NICE Reports Accelerated Total Revenue Growth of 20% For the Third Quarter of 2021 and 28% Growth in Cloud Revenue

Company Reports Double-Digit Revenue Growth Across All Regions and Business Segments

Company Raises Guidance for Total Revenue and EPS for Full Year 2021

HOBOKEN, N.J.–(BUSINESS WIRE)–NICE (NASDAQ: NICE) today announced results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

GAAP

Non-GAAP

Revenue of $490 million, growth of 20% year-over-year

Revenue of $494 million, growth of 20% year-over-year

Cloud revenue of $258 million, growth of 28% year-over-year

Cloud revenue of $262 million, growth of 29% year-over-year

Gross margin of 67.2% compared to 65.8% last year

Gross margin of 72.3% compared to 71.0% last year

Operating income of $64 million compared to $62 million last year, growth of 4% year-over-year

Operating income of $140.0 million compared to $116.8 million last year, growth of 20%

Operating margin of 13.1% compared to 15.1% last year

Operating margin of 28.3%, compared to 28.3% last year

Diluted EPS of $0.70 versus $0.76 last year

Diluted EPS of $1.68 versus $1.41 last year, growth of 19%

Operating cash flow increased 4% year-over-year to $103.5 million

 

“We are pleased to report another quarter of accelerated top line growth as total revenue increased 20% in the third quarter compared to the same period last year,” said Barak Eilam, CEO of NICE. “The excellent results across the board in Q3 reflect our leadership and the strategic, central role we play amid four key dynamics that are taking place in our industry – cloud, digital, AI and the shift to platforms.”

Mr. Eilam continued, “We are witnessing continued strong momentum in the cloud with 28% growth in cloud revenue in Q3, as well as clear market leadership with over 725,000 agents globally on CXone. Digital revenues grew 78% in the third quarter, we tripled the number of deals in Enlighten driven by demand for AI and we are continuing to see increasing competitive replacements of legacy incumbent providers as more customers are taking a platform approach to their CX. Much of the platform success is happening at the high end of the market where we witnessed an increase of 46% in large enterprise deals.”

GAAP Financial Highlights for the Third Quarter Ended September 30:

Revenues: Third quarter 2021 total revenues increased 19.7% to $490.4 million compared to $409.8 million for the third quarter of 2020.

Gross Profit: Third quarter 2021 gross profit and gross margin increased to $329.6 million and 67.2%, respectively, compared to $269.7 million and 65.8%, respectively, for the third quarter of 2020.

Operating Income: Third quarter 2021 operating income increased 3.6% to $64.2 million compared to $62.0 million, for the third quarter of 2020. Third quarter operating margin decreased to 13.1% compared to 15.1%, for the third quarter of 2020.

Net Income: Third quarter 2021 net income totaled $47.2 million compared to $50.7 for the third quarter of 2020. Net income margin decreased to 9.6% compared to 12.4% for the third quarter of 2020.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the Third quarter of 2021 decreased to $0.70, compared to $0.76 in the third quarter of 2020.

Operating Cash Flow and Cash Balance: Third quarter 2021 operating cash flow was $103.5 million. In the third quarter, $4.3 million was used for share repurchases. As of September 30, 2021, total cash and cash equivalents, and short-term investments were $1,455.5 million, and total debt was $607.3 million.

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

Revenues: Third quarter 2021 Non-GAAP total revenues increased 19.9% to $494.4 million compared to $412.4 million for the third quarter of 2020.

Gross Profit: Third quarter 2021 Non-GAAP gross profit and gross margin increased to $357.5 million and 72.3%, respectively, compared to $292.9 million and 71.0%, respectively, for the third quarter of 2020.

Operating Income: Third quarter 2021 Non-GAAP operating income increased 19.9% to $140.0 million compared to $116.8 million for the third quarter of 2020. Non-GAAP operating margin was 28.3%, compared to 28.3% last year.

Net Income: Third quarter 2021 Non-GAAP net income increased 20.3% to $112.6 million from $93.6 million for the third quarter of 2020. Non-GAAP net income margin was 22.8%, compared to 22.7% last year.

Fully Diluted Earnings Per Share: Third quarter 2021 Non-GAAP fully diluted earnings per share increased 19.1% to $1.68, compared to $1.41 for the third quarter of 2020.

Raising Full Year 2021 Guidance:

Company raised full year 2021 Non-GAAP total revenue guidance, which is now expected to be in a range of $1,899 million to $1,909 million.

Company raised full year 2021 Non-GAAP fully diluted earnings per share guidance, which is now expected to be in a range of $6.43 to $6.53.

Quarterly Results Conference Call

NICE management will host its earnings conference call today November 11th, 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 debt and loss from extinguishment of 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.

