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NICE Reports 16% Growth in Total Revenue and Record Profitability for the First Quarter of 2022

Cloud Revenue Increased 29% with Record Cloud Gross Margin

Record $193 Million Cash Flow Generated from Operations

Company Raises Both Revenue and EPS Guidance for Full Year 2022

NICE (NASDAQ: NICE) today announced results for the first quarter ended March 31, 2022.

First Quarter 2022 Financial Highlights

GAAP

Non-GAAP

Revenue of $527 million, growth of 15.9% year-over-year

Revenue of $527 million, growth of 15.4% year-over-year

Cloud revenue of $295 million, growth of 29.2% year-over-year

Cloud revenue of $295 million, growth of 28.1% year-over-year

Gross margin of 68.3% compared to 67.5% last year

Gross margin of 73.0% compared to 72.7% last year

Operating income of $72 million compared to $66 million last year, growth of 8.9% year-over-year

Operating income of $149 million compared to $129 million last year, growth of 15.7% year-over-year

Operating margin of 13.7% compared to 14.6% last year

Operating margin of 28.3%, compared to 28.2% last year

Diluted EPS of $0.87 versus $0.78 last year

Diluted EPS of $1.80 versus $1.54 last year, growth of 16.9%

Operating cash flow increased 17.3% to $193 million compared to last year

 

“The excellent financial results we delivered and the rising momentum we experienced throughout last year continued into the first quarter of 2022 as we reported a 16% increase in total revenue with a robust underlying 29% growth in cloud revenue,” said Barak Eilam, CEO, NICE. “Demand is strong, and we are seeing it across the board in our business. Our exceptional financial profile of double-digit top line growth combined with best-in-class profitability, outstanding cash generation and a rock-solid balance sheet, uniquely positions us in our industry to further cement our leadership,” said Barak Eilam, CEO, NICE.

Mr. Eilam continued, “Three key elements are driving our continued strong revenue growth and excellent profitability: our widening leadership in the large enterprise market, our industry leading international footprint, and our unparalleled next-gen digital and AI offering. These three elements, combined with strong and durable demand in our markets, are providing us the fuel to continue executing well on our long-term strategy.”

GAAP Financial Highlights for the First Quarter Ended March 31:

Revenues: First quarter 2022 total revenues increased 15.9% to $527.4 million compared to $455.0 million for the first quarter of 2021.

Gross Profit: First quarter 2022 gross profit was $360.4 million compared to $307.2 million for the first quarter of 2021. First quarter 2022 gross margin was 68.3% compared to 67.5% for the first quarter of 2021.

Operating Income: First quarter 2022 operating income was $72.4 million compared to $66.5 million for the first quarter of 2021. First quarter 2022 operating margin was 13.7% compared to 14.6% for the first quarter of 2021.

Net Income: First quarter 2022 net income was $57.9 million compared to $52.2 million for the first quarter of 2021. First quarter 2022 net income margin was 11.0% compared to 11.5% for the first quarter of 2021.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the first quarter of 2022 was $0.87 compared to $0.78 in the first quarter of 2021.

Operating Cash Flow and Cash Balance: First quarter 2022 operating cash flow was $192.7 million. In the first quarter, $63.8 million were used for share repurchases. As of March 31, 2022, total cash and cash equivalents, short and long term investments were $1,490.8 million. Our debt, net of a hedge instrument, was 540.8 million dollars, resulting in net cash and investments of 950.0 million dollars.

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

Revenues: First quarter 2022 total revenues increased 15.4% to $527.4 million compared to $457.0 million for the first quarter of 2021.

Gross Profit: First quarter 2022 Non-GAAP gross profit increased to $385.2 million compared to $332.1 million for the first quarter of 2021. First quarter 2022 Non-GAAP gross margin was 73.0% compared to 72.7% for the first quarter of 2021.

Operating Income: First quarter 2022 Non-GAAP operating income increased to $149.0 million compared to $128.8 million for the first quarter of 2021. First quarter 2022 Non-GAAP operating margin was 28.3% compared to 28.2% for the first quarter of 2021.

Net Income: First quarter 2022 Non-GAAP net income increased to $120.5 million compared to $102.8 million for the first quarter of 2021. First quarter 2022 Non-GAAP net income margin totaled 22.8% compared to 22.5% for the first quarter of 2021.

