EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1

NICE Reports 27% Growth in Cloud Revenue For the First Quarter of 2020
 
Double Digit Growth in Operating Income and Earnings Per Share

Hoboken, New Jersey, May 14, 2020 - NICE (NASDAQ: NICE) today announced results for the first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

GAAP
Non-GAAP
Revenue of $410 million, growth of 9% year-over-year
Revenue of $411 million, growth of 9% year-over-year
Cloud revenue of $173 million, growth of 27% year-over-year
Cloud revenue of $173 million, growth of 27% year-over-year
Gross margin of 65.9% compared to 65.2% last year
Gross margin of 70.9% compared to 70.5% last year
Operating income of $59 million compared to $52 million last year, growth of 13%
Operating income of $111 million compared to $97 million last year, growth of 14%
Operating margin of 14.3% compared to 13.8% last year
Operating margin of 26.9% compared to 25.7% last year
Diluted EPS of $0.71 versus $0.58 last year, growth of 22%
Diluted EPS of $1.34 versus $1.18 last year, growth of 14%

“We are pleased to report strong first quarter results driven by an accelerated 27% growth in cloud revenue. We also delivered double-digit growth in operating income and earnings per share with further expansion of our operating margin,” said Barak Eilam, CEO NICE. “In light of the current environment, these strong results demonstrate the mission critical nature of our solutions and the strength of our cloud business driven by our three market leading cloud platforms, CXone for Customer Experience, X-Sight for Financial Crime and Compliance, and NICE Investigate for Public Safety.”

Mr. Eilam continued, “At the onset of COVID-19, we took immediate action, responding with solutions to provide customers the help they needed to quickly overcome the challenges they faced in this new environment, specifically their ability to move rapidly to the cloud and transform to digital. In fact, we signed up dozens of customers with thousands of agents for our CXone@home offering aimed at helping these customers shift their agents to work from home. I am pleased to see that we have witnessed great response to our offerings across all our business segments that provided the agility these organizations needed.

“At the same time, these organizations are preparing for the next phase - the transformation to cloud and digital. Furthermore, their ability to respond very rapidly in the last few months and manage changes that they thought would take years instead of days is giving them confidence that they have the ability to transform quickly. While we are faced with some unpredictability in the short term due to the economic environment, we continue to experience strong growth in our cloud business. As the clear leader in both cloud and digital in our markets, along with a strong balance sheet, strong cash generation and a keen focus on execution and profitability, we are clearly in the best competitive position to provide the platforms that these organizations need to transform their operations.”


GAAP Financial Highlights for the First Quarter Ended March 31:
 
Revenues: First quarter 2020 total revenues increased 8.9% to $410.4 million compared to $377.0 million for the first quarter of 2019.

Gross Profit: First quarter 2020 gross profit and gross margin increased to $270.3 million and 65.9%, respectively, compared to  $246.0 million and 65.2%, respectively, for the first quarter of 2019.

Operating Income: First quarter 2020 operating income and operating margin increased to $58.8 million and 14.3%, respectively, compared to $51.9 million and 13.8%, respectively, for the first quarter of 2019.

Net Income: First quarter 2020 net income and net income margin increased to $46.1 million and 11.2%, respectively, compared to $37.1 million and 9.8%, respectively, for the first quarter of 2019.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the First quarter of 2020 increased 22.4% to $0.71, compared to $0.58 in the first quarter of 2019.

Operating Cash Flow and Cash Balance: First quarter 2020 operating cash flow was $154.8 million. In the first quarter, $24.1 million was used for share repurchases. As of March 31, 2020, total cash and cash equivalents, short and long term investments were $1,035.4 million, and total debt was $467.2 million.
 
Non-GAAP Financial Highlights for the First Quarter Ended March 31:
 
Revenues: First quarter 2020 Non-GAAP total revenues increased 8.8% to $411.2 million compared to $377.9 million for the first quarter of 2019.

Gross Profit: First quarter 2020 Non-GAAP gross profit and gross margin increased to $291.6 million and 70.9%, respectively, compared to $266.5 million and 70.5%, respectively, for the first quarter of 2019.

Operating Income: First quarter 2020 Non-GAAP operating income and Non-GAAP operating margin increased to $110.5 million and 26.9%, respectively, compared to $97.0 million and 25.7%, respectively, for the first quarter of 2019.

