Business Wire | Nov 12, 2020 05:30AM EST

NICE Reports 35% Record Cloud Growth for Third Quarter 2020

Nov. 12, 2020

HOBOKEN, N.J.--(BUSINESS WIRE)--Nov. 12, 2020--NICE (NASDAQ: NICE) today announced results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Highlights

GAAP Non-GAAP

Cloud revenue of $202 million, growth Cloud revenue of $204 million, growthof 34% year-over-year of 35% year-over-year

Total revenue of $410 million, growth Total revenue of $412 million, growthof 6% year-over-year of 7% year-over-year

Gross margin of 65.8% compared to Gross margin of 71.0% compared to65.7% last year 70.9% last year

Cloud gross margin of 56.6% compared Cloud gross margin of 65.6% comparedto 51.6% last year to 61.9% last year

Operating income of $62 million Operating income of $117 millioncompared to $56 million last year, an compared to $106 million last year, anincrease of 11% increase of 10%

Operating margin of 15.1% compared to Operating margin of 28.3% compared to14.4% last year 27.4% last year

Diluted EPS of $0.76 versus $0.69 last Diluted EPS of $1.41 versus $1.30 lastyear, 10% growth year-over-year year, 8% growth year-over-year

Operating cash flow of $99 million compared to $82 million last year

"We are pleased to report a very strong third quarter driven by continued rapid acceleration in our cloud business," said Barak Eilam, CEO, NICE. "Cloud grew a record 35 percent and now represents 50 percent of our total revenue, which is a major milestone for NICE. We achieved 10 percent sequential growth in the cloud compared to the second quarter of this year, and we already surpassed the more than 800 million dollar cloud revenue run rate that we had originally expected by the end of the year."

Mr. Eilam continued, "The acceleration in our cloud growth is being driven by several factors, including substantial growth in new customers, rapid adoption by large enterprises, new verticals that are embracing remote service and digital transformation that has become front and center for organizations of all sizes. We witnessed an increase of over 50 percent in new customers compared to the same quarter last year. Additionally, we saw a 91 percent sequential increase in digital volumes for CXone, and a 154 percent increase year-over-year, confirming the strength of our leadership in digital."

GAAP Financial Highlights for the Third Quarter Ended September 30:

Revenues: Third quarter 2020 total revenues increased 6.1% to $409.8 million compared to $386.3 million for the third quarter of 2019.

Gross Profit: Third quarter 2020 gross profit and gross margin increased to $269.7 million and 65.8%, respectively, compared to $253.6 million and 65.7%, respectively, for the third quarter of 2019.

Operating Income: Third quarter 2020 operating income and operating margin increased to $62.0 million and 15.1%, respectively, compared to $55.7 million and 14.4%, respectively, for the third quarter of 2019.

Net Income: Third quarter 2020 net income and net income margin increased to $50.7 million and 12.4%, respectively, compared to $45.0 million and 11.7%, respectively, for the third quarter of 2019.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the third quarter of 2020 increased 10.1% to $0.76, compared to $0.69 in the third quarter of 2019.

Operating Cash Flow and Cash Balance: Third quarter 2020 operating cash flow was $99.0 million. As of September 30, 2020, total cash and cash equivalents, short term investments were $1,542.5 million, and total debt was $891.3 million.

Non-GAAP Financial Highlights for the Third Quarter Ended September 30:

Revenues: Third quarter 2020 non-GAAP total revenues increased to $412.4 million, up 6.5% from $387.1 million for the third quarter of 2019.

Gross Profit: Third quarter 2020 non-GAAP gross profit and gross margin increased to $292.9 million and 71.0%, respectively, from $274.4 million and 70.9%, respectively for the third quarter of 2019.

Operating Income: Third quarter 2020 non-GAAP operating income and non-GAAP operating margin increased to $116.8 million and 28.3%, respectively, from $105.9 million and 27.4%, respectively, for the third quarter of 2019.

