NICE Reports Accelerated Cloud Revenue Growth for The Fourth Quarter and Full Year 2020

NICE (NASDAQ: NICE) today announced results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

GAAP

Non-GAAP

Cloud revenue of $219 million, growth of 31% year-over-year

Cloud revenue of $223 million, growth of 33% year-over-year

Total revenue of $435 million, growth of 1% year-over-year

Total revenue of $438 million, growth of 2% year-over-year

Cloud gross margin of 58.3% compared to 54.2% last year

Cloud gross margin of 67.6% compared to 63.8% last year

Operating income of $65 million compared to $78 million last year

Operating income of $132 million compared to $130 million last year

Operating margin of 15.0% compared to 18.0% last year

Operating margin of 30.1% compared to 30.2% last year

Diluted EPS of $0.83 compared to $0.95 last year

Diluted EPS of $1.61 compared to $1.58 last year

Operating cash flow of $167 million compared to $91 million last year

Full Year 2020 Financial Highlights

GAAP

Non-GAAP

Cloud revenue of $777 million, growth of 30% year-over-year

Cloud revenue of $786 million, growth of 31% year-over-year

Total revenue of $1,648 million, growth of 5% year-over-year

Total revenue of $1,657 million, growth of 5% year-over-year

Cloud gross margin of 56.3% compared to 51.3% last year

Cloud gross margin of 65.6% compared to 61.8% last year

Operating income of $242 million compared to $239 million last year

Operating income of $470 million compared to $434 million last year

Operating margin of 14.7% compared to 15.2% last year

Operating margin of 28.4% compared to 27.5% last year

Diluted EPS of $2.98 versus $2.88 last year, 3% growth year-over-year

Diluted EPS of $5.73 versus $5.31 last year, 8% growth year-over-year

Record cash flow from operations of $480 million compared to $374 million last year

“We are pleased to report another exceptional year at NICE highlighted by groundbreaking innovation and speed of execution in cloud, digital and artificial intelligence. We witnessed accelerated cloud growth, cloud exceeded more than 50% of our total revenue for the second half of the year, and we exited 2020 with more than $900 million in an annualized cloud revenue run rate propelled by the tremendous success of our CXone cloud platform. We saw a 100% year-over-year increase in our customers’ digital interactions volume and 50% of our new deals were driven by digital initiatives. Our market leading AI solution, Enlighten, experienced strong demand with many new deals and a fast growing pipeline,” said Barak Eilam, CEO of NICE.

Mr. Eilam continued, “2021 is shaping up to be a year of a changed reality, in which the events of 2020 have created a new normal, and at the same time provided new opportunities in cloud and digital. Enterprises are seeking to rapidly accelerate their innovation cycles and leap forward much faster than before while continuously adapting to changes. We are well-positioned to capitalize on this transition with our leading digital cloud platforms together with a large and fast growing total addressable market.”

GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31:

Revenues: Fourth quarter 2020 total revenues increased 1.0% to $434.6 million compared to $430.2 million for the fourth quarter of 2019.
Full year 2020 total revenues increased 4.7% to $1,648.0 million compared to $1,573.9 million for the full year 2019.

Gross Profit: Fourth quarter 2020 gross profit was $288.5 million compared to $292.9 million for the fourth quarter of 2019. Fourth quarter 2020 gross margin was 66.4% compared to 68.1% for the fourth quarter of 2019.
Full year 2020 gross profit increased to $1,086.1 million compared to $1,042.1 million for the full year 2019. Full year 2020 gross margin was 65.9% compared to 66.2% for the full year 2019.

Operating Income: Fourth quarter 2020 operating income was $65.1 million compared to $77.6 million for the fourth quarter of 2019. Fourth quarter 2020 operating margin was 15.0% compared to 18.0% for the fourth quarter of 2019.
Full year 2020 operating income increased to $242.0 million compared to $238.7 million for the full year 2019. Full year 2020 operating margin was 14.7% compared to 15.2% for the full year 2019.

