EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
NICE Reports 10% Revenue Growth for the First Quarter 2018 Along
with 32% Growth in Cloud Revenue
 
Double Digit Growth in Operating Income and EPS and Significant Cloud Gross Margin Improvement

Company Raises Guidance for Full-Year 2018 Revenue and Earnings Per Share

Hoboken, New Jersey, May 10, 2018 - NICE (NASDAQ: NICE) today announced results for the first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights

GAAP
Non-GAAP
Revenue of $335 million, growth of 10% year-over-year
Revenue of $341 million, growth of 11% year-over-year
Cloud revenue of $104 million, growth of 32% year-over-year
Cloud revenue of $106 million, growth of 33% year-over-year
Gross margin of 64.7% compared to 62.1% last year
Gross margin of 70.6% compared to 69.9% last year
Operating income of $34 million compared to $28 million last year, 22% growth year-over-year
Operating income of $84 million compared to $74 million last year, 14% growth year-over-year
Operating margin of 10.2% compared to 9.1% last year
Operating margin of 24.6% compared to 23.9% last year
Diluted EPS of $0.37 versus $0.28 last year, 32% growth
Diluted EPS of $1.03 versus $0.89 last year, 16% growth
Operating cash flow reached $137 million
  

The GAAP column of the table contains the financial highlights of the first quarter 2018 under ASC 606 with the comparison period under ASC 605.

The non-GAAP column of the table contains the financial highlights of the first quarter 2018 under ASC 605 with the comparison period under ASC 605.
 
“We are pleased with the strong start to the year as evidenced by the double-digit growth in total revenue, along with a 32% increase in cloud revenue,” said Barak Eilam, CEO of NICE. “Moreover, we continue to capture high quality cloud revenue as demonstrated by the continued increase in our cloud profitability.”
 
Mr. Eilam continued, “Our strong performance in the cloud is being driven by CXone. What was once a vision for CXone has become a reality with an increasing number of customers in all market segments adopting our cloud platform. This includes a growing number of large enterprises where we are seeing implementations of well over 1,000 seats and total contract values in the seven and eight digit ranges. We owe the success of CXone to its true, native cloud infrastructure, its scalability and its elasticity, as well as, to a growing number of ecosystem partners embracing our cloud strategy.
 
“Our investments in innovation, especially cloud, analytics and artificial Intelligence, puts us in a unique position to further differentiate our offering and strengthen our competitive position.”
 
 
GAAP Financial Highlights for the First Quarter Ended March 31:
 
The GAAP numbers presented below for the first quarter 2018 are under ASC 606 and the comparison period GAAP numbers for the first quarter 2017 are under ASC 605
 
Revenues: First quarter 2018 total revenues increased 9.8% to $335.4 million compared to $305.6 million for the first quarter of 2017.

Gross Profit: First quarter 2018 gross profit and gross margin increased to $216.9 million and 64.7%, respectively, compared to $189.9 million and 62.1%, respectively, for the first quarter of 2017.

Operating Income: First quarter 2018 operating income and operating margin increased to $34.2 million and 10.2%, respectively, compared to $27.9 million and 9.1%, respectively, for the first quarter of 2017.

Net Income: First quarter 2018 net income and net income margin increased to $23.5 million and 7.0%, respectively, compared to $17.3 million and 5.7%, respectively, for the first quarter of 2017.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the first quarter of 2018 increased to $0.37 compared to $0.28 in the first quarter of 2017.

Operating Cash Flow and Cash Balance: First quarter 2018 operating cash flow was $136.9 million. In the first quarter, $4.3 million was used for share repurchases. As of March 31, 2018, total cash and cash equivalents, short term investments and marketable securities were $646.7 million, and total debt was $449.7 million.
 
Non-GAAP Financial Highlights for the First Quarter Ended March 31:
 
The non-GAAP numbers presented below for the first quarter 2018 and for the comparison period non-GAAP numbers for the first quarter 2017 are both under ASC 605.
 
Revenues: First quarter 2018 non-GAAP total revenues increased to $340.9 million, up 10.7% from $308.0 million for the first quarter of 2017.

Gross Profit: First quarter 2018 non-GAAP gross profit and non-GAAP gross margin increased to $240.8 million and 70.6%, respectively, from $215.2 million and 69.9%, respectively, for the first quarter of 2017.

Operating Income: First quarter 2018 non-GAAP operating income and non-GAAP operating margin increased to $83.8 million and 24.6%, respectively, from $73.6 million and 23.9%, respectively, for the first quarter of 2017.

Net Income: First quarter 2018 non-GAAP net income and net income margin increased to $64.5 million and 18.9%, respectively, from $55.1 million and 17.9%, respectively, for the first quarter of 2017.

