EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
 
Exhibit 99.1
 
 
 
NICE Reports 35% Growth in Revenue for the First Quarter 2017

Recurring Revenue Increased Significantly to 64% of Total Revenue in First Quarter 2017
Company Increases EPS Guidance

Hoboken, New Jersey, May 4, 2017 - NICE (NASDAQ: NICE) today announced results for the first quarter 2017 ended March 31, 2017.
 
First Quarter 2017 Financial Highlights

GAAP
Non-GAAP
Revenue growth of 35% year-over-year
Revenue growth of 36% year-over-year
Operating income of $28 million compared to $37 million last year
Operating income of $74 million, up 27% year-over-year
Effective tax rate of 8.8% compared to 14.5% last year
Effective tax rate of 23.2% compared to 19.5% last year
Diluted EPS from continuing operations of $0.28 versus $0.58 last year
Diluted EPS from continuing operations of $0.89 versus $0.81 last year
Cash flow from operations increased 16% to $133 million
  
 
“We are very pleased with the results for the first quarter of 2017,” said Barak Eilam, CEO of NICE.  “Non-GAAP revenue grew 36% and non-GAAP operating income increased 27% compared to the same quarter last year.  We were also very pleased to see a substantial increase in recurring revenue.  With recurring revenue now representing almost two thirds of our total revenue, it gives us additional confidence and visibility into the business.”
 
Mr. Eilam continued, “The strong financial performance this quarter is the result of the good progress that we are seeing in our four strategic pillars: cloud, omni channel, analytics and artificial intelligence.  As a result, we experienced particular strength for our analytics solutions, where we have seen a high volume of very large deals.  Additionally, we are very pleased with progress of the integration of inContact, and we are witnessing accelerated momentum in our cloud business.”
 
GAAP Financial Highlights for the First Quarter Ended March 31:
 
The following GAAP financial data, excluding cash flow and cash balance, are from continuing operations, which exclude the results of the Intelligence and the Physical Security divisions for both 2017 and 2016.
 
Revenues: First quarter 2017 total revenues increased 35.3% to $305.6 million compared to $226.0 million for the first quarter of 2016.

Gross Profit: First quarter 2017 gross profit increased to $189.9 million compared to $151.5 million for the first quarter of 2016, and gross margin was 62.1% compared to 67.0% for the first quarter of 2016.

Operating Income: First quarter 2017 operating income and operating margin were $27.9 million and 9.1%, respectively, compared to $37.5 million and 16.6%, respectively, for the first quarter of 2016.

Net Income from Continuing Operations: First quarter 2017 net income and net margin were $17.3 million and 5.7%, respectively, compared to $35.3 million and 15.6%, respectively, for the first quarter of 2016.

Fully Diluted Earnings Per Share from Continuing Operations: Fully diluted earnings per share for the first quarter of 2017 were $0.28, compared to $0.58 in the first quarter of 2016.

Operating Cash Flow and Cash Balance: First quarter 2017 operating cash flow was $132.7 million. In the first quarter, $8.4 million was used for share repurchases. As of March 31, 2017, total cash and cash equivalents, short term investments and marketable securities were $388.7 million, and total debt was $441.5 million.
 
Non-GAAP Financial Highlights for the First Quarter Ended March 31:
 
The following non-GAAP financial data are from continuing operations, which exclude the results of the Intelligence and the Physical Security divisions for both 2017 and 2016.

Revenues: First quarter 2017 non-GAAP total revenues were $308.0 million, up 36.2% from $226.1 million for the first quarter of 2016.

Gross Profit: First quarter 2017 non-GAAP gross profit increased to $215.2 million compared to $159.7, and non-GAAP gross margin was 69.9%, compared to 70.6% for the first quarter of 2016.

Operating Income: First quarter 2017 non-GAAP operating income increased to $73.6 million compared to $57.8 million, and non-GAAP operating margin was 23.9% compared to 25.6% for the first quarter of 2016.

Net Income from Continuing Operations: First quarter 2017 non-GAAP net income increased to $55.1 million compared to $49.6 million, and non-GAAP net income margin was 17.9% compared to 21.9% for the first quarter of 2016.

Fully Diluted Earnings Per Share from Continuing Operations: First quarter 2017 non-GAAP fully diluted earnings per share increased 9.9% to $0.89, compared to $0.81 for the first quarter of 2016.
 
Second Quarter and Full Year 2017 Guidance:
 
Second Quarter 2017: Second quarter 2017 non-GAAP total revenues are expected to be in a range of $309 million to $319 million. Second quarter 2017 non-GAAP fully diluted earnings per share are expected to be in a range of $0.84 to $0.90.

Full Year 2017: Full year 2017 non-GAAP total revenues are reiterated to an expected range of $1,330 million to $1,354 million. Full year 2017 non-GAAP fully diluted earnings per share are increased to an expected range of $3.85 to $4.05.
 
Quarterly Results Conference Call

NICE management will host its earnings conference call today, May 4th, 2017 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)1296-480-100, United Kingdom 0-800-783-0906, Israel 1-809-242-041. The Passcode is 150 329 66. 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 897 068 81.

