM ASSETS:
Property and equipment, net
171,203
159,285
Deferred tax assets
132,264
116,889
Other intangible assets, net
162,044
209,605
Operating lease right-of-use assets
100,022
102,893
Goodwill
1,623,549
1,617,118
Prepaid expenses and other long-term assets
226,395
231,496
Total long-term assets
2,415,477
2,437,286
TOTAL ASSETS
$
4,929,338
$
4,854,419
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables
$
45,269
$
56,019
Deferred revenues and advances from customers
361,764
338,930
Current maturities of operating leases
12,911
13,525
Debt
220,427
209,292
Accrued expenses and other liabilities
446,299
523,451
Total current liabilities
1,086,670
1,141,217
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers
50,946
57,211
Operating leases
95,100
99,262
Deferred tax liabilities
6,709
7,336
Debt
456,223
455,382
Other long-term liabilities
38,888
38,588
Total long-term liabilities
647,866
657,779
SHAREHOLDERS' EQUITY
Nice Ltd's equity
3,182,461
3,042,085
Non-controlling interests
12,341
13,338
Total shareholders' equity
3,194,802
3,055,423
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
4,929,338
$
4,854,419
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,
2023
2022
2023
2022
Unaudited
Unaudited
Unaudited
Unaudited
Revenue:
Cloud
$
381,948
$
311,394
$
749,515
$
605,986
Services
158,945
166,733
318,802
323,707
Product
40,220
52,454
84,655
128,317
Total revenue
581,113
530,581
1,152,972
1,058,010
Cost of revenue:
Cloud
134,984
113,441
266,580
226,790
Services
47,019
44,994
94,924
91,902
Product
7,710
6,489
14,805
13,234
Total cost of revenue
189,713
164,924
376,309
331,926
Gross profit
391,400
365,657
776,663
726,084
Operating expenses:
Research and development, net
78,640
73,482
156,741
150,060
Selling and marketing
151,964
150,410
300,443
303,028
General and administrative
55,367
57,075
120,543
115,942
Total operating expenses
285,971
280,967
577,727
569,030
Operating income
105,429
84,690
198,936
157,054
Financial and other expense/(income),
net
(9,350)
50
(18,071)
(436)
Income before tax
114,779
84,640
217,007
157,490
Taxes on income
27,424
19,068
52,711
33,977
Net income
$
87,355
$
65,572
$
164,296
$
123,513
Earnings per share:
Basic
$
1.37
$
1.03
$
2.57
$
1.94
Diluted
$
1.31
$
0.99
$
2.47
$
1.86
Weighted average shares outstanding:
Basic
63,723
63,806
63,831
63,775
Diluted
66,435
66,274
66,548
66,563
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW
STATEMENTS
U.S. dollars in thousands
Quarter ended
Year to date
June 30,
June 30,
2023
2022
2023
2022
Unaudited
Unaudited
Unaudited
Unaudited
Operating
Activities
Net income
$
87,355
$
65,572
$
164,296
$
123,513
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
42,033
42,202
83,879
86,483
Share-based compensation
39,314
43,109
84,275
91,293
Amortization of premium and discount and accrued interest on
marketable securities
(224)
1,254
1,046
5,072
Deferred taxes, net
(8,994)
(10,248)
(16,872)
(12,044)
Changes in operating assets and liabilities: Trade Receivables, net
(8,665)
(49,596)
8,087
(70,855)
Prepaid expenses and other current assets
(10,674)
(11,479)
(22,046)
(40,410)
Operating lease right-of-use assets
2,435
3,941
5,503
7,883
Trade payables
(9,668)
15,354
(10,848)
24,432
Accrued expenses and other current liabilities
(48,832)
(63,560)
(49,526)
(34,331)
Deferred revenue
(18,424)
(15,718)
14,823
36,631
Operating lease liabilities
(3,494)
(6,997)
(7,401)
(11,994)
Amortization of discount on long-term debt
1,129
1,151
2,283
2,288
Loss from extinguishment of debt
37
113
37
1,205
Other
1,926
933
2,789
(424)
Net cash provided by operating activities
65,254
16,031
260,325
208,742
Investing
Activities
Purchase of property and equipment
(4,513)
(5,301)
(17,619)
(14,885)
Purchase of Investments
(121,817)
(123,536)
(191,359)
(221,802)
Proceeds from Investments
107,653
79,924
172,552
181,590
Capitalization of internal use software costs
(14,491)
(13,073)
(28,627)
(23,744)
Other
-
276
-
276
Net cash used in investing activities
(33,168)
(61,710)
(65,053)
(78,565)
Financing
Activities
Proceeds from issuance of shares upon exercise of options
765
198
1,724
273
Purchase of treasury shares
(65,196)
(34,070)
(129,911)
(97,912)
Dividends paid to noncontrolling interest
-
(376)
(1,480)
(376)
Repayment of debt
(1,534)
(2,017)
(1,534)
(20,110)