Net Income: Third quarter 2020 non-GAAP net income and non-GAAP net income margin increased to $93.6 million and 22.7%, respectively, from $84.3 million and 21.8%, respectively, for the third quarter of 2019.

Fully Diluted Earnings Per Share: Third quarter 2020 non-GAAP fully diluted earnings per share increased 8.5% to $1.41, compared to $1.30 for the third quarter of 2019.

Full-Year 2020 Guidance:

Full-year 2020 Non-GAAP total revenues are expected to be in a range of $1,645 million to $1,655 million. Full-year 2020 Non-GAAP fully diluted earnings per share are expected to be in a range of $5.63 to $5.73.

Quarterly Results Conference Call

NICE management will host its earnings conference call today November 12th, 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 308 565 57. 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 783 390 51.

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 NICENICE (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 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands September 30, December 31,

2020 2019

Unaudited Audited

ASSETS CURRENT ASSETS:Cash and cash equivalents $ 753,116 $ 228,323

Short-term investments 789,415 210,772

Trade receivables 294,176 319,622

Prepaid expenses and other current assets 128,926 116,972

Total current assets 1,965,633 875,689

LONG-TERM ASSETS:Long-term investments - 542,389

Property and equipment, net 140,262 141,647

Deferred tax assets 25,808 30,513

Other intangible assets, net 395,809 411,019

Operating lease right-of-use assets 102,132 106,196

Goodwill 1,496,429 1,378,418

Other long-term assets 145,343 124,034

Total long-term assets 2,305,783 2,734,216

TOTAL ASSETS $ 4,271,416 $ 3,609,905

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Trade payables $ 33,685 $ 30,376

Deferred revenues and advances from customers 260,059 245,792

Current maturities of operating leases 21,846 21,519

Exchangeable senior notes 257,732 251,583

Accrued expenses and other liabilities 366,658 391,685

Total current liabilities 939,980 940,955

LONG-TERM LIABILITIES:Deferred revenues and advances from customers 35,871 26,045

Operating leases 97,764 103,490

Deferred tax liabilities 44,088 52,509

Long-term debt 633,584 213,313

Other long-term liabilities 17,052 16,327

Total long-term liabilities 828,359 411,684

SHAREHOLDERS' EQUITYNice Ltd's equity 2,478,555 2,257,266

Non-controlling interests 24,522 -

Total shareholders' equity 2,503,077 2,257,266

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,271,416 $ 3,609,905

NICE LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEU.S. dollars in thousands (except per share amounts)Quarter ended

Year to date

September 30,

September 30,

2020

2019

2020

2019

Unaudited

Unaudited

Unaudited

Unaudited

Revenue:Product$

38,746

$

56,950

$

141,611

$

188,999

Services169,358

178,609

513,529

525,947

Cloud201,723

150,704

558,295

428,758

Total revenue409,827

386,263

1,213,435

1,143,704

Cost of revenue:Product5,434

5,318

16,711

16,850

Services47,008

54,476

150,558

164,218

Cloud87,637

72,877

248,628

213,418

Total cost of revenue140,079

132,671

415,897

394,486

Gross profit269,748

253,592

797,538

749,218

Operating expenses:Research and development, net55,482

48,531

162,019

141,553

Selling and marketing97,011

96,138

294,332

293,083

General and administrative45,801

42,438

135,312

121,181

Amortization of acquired intangible assets9,496

10,780

28,951

32,276

Total operating expenses207,790

197,887

620,614

588,093

Operating income61,958

55,705

176,924

161,125

Financial and other expense/(income), net1,032

(252

)

