- Both Revenue and EPS Exceed the High End of Q3 Guidance
Range
- Company Raises Revenue and EPS Guidance for Full Year 2023 and
Provides Initial Outlook for 2024
- New $300 Million Share Repurchase Program Announced
NICE (NASDAQ: NICE) today announced results for the third
quarter ended September 30, 2023, as compared to the corresponding
period of the previous year.
Third Quarter 2023 Financial Highlights
GAAP
Non-GAAP
Total revenue was $601.3 million and
increased 8%
Total revenue was $601.3 million and
increased 8%
Cloud revenue was $403.3 million and
increased 22%
Cloud revenue was $403.3 million and
increased 22%
Cloud gross margin was 65.1% compared to
64.1% last year
Cloud gross margin was 70.4% compared to
70.4% last year
Operating income was $113.6 million and
increased 26%
Operating income was $183.9 million and
increased 15%
Operating margin was 18.9% compared to
16.3% last year
Operating margin was 30.6% compared to
28.7% last year
Diluted EPS was $1.39 and increased
30%
Diluted EPS was $2.27 and increased
18%
Operating cash flow was $120.6 million and
increased 28%
“We are pleased to report another strong quarter exceeding the
high end of our guidance range on both total revenue and earnings
per share for the third quarter,” said Barak Eilam, CEO of NICE.
“Our record revenue was driven by another outstanding quarter with
cloud revenue growth of 22%, which is the fastest growth rate in
our industry on the largest cloud revenue base. Our robust top line
result was paired with another quarter of industry-leading,
unrivaled profitability demonstrated by further strong growth in
operating income, operating margin and earnings per share. Our
newly announced $300 million share buyback program reinforces our
confidence in the strength of the underlying fundamentals of our
business and our rock-solid financial profile.”
Mr. Eilam continued, “We are leading the CX market riding the
strong forces of cloudification, platformization and AI. With
record pipeline driven by digital and AI, we are well positioned to
finish the year on a strong note and are pleased to provide our
initial financial outlook on both top line and profitability beyond
this year, reflecting the strength of our market leading
position.”
GAAP Financial Highlights for the Third
Quarter Ended September 30:
Revenues: Third quarter 2023 total revenues increased 8%
to $601.3 million compared to $554.7 million for the third quarter
of 2022.
Gross Profit: Third quarter 2023 gross profit was $410.4
million compared to $383.9 million for the third quarter of 2022.
Third quarter 2023 gross margin was 68.2% compared to 69.2% for the
third quarter of 2022.
Operating Income: Third quarter 2023 operating income
increased 26% to $113.6 million compared to $90.3 million for the
third quarter of 2022. Third quarter 2023 operating margin was
18.9% compared to 16.3% for the third quarter of 2022.
Net Income: Third quarter 2023 net income increased 30%
to $92.4 million compared to $71.2 million for the third quarter of
2022. Third quarter 2023 net income margin was 15.4% compared to
12.8% for the third quarter of 2022.
Fully Diluted Earnings Per Share: Fully diluted earnings
per share for the third quarter of 2023 increased 30% to $1.39
compared to $1.07 in the third quarter of 2022.
Operating Cash Flow and Cash Balance: Third quarter 2023
operating cash flow was $120.6 million. In the third quarter of
2023, $89.5 million was used for share repurchases. As of September
30, 2023, total cash and cash equivalents, and short-term
investments were $1,651.6 million. Our debt, net of a hedge
instrument, was $544.3 million, resulting in net cash and
investments of $1,107.3 million.
Non-GAAP Financial Highlights for the
Third Quarter Ended September 30:
Revenues: Third quarter 2023 total revenues increased 8%
to $601.3 million compared to $554.7 million for the third quarter
of 2022.
Gross Profit: Third quarter 2023 Non-GAAP gross profit
increased to $434.4 million compared to $408.0 million for the
third quarter of 2022. Third quarter 2023 Non-GAAP gross margin was
72.2% compared to 73.5% for the third quarter of 2022.
Operating Income: Third quarter 2023 Non-GAAP operating
income increased 15% to $183.9 million compared to $159.3 million
for the third quarter of 2022. Third quarter 2023 Non-GAAP
operating margin was 30.6% compared to 28.7% for the third quarter
of 2022.