Fully Diluted Earnings Per Share: First quarter 2018 non-GAAP fully diluted earnings per share increased 15.7% to $1.03, compared to $0.89 for the first quarter of 2017.
 
Adoption of the New Revenue Recognition Standard - ASC 606
 
NICE adopted the new revenue recognition accounting standard, Accounting Standards Codification ("ASC") 606, effective January 1, 2018, on a modified retrospective basis. Financial results for reporting periods during 2018 are presented in compliance with the ASC 606. Historical financial results for reporting periods prior to 2018 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard, ASC 605. This press release includes additional information to reconcile the impacts of the adoption of the new revenue recognition standard on the Company's financial results for the quarter ended March 31, 2018.

Guidance for the second quarter and the full-year 2018 is provided using the accounting standard ASC 605 in order to provide better transparency and comparability to 2017 financial data, which was reported under ASC 605.
 
 
Second Quarter and Full Year 2018 Guidance:
 
Second Quarter 2018: Second quarter 2018 non-GAAP total revenues are expected to be in a range of $338 million to $348 million. Second quarter 2018 non-GAAP fully diluted earnings per share are expected to be in a range of $1.00 to $1.06.

Full Year 2018: The Company increased full year 2018 non-GAAP total revenues to an expected range of $1,434 million to $1,458 million. The Company increased full year 2018 non-GAAP fully diluted earnings per share to an expected range of $4.43 to $4.63.
 
Quarterly Results Conference Call

NICE management will host its earnings conference call today, May 10th, 2018 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 in to the following numbers: United States 1-866-804-8688 or +1-718-354-1175, International +44(0)1296-311-600, United Kingdom 0-800-678-1161, Israel 1-809-344-364. The Passcode is 690 577 87. Additional access numbers can be found at http://www.btconferencing.com/globalaccess/?bid=54_attended. The call will be webcast live on the Company’s website at http://www.nice.com/news-and-events/ir-events. An online replay will also be available approximately two hours following the call. A telephone replay of the call will be available for 7 days after the live broadcast, and may be accessed by dialing: United States 1-877-482-6144, International +44(0)20-7136-9233, United Kingdom 0-800-032-9687. The Passcode for the replay is 351 623 93.
 
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, share-based compensation, certain business combination accounting entries, amortization of discount on long term debt, ASC 606 to ASC 605 adjustments and tax adjustment re non-GAAP adjustments. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. 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. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigned to that liability should be based on its fair value at the date of acquisition. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. 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.
 
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.

Investors
Marty Cohen, +1 551 256 5354, ir@nice.com, ET
Yisca Erez, +972 9 775-3798, ir@nice.com, CET
 
Media Contact
Chris Irwin-Dudek, +1 (551) 256-5140, Chris.Irwin-Dudek@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. Such forward-looking statements, including the statements by Mr. Eilam, are generally stated in terms of the Company’s plans, expectations and intentions. These statements are based on the current beliefs, expectations and assumptions of the Company’s management and the current economic environment. 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. 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 competition, success and growth of cloud Software-as-a-Service business, cyber security attacks or other security breaches, privacy concerns and legislation, dependency on third-party cloud computing platform providers, hosting facilities and service partners, changes in general economic and business conditions, rapidly changing technology, changes in currency exchange rates and interest rates, difficulties in making additional acquisitions or effectively integrating acquired operations, products, technologies and personnel, successful execution of growth strategy, the effects of tax reforms, and the effect of newly enacted or modified laws, regulation or standards on the Company and its products; and 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 in our other relevant filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance, and undue reliance should not be placed upon these statements. The forward-looking statements contained in this presentation are made as of the date hereof, and the Company undertakes no obligation to update or revise them, except as required by law.
 
 
NICE LTD. AND SUBSIDIARIES
      
CONSOLIDATED STATEMENTS OF INCOME
      
U.S. dollars in thousands (except per share amounts)
      
 
   
Quarter ended
  
   
March 31,
  
   
2018
    
2017
  
   
Unaudited
    
Unaudited
  
             
Revenue:
            
Product
  
$
61,370
    
$
68,457
  
Services
    
170,217
      
158,416
  
Cloud
    
103,855
      
78,749
  
Total revenue
    
335,442
      
305,622
  
                 
Cost of revenue:
                
Product
    
8,137
      
13,211
  
Services
    
58,385
      
58,716
  
Cloud
    
51,993
      
43,807
  
Total cost of revenue
    
118,515
      
115,734
  
                 
Gross profit
    
216,927
      
189,888
  
                 
Operating expenses:
                
Research and development, net
    
45,867
      
42,954
  
Selling and marketing
    
89,926
      
79,201
  
General and administrative
    
36,372
      
29,227
  
Amortization of acquired intangible assets
    
10,585
      
10,565
  
Total operating expenses
    
182,750
      
161,947
  
                 
Operating income
    
34,177
      
27,941
  
                 
Finance and other expense, net
    
(3,968
)
    