2,259

3,890

Income before tax60,926

55,957

174,665

157,235

Taxes on income10,273

10,918

33,293

33,074

Net income$

50,653

$

45,039

$

141,372

$

124,161

Less: net loss attributable to non-controlling interests112

-

378

-

Net income attributable to Nice Ltd.'s shareholders$

50,765

$

45,039

$

141,750

$

124,161

Earnings per share:Basic$

0.81

$

0.72

$

2.26

$

2.00

Diluted$

0.76

$

0.69

$

2.15

$

1.93

Weighted average shares outstanding:Basic62,756

62,160

62,624

62,041

Diluted66,253

65,066

65,741

64,493

NICE LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEU.S. dollars in thousands (except per share amounts) Quarter ended Year to date

September 30, September 30,

2020 2019 2020 2019

Unaudited Unaudited Unaudited Unaudited

Revenue:Product $ 38,746 $ 56,950 $ 141,611 $ 188,999

Services 169,358 178,609 513,529 525,947

Cloud 201,723 150,704 558,295 428,758

Total revenue 409,827 386,263 1,213,435 1,143,704

Cost of revenue:Product 5,434 5,318 16,711 16,850

Services 47,008 54,476 150,558 164,218

Cloud 87,637 72,877 248,628 213,418

Total cost of revenue 140,079 132,671 415,897 394,486

Gross profit 269,748 253,592 797,538 749,218

Operating expenses:Research and development, net 55,482 48,531 162,019 141,553

Selling and marketing 97,011 96,138 294,332 293,083

General and administrative 45,801 42,438 135,312 121,181

Amortization of acquired 9,496 10,780 28,951 32,276intangible assetsTotal operating expenses 207,790 197,887 620,614 588,093

Operating income 61,958 55,705 176,924 161,125

Financial and other expense/ 1,032 (252 ) 2,259 3,890(income), net Income before tax 60,926 55,957 174,665 157,235

Taxes on income 10,273 10,918 33,293 33,074

Net income $ 50,653 $ 45,039 $ 141,372 $ 124,161

Less: net loss attributable to 112 - 378 -non-controlling interests Net income attributable to $ 50,765 $ 45,039 $ 141,750 $ 124,161Nice Ltd.'s shareholders Earnings per share:Basic $ 0.81 $ 0.72 $ 2.26 $ 2.00

Diluted $ 0.76 $ 0.69 $ 2.15 $ 1.93

Weighted average sharesoutstanding:Basic 62,756 62,160 62,624 62,041

Diluted 66,253 65,066 65,741 64,493

NICE LTD. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP RESULTSU.S. dollars in thousands (except per share amounts)Quarter ended

Year to date

September 30,

September 30,

2020

2019

2020

2019

GAAP revenues$

409,827

$

386,263

$

1,213,435

$

1,143,704

Valuation adjustment on acquired deferred product revenue-

-

-

15

Valuation adjustment on acquired deferred services revenue81

3

81

5

Valuation adjustment on acquired deferred cloud revenue2,458

867

5,187

2,692

Non-GAAP revenues$

412,366

$

387,133

$

1,218,703

$

1,146,416

GAAP cost of revenue$

140,079

$

132,671

$

415,897

$

394,486

Amortization of acquired intangible assets on cost of product(1,135

)

(1,123

)

(3,394

)

(2,972

)

Amortization of acquired intangible assets on cost of services(322

)

(1,535

)

(3,341

)

(4,604

)

Amortization of acquired intangible assets on cost of cloud(16,800

)

(15,270

)

(48,422

)

(45,118

)

Valuation adjustment on acquired deferred cost of cloud200

575

737

1,893

Cost of product revenue adjustment (1)(69

)

(97

)

(205

)

(304

)

Cost of services revenue adjustment (1)(1,677

)

(2,106

)

(4,957

)

(6,251

)

Cost of cloud revenue adjustment (1)(809

)

(358

)

(2,601

)

(2,142

)

Non-GAAP cost of revenue$

119,467

$

112,757

$

353,714

$

334,988

GAAP gross profit$

269,748

$

253,592

$

797,538

$

749,218

Gross profit adjustments23,151

20,784

67,451

62,210

Non-GAAP gross profit$

292,899

$

274,376

$

864,989

$

811,428

GAAP operating expenses$

207,790

$

197,887

$

620,614

$

588,093

Research and development (1,2)(2,565

)

