Business Wire | May 13, 2021 05:30AM EDT

NICE Reports 32% Growth in Cloud Revenue for the First Quarter of 2021

May 13, 2021

HOBOKEN, N.J.--(BUSINESS WIRE)--May 13, 2021--NICE (NASDAQ: NICE) today announced results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

GAAP Non-GAAP

Revenue of $455 million, growth of 11% Revenue of $457 million, growth of 11%year-over-year year-over-year

Cloud revenue of $228 million, growth Cloud revenue of $230 million, growth ofof 32% year-over-year 33% year-over-year

Gross margin of 67.5% compared to Gross margin of 72.7% compared to 70.9%65.9% last year last year

Operating income of $66 million Operating income of $128.8 millioncompared to $59 million last year, compared to $110.5 million last year,growth of 13% growth of 17%

Operating margin of 14.6% compared to Operating margin of 28.2% compared to14.3% last year 26.9% last year

Diluted EPS of $0.78 versus $0.71 last Diluted EPS of $1.54 versus $1.34 lastyear, growth of 10% year, growth of 15%

"We are pleased to begin 2021 on a high note as we reported very strong first quarter results across the board, including double-digit growth in both total revenue and earnings per share," said Barak Eilam, CEO, NICE. "Driving this outstanding performance is our continued robust growth in cloud, as we are witnessing further rapid penetration of CXone in all market segments, especially in very large enterprises, a segment of the market in which we are clearly differentiated from a competitive standpoint."

Mr. Eilam continued, "We also continue to see tremendous growth for CXone in international markets where we witnessed a three times increase in bookings bolstered by our growing international partners program. In addition, we continued to see strong demand by enterprises to digitally transform leading to a two and a half times increase in the volume of digital interactions on our platform. With a record pipeline and robust bookings for CXone, we are in an excellent position to capitalize on a large and fast-growing total addressable market."

GAAP Financial Highlights for the First Quarter Ended March 31:

Revenues: First quarter 2021 total revenues increased 10.9% to $455.0 million compared to $410.40 million for the first quarter of 2020.

Gross Profit: First quarter 2021 gross profit and gross margin increased to $307.2 million and 67.5%, respectively, compared to $270.3 million and 65.9%, respectively, for the first quarter of 2020.

Operating Income: First quarter 2021 operating income and operating margin increased to $66.5 million and 14.6%, respectively, compared to $58.8 million and 14.3%, respectively, for the first quarter of 2020.

Net Income: First quarter 2021 net income and net income margin increased to $52.2 million and 11.5%, respectively, compared to $46.1 million and 11.2%, respectively, for the first quarter of 2020.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the First quarter of 2021 increased 9.9% to $0.78, compared to $0.71 in the first quarter of 2020.

Operating Cash Flow and Cash Balance: First quarter 2021 operating cash flow was $164.2 million. In the first quarter, $44 million was used for share repurchases. As of March 31, 2021, total cash and cash equivalents, short and long term investments were $1,561.2 million, and total debt was $685.3 million.

Non-GAAP Financial Highlights for the First Quarter Ended March 31:

Revenues: First quarter 2021 Non-GAAP total revenues increased 11.1% to $457.0 million compared to $411.2 million for the first quarter of 2020.

Gross Profit: First quarter 2021 Non-GAAP gross profit and gross margin increased to $332.1 million and 72.7%, respectively, compared to $291.6 million and 70.9%, respectively, for the first quarter of 2020.

Operating Income: First quarter 2021 Non-GAAP operating income and Non-GAAP operating margin increased to $128.8 million and 28.2%, respectively, compared to $110.5 million and 26.9%, respectively, for the first quarter of 2020.

Net Income: First quarter 2021 Non-GAAP net income and Non-GAAP net income margin increased to $102.8 million and 22.5%, respectively, from $87.9 million and 21.4%, respectively, for the first quarter of 2020.

Fully Diluted Earnings Per Share: First quarter 2021 Non-GAAP fully diluted earnings per share increased 14.9% to $1.54, compared to $1.34 for the first quarter of 2020.

Second Quarter and Full Year 2021 Guidance:

Second Quarter 2021:Second quarter 2021 Non-GAAP total revenues are expected to be in a range of $445 million to $455 million. Second quarter 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.45 to $1.55.

Raising Full Year 2021 Guidance:Full year 2021 Non-GAAP total revenues are expected to be in a range of $1,800 million to $1,820 million (higher than the previous guidance range of $1,790 million to $1,810 million). Full year 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $6.19 to $6.39 (higher than the previous guidance range of $6.12 to $6.32).

Quarterly Results Conference Call

NICE management will host its earnings conference call today May 13th, 2021 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.

