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NICE Reports Accelerated Total Revenue Growth of 16% and Cloud Revenue Growth of 32% for the Second Quarter of 2021

Company Raises Full-Year Total Revenue and EPS Guidance

NICE (NASDAQ: NICE) today announced results for the second quarter ended June 30, 2021.

Second Quarter 2021 Financial Highlights

GAAP

 

Non-GAAP

Revenue of $456 million, growth of 16% year-over-year

 

Revenue of $459 million, growth of 16% year-over-year

Cloud revenue of $243 million, growth of 32% year-over-year

 

Cloud revenue of $246 million, growth of 32% year-over-year

Gross margin of 67.0% compared to 65.5% last year

 

Gross margin of 72.2% compared to 71.0% last year

Operating income of $64 million compared to $56 million last year, growth of 14% year-over-year

 

Operating income of $129.6 million compared to $111.4 million last year, growth of 16%

Operating margin of 14.0% compared to 14.3% last year

 

Operating margin of 28.2%, compared to 28.2% last year

Diluted EPS of $0.67 versus $0.68 last year, decrease of 1%

 

Diluted EPS of $1.57 versus $1.37 last year, growth of 15%

Operating cash flow increased 37% year-over-year to $81.4 million

 

 

“We are very pleased with the accelerated top line growth of 16% in the second quarter, which is a result of the combination of robust cloud growth and cloud revenue increasing to more than 50% of our total revenue,” said Barak Eilam, CEO of NICE. “The strong second quarter financial results in all key metrics are being driven by solid execution in cloud, digital and AI, continued success with CXone in large enterprises and rapid growth in international markets.”

Mr. Eilam continued, “While the cloudification of our market continues to speed up, the expansion to full digital CX represents an additional significant opportunity for NICE. With the investments we made in digital CX both organically and through acquisitions over the past 18 months, we have evolved CXone into a complete digital CX platform with a unique set of solutions that can now cover the entire customer journey across all customer touchpoints, including more than 35 digital channels. Digital transformation is still in the very early stages, and as the clear market leader, we believe we will achieve the same outstanding success in digital as we have in cloud.”

GAAP Financial Highlights for the Second Quarter Ended June 30:

Revenues: Second quarter 2021 total revenues increased 16.0% to $456.0 million compared to $393.2 million for the second quarter of 2020.

Gross Profit: Second quarter 2021 gross profit and gross margin increased to $305.5 million and 67.0%, respectively, compared to $257.4 million and 65.5%, respectively, for the second quarter of 2020.

Operating Income: Second quarter 2021 operating income increased 14.0% to $64.0 million compared to $56.1 million, for the second quarter of 2020. Second quarter operating margin decreased to 14.0% compared to 14.3%, for the second quarter of 2020.

Net Income: Second quarter 2021 net income totaled $44.4 million compared to $44.6 for the second quarter of 2020. Net income margin decreased to 9.7% compared to 11.3% for the second quarter of 2020.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the Second quarter of 2021 decreased to $0.67, compared to $0.68 in the second quarter of 2020.

Operating Cash Flow and Cash Balance: Second quarter 2021 operating cash flow was $81.4 million. In the second quarter, $340 thousand was used for share repurchases. As of June 30, 2021, total cash and cash equivalents, short and long term investments were $1,407.7 million, and total debt was $613.1 million.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30:

Revenues: Second quarter 2021 Non-GAAP total revenues increased 16.0% to $458.9 million compared to $395.1 million for the second quarter of 2020.

Gross Profit: Second quarter 2021 Non-GAAP gross profit and gross margin increased to $331.5 million and 72.2%, respectively, compared to $280.5 million and 71.0%, respectively, for the second quarter of 2020.

Operating Income: Second quarter 2021 Non-GAAP operating income increased 16.4% to $129.6 million compared to $111.4 million for the second quarter of 2020. Non-GAAP operating margin was 28.2%, compared to 28.2% last year.

Net Income: Second quarter 2021 Non-GAAP net income increased 16% to $104.3 million from $89.9 million for the second quarter of 2020. Non-GAAP net income margin was 22.7%, compared to 22.7% last year.

Fully Diluted Earnings Per Share: Second quarter 2021 Non-GAAP fully diluted earnings per share increased 14.6% to $1.57, compared to $1.37 for the second quarter of 2020.

Third Quarter and Full Year 2021 Guidance:

Third Quarter 2021:

Third quarter 2021 Non-GAAP total revenues are expected to be in a range of $460 million to $470 million.

Third quarter 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.51 to $1.61.