(2,033

)

(7,553

)

(5,182

)

Sales and marketing (1,2)(5,561

)

(7,737

)

(19,623

)

(19,211

)

General and administrative (1,2)(14,065

)

(8,962

)

(38,239

)

(24,378

)

Amortization of acquired intangible assets(9,496

)

(10,780

)

(28,951

)

(32,276

)

Valuation adjustment on acquired deferred commission35

76

106

245

Non-GAAP operating expenses$

176,138

$

168,451

$

526,354

$

507,291

GAAP financial and other expense/(income), net$

1,032

$

(252

)

$

2,259

$

3,890

Amortization of discount on debt(3,070

)

(2,377

)

(7,944

)

(6,847

)

Non-GAAP financial and other income, net$

(2,038

)

$

(2,629

)

$

(5,685

)

$

(2,957

)

GAAP taxes on income$

10,273

$

10,918

$

33,293

$

33,074

Tax adjustments re non-GAAP adjustments14,911

13,324

39,701

33,258

Non-GAAP taxes on income$

25,184

$

24,242

$

72,994

$

66,332

GAAP net income$

50,653

$

45,039

$

141,372

$

124,161

Valuation adjustment on acquired deferred revenue2,539

870

5,268

2,712

Valuation adjustment on acquired deferred cost of cloud revenue(200

)

(575

)

(737

)

(1,893

)

Amortization of acquired intangible assets27,753

28,708

84,108

84,970

Valuation adjustment on acquired deferred commission(35

)

(76

)

(106

)

(245

)

Share-based compensation (1)22,404

21,293

69,255

56,625

Acquisition related expenses (2)2,342

-

3,923

843

Amortization of discount on long term debt3,070

2,377

7,944

6,847

Tax adjustments re non-GAAP adjustments(14,911

)

(13,324

)

(39,701

)

(33,258

)

Non-GAAP net income$

93,615

$

84,312

$

271,326

$

240,762

GAAP diluted earnings per share$

0.76

$

0.69

$

2.15

$

1.93

Non-GAAP diluted earnings per share$

1.41

$

1.30

$

4.13

$

3.73

Shares used in computing GAAP diluted earnings per share66,253

65,066

65,741

64,493

Shares used in computing non-GAAP diluted earnings per share66,253

65,066

65,741

64,493

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

September 30,

September 30,

2020

2019

2020

2019

Cost of product revenue$

69

$

97

$

205

$

304

Cost of services revenue1,677

2,106

4,957

6,251

Cost of cloud revenue809

358

2,601

2,142

Research and development2,565

2,033

7,553

5,177

Sales and marketing5,519

7,737

19,493

19,181

General and administrative11,765

8,962

34,446

23,570

$

22,404

$

21,293

$

69,255

$

56,625

(2) Acquisition related expenses

Quarter ended

Year to date

September 30,

September 30,

2020

2019

2020

2019

Research and development$

-

$

-

$

-

$

5

Sales and marketing42

-

130

30

General and administrative2,300

-

3,793

808

$

2,342

$

-

$

3,923

$

843

NICE LTD. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP RESULTSU.S. dollars in thousands (except per share amounts) Quarter ended Year to date

September 30, September 30,

2020 2019 2020 2019

GAAP revenues $ 409,827 $ 386,263 $ 1,213,435 $ 1,143,704

Valuation adjustment on - - - 15 acquired deferredproduct revenueValuation adjustment on 81 3 81 5 acquired deferredservices revenueValuation adjustment on 2,458 867 5,187 2,692 acquired deferred cloudrevenueNon-GAAP revenues $ 412,366 $ 387,133 $ 1,218,703 $ 1,146,416