Net Income: Fourth quarter 2020 net income was $55.0 million compared to $61.7 million for the fourth quarter of 2019. Fourth quarter 2020 net income margin was 12.6% compared to 14.4% for the fourth quarter of 2019.
Full year 2020 net income and net income margin increased to $196.3 million and 11.9%, respectively, compared to $185.9 million and 11.8%, respectively, for the full year 2019.

Fully Diluted Earnings Per Share: Fully diluted earnings per share for the fourth quarter of 2020 was $0.83 compared to $0.95 in the fourth quarter of 2019.
Fully diluted earnings per share for the full year 2020 increased to $2.98 compared to $2.88 for the full year 2019.

Operating Cash Flow and Cash Balance: Fourth quarter 2020 operating cash flow was $166.9 million and full year operating cash flow reached $480.3 million. In the fourth quarter, $20.7 million was used for share repurchases and $48.3 million was used for share repurchases for the full year of 2020. As of December 31, 2020, total cash and cash equivalents, short and long term investments were $1,463.9 million, and total debt was $681.2 million.

Non-GAAP Financial Highlights for the Fourth Quarter and Full Year Ended December 31:

Revenues: Fourth quarter 2020 Non-GAAP total revenues increased to $438.4 million, up 1.7% from $431.1 million for the fourth quarter of 2019.
Non-GAAP total revenues for the full year 2020 increased 5.0% to $1,657.1 million compared to $1,577.5 million for the full year 2019.

Gross Profit: Fourth quarter 2020 Non-GAAP gross profit increased to $316.7 million compared to $313.8 million for the fourth quarter of 2019. Fourth quarter 2020 Non-GAAP gross margin was 72.2% compared to 72.8% for the fourth quarter of 2019.
Full year 2020 Non-GAAP gross profit increased to $1,181.6 million compared to $1,125.3 million and full year 2020 Non-GAAP gross margin was 71.3%, the same as Non-GAAP gross margin for full year 2019.

Operating Income: Fourth quarter 2020 Non-GAAP operating income increased to $131.7 million compared to $130.2 million for the fourth quarter of 2019. Fourth quarter 2020 Non-GAAP operating margin was 30.1% compared to 30.2% for the fourth quarter of 2019.
Full year 2020 Non-GAAP operating income and Non-GAAP operating margin increased to $470.4 million and 28.4%, respectively, from $434.3 million and 27.5%, respectively, for the full year 2019.

Net Income: Fourth quarter 2020 Non-GAAP net income and Non-GAAP net income margin increased to $106.9 million and 24.4%, respectively, from $102.6 million and 23.8%, respectively, for the fourth quarter of 2019.
Full year 2020 Non-GAAP net income and Non-GAAP net income margin increased to $378.2 million and 22.8%, respectively, from $343.4 million and 21.8%, respectively, for the full year 2019.

Fully Diluted Earnings Per Share: Fourth quarter 2020 Non-GAAP fully diluted earnings per share increased 1.9% to $1.61, compared to $1.58 for the fourth quarter of 2019.
Full year 2020 Non-GAAP fully diluted earnings per share increased 7.9% to $5.73 compared to $5.31 for the full year 2019.

First Quarter and Full Year 2021 Guidance:

First Quarter 2021: First quarter 2021 Non-GAAP total revenues are expected to be in a range of $445 million to $455 million. First quarter 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $1.42 to $1.52.

Full Year 2021: Full year 2021 Non-GAAP total revenues are expected to be in a range of $1,790 million to $1,810 million. Full year 2021 Non-GAAP fully diluted earnings per share are expected to be in a range of $6.12 to $6.32.