Net Income: Third quarter 2023 Non-GAAP net income
increased 18% to $150.6 million compared to $127.8 million for the
third quarter of 2022. Third quarter 2023 Non-GAAP net income
margin totaled 25.0% compared to 23.0% for the third quarter of
2022.
Fully Diluted Earnings Per Share: Third quarter 2023
Non-GAAP fully diluted earnings per share increased 18% to $2.27
compared to $1.92 for the third quarter of 2022.
Full-Year 2023
Guidance:
Raising Full-Year 2023 Guidance:
The Company increased full-year 2023 Non-GAAP total revenues to
an expected range of $2,359 million to $2,379 million, representing
9% 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 $8.58 to $8.78,
representing 14% growth at the midpoint compared to full-year
2022.
2024 Outlook:
The Company is providing preliminary expectations beyond 2023 as
follows:
- Full-year 2024 cloud revenue growth of at least 18% year over
year, exclusive of any contribution from the LiveVox acquisition,
which is expected to close in the first half of 2024.
- On a full year basis for 2024, LiveVox is expected to
contribute approximately $142 million of revenue.
- Including synergies from LiveVox, we expect 2024 EBITDA to be
nearly $900 million and to exceed $1 billion in 2025.
Quarterly Results Conference Call
NICE management will host its earnings conference call today
November 16, 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 impact
of conflicts in the Middle East, 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
September 30,
2023
December 31,
2022
Unaudited
Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
713,090
$
529,596
Short-term investments
938,500
1,041,943
Trade receivables
537,951
518,517
Debt hedge option
93,505
122,323
Prepaid expenses and other current assets
205,564
204,754
Total current assets
2,488,610
2,417,133
LONG-TERM ASSETS:
Property and equipment, net
170,619
159,285
Deferred tax assets
145,404
116,889
Other intangible assets, net
150,708
209,605
Operating lease right-of-use assets
97,814
102,893
Goodwill
1,627,186
1,617,118
Prepaid expenses and other long-term assets
215,650
231,496
Total long-term assets
2,407,381
2,437,286
TOTAL ASSETS
$
4,895,991
$
4,854,419
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables
$
56,998
$
56,019
Deferred revenues and advances from customers
304,968
338,930
Current maturities of operating leases
12,569
13,525
Debt
181,131
209,292
Accrued expenses and other liabilities
460,910
523,451
Total current liabilities
1,016,576
1,141,217
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers
51,502
57,211
Operating leases
92,270
99,262
Deferred tax liabilities
8,760
7,336
Debt
456,652
455,382
Other long-term liabilities
38,535
38,588
Total long-term liabilities
647,719
657,779
SHAREHOLDERS' EQUITY
Nice Ltd's equity
3,218,880
3,042,085
Non-controlling interests
12,816
13,338
Total shareholders' equity
3,231,696
3,055,423
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
4,895,991
$
4,854,419
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME U.S. dollars in thousands
(except per share amounts)
Quarter ended September
30,
Year to date September
30,
2023
2022
2023
2022
Unaudited
Unaudited
Unaudited
Unaudited
Revenue:
Cloud
$
403,324
$
330,487
$
1,152,839
$
936,472
Services
160,220
165,202
479,022
488,909
Product
37,800
59,035
122,455
187,353
Total revenue
601,344
554,724
1,754,316
1,612,734
Cost of revenue:
Cloud
140,564
118,706
407,144
345,497
Services
45,292
45,697
140,216
137,598
Product
5,130
6,379
19,935
19,613
Total cost of revenue
190,986
170,782
567,295
502,708
Gross profit
410,358
383,942
1,187,021
1,110,026
Operating expenses:
Research and development, net
84,848
74,048
241,589
224,108