GAAP cost of revenue $ 140,079 $ 132,671 $ 415,897 $ 394,486

Amortization of acquired (1,135 ) (1,123 ) (3,394 ) (2,972 )intangible assets oncost of productAmortization of acquired (322 ) (1,535 ) (3,341 ) (4,604 )intangible assets oncost of servicesAmortization of acquired (16,800 ) (15,270 ) (48,422 ) (45,118 )intangible assets oncost of cloudValuation adjustment on 200 575 737 1,893 acquired deferred costof cloudCost of product revenue (69 ) (97 ) (205 ) (304 )adjustment (1)Cost of services revenue (1,677 ) (2,106 ) (4,957 ) (6,251 )adjustment (1)Cost of cloud revenue (809 ) (358 ) (2,601 ) (2,142 )adjustment (1)Non-GAAP cost of revenue $ 119,467 $ 112,757 $ 353,714 $ 334,988

GAAP gross profit $ 269,748 $ 253,592 $ 797,538 $ 749,218

Gross profit adjustments 23,151 20,784 67,451 62,210

Non-GAAP gross profit $ 292,899 $ 274,376 $ 864,989 $ 811,428

GAAP operating expenses $ 207,790 $ 197,887 $ 620,614 $ 588,093

Research and development (2,565 ) (2,033 ) (7,553 ) (5,182 )(1,2)Sales and marketing (5,561 ) (7,737 ) (19,623 ) (19,211 )(1,2)General and (14,065 ) (8,962 ) (38,239 ) (24,378 )administrative (1,2)Amortization of acquired (9,496 ) (10,780 ) (28,951 ) (32,276 )intangible assetsValuation adjustment on 35 76 106 245 acquired deferredcommissionNon-GAAP operating $ 176,138 $ 168,451 $ 526,354 $ 507,291 expenses GAAP financial and other $ 1,032 $ (252 ) $ 2,259 $ 3,890 expense/(income), netAmortization of discount (3,070 ) (2,377 ) (7,944 ) (6,847 )on debtNon-GAAP financial and $ (2,038 ) $ (2,629 ) $ (5,685 ) $ (2,957 )other income, net GAAP taxes on income $ 10,273 $ 10,918 $ 33,293 $ 33,074

Tax adjustments re 14,911 13,324 39,701 33,258 non-GAAP adjustmentsNon-GAAP taxes on income $ 25,184 $ 24,242 $ 72,994 $ 66,332

GAAP net income $ 50,653 $ 45,039 $ 141,372 $ 124,161

Valuation adjustment on 2,539 870 5,268 2,712 acquired deferredrevenueValuation adjustment on (200 ) (575 ) (737 ) (1,893 )acquired deferred costof cloud revenueAmortization of acquired 27,753 28,708 84,108 84,970 intangible assetsValuation adjustment on (35 ) (76 ) (106 ) (245 )acquired deferredcommissionShare-based compensation 22,404 21,293 69,255 56,625 (1)Acquisition related 2,342 - 3,923 843 expenses (2)Amortization of discount 3,070 2,377 7,944 6,847 on long term debtTax adjustments re (14,911 ) (13,324 ) (39,701 ) (33,258 )non-GAAP adjustmentsNon-GAAP net income $ 93,615 $ 84,312 $ 271,326 $ 240,762

GAAP diluted earnings $ 0.76 $ 0.69 $ 2.15 $ 1.93 per share Non-GAAP diluted $ 1.41 $ 1.30 $ 4.13 $ 3.73 earnings per share Shares used in computing 66,253 65,066 65,741 64,493 GAAP diluted earningsper share Shares used in computing 66,253 65,066 65,741 64,493 non-GAAP dilutedearnings per share NICE LTD. ANDSUBSIDIARIES

RECONCILIATION OF GAAPTO NON-GAAP RESULTS(continued)U.S. dollars inthousands (1) Share-basedCompensation