Raising Full Year 2021 Guidance:

Full year 2021 Non-GAAP total revenues are expected to be in a range of $1,835 million to $1,855 million (higher than the previous guidance range of $1,800 million to $1,820 million).

Full year 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $6.26 to $6.46 (higher than the previous guidance range of $6.19 to $6.39).

Quarterly Results Conference Call

NICE management will host its earnings conference call today August 5th, 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 1-877-300-8521 or +1-412-317-6026, United Kingdom 0-800-279-9489, Israel 1-809-213-284.

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

 

June 30,

 

December 31,

 

2021

 

 

2020

Unaudited

Audited

 

ASSETS

 

CURRENT ASSETS:

Cash and cash equivalents

$

343,452

$

442,267

Short-term investments

 

1,064,290

 

1,021,613

Trade receivables

 

331,493

 

303,100

Prepaid expenses and other current assets

 

169,642

 

175,340

 

Total current assets

 

1,908,877

 

1,942,320

 

LONG-TERM ASSETS:

Property and equipment, net

 

143,014

 

137,785

Deferred tax assets

 

35,133

 

32,735

Other intangible assets, net

 

349,924

 

366,003

Operating lease right-of-use assets

 

91,647

 

97,162

Goodwill

 

1,595,613

 

1,503,252

Other long-term assets

 

180,125

 

153,660

 

 

Total long-term assets

 

2,395,456

 

2,290,597

 

TOTAL ASSETS

$

4,304,333

$

4,232,917

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

CURRENT LIABILITIES:

Trade payables

$

40,850

$

33,132

Deferred revenues and advances from customers

 

327,955

 

311,851

Current maturities of operating leases

 

21,372

 

22,412

Debt

 

187,866

 

259,881

Accrued expenses and other liabilities

 

409,992

 

417,174

 

Total current liabilities

 

988,035

 

1,044,450

 

LONG-TERM LIABILITIES:

Deferred revenues and advances from customers

 

73,197

 

36,295

Operating leases

 

86,389

 

92,262

Deferred tax liabilities

 

18,396

 

32,109

Debt

 

425,284

 

421,337

Other long-term liabilities

 

17,514

 

17,980

 

Total long-term liabilities

 

620,780

 

599,983

 

SHAREHOLDERS' EQUITY

Nice Ltd's equity

 

2,672,128

 

2,563,910

Non-controlling interests

 

23,390

 

24,574

 

Total shareholders' equity

 

2,695,518

 

2,588,484

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,304,333

$

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

June 30,

 

June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Revenue:

Cloud

 

$

242,724

$

183,944

$

470,805

$

356,572

Services

 

 

167,133

 

170,979

 

328,924

 

344,171

Product

 

 

46,174

 

38,257

 

111,323

 

102,865

Total revenue

 

456,031

 

393,180

 

911,052

 

803,608

 

Cost of revenue:

Cloud

 

 

99,172

 

80,523

 

192,754

 

160,991

Services

 

 

46,882

 

50,037

 

95,816

 

103,550

Product

 

 

4,453

 

5,173

 

9,799

 

11,277

Total cost of revenue

 

150,507

 

135,733

 

298,369

 

275,818

 

Gross profit

 

305,524

 

257,447

 

612,683

 

527,790

 

Operating expenses:

Research and development, net

 

 

62,218

 

53,756

 

121,373

 

106,537

Selling and marketing

 

 

126,195

 

107,155

 

254,754

 

216,776

General and administrative

 

 

53,133

 

40,398

 

106,105

 

89,511

Total operating expenses

 

241,546

 

201,309

 

482,232

 

412,824

 

Operating income

 

63,978

 

56,138

 

130,451

 

114,966

 

Financial and other expense/(income), net

 

9,062

 

(423)

 

12,456

 

1,227

 

Income before tax

 

54,916

 

56,561

 

117,995

 

113,739

Taxes on income

 

10,515

 

11,956

 

21,383

 

23,020

Net income

$

44,401

$

44,605

$

96,612

$

90,719

 

Less: net loss attributable to non-controlling interests

 

380

 

182

 

383

 

266

 

Net income attributable to NICE Ltd.'s shareholders

$

44,781

$

44,787

$

96,995

$

90,985

 
 

Earnings per share:

Basic

 

$

0.70

$

0.71

$

1.53

$

1.45

Diluted

 

$

0.67

$

0.68

$

1.45

$

1.39

 

Weighted average shares outstanding:

Basic

 

 

63,108

 

62,638

 

63,096

 

62,557

Diluted

 

