NICE Reports 16% Growth in Total Revenue and 28% Cloud Revenue Growth for the Second Quarter of 2022

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Significant Expansion in Both Gross and Operating Margins

Company Raises Both Revenue and EPS Guidance for Full Year 2022

NICE 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).

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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 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

 

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