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 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
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

Sep 30,

 

December 31,

2021

 

2020

Unaudited

Audited

 

ASSETS

 

CURRENT ASSETS:

Cash and cash equivalents

$

397,696

$

442,267

Short-term investments

 

1,057,790

 

1,021,613

Trade receivables

 

355,136

 

303,100

Prepaid expenses and other current assets

 

170,513

 

175,340

 

Total current assets

 

1,981,135

 

1,942,320

 

LONG-TERM ASSETS:

Property and equipment, net

 

147,263

 

137,785

Deferred tax assets

 

41,799

 

32,735

Other intangible assets, net

 

326,861

 

366,003

Operating lease right-of-use assets

 

87,800

 

97,162

Goodwill

 

1,597,411

 

1,503,252

Other long-term assets

 

191,147

 

153,660

 

 

Total long-term assets

 

2,392,281

 

2,290,597

 

TOTAL ASSETS

$

4,373,416

$

4,232,917

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

Trade payables

$

27,053

$

33,132

Deferred revenues and advances from customers

 

326,673

 

311,851

Current maturities of operating leases

 

20,371

 

22,412

Debt

 

180,071

 

259,881

Accrued expenses and other liabilities

 

446,614

 

417,174

 

Total current liabilities

 

1,000,782

 

1,044,450

 

LONG-TERM LIABILITIES:

Deferred revenues and advances from customers

 

66,847

 

36,295

Operating leases

 

82,716

 

92,262

Deferred tax liabilities

 

6,960

 

32,109

Debt

 

427,271

 

421,337

Other long-term liabilities

 

17,504

 

17,980

 

Total long-term liabilities

 

601,298

 

599,983

 

SHAREHOLDERS’ EQUITY

Nice Ltd’s equity

 

2,747,802

 

2,563,910

Non-controlling interests

 

23,534

 

24,574

 

Total shareholders’ equity

 

2,771,336

 

2,588,484

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

4,373,416

$

4,232,917

NICE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars in thousands (except per share amounts)

   
 

Quarter ended

 

Year to date

 

Sep 30,

 

Sep 30,

 

2021

 

2020

 

2021

 

2020

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

   

Revenue:

 

Cloud

 

$

258,398

$

201,723

$

729,203

$

558,295

Services

 

 

164,783

 

169,358

 

493,707

 

513,529

Product

 

 

67,223

 

38,746

 

178,546

 

141,611

Total revenue

 

 

490,404

 

409,827

 

1,401,456

 

1,213,435

   

Cost of revenue:

 

Cloud

 

 

105,790

 

87,637

 

298,544

 

248,628

Services

 

 

47,980

 

47,008

 

143,796

 

150,558

Product

 

 

7,073

 

5,434

 

16,872

 

16,711

Total cost of revenue

 

 

160,843

 

140,079

 

459,212

 

415,897

   

Gross profit

 

 

329,561

 

269,748

 

942,244

 

797,538

   

Operating expenses:

 

Research and development, net

 

 

74,482

 

55,482

 

195,855

 

162,019

Selling and marketing

 

 

131,776

 

106,507

 

386,530

 

323,283

General and administrative

 

 

59,134

 

45,801

 

165,239

 

135,312

Total operating expenses

 

 

265,392

 

207,790

 

747,624

 

620,614

   

Operating income

 

 

64,169

 

61,958

 

194,620

 

176,924

   

Financial and other expense, net

 

 

3,138

 

1,032

 

15,594

 

2,259

   

Income before tax

 

 

61,031

 

60,926

 

179,026

 

174,665

Taxes on income

 

 

13,803

 

10,273

 

35,186

 

33,293

Net income

 

$

47,228

$

50,653

$

143,840

$

141,372

   

Less: net profit (loss) attributable to non-controlling interests

 

 

145

 

(112)

 

(238)

 

(378)

   

Net income attributable to NICE Ltd.’s shareholders

 

$

47,083

$

50,765

 

$

144,078

$

141,750

   
   

Earnings per share:

 

Basic

 

$

0.75

$

0.81

$

2.28

$

2.26

Diluted

 

$

0.70

$

0.76

$

2.15

$

2.15

   

Weighted average shares outstanding:

 

Basic

 

 

63,182

 

62,756

 

63,125

 

62,624

Diluted

 

 

67,101

 

66,253

 

66,779

 

65,741

NICE LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

 

Quarter ended

 

Year to date

 

Sep 30,

 

Sep 30,

 

2021

 

2020

 

2021

 

2020

 

Unaudited

Unaudited

Unaudited

Unaudited

Operating Activities

 
   

Net income

 

$

47,228

$

50,653

$

143,840

$

141,372

Depreciation and amortization

 

 

45,907

 

45,482

 

136,742

 