Net Income: First quarter 2020 Non-GAAP net income and Non-GAAP net income margin increased to $87.9 million and 21.4%, respectively, from $75.5 million and 20.0%, respectively, for the first quarter of 2019.

Fully Diluted Earnings Per Share: First quarter 2020 Non-GAAP fully diluted earnings per share increased 13.6% to $1.34, compared to $1.18 for the first quarter of 2019.
 
Second Quarter and Full Year 2020 Guidance:
 
NICE’s guidance is based on current market conditions and expectations. The guidance is subject to various cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.
 
Second Quarter 2020: Second quarter 2020 Non-GAAP total revenues are expected to be in a range of $387 million to $397 million. Second quarter 2020 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.28 to $1.38.

Given uncertainties related to the COVID-19 pandemic and the rapidly changing global economic environment, the company is withdrawing its previously issued full-year 2020 guidance provided February 13, 2020.
Quarterly Results Conference Call

NICE management will host its earnings conference call today May 14th, 2020 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 1-866-804-8688 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 975 313 67. 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 https://www.nice.com/investor-relations/upcoming-event. 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 706 733 80.

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 long term debt and the tax effect of the Non-GAAP adjustments. Business combination accounting rules require the recognition of a legal performance obligation related to a revenue arrangement of an acquired entity as a liability. The amount assigned to such liability should be based on its fair value at the date of acquisition. The Non-GAAP adjustment for a revenue arrangement is intended to reflect the full amount of such revenue. 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.

Investors
Marty Cohen, +1 551 256 5354, ir@nice.com, ET
Yisca Erez, +972 9 775-3798, ir@nice.com, CET

Media Contact
Chris Irwin-Dudek, +1 (551) 256-5140, Chris.Irwin-Dudek@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 and various other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”). In addition, COVID-19 is contributing to a general slowdown in the global economy and may affect the Company’s business, results of operations, financial condition and our future strategic plans. At this time, the extent to which the COVID-19 may impact the Company’s financial condition or results of operations is uncertain. Furthermore, due to our subscription based business model, the effect of the COVID-19 may not be fully reflected in our results of operations until future periods, if at all. 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,
  
   
2020
    
2019
  
   
Unaudited
    
Unaudited
  
             
Revenue:
            
Product
  
$
64,608
    
$
70,031
  
Services
    
173,192
      
170,918
  
Cloud
    
172,628
      
136,078
  
Total revenue
    
410,428
      
377,027
  
                 
Cost of revenue:
                
Product
    
6,104
      
5,881
  
Services
    
53,513
      
55,123
  
Cloud
    
80,468
      
70,046
  
Total cost of revenue
    
140,085
      
131,050
  
                 
Gross profit
    
270,343
      
245,977
  
                 
Operating expenses:
                
Research and development, net
    
52,781
      
46,566
  
Selling and marketing
    
99,816
      
102,067
  
General and administrative
    
49,113
      
34,714
  
Amortization of acquired intangible assets
    
9,805
      
10,701
  
Total operating expenses
    
211,515
      
194,048
  
                 
Operating income
    
58,828
      
51,929
  
                 
Finance and other expense, net
    
1,650
      
3,418
  
                 
Income before tax
    
57,178
      
48,511
  
Taxes on income
    
11,064
      
11,447
  
Net income
    
46,114
      
37,064
  
                 
Less: net loss attributable to non-controlling interests
    
84
      
-
  
                 
Net income attributable to Nice Ltd.'s shareholders
    
46,198
      
37,064
  
                 
Earnings per share:
                
Basic
  
$
0.74
    
$
0.60
  
Diluted
  
$
0.71
    
$
0.58
  
                 
Weighted average shares outstanding:
                
Basic
    
62,477
      
61,842
  
Diluted
    
65,335
      
63,759
  



NICE LTD. AND SUBSIDIARIES
      
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
      
U.S. dollars in thousands (except per share amounts)
      

   
Quarter ended
  
   
March 31,
  
   
2020
    
2019
  
             
GAAP revenues
  
$
410,428
    
$
377,027
  
Valuation adjustment on acquired deferred product revenue
    
-
      
15
  
Valuation adjustment on acquired deferred services revenue
    
-
      
2
  
Valuation adjustment on acquired deferred cloud revenue
    
779
      
872
  
Non-GAAP revenues
  
$
411,207
    
$
377,916
  
                 
GAAP cost of revenue
  
$
140,085
    
$
131,050
  
Amortization of acquired intangible assets on cost of product
    
(1,134
)
    