 

66,512

 

65,633

 

66,618

 

65,484

 

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,

 

2021

 

 

2020

 

 

2021

 

 

2020

GAAP revenues

$

456,031

$

393,180

$

911,052

$

803,608

Valuation adjustment on acquired deferred cloud revenue

 

2,773

 

1,950

 

4,596

 

2,729

Valuation adjustment on acquired deferred services revenue

 

60

 

-

 

166

 

-

Valuation adjustment on acquired deferred product revenue

 

-

 

-

 

-

 

-

Non-GAAP revenues

$

458,864

$

395,130

$

915,814

$

806,337

 
 

GAAP cost of revenue

$

150,507

$

135,733

$

298,369

$

275,818

Amortization of acquired intangible assets on cost of cloud

 

(18,211)

 

(16,064)

 

(35,727)

 

(31,622)

Amortization of acquired intangible assets on cost of services

 

(1,226)

 

(1,497)

 

(2,451)

 

(3,019)

Amortization of acquired intangible assets on cost of product

 

(287)

 

(1,125)

 

(570)

 

(2,259)

Valuation adjustment on acquired deferred cost of cloud

 

26

 

244

 

51

 

537

Cost of cloud revenue adjustment (1)

 

(1,676)

 

(948)

 

(3,170)

 

(1,792)

Cost of services revenue adjustment (1)

 

(1,646)

 

(1,680)

 

(4,081)

 

(3,280)

Cost of product revenue adjustment (1)

 

(126)

 

(68)

 

(251)

 

(136)

Non-GAAP cost of revenue

$

127,361

$

114,595

$

252,170

$

234,247

 
 

GAAP gross profit

$

305,524

$

257,447

$

612,683

$

527,790

Gross profit adjustments

 

25,979

 

23,088

 

50,961

 

44,300

Non-GAAP gross profit

$

331,503

$

280,535

$

663,644

$

572,090

 
 

GAAP operating expenses

$

241,546

$

201,309

$

482,232

$

412,824

Research and development (1,2)

 

(4,111)

 

(2,373)

 

(8,168)

 

(4,988)

Sales and marketing (1,2)

 

(6,911)

 

(8,797)

 

(17,819)

 

(14,062)

General and administrative (1,2)

 

(18,688)

 

(11,340)

 

(31,375)

 

(24,174)

Amortization of acquired intangible assets

 

(9,952)

 

(9,650)

 

(19,660)

 

(19,455)

Valuation adjustment on acquired deferred commission

 

55

 

36

 

108

 

71

Non-GAAP operating expenses

$

201,939

$

169,185

$

405,318

$

350,216

 

 

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

June 30,

 

June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

GAAP financial and other expense, net

$

9,062

$

(423)

$

12,456

$

1,227

Amortization of discount on debt and loss from extinguishment of debt

 

(10,811)

 

(2,532)

 

(14,937)

 

(4,874)

Non-GAAP financial and other income, net

$

(1,749)

$

(2,955)

$

(2,481)

$

(3,647)

 
 

GAAP taxes on income

$

10,515

$

11,956

$

21,383

$

23,020

Tax adjustments re non-GAAP adjustments

 

16,529

 

12,499

 

32,343

 

24,790

Non-GAAP taxes on income

$

27,044

$

24,455

$

53,726

$

47,810

 
 

GAAP net income

$

44,401

$

44,605

$

96,612

$

90,719

Valuation adjustment on acquired deferred revenue

 

2,833

 

1,950

 

4,762

 

2,729

Valuation adjustment on acquired deferred cost of cloud revenue

 

(26)

 

(244)

 

(51)

 

(537)

Amortization of acquired intangible assets

 

29,676

 

28,336

 

58,408

 

56,355

Valuation adjustment on acquired deferred commission

 

(55)

 

(36)

 

(108)

 

(71)

Share-based compensation (1)

 

31,251

 

25,206

 

62,957

 

46,851

Acquisition related expenses (2)

 

1,907

 

-

 

1,907

 

1,581

Amortization of discount on debt and loss from extinguishment of debt

 

10,812

 

2,532

 

14,937

 

4,874

Tax adjustments re non-GAAP adjustments

 

(16,529)

 

(12,499)

 

(32,343)

 

(24,790)

Non-GAAP net income

$

104,270

$

89,850

$

207,081

$

177,711

 
 

GAAP diluted earnings per share

$

0.67

$

0.68

$

1.45

$

1.39

 

Non-GAAP diluted earnings per share

$

1.57

$

1.37

$

3.11

$

2.71

 

