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