(870
)
Amortization of acquired intangible assets on cost of services
    
(1,522
)
    
(1,535
)
Amortization of acquired intangible assets on cost of cloud
    
(15,558
)
    
(14,805
)
Valuation adjustment on acquired deferred cost of cloud
    
293
      
686
  
Cost of product revenue adjustment (1)
    
(68
)
    
(105
)
Cost of services revenue adjustment (1)
    
(1,600
)
    
(2,144
)
Cost of cloud revenue adjustment (1,2)
    
(844
)
    
(907
)
Non-GAAP cost of revenue
  
$
119,652
    
$
111,370
  
                 
GAAP gross profit
  
$
270,343
    
$
245,977
  
Gross profit adjustments
    
21,212
      
20,569
  
Non-GAAP gross profit
  
$
291,555
    
$
266,546
  
                 
GAAP operating expenses
  
$
211,515
    
$
194,048
  
Research and development (1)
    
(2,615
)
    
(1,562
)
Sales and marketing (1,2)
    
(5,265
)
    
(5,676
)
General and administrative (1,2)
    
(12,834
)
    
(6,610
)
Amortization of acquired intangible assets
    
(9,805
)
    
(10,702
)
Valuation adjustment on acquired deferred commission
    
35
      
93
  
Non-GAAP operating expenses
  
$
181,031
    
$
169,591
  
                 
GAAP finance & other expense (income), net
  
$
1,650
    
$
3,418
  
Amortization of discount on debt
    
(2,342
)
    
(2,308
)
Non-GAAP finance & other expense (income), net
  
$
(692
)
  
$
1,110
  
                 
GAAP taxes on income
  
$
11,064
    
$
11,447
  
Tax adjustments re non-GAAP adjustments
    
12,291
      
8,882
  
Non-GAAP taxes on income
  
$
23,355
    
$
20,329
  
                 
GAAP net income
  
$
46,114
    
$
37,064
  
Valuation adjustment on acquired deferred revenue
    
779
      
889
  
Valuation adjustment on acquired deferred cost of cloud revenue
    
(293
)
    
(686
)
Amortization of acquired intangible assets
    
28,019
      
27,912
  
Valuation adjustment on acquired deferred commission
    
(35
)
    
(93
)
Share-based compensation (1)
    
21,645
      
17,004
  
Acquisition related expenses (2)
    
1,581
      
-
  
Amortization of discount on long term debt
    
2,342
      
2,308
  
Tax adjustments re non-GAAP adjustments
    
(12,291
)
    
(8,882
)
Non-GAAP net income
  
$
87,861
    
$
75,516
  
                 
GAAP diluted earnings per share
  
$
0.71
    
$
0.58
  
                 
Non-GAAP diluted earnings per share
  
$
1.34
    
$
1.18
  
                 
Shares used in computing GAAP diluted earnings per share
    
65,335
      
63,759
  
                 
Shares used in computing non-GAAP diluted earnings per share
    
65,335
      
63,759
  


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,
  
   
2020
    
2019
  
             
    Cost of product revenue
  
$
68
    
$
105
  
    Cost of services revenue
    
1,600
      
2,144
  
    Cost of cloud revenue
    
844
      
907
  
    Research and development
    
2,615
      
1,562
  
    Sales and marketing
    
5,177
      
5,676
  
    General and administrative
    
11,341
      
6,610
  
   
$
21,645
    
$
17,004
  

(2)  Acquisition related expenses
            
             
   
Quarter ended
  
   
March 31,
  
   
2020
    
2019
  
             
    Sales and marketing
  
$
88
    
$
-
  
    General and administrative
    
1,493
      
-
  
   
$
1,581
    
$
-
  


NICE LTD. AND SUBSIDIARIES
      
CONSOLIDATED CASH FLOW STATEMENTS
      
U.S. dollars in thousands
      

   
Quarter ended
  
   
March 31,
  
   
2020
    
2019
  
   
Unaudited
    
Unaudited
  
             
Operating Activities
            
             
Net income
  
$
46,114
      
37,064
  
Depreciation and amortization
    
44,050
      
41,808
  
Stock based compensation
    
21,568
      
17,004
  
Amortization of premium and discount and accrued interest on marketable securities
    