Fully Diluted Earnings Per Share: First quarter 2022 Non-GAAP fully diluted earnings per share increased 16.9% to $1.80 compared to $1.54 for the first quarter of 2021.

Second Quarter and Full Year 2022 Guidance:

Second Quarter 2022:

Second quarter 2022 Non-GAAP total revenues are expected to be in a range of $520 million to $530 million.

Second quarter 2022 Non-GAAP fully diluted earnings per share is expected to be in a range of $1.75 to $1.85.

Raising Full Year 2022 Guidance:

Full year 2022 Non-GAAP total revenues are expected to be in a range of $2,160 million to $2,180 million (compared to previous guidance range of $2,140 million to $2,160 million).

Full year 2022 Non-GAAP fully diluted earnings per share is expected to be in a range of $7.25 to $7.45 (compared to previous guidance range of $7.07 to $7.27).

Quarterly Results Conference Call

NICE management will host its earnings conference call today May 12, 2022, 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.

Explanation of Non-GAAP measures

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. The Company early adopted ASU 2021-08, Business Combinations, effective January 1, 2021. The amendments in ASU 2021-08 require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The Company applied the new guidance retrospectively to all business combinations for which the acquisition date occurred on or after January 1, 2021, therefore comparative financials were not adjusted. Through December 31, 2020 business combination accounting rules required 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 was based on its fair value at the date of acquisition. Comparative financials 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

   
 

March 31,

 

December 31,

 

2022

 

2021

 

Unaudited

 

Audited

     

ASSETS

   
     

CURRENT ASSETS:

   

Cash and cash equivalents

 

$

471,715

 

$

378,656

Short-term investments

 

 

1,019,092

 

 

1,046,095

Trade receivables

 

 

416,716

 

 

395,583

Debt hedge option

 

 

154,464

 

 

292,940

Prepaid expenses and other current assets

 

 

205,248

 

 

184,604

     

Total current assets

 

 

2,267,235

 

 

2,297,878

     

LONG-TERM ASSETS:

   

Property and equipment, net

 

 

151,455

 

 

145,654

Deferred tax assets

 

 

62,300

 

 

55,246

Other intangible assets, net

 

 

266,542

 

 

295,378

Operating lease right-of-use assets

 

 

81,031

 

 

85,055

Goodwill

 

 

1,602,493

 

 

1,606,756

Prepaid expenses and other long-term assets

 

 

229,573

 

 

224,445

 

 

 

 

Total long-term assets

 

 

2,393,394

 

 

2,412,534

     

TOTAL ASSETS

 

$

4,660,629

 

$

4,710,412

     

LIABILITIES AND SHAREHOLDERS' EQUITY

   
     

CURRENT LIABILITIES:

   

Trade payables

 

$

45,197

 

$

36,121

Deferred revenues and advances from customers

 

 

384,344

 

 

330,459

Current maturities of operating leases

 

 

19,028

 

 

19,514

Debt

 

 

241,190

 

 

395,946

Accrued expenses and other liabilities

 

 

516,630

 

 

487,547

     

Total current liabilities

 

 

1,206,389

 

 

1,269,587

     

LONG-TERM LIABILITIES:

   

Deferred revenues and advances from customers

 

 

63,981

 

 

66,606

Operating leases

 

 

76,616

 

 

81,185

Deferred tax liabilities

 

 

6,865

 

 

7,429

Debt

 

 

454,106

 

 

429,267

Other long-term liabilities

 

 

17,958

 

 

18,379

     

Total long-term liabilities

 

 

619,526

 

 

602,866

     

SHAREHOLDERS' EQUITY

   

Nice Ltd's equity

 

 

2,821,750

 

 

2,825,085

Non-controlling interests

 

 

12,964

 

 

12,874

Total equity

 

 

2,834,714

 

 

2,837,959

     

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

4,660,629

 

$

4,710,412

NICE LTD. AND SUBSIDIARIES

   

CONSOLIDATED STATEMENTS OF INCOME

 

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

   
 

Quarter ended

 

March 31,

 

2022

 

2021

 

Unaudited

 

Unaudited

     

Revenue:

   

Cloud

 

$

294,592

 

 

$

228,081

Services

 

 

156,974

 

 

 

161,791

Product

 

 

75,863

 

 

 

65,149

Total revenue

 

 

527,429

 

 

 

455,021

     

Cost of revenue:

   

Cloud

 

 

113,349

 

 

 

93,582

Services

 

 

46,908

 