Net cash used in financing activities
(65,965)
(36,265)
(131,201)
(118,125)
Effect of exchange rates on cash and cash
equivalents
546
(5,702)
1,713
(6,639)
Net change in cash, cash equivalents and
restricted cash
(33,333)
(87,646)
65,784
5,413
Cash, cash equivalents and restricted
cash, beginning of period
$
632,212
$
471,715
$
533,095
$
378,656
Cash, cash equivalents and restricted
cash, end of period
$
598,879
$
384,069
$
598,879
$
384,069
Reconciliation of cash, cash equivalents
and restricted cash reported in the consolidated balance sheet:
Cash and cash equivalents
$
598,079
$
382,219
$
598,079
$
382,219
Restricted cash included in other current assets
$
800
$
1,850
$
800
$
1,850
Total cash, cash equivalents and restricted cash shown in the
statement of cash flows
$
598,879
$
384,069
$
598,879
$
384,069
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,
2023
2022
2023
2022
GAAP revenues
$
581,113
$
530,581
$
1,152,972
$
1,058,010
Non-GAAP revenues
$
581,113
$
530,581
$
1,152,972
$
1,058,010
GAAP cost of revenue
$
189,713
$
164,924
$
376,309
$
331,926
Amortization of acquired intangible assets
on cost of cloud
(19,396)
(18,623)
(38,765)
(37,287)
Amortization of acquired intangible assets
on cost of services
-
-
-
(377)
Amortization of acquired intangible assets
on cost of product
(257)
(258)
(506)
(534)
Valuation adjustment on acquired deferred
cost of cloud
-
13
-
28
Cost of cloud revenue adjustment (1)
(2,253)
(1,741)
(4,200)
(4,070)
Cost of services revenue adjustment
(1)
(2,864)
(2,519)
(5,748)
(5,486)
Cost of product revenue adjustment (1)
(140)
(134)
(278)
(266)
Non-GAAP cost of revenue
$
164,803
$
141,662
$
326,812
$
283,934
GAAP gross profit
$
391,400
$
365,657
$
776,663
$
726,084
Gross profit adjustments
24,910
23,262
49,497
47,992
Non-GAAP gross profit
$
416,310
$
388,919
$
826,160
$
774,076
GAAP operating expenses
$
285,971
$
280,967
$
577,727
$
569,030
Research and development (1)
(7,783)
(7,886)
(16,181)
(16,401)
Sales and marketing (1)
(13,055)
(13,129)
(24,157)
(29,398)
General and administrative (1)
(14,059)
(18,086)
(35,355)
(36,486)
Amortization of acquired intangible
assets
(4,428)
(6,963)
(8,943)
(15,774)
Valuation adjustment on acquired deferred
commission
36
52
76
105
Non-GAAP operating expenses
$
246,682
$
234,955
$
493,167
$
471,076
GAAP financial and other income, net
$
(9,350)
$
50
$
(18,071)
$
(436)
Amortization of discount and loss of
extinguishment on debt
(1,166)
(1,264)
(2,320)
(3,493)
Change in fair value of contingent
consideration
(578)
-
(578)
-
Non-GAAP financial and other income,
net
(11,094)
(1,214)
(20,969)
(3,929)
GAAP taxes on income
$
27,424
$
19,068
$
52,711
$
33,977
Tax adjustments re non-GAAP
adjustments
11,793
12,911
24,101
29,262
Non-GAAP taxes on income
$
39,217
$
31,979
$
76,812
$
63,239
GAAP net income
$
87,355
$
65,572
$
164,296
$
123,513
Valuation adjustment on acquired deferred
cost of cloud revenue
-
(13)
-
(28)
Amortization of acquired intangible
assets
24,081
25,844
48,214
53,972
Valuation adjustment on acquired deferred
commission
(36)
(52)
(76)
(105)
Share-based compensation (1)
40,154
43,495
85,919
92,109
Amortization of discount and loss of
extinguishment on debt
1,166
1,264
2,320
3,493
Change in fair value of contingent
consideration
578
-
578
-
Tax adjustments re non-GAAP
adjustments
(11,793)
(12,911)
(24,101)
(29,262)
Non-GAAP net income
$
141,505
$
123,199
$
277,150
$
243,692
GAAP diluted earnings per share
$
1.31
$
0.99
$
2.47
$
1.86
Non-GAAP diluted earnings per share
$
2.13
$
1.86
$
4.16
$
3.66
Shares used in computing GAAP diluted
earnings per share
66,435
66,274
66,548
66,563
Shares used in computing non-GAAP diluted
earnings per share
66,435
66,274
66,548
66,563
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,
2023
2022
2023
2022
Cost of cloud revenue
$
2,253
$
1,741
$
4,200
$
4,070
Cost of services revenue
2,864
2,519
5,748
5,486
Cost of product revenue
140
134
278
266
Research and development
7,783
7,886
16,181
16,401
Sales and marketing
13,055
13,129
24,157
29,398
General and administrative
14,059
18,086
35,355
36,486
$
40,154
$
43,495
$
85,919
$
92,107
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230817131473/en/
Investor Relations Contact 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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