Selling and marketing
144,171
158,608
444,614
461,636
General and administrative
67,713
60,991
188,256
176,933
Total operating expenses
296,732
293,647
874,459
862,677
Operating income
113,626
90,295
312,562
247,349
Financial and other income, net
(7,037)
(596)
(25,108)
(1,032)
Income before tax
120,663
90,891
337,670
248,381
Taxes on income
28,310
19,645
81,021
53,622
Net income
$
92,353
$
71,246
$
256,649
$
194,759
Earnings per share:
Basic
$
1.46
$
1.12
$
4.03
$
3.05
Diluted
$
1.39
$
1.07
$
3.86
$
2.93
Weighted average shares outstanding:
Basic
63,422
63,739
63,693
63,763
Diluted
66,223
66,446
66,438
66,524
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS U.S. dollars in
thousands
Quarter ended September
30,
Year to date September
30,
2023
2022
2023
2022
Unaudited
Unaudited
Unaudited
Unaudited
Operating
Activities
Net income
$
92,353
$
71,246
$
256,649
$
194,759
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
42,269
42,594
126,148
129,077
Share-based compensation
46,213
42,396
130,488
133,689
Amortization of premium and discount and accrued interest on
marketable securities
998
2,090
2,044
7,162
Deferred taxes, net
(13,915)
(11,582)
(30,787)
(23,626)
Changes in operating assets and liabilities:
Trade Receivables, net
(25,807)
(14,780)
(17,720)
(85,635)
Prepaid expenses and other current assets
(315)
137
(22,361)
(40,273)
Operating lease right-of-use assets
3,182
3,494
8,685
16,814
Trade payables
11,632
(22,789)
784
1,643
Accrued expenses and other current liabilities
20,835
24,048
(28,691)
(10,283)
Deferred revenue
(54,485)
(38,963)
(39,662)
(2,332)
Operating lease liabilities
(4,140)
(5,057)
(11,541)
(22,488)
Amortization of discount on long-term debt
1,166
1,143
3,449
3,431
Loss from extinguishment of debt
-
1
37
1,206
Other
624
289
3,412
(135)
Net cash provided by operating activities
120,610
94,267
380,934
303,009
Investing
Activities
Purchase of property and equipment
(5,507)
(6,067)
(23,126)
(20,952)
Purchase of Investments
(9,284)
(143,655)
(200,643)
(365,457)
Proceeds from Investments
134,486
140,814
307,038
322,404
Capitalization of internal use software costs
(12,479)
(13,427)
(41,106)
(37,171)
Payments for business acquisitions, net of cash acquired
(18,405)
-
(18,405)
-
Other
-
-
-
276
Net cash provided by (used in) investing activities
88,811
(22,335)
23,758
(100,900)
Financing
Activities
Proceeds from issuance of shares upon exercise of options
43
151
1,767
424
Purchase of treasury shares
(89,506)
(22,489)
(219,417)
(120,401)
Dividends paid to noncontrolling interest
-
-
(1,480)
(376)
Repayment of debt
(23)
(18)
(1,557)
(20,128)
Net cash used in financing activities
(89,486)
(22,356)
(220,687)
(140,481)
Effect of exchange rates on cash and cash
equivalents
(2,824)
(5,663)
(1,111)
(12,302)
Net change in cash, cash equivalents and
restricted cash
117,111
43,913
182,894
49,326
Cash, cash equivalents and restricted
cash, beginning of period
$
598,879
$
384,069
$
533,096
$
378,656
Cash, cash equivalents and restricted
cash, end of period
$
715,990
$
427,982
$
715,990
$
427,982
Reconciliation of cash, cash equivalents
and restricted cash reported in the consolidated balance sheet:
Cash and cash equivalents
$
713,090
$
423,032
$
713,090
$
423,032
Restricted cash included in other current assets
$
2,900
$
4,950
$
2,900
$
4,950
Total cash, cash equivalents and restricted cash shown in the
statement of cash flows
$
715,990
$
427,982
$
715,990
$
427,982
NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS U.S. dollars in
thousands (except per share amounts)
Quarter ended September
30,
Year to date September
30,
2023
2022
2023
2022
GAAP revenues
$
601,344
$
554,724
$
1,754,316
$
1,612,734
Non-GAAP revenues
$