Quarterly Results Conference Call

NICE management will host its earnings conference call today February 18th, 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 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 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 fourth-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 and various other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”). In addition, COVID-19 is contributing to a general slowdown in the global economy. At this time, the extent and duration of the continued impact of the pandemic is unknown, and therefore we cannot predict how it may affect the Company’s future business, results of operations, financial condition and strategic plans. Furthermore, due to our subscription based business model, the effect of COVID-19 may not be fully reflected in our results of operations until future periods, if at all. 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
 
December 31,December 31,

2020

2019

AuditedAudited
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents

$

442,267

$

228,323

Short-term investments

1,021,613

210,772

Trade receivables

303,100

319,622

Prepaid expenses and other current assets

175,340

116,972

 
Total current assets

1,942,320

875,689

 
LONG-TERM ASSETS:
Long-term investments

-

542,389

Property and equipment, net

137,785

141,647

Deferred tax assets

32,735

30,513

Other intangible assets, net

366,003

411,019

Operating lease right-of-use assets

97,162

106,196

Goodwill

1,503,252

1,378,418

Other long-term assets

153,660

124,034

 
Total long-term assets

2,290,597

2,734,216

 
TOTAL ASSETS

$

4,232,917

$

3,609,905

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables

$

33,132

$

30,376

Deferred revenues and advances from customers

311,851

245,792

Current maturities of operating leases

22,412

21,519

Exchangeable senior notes

259,881

251,583

Accrued expenses and other liabilities

417,174

391,685

 
Total current liabilities

1,044,450

940,955

 
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers

36,295

26,045

Operating leases

92,262

103,490

Deferred tax liabilities

32,109

52,509

Long-term debt

421,337

213,313

Other long-term liabilities

17,980

16,327

 
Total long-term liabilities

599,983

411,684

 
SHAREHOLDERS' EQUITY
NICE Ltd's equity

2,563,910

2,257,266

Non-controlling interests

24,574

-

 
Total shareholders' equity

2,588,484

2,257,266

 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,232,917

$

3,609,905

 
 
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share amounts)
 
Quarter endedYear ended
December 31,December 31,

2020

2019

2020

2019

AuditedAuditedAuditedAudited
 
Revenue:
Product

$

41,542

$

80,101

$

183,153

$

269,100

Services

174,003

183,117

687,532

709,064

Cloud

219,036

166,990

777,331

595,748

Total revenue

434,581

430,208

1,648,016

1,573,912

 
Cost of revenue:
Product

5,453

6,076

22,164

22,926

Services

49,245

54,772

199,803

218,990

Cloud

91,357

76,434

339,985

289,852

Total cost of revenue

146,055

137,282

561,952

531,768

 
Gross profit

288,526

292,926

1,086,064

1,042,144

 
Operating expenses:
Research and development, net

56,163

52,165

218,182

193,718

Selling and marketing

112,104

106,221

406,436

399,304

General and administrative

45,421

46,841

180,733

168,022

Amortization of acquired intangible assets

9,715

10,107

38,666

42,383

Total operating expenses

223,403

215,334

844,017

803,427

 
Operating income

65,123

77,592

242,047

238,717

 
Financial and other expense, net

2,600

554

4,859

4,444

 
Income before tax

62,523

77,038

237,188

234,273

Taxes on income

7,549

15,295

40,842

48,369

Net income

$

54,974

$

61,743

$

196,346

$

185,904

 
Less: net income/(loss) attributable to non-controlling interests

51

-

(327)

-

 
Net income attributable to NICE Ltd.'s shareholders

$

54,923

#

$

61,743

$

196,673

$

185,904

 
 
Earnings per share:
Basic

$

0.87

$

0.99

$

3.13

$

2.99

Diluted

$

0.83

$

0.95

$

2.98

$

2.88

 
Weighted average shares outstanding:
Basic

62,967

62,357

62,710

62,120

Diluted

66,600

65,161

65,956

64,661

 
NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter endedYear ended
December 31,December 31,