(8,990
)
                 
Income before tax
    
30,209
      
18,951
  
Taxes on income
    
6,683
      
1,662
  
Net income
  
$
23,526
    
$
17,289
  
                 
Basic earnings per share
  
$
0.39
    
$
0.29
  
                 
Diluted earnings per share
  
$
0.37
    
$
0.28
  
                 
Weighted average number of shares outstanding used to compute:
                
               
Basic earnings per share
    
61,054
      
60,127
  
Diluted earnings per share
    
62,776
      
61,751
  
 
NICE LTD. AND SUBSIDIARIES
        
RECONCILIATION OF GAAP TO NON-GAAP RESULTS AND ASC 606 TO NON-GAAP ASC 605
    
U.S. dollars in thousands (except per share amounts)
        
 
   
Quarter ended   
  
   
March 31,   
  
   
2018
    
2017
  
GAAP revenues
  
$
335,442
    
$
305,622
  
Valuation adjustment on acquired deferred product revenue
    
15
      
219
  
Valuation adjustment on acquired deferred services revenue
    
306
      
997
  
Valuation adjustment on acquired deferred cloud revenue
    
1,886
      
1,211
  
ASC 606 to ASC 605 revenue adjustment
    
3,277
      
-
  
Non-GAAP revenues
  
$
340,926
    
$
308,049
  
                 
GAAP cost of revenue
  
$
118,515
    
$
115,734
  
Amortization of acquired intangible assets on cost of product
    
(2,589
)
    
(6,358
)
Amortization of acquired intangible assets on cost of services
    
(823
)
    
(3,208
)
Amortization of acquired intangible assets on cost of cloud
    
(12,755
)
    
(10,975
)
Valuation adjustment on acquired deferred cost of cloud
    
336
      
431
  
Cost of product revenue adjustment (1)
    
(188
)
    
(175
)
Cost of services revenue adjustment (1)
    
(1,753
)
    
(1,875
)
Cost of cloud revenue adjustment (1)
    
(769
)
    
(769
)
ASC 606 to ASC 605 cost of revenue adjustment
    
124
      
-
  
Non-GAAP cost of revenue
  
$
100,098
    
$
92,805
  
                 
GAAP gross profit
  
$
216,927
    
$
189,888
  
Gross profit adjustments
    
23,901
      
25,356
  
Non-GAAP gross profit
  
$
240,828
    
$
215,244
  
                 
GAAP operating expenses
  
$
182,750
    
$
161,947
  
Research and development (1)
    
(2,344
)
    
(2,211
)
Sales and marketing (1)
    
(6,303
)
    
(5,646
)
General and administrative (1)
    
(4,782
)
    
(1,886
)
Amortization of acquired intangible assets
    
(10,585
)
    
(10,565
)
ASC 606 to ASC 605 operating expenses adjustment
    
(1,745
)
    
-
  
Non-GAAP operating expenses
  
$
156,991
    
$
141,639
  
                 
GAAP finance & other expense, net
  
$
(3,968
)
  
$
(8,990
)
Amortization of discount on long-term debt
    
2,163
      
7,165
  
Non-GAAP finance & other expense, net
  
$
(1,805
)
  
$
(1,825
)
                 
GAAP taxes on income
  
$
6,683
    
$
1,662
  
Tax adjustments re non-GAAP adjustments
    
9,775
      
14,991
  
Tax adjustment re ASC 606 to ASC 605
    
1,029
      
-
  
Non-GAAP taxes on income
  
$
17,487
    
$
16,653
  
                 
GAAP net income
  
$
23,526
    
$
17,289
  
Valuation adjustment on acquired deferred revenue
    
2,207
      
2,427
  
Valuation adjustment on acquired deferred cost of cloud revenue
    
(336
)
    
(431
)
Amortization of acquired intangible assets
    
26,752
      
31,106
  
Share-based compensation (1)
    
16,139
      
12,562
  
Amortization of discount on long-term debt
    
2,163
      
7,165
  
Tax adjustments re non-GAAP adjustments
    
(9,775
)
    
(14,991
)
ASC 606 to ASC 605 adjustments
    
3,869
      
-
  
Non-GAAP net income
  
$
64,545
    
$
55,127
  
                 
GAAP diluted earnings per share
  
$
0.37
    
$
0.28
  
                 
Non-GAAP diluted earnings per share
  
$
1.03
    
$
0.89
  
                 
Shares used in computing GAAP diluted earnings per share
    
62,776
      
61,751
  
                 
Shares used in computing non-GAAP diluted earnings per share
    
62,776
      
61,751
  
 
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,
  
         
2018
      
2017
  
                     
   