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 StatementsThis 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. At this time, the extent and duration of the continued impact of the pandemic is unknown, and therefore we cannot predict how it may affect the Company's future business, results of operations, financial condition and strategic plans. Furthermore, due to our subscription-based business model, the effect of 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 March 31, December 31, 2021 2020

Unaudited Audited

ASSETS CURRENT ASSETS:

Cash and cash equivalents $ 451,128 $ 442,267

Short-term investments 1,110,057 1,021,613

Trade receivables 322,658 303,100

Prepaid expenses and other current assets 176,922 175,340

Total current assets 2,060,765 1,942,320

LONG-TERM ASSETS:

Property and equipment, net 136,687 137,785

Deferred tax assets 34,543 32,735

Other intangible assets, net 337,303 366,003

Operating lease right-of-use assets 92,684 97,162

Goodwill 1,503,549 1,503,252

Other long-term assets 156,503 153,660



Total long-term assets 2,261,269 2,290,597

TOTAL ASSETS $ 4,322,034 $ 4,232,917

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:

Trade payables $ 45,193 $ 33,132

Deferred revenues and advances from customers 320,034 311,851

Current maturities of operating leases 20,564 22,412

Exchangeable senior notes 262,011 259,881

Accrued expenses and other liabilities 415,107 417,174

Total current liabilities 1,062,909 1,044,450

LONG-TERM LIABILITIES:

Deferred revenues and advances from customers 80,271 36,295

Operating leases 88,421 92,262

Deferred tax liabilities 31,659 32,109

Long-term debt 423,306 421,337

Other long-term liabilities 17,182 17,980

Total long-term liabilities 640,839 599,983

SHAREHOLDERS' EQUITY

Nice Ltd's equity 2,593,715 2,563,910

Non-controlling interests 24,571 24,574

Total shareholders' equity 2,618,286 2,588,484

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,322,034 $ 4,232,917

NICE LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEU.S. dollars in thousands (except per share amounts)Quarter ended March 31,

2021

2020

Unaudited

Unaudited

Revenue:Cloud$

228,081

$

172,628

Services161,791

173,192

Product65,149

64,608

Total revenue455,021

410,428

Cost of revenue:Cloud93,582

80,468

Services48,934

53,513

Product5,346

6,104

Total cost of revenue147,862

140,085

Gross profit307,159

270,343

Operating expenses:Research and development, net59,155

52,781

Selling and marketing128,559

109,621

General and administrative52,972

49,113

Total operating expenses240,686

211,515

Operating income66,473

58,828

Financial and other expense, net3,394

1,650

Income before tax63,079

57,178

Taxes on income10,868

11,064

Net income$

52,211

$

46,114

Less: net loss attributable to non-controlling interests3

84

Net income attributable to NICE Ltd.'s shareholders$

52,214

$

46,198

Earnings per share:Basic$

0.83

$

0.74

Diluted$

0.78

$

0.71

Weighted average shares outstanding:Basic63,085

62,477

Diluted66,723

65,335

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

Quarter ended March 31,

2021 2020

Unaudited Unaudited

Revenue: Cloud $ 228,081 $ 172,628

Services 161,791 173,192

Product 65,149 64,608

Total revenue 455,021 410,428

Cost of revenue: Cloud 93,582 80,468

Services 48,934 53,513

Product 5,346 6,104

Total cost of revenue 147,862 140,085

Gross profit 307,159 270,343

Operating expenses: Research and development, net 59,155 52,781

Selling and marketing 128,559 109,621

General and administrative 52,972 49,113

Total operating expenses 240,686 211,515

Operating income 66,473 58,828

Financial and other expense, net 3,394 1,650

Income before tax 63,079 57,178

Taxes on income 10,868 11,064

Net income $ 52,211 $ 46,114

Less: net loss attributable to non-controlling interests 3 84

Net income attributable to NICE Ltd.'s shareholders $ 52,214 $ 46,198

Earnings per share: Basic $ 0.83 $ 0.74

Diluted $ 0.78 $ 0.71

Weighted average shares outstanding: Basic 63,085 62,477

Diluted 66,723 65,335

NICE LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTSU.S. dollars in thousands

Quarter ended March 31,

2021

2020

Unaudited

Unaudited

Operating Activities

Net income

$

52,211

$

46,114

Depreciation and amortization44,924

44,050

Stock based compensation31,455

21,568

Amortization of premium and discount and accrued interest on marketable securities3,931

748

Deferred taxes, net(858)

(9,192)

Changes in operating assets and liabilities:Trade Receivables(19,684)

659

Prepaid expenses and other assets(10,860)

(14,091)

Trade payables9,704

12,478

Accrued expenses and other current liabilities(1,365)