2020

2019

2020

2019

AuditedAuditedAuditedAudited
 
Operating Activities
 
Net income

$

54,974

$

61,743

$

196,346

$

185,904

Depreciation and amortization

46,893

44,486

182,026

173,230

Stock based compensation

32,828

24,275

101,667

80,864

Amortization of premium and discount and accrued interest on marketable securities

157

134

(633)

(53)

Deferred taxes, net

(16,588)

18,899

(33,241)

(12,208)

Changes in operating assets and liabilities:
Trade Receivables

(5,343)

(56,763)

22,245

(29,863)

Prepaid expenses and other assets

(49,028)

11,977

(80,665)

(76,180)

Trade payables

(1,137)

5,850

4,094

777

Accrued expenses and other current liabilities

51,459

(22,059)

14,875

31,730

Operating lease right-of-use assets, net

5,241

7,262

18,167

19,104

Deferred revenue

48,585

499

63,202

13,810

Long term liabilities

-

(11)

-

(311)

Operating lease liabilities

(5,272)

(6,844)

(19,569)

(18,839)

Amortization of discount on long term debt

5,352

2,388

13,297

9,236

Other

(1,251)

(387)

(1,505)

(3,043)

Net cash provided by operating activities

166,870

91,449

480,306

374,158

 
Investing Activities
 
Purchase of property and equipment

(2,519)

(5,767)

(24,186)

(27,294)

Purchase of Investments

(277,038)

(125,165)

(583,115)

(619,060)

Proceeds from Investments

45,444

79,084

328,593

362,713

Capitalization of software development costs

(10,322)

(8,739)

(39,098)

(34,679)

Payments for business and asset acquisitions, net of cash acquired

-

-

(147,261)

(25,972)

Net cash used in investing activities

(244,435)

(60,587)

(465,067)

(344,291)

 
Financing Activities
 
Proceeds from issuance of shares upon exercise of share options

688

717

8,865

5,428

Purchase of treasury shares

(20,671)

(24,664)

(48,272)

(47,276)

Capital Lease payments

-

(185)

(177)

(816)

Repayment of long term debt

(215,000)

-

(215,000)

-

Proceeds/(costs) from issuance of exchangeable notes

(48)

-

451,421

-

Net cash provided by/(used in) financing activities

(235,031)

(24,132)

196,837

(42,664)

 
Effect of exchange rates on cash and cash equivalents

1,747

754

1,868

(979)

 
Net change in cash and cash equivalents

(310,849)

7,484

213,944

(13,776)

Cash and cash equivalents, beginning of period

$

753,116

$

220,839

$

228,323

$

242,099

 
Cash and cash equivalents, end of period

$

442,267

$

228,323

$

442,267

$

228,323

 

 
NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
 
Quarter endedYear ended
December 31,December 31,

2020

2019

2020

2019

GAAP revenues

$

434,581

$

430,208

$

1,648,016

$

1,573,912

Valuation adjustment on acquired deferred product revenue

-

-

-

15

Valuation adjustment on acquired deferred services revenue

149

-

230

5

Valuation adjustment on acquired deferred cloud revenue

3,679

842

8,866

3,534

Non-GAAP revenues

$

438,409

$

431,050

$

1,657,112

$

1,577,466

 
 
GAAP cost of revenue

$

146,055

$

137,282

$

561,952

$

531,768

Amortization of acquired intangible assets on cost of product

(1,073)

(1,134)

(4,467)

(4,106)

Amortization of acquired intangible assets on cost of services

(1,225)

(1,522)

(4,566)

(6,126)

Amortization of acquired intangible assets on cost of cloud

(18,012)

(15,323)

(66,434)

(60,441)

Valuation adjustment on acquired deferred cost of cloud

194

532

931

2,425

Cost of product revenue adjustment (1)

(131)

131

(336)

(173)

Cost of services revenue adjustment (1)

(2,593)

(1,941)

(7,550)

(8,192)

Cost of cloud revenue adjustment (1)

(1,457)

(813)