Cost of product revenue
  
$
(188
)
  
$
(175
)
   
Cost of services revenue
    
(1,753
)
    
(1,875
)
   
Cost of cloud revenue
    
(769
)
    
(769
)
   
Research and development
    
(2,344
)
    
(2,211
)
   
Sales and marketing
    
(6,303
)
    
(5,646
)
   
General and administrative
    
(4,782
)
    
(1,886
)
        
$
(16,139
)
  
$
(12,562
)
 
NICE LTD. AND SUBSIDIARIES
        
CONDENSED CONSOLIDATED BALANCE SHEETS
        
U.S. dollars in thousands
        
 
   
March 31,
    
December 31,
  
   
2018
    
2017
  
   
Unaudited
    
Audited
  
             
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
334,461
    
$
328,302
  
Short-term investments
    
134,079
      
63,951
  
Trade receivables
    
232,495
      
230,729
  
Prepaid expenses and other current assets
    
78,974
      
70,074
  
                 
Total current assets
    
780,009
      
693,056
  
                 
LONG-TERM ASSETS:
                
Long-term investments
    
178,149
      
132,820
  
Property and equipment, net
    
120,311
      
118,275
  
Deferred tax assets
    
31,724
      
11,850
  
Other intangible assets, net
    
524,639
      
551,347
  
Goodwill
    
1,321,845
      
1,318,242
  
Other long-term assets
    
69,829
      
19,496
  
                 
Total long-term assets
    
2,246,497
      
2,152,030
  
                 
TOTAL ASSETS
  
$
3,026,506
    
$
2,845,086
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
23,964
    
$
29,438
  
Deferred revenues and advances from customers
    
235,297
      
184,564
  
Accrued expenses and other liabilities
    
307,597
      
309,350
  
                 
Total current liabilities
    
566,858
      
523,352
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues and advances from customers
    
39,919
      
37,550
  
Deferred tax liabilities
    
88,942
      
57,796
  
Long-term debt
    
449,724
      
447,642
  
Other long-term liabilities
    
27,839
      
29,185
  
                 
Total long-term liabilities
    
606,424
      
572,173
  
                 
SHAREHOLDERS' EQUITY
    
1,853,224
      
1,749,561
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
3,026,506
    
$
2,845,086
  
 
NICE LTD. AND SUBSIDIARIES
      
CONSOLIDATED CASH FLOW STATEMENTS
      
U.S. dollars in thousands
      
 
   
Quarter ended
  
   
March 31,
  
   
2018
    
2017
  
   
Unaudited
    
Unaudited
  
             
Operating Activities
            
             
Net income
  
$
23,526
    
$
17,289
  
Adjustments to reconcile net income to net cash provided by operating activities
                
Depreciation and amortization
    
37,937
      
39,143
  
Stock based compensation
    
16,139
      
12,562
  
Amortization of premium and discount and accrued interest on marketable securities
    
(298
)
    
190
  
Deferred taxes, net
    
(9,667
)
    
(11,671
)
Changes in operating assets and liabilities:
                
Trade Receivables
    
(16,154
)
    
56,299
  
Prepaid expenses and other current assets
    
(12,419
)
    
(6,787
)
Trade payables
    
(5,501
)
    
(112
)
Accrued expenses and other current liabilities
    
(4,420
)
    
(31,299
)
Deferred revenue
    
106,117
      
50,664
  
Long term liabilities
    
(383
)
    
(747
)
Amortization of discount on long term debt
    
2,163
      
7,165
  
Other
    
(183
)
    
49
  
  Net cash provided by operating activities
    
136,857
      
132,745
  
                 
Investing Activities
                
                 
Purchase of property and equipment
    
(5,316
)
    
(10,414
)
Purchase of Investments
    
(135,645
)
    
(24,999
)
Proceeds from Investments
    
19,017
      
32,016
  
Capitalization of software development costs
    
(7,804
)
    
(6,938
)
  Net cash used in investing activities
    
(129,748
)
    
(10,335
)
                 
Financing Activities
                
                 
Proceeds from issuance of shares upon exercise of share options
    
3,244
      
3,733
  
Purchase of treasury shares
    
(4,252
)
    
(8,429
)
Dividends paid
    
-
      
(9,637
)
Repayment of long term debt
    
-
      
(260,000
)
Proceeds from issuance of debt, net of costs
    
-
      
260,842
  
  Net cash used in financing activities
    
(1,008
)
    
(13,491
)
                 
Effect of exchange rates on cash and cash equivalents
    
58
      
806
  
                 
Net change in cash and cash equivalents
    
6,159
      
109,725
  
Cash and cash equivalents, beginning of period
    
328,302
      
157,026
  
                 
Cash and cash equivalents, end of period
  
$
334,461
    
$
266,751