135,133

Stock based compensation

 

 

40,628

 

22,207

 

103,062

 

68,839

Amortization of premium and discount and accrued interest on marketable securities

 

 

4,015

 

2,080

 

10,012

 

(790)

Deferred taxes, net

 

 

(13,137)

 

(6,783)

 

(30,202)

 

(16,653)

Changes in operating assets and liabilities:

 

Trade Receivables

 

 

(23,161)

 

12,795

 

(45,628)

 

27,588

Prepaid expenses and other assets

 

 

(11,255)

 

3,131

 

(36,218)

 

(31,637)

Trade payables

 

 

(14,435)

 

6,036

 

(9,643)

 

5,231

Accrued expenses and other current liabilities

 

 

35,030

 

(15,124)

 

22,601

 

(36,584)

Operating lease right-of-use assets, net

 

 

3,394

 

4,414

 

12,317

 

12,926

Deferred revenue

 

 

(10,793)

 

(23,481)

 

37,267

 

14,617

Operating lease liabilities

 

 

(4,330)

 

(4,608)

 

(14,805)

 

(14,297)

Amortization of discount on debt

 

 

3,911

 

3,070

 

11,523

 

7,945

Loss in respect of extinguishment of debt

 

 

778

 

 

8,076

 

Other

 

 

(302)

 

(839)

 

214

 

(254)

Net cash provided by operating activities

 

 

103,478

 

99,033

 

349,158

 

313,436

   

Investing Activities

 
   

Purchase of property and equipment

 

 

(8,153)

 

(4,211)

 

(21,113)

 

(21,667)

Purchase of Investments

 

 

(58,148)

 

(151,589)

 

(281,896)

 

(306,077)

Proceeds from Investments

 

 

58,860

 

118,284

 

225,964

 

283,149

Capitalization of software development costs

 

 

(10,712)

 

(9,577)

 

(31,987)

 

(28,776)

Payments for business and asset acquisitions, net of cash acquired

 

 

(14,302)

 

(96,425)

 

(143,164)

 

(147,261)

Net cash used in investing activities

 

 

(32,455)

 

(143,518)

 

(252,196)

 

(220,632)

   

Financing Activities

 
   

Proceeds from issuance of shares upon exercise of share options

 

 

1,109

 

828

 

3,484

 

8,177

Purchase of treasury shares

 

 

(4,346)

 

 

(48,908)

 

(27,601)

Proceeds from issuance of exchangeable notes

 

 

 

451,469

 

 

451,469

Dividends paid to noncontrolling interest

 

 

 

 

(801)

 

Capital Lease payments

 

 

 

 

 

(177)

Repayment of debt

 

 

(10,501)

 

 

(93,315)

 

Net cash provided by/(used in) financing activities

 

 

(13,738)

 

452,297

 

(139,540)

 

431,868

   

Effect of exchange rates on cash and cash equivalents

 

 

(3,041)

 

1,206

 

(1,993)

 

121

   

Net change in cash and cash equivalents

 

 

54,244

 

409,018

 

(44,571)

 

524,793

Cash and cash equivalents, beginning of period

 

$

343,452

$

344,098

$

442,267

$

228,323

   

Cash and cash equivalents, end of period

 

$

397,696

$

753,116

$

397,696

$

753,116

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

 

Sep 30,

 

Sep 30,

 

2021

 

2020

 

2021

 

2020

GAAP revenues

 

$

490,404

$

409,827

$

1,401,456

$

1,213,435

Valuation adjustment on acquired deferred cloud revenue

 

 

3,996

 

2,458

 

8,593

 

5,187

Valuation adjustment on acquired deferred services revenue

 

 

9

 

81

 

175

 

81

Non-GAAP revenues

 

$

494,409

$

412,366

$

1,410,224

$

1,218,703

   
   

GAAP cost of revenue

 

$

160,843

$

140,079

$

459,212

$

415,897

Amortization of acquired intangible assets on cost of cloud

 

 

(17,493)

 

(16,800)

 

(53,220)

 

(48,422)

Amortization of acquired intangible assets on cost of services

 

 

(1,107)

 

(322)

 

(3,558)

 

(3,341)

Amortization of acquired intangible assets on cost of product

 

 

(283)

 

(1,135)

 

(853)

 

(3,394)

Valuation adjustment on acquired deferred cost of cloud

 

 

25

 

200

 

76

 

737

Cost of cloud revenue adjustment (1)

 

 

(2,117)

 

(809)

 

(5,287)

 

(2,601)

Cost of services revenue adjustment (1)

 

 

(2,835)

 

(1,677)

 

(6,916)

 

(4,957)

Cost of product revenue adjustment (1)

 

 

(159)

 

(69)

 

(410)

 

(205)

Non-GAAP cost of revenue

 