11,897

Operating lease right-of-use assets, net4,481

4,149

Deferred revenue51,903

38,513

Operating lease liabilities(5,697)

(5,557)

Amortization of discount on long term debt4,099

2,343

Other(5)

1,143

Net cash provided by operating activities164,239

154,822

Investing Activities

Purchase of property and equipment(2,329)

(9,633)

Purchase of Investments(153,306)

(85,427)

Proceeds from Investments54,577

85,885

Capitalization of software development costs(10,116)

(9,287)

Payments for business and asset acquisitions, net of cash acquired-

(50,836)

Proceeds from business and asset acquisitions adjustments444

-

Net cash used in investing activities(110,730)

(69,298)

Financing Activities

Proceeds from issuance of shares upon exercise of share options292

1,484

Purchase of treasury shares(44,222)

(24,070)

Capital Lease payments-

(162)

Net cash provided by/(used in) financing activities(43,930)

(22,748)

Effect of exchange rates on cash and cash equivalents

(718)

(1,987)

Net change in cash and cash equivalents

8,861

60,789

Cash and cash equivalents, beginning of period

$

442,267

$

228,323

Cash and cash equivalents, end of period

$

451,128

$

289,112

NICE LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTSU.S. dollars in thousands



Quarter ended March 31,

2021 2020

Unaudited Unaudited

Operating Activities

Net income $ 52,211 $ 46,114

Depreciation and amortization 44,924 44,050

Stock based compensation 31,455 21,568

Amortization of premium and discount and accrued 3,931 748interest on marketable securitiesDeferred taxes, net (858) (9,192)

Changes in operating assets and liabilities: Trade Receivables (19,684) 659

Prepaid expenses and other assets (10,860) (14,091)

Trade payables 9,704 12,478

Accrued expenses and other current liabilities (1,365) 11,897

Operating lease right-of-use assets, net 4,481 4,149

Deferred revenue 51,903 38,513

Operating lease liabilities (5,697) (5,557)

Amortization of discount on long term debt 4,099 2,343

Other (5) 1,143

Net cash provided by operating activities 164,239 154,822

Investing Activities

Purchase of property and equipment (2,329) (9,633)

Purchase of Investments (153,306) (85,427)

Proceeds from Investments 54,577 85,885

Capitalization of software development costs (10,116) (9,287)

Payments for business and asset acquisitions, net of - (50,836)cash acquiredProceeds from business and asset acquisitions 444 -adjustmentsNet cash used in investing activities (110,730) (69,298)

Financing Activities

Proceeds from issuance of shares upon exercise of 292 1,484share optionsPurchase of treasury shares (44,222) (24,070)

Capital Lease payments - (162)

Net cash provided by/(used in) financing activities (43,930) (22,748)

Effect of exchange rates on cash and cash (718) (1,987)equivalents

Net change in cash and cash equivalents 8,861 60,789

Cash and cash equivalents, beginning of period $ 442,267 $ 228,323

Cash and cash equivalents, end of period $ 451,128 $ 289,112

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

Quarter endedMarch 31,

2021

2020

GAAP revenues

$

455,021

$

410,428

Valuation adjustment on acquired deferred cloud revenue

1,823

779

Valuation adjustment on acquired deferred services revenue

106

-

Valuation adjustment on acquired deferred product revenue

-

-

Non-GAAP revenues

$

456,950

$

411,207

GAAP cost of revenue

$

147,862

$

140,085

Amortization of acquired intangible assets on cost of cloud

(17,515)

(15,558)

Amortization of acquired intangible assets on cost of services

(1,225)

(1,522)

Amortization of acquired intangible assets on cost of product

(283)

(1,134)

Valuation adjustment on acquired deferred cost of cloud

25

293

Cost of cloud revenue adjustment (1)

(1,494)

(844)

Cost of services revenue adjustment (1)

(2,435)

(1,600)

Cost of product revenue adjustment (1)

(125)

(68)

Non-GAAP cost of revenue

$

124,810

$

119,652

GAAP gross profit

$

307,159

$

270,343

Gross profit adjustments

24,981

21,212

Non-GAAP gross profit

$

332,140

$

291,555

GAAP operating expenses

$

240,686

$

211,515

Research and development (1,2)

(4,057)

(2,615)

Sales and marketing (1,2)

(10,908)

(5,265)

General and administrative (1,2)

(12,687)

(12,834)

Amortization of acquired intangible assets

(9,709)

(9,805)