748
      
(341
)
Deferred taxes, net
    
(9,192
)
    
(7,858
)
Changes in operating assets and liabilities:
                
Trade Receivables
    
659
      
30,723
  
Prepaid expenses and other assets
    
(14,091
)
    
(20,582
)
Trade payables
    
12,478
      
(825
)
Accrued expenses and other current liabilities
    
11,897
      
32,438
  
Operating lease right-of-use assets, net
    
4,149
      
4,117
  
Deferred revenue
    
38,513
      
53,407
  
Long term liabilities
    
-
      
123
  
Operating lease liabilities
    
(5,557
)
    
(5,505
)
Amortization of discount on long term debt
    
2,343
      
2,307
  
Other
    
1,143
      
(1,468
)
  Net cash provided by operating activities
    
154,822
      
182,412
  
                 
Investing Activities
                
                 
Purchase of property and equipment
    
(9,633
)
    
(8,416
)
Purchase of Investments
    
(85,427
)
    
(191,308
)
Proceeds from Investments
    
85,885
      
76,950
  
Capitalization of software development costs
    
(9,287
)
    
(8,494
)
Payments for business acquisitions, net of cash acquired
    
(50,836
)
    
-
  
  Net cash used in investing activities
    
(69,298
)
    
(131,268
)
                 
Financing Activities
                
                 
Proceeds from issuance of shares upon exercise of share options
    
1,484
      
1,617
  
Purchase of treasury shares
    
(24,070
)
    
(10,100
)
Capital Lease payments
    
(162
)
    
(253
)
  Net cash used in financing activities
    
(22,748
)
    
(8,736
)
                 
Effect of exchange rates on cash and cash equivalents
    
(1,987
)
    
189
  
                 
Net change in cash and cash equivalents
    
60,789
      
42,597
  
Cash and cash equivalents, beginning of period
  
$
228,323
    
$
242,099
  
                 
Cash and cash equivalents, end of period
  
$
289,112
    
$
284,696
  



NICE LTD. AND SUBSIDIARIES
        
CONDENSED CONSOLIDATED BALANCE SHEETS
    
U.S. dollars in thousands
        

   
March 31,
    
December 31,
  
   
2020
    
2019
  
   
Unaudited
    
Audited
  
             
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
289,112
    
$
228,323
  
Short-term investments
    
192,525
      
210,772
  
Trade receivables
    
315,786
      
319,622
  
Prepaid expenses and other current assets
    
130,163
      
116,972
  
                 
Total current assets
    
927,586
      
875,689
  
                 
LONG-TERM ASSETS:
                
Long-term investments
    
553,732
      
542,389
  
Property and equipment, net
    
141,775
      
141,647
  
Deferred tax assets
    
30,626
      
30,513
  
Other intangible assets, net
    
405,710
      
411,019
  
Operating lease right-of-use assets
    
103,649
      
106,196
  
Goodwill
    
1,428,056
      
1,378,418
  
Other long-term assets
    
124,762
      
124,034
  
                 
Total long-term assets
    
2,788,310
      
2,734,216
  
                 
TOTAL ASSETS
  
$
3,715,896
    
$
3,609,905
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
40,979
    
$
30,376
  
Deferred revenues and advances from customers
    
274,793
      
245,792
  
Current maturities of operating leases
    
21,200
      
21,519
  
Exchangeable senior notes
    
253,616
      
251,583
  
Accrued expenses and other liabilities
    
407,391
      
391,685
  
                 
Total current liabilities
    
997,979
      
940,955
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues and advances from customers
    
31,199
      
26,045
  
Operating leases
    
99,780
      
103,490
  
Deferred tax liabilities
    
46,494
      
52,509
  
Loan
    
213,542
      
213,313
  
Other long-term liabilities
    
16,197
      
16,327
  
                 
Total long-term liabilities
    
407,212
      
411,684
  
                 
SHAREHOLDERS' EQUITY
                
Nice Ltd's equity
    
2,285,804
      
2,257,266
  
Non-controlling interests
    
24,901
      
-
  
                 
Total shareholders' equity
    
2,310,705
      
2,257,266
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
3,715,896
    
$
3,609,905