601,344
$
554,724
$
1,754,316
$
1,612,734
GAAP cost of revenue
$
190,986
$
170,782
$
567,295
$
502,708
Amortization of acquired intangible assets
on cost of cloud
(18,967)
(18,564)
(57,732)
(55,851)
Amortization of acquired intangible assets
on cost of services
-
-
-
(377)
Amortization of acquired intangible assets
on cost of product
(260)
(242)
(766)
(776)
Valuation adjustment on acquired deferred
cost of cloud
-
13
-
41
Cost of cloud revenue adjustment (1)
(2,160)
(2,319)
(6,360)
(6,389)
Cost of services revenue adjustment
(1)
(3,016)
(2,778)
(8,764)
(8,264)
Cost of product revenue adjustment (1)
384
(135)
106
(401)
Non-GAAP cost of revenue
$
166,967
$
146,757
$
493,779
$
430,691
GAAP gross profit
$
410,358
$
383,942
$
1,187,021
$
1,110,026
Gross profit adjustments
24,019
24,025
73,516
72,017
Non-GAAP gross profit
$
434,377
$
407,967
$
1,260,537
$
1,182,043
GAAP operating expenses
$
296,732
$
293,647
$
874,459
$
862,677
Research and development (1)
(8,224)
(7,424)
(24,405)
(23,825)
Sales and marketing (1,2)
(12,376)
(13,723)
(36,533)
(43,121)
General and administrative (1,2)
(22,348)
(16,505)
(57,703)
(52,991)
Amortization of acquired intangible
assets
(3,308)
(7,379)
(12,251)
(23,153)
Valuation adjustment on acquired deferred
commission
30
48
106
153
Non-GAAP operating expenses
$
250,506
$
248,664
$
743,673
$
719,740
GAAP financial and other income, net
$
(7,037)
$
(596)
$
(25,108)
$
(1,032)
Amortization of discount and loss of
extinguishment on debt
(1,166)
(1,144)
(3,486)
(4,637)
Change in fair value of contingent
consideration
(239)
-
(817)
-
Non-GAAP financial and other income,
net
(8,442)
(1,740)
(29,411)
(5,669)
GAAP taxes on income
$
28,310
$
19,645
$
81,021
$
53,622
Tax adjustments re non-GAAP
adjustments
13,372
13,598
37,473
42,860
Non-GAAP taxes on income
$
41,682
$
33,243
$
118,494
$
96,482
GAAP net income
$
92,353
$
71,246
$
256,649
$
194,759
Valuation adjustment on acquired deferred
cost of cloud revenue
-
(13)
-
(41)
Amortization of acquired intangible
assets
22,535
26,185
70,749
80,157
Valuation adjustment on acquired deferred
commission
(30)
(48)
(106)
(153)
Share-based compensation (1)
47,287
42,884
133,206
134,991
Acquisition related expenses (2)
453
-
453
-
Amortization of discount and loss of
extinguishment on debt
1,166
1,144
3,486
4,637
Change in fair value of contingent
consideration
239
-
817
-
Tax adjustments re non-GAAP
adjustments
(13,372)
(13,598)
(37,473)
(42,860)
Non-GAAP net income
$
150,631
$
127,800
$
427,781
$
371,490
GAAP diluted earnings per share
$
1.39
$
1.07
$
3.86
$
2.93
Non-GAAP diluted earnings per share
$
2.27
$
1.92
$
6.44
$
5.58
Shares used in computing GAAP diluted
earnings per share
66,223
66,446
66,438
66,524
Shares used in computing non-GAAP diluted
earnings per share
66,223
66,446
66,438
66,524
NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued) U.S.
dollars in thousands
(1)
Share-based
Compensation
Quarter ended September
30,
Year to date September
30,
2023
2022
2023
2022
Cost of cloud revenue
$
2,160
$
2,319
$
6,360
$
6,389
Cost of services revenue
3,016
2,778
8,764
8,264
Cost of product revenue
(384)
135
(106)
401
Research and development
8,224
7,424
24,405
23,825
Sales and marketing
12,351
13,723
36,508
43,121
General and administrative
21,920
16,505
57,275
52,991
$
47,287
$
42,884
$
133,206
$
134,991
(2)
Acquisition
related expenses
Quarter ended September
30,
Year to date September
30,
2023
2022
2023
2022
Sales and marketing
$
25
$
-
$
25
$
-
General and administrative
428
-
428
-
$
453
$
-
$
453
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231116073831/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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