(4,058)

(2,955)

Non-GAAP cost of revenue

$

121,758

$

117,212

$

475,472

$

452,200

 
 
GAAP gross profit

$

288,526

$

292,926

$

1,086,064

$

1,042,144

Gross profit adjustments

28,125

20,912

95,576

83,122

Non-GAAP gross profit

$

316,651

$

313,838

$

1,181,640

$

1,125,266

 
 
GAAP operating expenses

$

223,403

$

215,334

$

844,017

$

803,427

Research and development (1,2)

(4,324)

(2,896)

(11,877)

(8,078)

Sales and marketing (1,2)

(10,769)

(7,468)

(30,392)

(26,679)

General and administrative (1,2)

(13,775)

(11,327)

(52,014)

(35,705)

Amortization of acquired intangible assets

(9,719)

(10,107)

(38,670)

(42,383)

Valuation adjustment on acquired deferred commission

89

62

195

307

Non-GAAP operating expenses

$

184,905

$

183,598

$

711,259

$

690,889

 
 
GAAP financial and other expense, net

$

2,600

$

554

$

4,859

$

4,444

Amortization of discount on debt

(5,353)

(2,388)

(13,297)

(9,235)

Non-GAAP financial and other income, net

$

(2,753)

$

(1,834)

$

(8,438)

$

(4,791)

 
 
GAAP taxes on income

$

7,549

$

15,295

$

40,842

$

48,369

Tax adjustments re non-GAAP adjustments

20,056

14,142

59,757

47,400

Non-GAAP taxes on income

$

27,605

$

29,437

$

100,599

$

95,769

 
 
GAAP net income

$

54,974

$

61,743

$

196,346

$

185,904

Valuation adjustment on acquired deferred revenue

3,828

842

9,096

3,554

Valuation adjustment on acquired deferred cost of cloud revenue

(194)

(532)

(931)

(2,425)

Amortization of acquired intangible assets

30,029

28,086

114,137

113,056

Valuation adjustment on acquired deferred commission

(89)

(62)

(195)

(307)

Share-based compensation (1)

33,049

24,314

102,304

80,939

Acquisition related expenses (2)

-

-

3,923

843

Amortization of discount on long term debt

5,353

2,388

13,297

9,235

Tax adjustments re non-GAAP adjustments

(20,056)

(14,142)

(59,757)

(47,400)

Non-GAAP net income

$

106,894

$

102,637

$

378,220

$

343,399

 
 
GAAP diluted earnings per share

$

0.83

$

0.95

$

2.98

$

2.88

 
Non-GAAP diluted earnings per share

$

1.61

$

1.58

$

5.73

$

5.31

 
Shares used in computing GAAP diluted earnings per share

66,600

65,161

65,956

64,661

 
Shares used in computing non-GAAP diluted earnings per share

66,600

65,161

65,956

64,661

 
NICE LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
 
 

(1)

Share-based Compensation
Quarter endedYear ended
December 31,December 31,

2020

2019

2020

2019

 
Cost of product revenue

$

131

$

(131)

$

336

$

173

Cost of services revenue

2,593

1,941

7,550

8,192

Cost of cloud revenue

1,457

813

4,058

2,955

Research and development

4,324

2,896

11,877

8,073

Sales and marketing

10,769

7,468

30,262

26,649

General and administrative

13,775

11,327

48,221

34,897

$

33,049

$

24,314

$

102,304

$

80,939

 
 

(2)

Acquisition related expenses
 
Quarter endedYear ended
December 31,December 31,

2020

2019

2020

2019

 
Research and development

$

-

$

-

$

-

$

5

Sales and marketing

-

-

130

30

General and administrative

-

-

3,793

808

$

-

$

-

$

3,923

$

843

 

Contacts:

Investors
Marty Cohen, +1 551 256 5354, ir@nice.com, ET
Yisca Erez, +972 9 775-3798, ir@nice.com, CET

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