 

 

48,934

Product

 

 

6,745

 

 

 

5,346

Total cost of revenue

 

 

167,002

 

 

 

147,862

     

Gross profit

 

 

360,427

 

 

 

307,159

     

Operating expenses:

   

Research and development, net

 

 

76,578

 

 

 

59,155

Selling and marketing

 

 

152,618

 

 

 

128,559

General and administrative

 

 

58,867

 

 

 

52,972

Total operating expenses

 

 

288,063

 

 

 

240,686

     

Operating income

 

 

72,364

 

 

 

66,473

     

Financial and other expense/(income), net

 

 

(486

)

 

 

3,394

     

Income before tax

 

 

72,850

 

 

 

63,079

Taxes on income

 

 

14,909

 

 

 

10,868

     

Net income

 

$

57,941

 

 

$

52,211

     
     

Basic

 

$

0.91

 

 

$

0.83

Diluted

 

$

0.87

 

 

$

0.78

     

Weighted average shares outstanding:

   
     

Basic

 

 

63,736

 

 

 

63,085

Diluted

 

 

66,853

 

 

 

66,723

NICE LTD. AND SUBSIDIARIES

   

CONSOLIDATED CASH FLOW STATEMENTS

   

U.S. dollars in thousands

   
 

Quarter ended

 

March 31,

 

2022

 

2021

 

Unaudited

 

Unaudited

     

Operating Activities

   
     

Net income

 

$

57,941

 

 

$

52,211

 

Adjustments to reconcile net income to net cash provided by operating activities

   

Depreciation and amortization

 

 

44,281

 

 

 

44,924

 

Stock based compensation

 

 

48,184

 

 

 

31,455

 

Amortization of premium and discount and accrued interest on marketable securities

 

 

3,818

 

 

 

3,931

 

Deferred taxes, net

 

 

(1,796

)

 

 

(858

)

Changes in operating assets and liabilities:

   

Trade Receivables, net

 

 

(21,259

)

 

 

(19,684

)

Prepaid expenses and other current assets

 

 

(28,931

)

 

 

(10,860

)

Operating lease right-of-use assets

 

 

3,942

 

 

 

4,481

 

Trade payables

 

 

9,078

 

 

 

9,704

 

Accrued expenses and other current liabilities

 

 

29,229

 

 

 

(1,365

)

Deferred revenue

 

 

52,349

 

 

 

51,903

 

Operating lease liabilities

 

 

(4,997

)

 

 

(5,697

)

Amortization of discount on long term debt

 

 

1,137

 

 

 

4,099

 

Loss from extinguishment of debt

 

 

1,092

 

 

 

(5

)

Other

 

 

(1,357

)

 

 

-

 

     

Net cash provided by operating activities

 

 

192,711

 

 

 

164,239

 

     

Investing Activities

   
     

Purchase of property and equipment

 

 

(9,584

)

 

 

(2,329

)

Purchase of Investments

 

 

(98,266

)

 

 

(153,306

)

Proceeds from Investments

 

 

101,666

 

 

 

54,577

 

Capitalization of software development costs

 

 

(10,671

)

 

 

(10,116

)

Proceeds from business and asset acquisitions adjustments

 

 

-

 

 

 

444

 

Net cash used in investing activities

 

 

(16,855

)

 

 

(110,730

)

     

Financing Activities

   
     

Proceeds from issuance of shares upon exercise of share options

 

 

75

 

 

 

292

 

Purchase of treasury shares

 

 

(63,842

)

 

 

(44,222

)

Repayment of debt

 

 

(18,093

)

 

 

-

 

Net cash provided by/(used in) financing activities

 

 

(81,860

)

 

 

(43,930

)

     

Effect of exchange rates on cash and cash equivalents

 

 

(937

)

 

 

(718

)

     

Net change in cash and cash equivalents

 

 

93,059

 

 

 

8,861

 

Cash and cash equivalents, beginning of period

 

$

378,656

 

 

$

442,267

 

     

Cash and cash equivalents, end of period

 

$

471,715

 

 

$

451,128

 

NICE LTD. AND SUBSIDIARIES

   

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

   

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

   
     
 

Quarter ended

 

March 31,

 

2022

 

2021

GAAP revenues

 

$

527,429

 

 

$

455,021

 

Valuation adjustment on acquired deferred cloud revenue

 

 

-

 

 

 

1,823

 

