"The results reported for the third quarter of 2018 reflect our continued focus on driving excellent execution around our strategic pillars of cloud, analytics and artificial intelligence that led to strong growth on both the top and bottom lines. As we look forward to ending the year on a high note, we now expect to exit 2018 with a cloud revenue run rate of $550 million up from our previous expectation of $500 million, while continuing to drive profitability," said Barak Eilam, CEO of NICE.
Mr. Eilam continued, "CXone, our open cloud platform which has gained tremendous market presence among our customers and high regard from industry analysts in just a little over one year since it was introduced, has been our vehicle to deliver our strategic pillars to the customer engagement market. We are now proceeding on a similar course with X-Sight, which was announced just a few weeks ago. X-Sight is the industry's first financial crime and compliance platform-as-a-service that combines advanced analytics and AI, automated data management, and robotics all delivered through the cloud.
"It is clearly evident that the platform strategy embodies the present and future for NICE. With X-Sight and CXone, we now have two significant, market leading, open, cloud platforms to help further penetrate our large and growing addressable market."
GAAP Financial Highlights for the Third Quarter Ended September 30:
The GAAP numbers presented below for the third quarter 2018 are under ASC 606 and the comparison period GAAP numbers for the third quarter 2017 are under ASC 605
Revenues: Third quarter 2018 total revenues increased 10.4% to $356.2 million compared to $322.8 million for the third quarter of 2017.
Gross Profit: Third quarter 2018 gross profit and gross margin increased to $232.7 million and 65.3%, respectively, compared to $207.4 million and 64.3%, respectively, for the third quarter of 2017.
Operating Income: Third quarter 2018 operating income and operating margin increased to $46.7 million and 13.1%, respectively, compared to $33.1 million and 10.3%, respectively, for the third quarter of 2017.
Net Income: Third quarter 2018 net income and net income margin increased to $39.3 million and 11.0%, respectively, compared to $26.2 million and 8.1%, respectively, for the third quarter of 2017.
Fully Diluted Earnings Per Share: Fully diluted earnings per share for the third quarter of 2018 increased to $0.62 compared to $0.42 in the third quarter of 2017.
Operating Cash Flow and Cash Balance: Third quarter 2018 operating cash flow was $87.0 million. As of September 30, 2018, total cash and cash equivalents, short term investments and marketable securities were $656.3 million, and total debt was $453.9 million.
Non-GAAP Financial Highlights for the Third Quarter Ended September 30:
The non-GAAP numbers presented below for the third quarter 2018 and for the comparison period non-GAAP numbers for the third quarter 2017 are both under ASC 605.
Revenues: Third quarter 2018 non-GAAP total revenues increased to $356.4 million, up 9.1% from $326.8 million for the third quarter of 2017.
Gross Profit: Third quarter 2018 non-GAAP gross profit increased to $252.1 compared to $232.5 million for the third quarter of 2017. Non-GAAP gross margin was 70.7% compared to 71.2% for the third quarter of 2017.
Operating Income: Third quarter 2018 non-GAAP operating income and non-GAAP operating margin increased to
$90.8 million and 25.5%, respectively, from $78.3 million and 24.0%, respectively, for the third quarter of 2017.
Net Income: Third quarter 2018 non-GAAP net income and non-GAAP net income margin increased to $71.6 million and 20.1%, respectively, from $58.9 million and 18.0%, respectively, for the third quarter of 2017.
Fully Diluted Earnings Per Share: Third quarter 2018 non-GAAP fully diluted earnings per share increased 17.9% to $1.12, compared to $0.95 for the third quarter of 2017.
Full Year 2018 Guidance:
Guidance for 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.
The Company increased full-year 2018 non-GAAP total revenues to be in an expected range of $1,450 million to $1,466 million and increased full-year 2018 non-GAAP fully diluted earnings per share to be in an expected range of $4.53 to $4.69.
The guidance includes the acquisition of Mattersight. The Company expects Mattersight to contribute an annual revenue run rate in a range of $32 million to $38 million.
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 September 30, 2018.
Quarterly Results Conference Call
NICE management will host its earnings conference call today, November 8th, 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 538 470 63. 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 295 658 73.
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, re-organization expenses, 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.
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.
Marty Cohen, +1 551 256 5354,
Yisca Erez, +972 9 775-3798,
Chris Irwin-Dudek, +1 (551) 256-5140,
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:
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 competition, success and growth of the Company's cloud Software-as-a-Service business, cyber security attacks or other security breaches against the Company, privacy concerns and legislation impacting the Company's business, the Company's 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 (including, with respect to the Company's acquisition of Mattersight Corporation), successful execution of the Company's growth strategy, the effects of tax reforms and 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 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.