Shares used in computing GAAP diluted earnings per share

 

66,512

 

65,633

 

66,618

 

65,484

 

Shares used in computing non-GAAP diluted earnings per share

 

66,512

 

65,633

 

66,618

 

65,484

 
 

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,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Cost of cloud revenue

$

1,676

$

948

$

3,170

$

1,792

Cost of services revenue

 

1,646

 

1,680

 

4,081

 

3,280

Cost of product revenue

 

126

 

68

 

251

 

136

Research and development

 

4,111

 

2,373

 

8,168

 

4,988

Sales and marketing

 

6,911

 

8,797

 

17,819

 

13,974

General and administrative

 

16,781

 

11,340

 

29,468

 

22,681

$

31,251

$

25,206

$

62,957

$

46,851

 
 

(2)

Acquisition related expenses

 

Quarter ended

 

Year to date

June 30,

 

June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development

$

-

$

-

$

-

$

-

Sales and marketing

 

-

 

-

 

-

 

88

General and administrative

 

1,907

 

-

 

1,907

 

1,493

$

1,907

$

-

$

1,907

$

1,581

 

NICE LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

Quarter ended

 

Year to date

June 30,

 

June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Operating Activities

 

Net income

$

44,402

$

44,605

$

96,613

$

90,719

Depreciation and amortization

 

45,911

 

45,601

 

90,835

 

89,651

Stock based compensation

 

30,979

 

25,064

 

62,434

 

46,632

Amortization of premium and discount and accrued interest on marketable securities

 

2,066

 

(3,618)

 

5,997

 

(2,870)

Deferred taxes, net

 

(16,207)

 

(678)

 

(17,065)

 

(9,870)

Changes in operating assets and liabilities:

Trade Receivables

 

(2,783)

 

14,134

 

(22,467)

 

14,793

Prepaid expenses and other assets

 

(14,103)

 

(20,677)

 

(24,963)

 

(34,768)

Trade payables

 

(4,912)

 

(13,283)

 

4,792

 

(805)

Accrued expenses and other current liabilities

 

(11,064)

 

(33,357)

 

(12,429)

 

(21,460)

Operating lease right-of-use assets, net

 

4,442

 

4,363

 

8,923

 

8,512

Deferred revenue

 

(3,843)

 

(415)

 

48,060

 

38,098

Operating lease liabilities

 

(4,778)

 

(4,132)

 

(10,475)

 

(9,689)

Amortization of discount on debt

 

3,513

 

2,532

 

7,612

 

4,875

Loss from extinguishment of debt

 

7,298

 

-

 

7,298

 

-

Other

 

519

 

(558)

 

515

 

585

Net cash provided by operating activities

 

81,440

 

59,581

 

245,680

 

214,403

 

Investing Activities

 

Purchase of property and equipment

 

(10,631)

 

(7,823)

 

(12,960)

 

(17,456)

Purchase of Investments

 

(70,442)

 

(69,061)

 

(223,748)

 

(154,488)

Proceeds from Investments

 

112,527

 

78,980

 

167,104

 

164,865

Capitalization of software development costs

 

(11,159)

 

(9,912)

 

(21,275)

 

(19,199)

Proceeds from business and asset acquisitions adjustments

 

-

 

-

 

444

 

-

Payments for business and asset acquisitions, net of cash acquired

 

(129,306)

 

-

 

(129,306)

 

(50,836)

Net cash used in investing activities

 

(109,011)

 

(7,816)

 

(219,741)

 

(77,114)

 

Financing Activities

 

Proceeds from issuance of shares upon exercise of share options

 

2,083

 

5,865

 

2,375

 

7,349

Purchase of treasury shares

 

(340)

 

(3,531)

 

(44,562)

 

(27,601)

Dividends paid to noncontrolling interest

 

(801)

 

-

 

(801)

 

-

Capital Lease payments

 

-

 

(15)

 

-

 

(177)

Repayment of debt

 

(82,814)

 

-

 

(82,814)

 

-

Net cash provided by/(used in) financing activities

 

(81,872)

 

2,319

 

(125,802)

 

(20,429)

 

Effect of exchange rates on cash and cash equivalents

 

1,767

 

902

 

1,048

 

(1,085)

 

Net change in cash and cash equivalents

 

(107,676)

 

54,986

 

(98,815)

 

115,775

Cash and cash equivalents, beginning of period

$

451,128

$

289,112

$

442,267

$

228,323

 

Cash and cash equivalents, end of period

$

343,452

$

344,098

$

343,452

$

344,098

 

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