Valuation adjustment on acquired deferred services revenue

 

 

-

 

 

 

106

 

Non-GAAP revenues

 

$

527,429

 

 

$

456,950

 

     
     

GAAP cost of revenue

 

$

167,002

 

 

$

147,862

 

Amortization of acquired intangible assets on cost of cloud

 

 

(18,665

)

 

 

(17,515

)

Amortization of acquired intangible assets on cost of services

 

 

(377

)

 

 

(1,225

)

Amortization of acquired intangible assets on cost of product

 

 

(276

)

 

 

(283

)

Valuation adjustment on acquired deferred cost of cloud

 

 

15

 

 

 

25

 

Cost of cloud revenue adjustment (1)

 

 

(2,324

)

 

 

(1,494

)

Cost of services revenue adjustment (1)

 

 

(2,967

)

 

 

(2,435

)

Cost of product revenue adjustment (1)

 

 

(132

)

 

 

(125

)

Non-GAAP cost of revenue

 

$

142,276

 

 

$

124,810

 

     
     

GAAP gross profit

 

$

360,427

 

 

$

307,159

 

Gross profit adjustments

 

 

24,726

 

 

 

24,981

 

Non-GAAP gross profit

 

$

385,153

 

 

$

332,140

 

     
     

GAAP operating expenses

 

$

288,063

 

 

$

240,686

 

Research and development (1)

 

 

(8,515

)

 

 

(4,057

)

Sales and marketing (1)

 

 

(16,269

)

 

 

(10,908

)

General and administrative (1)

 

 

(18,400

)

 

 

(12,687

)

Amortization of acquired intangible assets

 

 

(8,811

)

 

 

(9,709

)

Valuation adjustment on acquired deferred commission

 

 

53

 

 

 

53

 

Non-GAAP operating expenses

 

$

236,121

 

 

$

203,378

 

     
     

GAAP financial and other (income)/expense, net

 

$

(486

)

 

$

3,394

 

Amortization of discount and loss of extinguishment on debt

 

 

(2,229

)

 

 

(4,125

)

Non-GAAP financial and other income, net

 

$

(2,715

)

 

$

(731

)

     
     

GAAP taxes on income

 

$

14,909

 

 

$

10,868

 

Tax adjustments re non-GAAP adjustments

 

 

16,351

 

 

 

15,814

 

Non-GAAP taxes on income

 

$

31,260

 

 

$

26,682

 

NICE LTD. AND SUBSIDIARIES

   

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(continued)

   

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

   
     
 

Quarter ended

 

March 31,

 

2022

 

2021

GAAP net income

 

$

57,941

 

 

$

52,211

 

Valuation adjustment on acquired deferred revenue

 

 

-

 

 

 

1,929

 

Valuation adjustment on acquired deferred cost of cloud revenue

 

 

(15

)

 

 

(25

)

Amortization of acquired intangible assets

 

 

28,129

 

 

 

28,732

 

Valuation adjustment on acquired deferred commission

 

 

(53

)

 

 

(53

)

Share-based compensation (1)

 

 

48,607

 

 

 

31,706

 

Amortization of discount and loss of extinguishment on debt

 

 

2,229

 

 

 

4,125

 

Tax adjustments re non-GAAP adjustments

 

 

(16,351

)

 

 

(15,814

)

Non-GAAP net income

 

$

120,487

 

 

$

102,811

 

     
     

GAAP diluted earnings per share

 

$

0.87

 

 

$

0.78

 

     

Non-GAAP diluted earnings per share

 

$

1.80

 

 

$

1.54

 

     

Shares used in computing GAAP diluted earnings per share

 

 

66,853

 

 

 

66,723

 

     

Shares used in computing non-GAAP diluted earnings per share

 

 

66,853

 

 

 

66,723

 

NICE LTD. AND SUBSIDIARIES

   

RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)

 

U.S. dollars in thousands

   
     
     

(1

)

Share-based Compensation

   
 

Quarter ended

 

March 31,

 

2022

 

2021

     

Cost of cloud revenue

 

$

2,324

 

$

1,494

Cost of services revenue

 

 

2,967

 

 

2,435

Cost of product revenue

 

 

132

 

 

125

Research and development

 

 

8,515

 

 

4,057

Sales and marketing

 

 

16,269

 

 

10,908

General and administrative

 

 

18,400

 

 

12,687

 

$

48,607

 

$

31,706

 

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