Quarter ended Year to date

September 30, September 30,

2020 2019 2020 2019

Cost of product revenue $ 69 $ 97 $ 205 $ 304

Cost of services revenue 1,677 2,106 4,957 6,251

Cost of cloud revenue 809 358 2,601 2,142

Research and development 2,565 2,033 7,553 5,177

Sales and marketing 5,519 7,737 19,493 19,181

General and 11,765 8,962 34,446 23,570 administrative $ 22,404 $ 21,293 $ 69,255 $ 56,625

(2) Acquisition relatedexpenses

Quarter ended Year to date

September 30, September 30,

2020 2019 2020 2019

Research and development $ - $ - $ - $ 5

Sales and marketing 42 - 130 30

General and 2,300 - 3,793 808 administrative $ 2,342 $ - $ 3,923 $ 843

NICE LTD. AND SUBSIDIARIESCONSOLIDATED CASH FLOW STATEMENTSU.S. dollars in thousandsQuarter ended

Year to date

September 30,

September 30,

2020

2019

2020

2019

Unaudited

Unaudited

Unaudited

Unaudited

Operating ActivitiesNet income$

50,653

$

45,039

$

141,372

$

124,161

Depreciation and amortization45,482

43,924

135,133

128,744

Stock based compensation22,207

21,273

68,839

56,589

Amortization of premium and discount and accrued interest on marketable securities2,080

387

(790

)

(187

)

Deferred taxes, net(6,783

)

(12,485

)

(16,653

)

(31,107

)

Changes in operating assets and liabilities:Trade Receivables12,795

6,788

27,588

26,900

Prepaid expenses and other assets3,131

(15,626

)

(31,637

)

(88,157

)

Trade payables6,036

(8,791

)

5,231

(5,073

)

Accrued expenses and other current liabilities(15,124

)

44,173

(36,584

)

53,789

Operating lease right-of-use assets, net4,414

4,346

12,926

11,842

Deferred revenue(23,481

)

(45,558

)

14,617

13,311

Long term liabilities-

(20

)

-

(300

)

Operating lease liabilities(4,608

)

(2,836

)

(14,297

)

(11,995

)

Amortization of discount on long term debt3,070

2,379

7,945

6,848

Other(839

)

(672

)

(254

)

(2,656

)

Net cash provided by operating activities99,033

82,321

313,436

282,709

Investing ActivitiesPurchase of property and equipment(4,211

)

(6,545

)

(21,667

)

(21,527

)

Purchase of Investments(151,589

)

(187,752

)

(306,077

)

(493,894

)

Proceeds from Investments118,284

113,121

283,149

283,629

Capitalization of software development costs(9,577

)

(8,549

)

(28,776

)

(25,940

)

Payments for business and asset acquisitions, net of cash acquired(96,425

)

(184

)

(147,261

)

(25,972

)

Net cash used in investing activities(143,518

)

(89,909

)

(220,632

)

(283,704

)

Financing ActivitiesProceeds from issuance of shares upon exercise of share options828

1,693

8,177

4,711

Purchase of treasury shares-

(7,897

)

(27,601

)

(22,612

)

Capital Lease payments-

(191

)

(177

)

(631

)

Proceeds from issuance of exchangeable notes451,469

-

451,469

-

Net cash provided by/(used in) financing activities452,297

(6,395

)

431,868

(18,532

)

Effect of exchange rates on cash and cash equivalents1,206

(1,489

)

121

(1,733

)

Net change in cash and cash equivalents409,018

(15,472

)

#524,793

(21,260

)

Cash and cash equivalents, beginning of period$

344,098

$

236,311

$

228,323

$

242,099

Cash and cash equivalents, end of period$

753,116

$

220,839

$

753,116

$

220,839

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005477/en/

CONTACT: ContactInvestors

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

CONTACT: Media Contact Chris Irwin-Dudek, +1 (551) 256-5140, Chris.Irwin-Dudek@nice.com