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

Rhea-AI Summary

NICE reported strong third quarter results for 2021, achieving 20% year-over-year revenue growth with GAAP revenue at $490 million and Non-GAAP revenue at $494 million. Cloud revenue surged by 28% to $258 million, while digital revenues rose 78%. Operating income increased to $64 million with a 3.6% increase year-over-year. However, diluted EPS fell slightly to $0.70. NICE raised its full year Non-GAAP revenue guidance to $1,899 million to $1,909 million, and EPS guidance to $6.43 to $6.53, emphasizing its leadership in cloud and digital solutions.

Positive

• 20% year-over-year growth in GAAP revenue to $490 million.
• Cloud revenue growth of 28% to $258 million.
• Digital revenue growth of 78% in Q3.
• Non-GAAP operating income increased by 19.9% to $140 million.
• Raised full year 2021 Non-GAAP revenue guidance to $1,899 million to $1,909 million.
• Raised full year Non-GAAP EPS guidance to $6.43 to $6.53.

Negative

• Diluted EPS decreased to $0.70 from $0.76 year-over-year.
• Operating margin decreased to 13.1% from 15.1% year-over-year.
• Net income decreased to $47.2 million from $50.7 million year-over-year.

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 11^th, 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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211111005588/en/

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

Source: NICE

FAQ

What were NICE's third quarter 2021 revenue results?

NICE reported GAAP revenue of $490 million and Non-GAAP revenue of $494 million, both reflecting a growth of 20% year-over-year.

How much did NICE's cloud revenue grow in Q3 2021?

Cloud revenue for NICE increased by 28% to $258 million in the third quarter of 2021.

What is the full year 2021 revenue guidance for NICE?

NICE raised its full year 2021 Non-GAAP total revenue guidance to a range of $1,899 million to $1,909 million.

What is the diluted EPS for NICE in Q3 2021?

The diluted EPS for NICE in the third quarter of 2021 decreased to $0.70 from $0.76 in the same quarter of the previous year.

What was the net income for NICE in Q3 2021?

NICE reported a net income of $47.2 million for the third quarter of 2021, down from $50.7 million in Q3 2020.