$

136,874

$

119,467

$

389,044

$

353,714

   
   

GAAP gross profit

 

$

329,561

$

269,748

$

942,244

$

797,538

Gross profit adjustments

 

 

27,974

 

23,151

 

78,936

 

67,451

Non-GAAP gross profit

 

$

357,535

$

292,899

$

1,021,180

$

864,989

   
   

GAAP operating expenses

 

$

265,392

$

207,790

$

747,624

$

620,614

Research and development (1)

 

 

(7,073)

 

(2,565)

 

(15,241)

 

(7,553)

Sales and marketing (1,2)

 

 

(9,707)

 

(5,561)

 

(27,526)

 

(19,623)

General and administrative (1,2)

 

 

(19,998)

 

(14,065)

 

(51,373)

 

(38,239)

Amortization of acquired intangible assets

 

 

(11,109)

 

(9,496)

 

(30,769)

 

(28,951)

Valuation adjustment on acquired deferred commission

 

 

53

 

35

 

161

 

106

Non-GAAP operating expenses

 

$

217,558

$

176,138

$

622,876

$

526,354

NICE LTD. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)

U.S. dollars in thousands (except per share amounts)

   
 

Quarter ended

Year to date

 

Sep 30,

Sep 30,

GAAP financial and other expense, net

 

$

3,138

$

1,032

$

15,594

$

2,259

Amortization of discount and loss of extinguishment on debt

 

 

(4,469)

 

(3,070)

 

(19,406)

 

(7,944)

Non-GAAP financial and other income, net

 

$

(1,331)

$

(2,038)

$

(3,812)

$

(5,685)

   
   

GAAP taxes on income

 

$

13,803

$

10,273

$

35,186

$

33,293

Tax adjustments re non-GAAP adjustments

 

 

14,916

 

14,911

 

47,259

 

39,701

Non-GAAP taxes on income

 

$

28,719

$

25,184

$

82,445

$

72,994

   
   

GAAP net income

 

$

47,228

$

50,653

$

143,840

$

141,372

Valuation adjustment on acquired deferred revenue

 

 

4,005

 

2,539

 

8,768

 

5,268

Valuation adjustment on acquired deferred cost of cloud revenue

 

 

(25)

 

(200)

 

(76)

 

(737)

Amortization of acquired intangible assets

 

 

29,992

 

27,753

 

88,400

 

84,108

Valuation adjustment on acquired deferred commission

 

 

(53)

 

(35)

 

(161)

 

(106)

Share-based compensation (1)

 

 

40,934

 

22,404

 

103,891

 

69,255

Acquisition related expenses (2)

 

 

955

 

2,342

 

2,862

 

3,923

Amortization of discount and loss of extinguishment on debt

 

 

4,469

 

3,070

 

19,406

 

7,944

Tax adjustments re non-GAAP adjustments

 

 

(14,916)

 

(14,911)

 

(47,259)

 

(39,701)

Non-GAAP net income

 

$

112,589

$

93,615

$

319,671

$

271,326

   
   

GAAP diluted earnings per share

 

$

0.70

$

0.76

$

2.15

$

2.15

   

Non-GAAP diluted earnings per share

 

$

1.68

$

1.41

$

4.79

$

4.13

   

Shares used in computing GAAP diluted earnings per share

 

 

67,101

 

66,253

 

66,779

 

65,741

   

Shares used in computing non-GAAP diluted earnings per share

 

 

67,101

 

66,253

 

66,779

 

65,741

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

   

Sep 30,

 

Sep 30,

   

2021

 

2020

 

2021

 

2020

     
 

Cost of cloud revenue

 

$

2,117

$

809

$

5,287

$

2,601

 

Cost of services revenue

 

 

2,835

 

1,677

 

6,916

 

4,957

 

Cost of product revenue

 

 

159

 

69

 

410

 

205

 

Research and development

 

 

7,073

 

2,565

 

15,241

 

7,553

 

Sales and marketing

 

 

9,707

 

5,519

 

27,526

 

19,493

 

General and administrative

 

 

19,043

 

11,765

 

48,511

 

34,446

   

$

40,934

$

22,404

$

103,891

$

69,255

     
     

(2)

 

Acquisition related expenses

 
     
   

Quarter ended

 

Year to date

   

Sep 30,

 

Sep 30,

   

2021

 

2020

 

2021

 

2020

     
 

Sales and marketing

 

$

$

42

$

$

130

 

General and administrative

 

 

955

 

2,300

 

2,862

 

3,793

   

$

955

$

2,342

$

2,862

$

3,923

 

Contacts

Investors
Marty Cohen, +1 551 256 5354, ET, ir@nice.com
Omri Arens, +972 3 763-0127, CET, ir@nice.com

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