Valuation adjustment on acquired deferred commission

53

35

Non-GAAP operating expenses

$

203,378

$

181,031

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

Quarter ended March 31,

2021 2020

GAAP revenues $ 455,021 $ 410,428

Valuation adjustment on acquired deferred cloud 1,823 779revenue

Valuation adjustment on acquired deferred services 106 -revenue

Valuation adjustment on acquired deferred product - -revenue

Non-GAAP revenues $ 456,950 $ 411,207

GAAP cost of revenue $ 147,862 $ 140,085

Amortization of acquired intangible assets on cost of (17,515) (15,558)cloud

Amortization of acquired intangible assets on cost of (1,225) (1,522)services

Amortization of acquired intangible assets on cost of (283) (1,134)product

Valuation adjustment on acquired deferred cost of 25 293cloud

Cost of cloud revenue adjustment (1) (1,494) (844)

Cost of services revenue adjustment (1) (2,435) (1,600)

Cost of product revenue adjustment (1) (125) (68)

Non-GAAP cost of revenue $ 124,810 $ 119,652

GAAP gross profit $ 307,159 $ 270,343

Gross profit adjustments 24,981 21,212

Non-GAAP gross profit $ 332,140 $ 291,555

GAAP operating expenses $ 240,686 $ 211,515

Research and development (1,2) (4,057) (2,615)

Sales and marketing (1,2) (10,908) (5,265)

General and administrative (1,2) (12,687) (12,834)

Amortization of acquired intangible assets (9,709) (9,805)

Valuation adjustment on acquired deferred commission 53 35

Non-GAAP operating expenses $ 203,378 $ 181,031

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

Quarter ended March 31,

2021

2020

GAAP financial and other expense, net

$

3,394

$

1,650

Amortization of discount on debt

(4,125)

(2,342)

Non-GAAP financial and other income, net

$

(731)

$

(692)

GAAP taxes on income

$

10,868

$

11,064

Tax adjustments re non-GAAP adjustments

15,814

12,291

Non-GAAP taxes on income

$

26,682

$

23,355

GAAP net income

$

52,211

$

46,114

Valuation adjustment on acquired deferred revenue

1,929

779

Valuation adjustment on acquired deferred cost of cloud revenue

(25)

(293)

Amortization of acquired intangible assets

28,732

28,019

Valuation adjustment on acquired deferred commission

(53)

(35)

Share-based compensation (1)

31,706

21,645

Acquisition related expenses (2)

-

1,581

Amortization of discount on long term debt

4,125

2,342

Tax adjustments re non-GAAP adjustments

(15,814)

(12,291)

Non-GAAP net income

$

102,811

$

87,861

GAAP diluted earnings per share

$

0.78

$

0.71

Non-GAAP diluted earnings per share

$

1.54

$

1.34

Shares used in computing GAAP diluted earnings per share

66,723

65,335

Shares used in computing non-GAAP diluted earnings per share

66,723

65,335

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

Quarter ended March 31,

2021 2020

GAAP financial and other expense, net $ 3,394 $ 1,650

Amortization of discount on debt (4,125) (2,342)

Non-GAAP financial and other income, net $ (731) $ (692)

GAAP taxes on income $ 10,868 $ 11,064

Tax adjustments re non-GAAP adjustments 15,814 12,291

Non-GAAP taxes on income $ 26,682 $ 23,355

GAAP net income $ 52,211 $ 46,114

Valuation adjustment on acquired deferred revenue 1,929 779

Valuation adjustment on acquired deferred cost of (25) (293)cloud revenue

Amortization of acquired intangible assets 28,732 28,019

Valuation adjustment on acquired deferred commission (53) (35)

Share-based compensation (1) 31,706 21,645

Acquisition related expenses (2) - 1,581

Amortization of discount on long term debt 4,125 2,342

Tax adjustments re non-GAAP adjustments (15,814) (12,291)

Non-GAAP net income $ 102,811 $ 87,861

GAAP diluted earnings per share $ 0.78 $ 0.71

Non-GAAP diluted earnings per share $ 1.54 $ 1.34

Shares used in computing GAAP diluted earnings per 66,723 65,335share

Shares used in computing non-GAAP diluted earnings per 66,723 65,335share

NICE LTD. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)U.S. dollars in thousands

(1)

Share-based Compensation

Quarter ended March 31,

2021

2020

Cost of cloud revenue

$

1,494

$

844

Cost of services revenue

2,435

1,600

Cost of product revenue

125

68

Research and development

4,057

2,615

Sales and marketing

10,908

5,177

General and administrative

12,687

11,341

$

31,706

$

21,645

(2)

Acquisition related expenses

Quarter ended March 31,

2021

2020

Sales and marketing

$

-

$

88

General and administrative

-

1,493

$

-

$

1,581

View source version on businesswire.com: https://www.businesswire.com/news/home/20210513005421/en/

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

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