 
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share-based compensation, and certain business combination accounting entries, settlement, amortization of discount on long term debt 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
Ilana Hart, +972 9 775-3818, ilana.hart@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 based on the current beliefs, expectations and assumptions of the management of NICE Ltd. (the Company).  In some cases, such forward-looking statements can be identified by terms such as believe, expect, may, will, intend, project, plan, estimate or similar words.  Forward-looking statements are subject to a number of risks and uncertainties that could cause the actual results or performance of the Company to differ materially from those described herein, including but not limited to the impact of the global economic environment on the Company’s customer base (particularly financial services firms) potentially impacting our business and financial condition; competition; changes in technology and market requirements; decline in demand for the Company's products; inability to timely develop and introduce new technologies, products and applications; difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel; loss of market share; an inability to maintain certain marketing and distribution arrangements; the effect of newly enacted or modified laws, regulation or standards on the Company and our products, and the risk that we will not be able to successfully execute on the Company’s cloud business strategy and generate profitability. For a more detailed description of the risk factors and uncertainties affecting the company, refer to the Company's reports filed from time to time with the Securities and Exchange Commission, including the Company’s Annual Report on Form 20-F. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company undertakes no obligation to update or revise them, except as required by law.
 
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS of INCOME
U.S. dollars in thousands (except per share amounts)
 
   
Quarter ended
  
   
March 31,
  
   
2017
    
2016
  
   
Unaudited
    
Unaudited
  
             
Revenue:
            
Product
  
$
68,457
    
$
65,117
  
Services
    
158,416
      
149,338
  
Cloud
    
78,749
      
11,512
  
Total revenue
    
305,622
      
225,967
  
                 
Cost of revenue:
                
Product
    
13,211
      
13,734
  
Services
    
58,716
      
57,025
  
Cloud
    
43,807
      
3,710
  
Total cost of revenue
    
115,734
      
74,469
  
                 
Gross profit
    
189,888
      
151,498
  
                 
Operating Expenses:
                
Research and development, net
    
42,954
      
32,521
  
Selling and marketing
    
79,201
      
55,783
  
General and administrative
    
29,227
      
23,192
  
Amortization of acquired intangible assets
    
10,565
      
2,507
  
Total operating expenses
    
161,947
      
114,003
  
                 
Operating income
    
27,941
      
37,495
  
                 
Finance and other income (expense), net
    
(8,990
)
    
3,765
  
                 
Income from continuing operations before tax
    
18,951
      
41,260
  
Taxes on income
    
1,662
      
6,003
  
Net income from continuing operations
    
17,289
      
35,257
  
                 
Discontinued operations
                
Loss from discontinued operations
    
-
      
(117
)
Taxes on income
    
-
      
-
  
Net loss from discontinued operations
    
-
      
(117
)
                 
Net income
  
$
17,289
    
$
35,140
  
                 
Basic earnings per share from continuing operations
  
$
0.29
    
$
0.59
  
Basic earnings (loss) per share from discontinued operations
  
$
-
    
$
(0.00
)
Basic earnings per share
  
$
0.29
    
$
0.59
  
                 
Diluted earnings per share from continuing operations
  
$
0.28
    
$
0.58
  
Diluted earnings (loss) per share from discontinued operations
  
$
-
    
$
(0.00
)
Diluted earnings per share
  
$
0.28
    
$
0.58
  
                 
Weighted average number of shares outstanding used to compute:
                
               
Basic earnings (loss) per share
    
60,127
      
59,433
  
Diluted earnings (loss) per share
    
61,751
      
60,851
  

NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
 
   
Quarter ended
  
   
March 31,
  
   
2017
    
2016
  
GAAP revenues
  
$
305,622
    
$
225,967
  
Valuation adjustment on acquired deferred product revenue
    
219
      
84
  
Valuation adjustment on acquired deferred service revenue
    
997
      
58
  
Valuation adjustment on acquired deferred cloud revenue
    
1,211
      
-
  
Non-GAAP revenues
  
$
308,049
    
$
226,109
  
                 
GAAP cost of  revenue
  
$
115,734
    
$
74,469
  
Amortization of acquired intangible assets on cost of product
    
(6,358
)
    
(6,291
)
Amortization of acquired intangible assets on cost of services
    
(3,208
)
    
-
  
Amortization of acquired intangible assets on cost of cloud
    
(10,975
)
    
-
  
Valuation adjustment on acquired deferred cost of services
    
431
      
-
  
Cost of product revenue adjustment (1)
    
(175
)
    
(121
)
Cost of services revenue adjustment (1,2)
    
(1,875
)
    
(1,542
)
Cost of cloud revenue adjustment (1)
    
(769
)
    
(62
)
Non-GAAP cost of  revenue
  
$
92,805
    
$
66,453
  
                 
GAAP gross profit
  
$
189,888
    
$
151,498
  
Gross profit adjustments
    
25,356
      
8,158
  
Non-GAAP gross profit
  
$
215,244
    
$
159,656
  
                 
GAAP operating expenses
  
$
161,947
    
$
114,003
  
Research and development (1,2,3)
    
(2,211
)
    
(1,982
)
Sales and marketing (1,3)
    
(5,646
)
    
(3,346
)
General and administrative (1,2,3)
    
(1,886
)
    
(4,351
)
Amortization of acquired intangible assets
    
(10,565
)
    
(2,507
)
Non-GAAP operating expenses
  
$
141,639
    
$
101,817
  
                 
GAAP finance & other income (expense), net
  
$
(8,990
)
  
$
3,765
  
Amortization of discount on long term debt
    
7,165
      
-
  
Non-GAAP finance & other income (expense), net
  
$
(1,825
)
  
$
3,765
  
                 
GAAP taxes on income
  
$
1,662
    
$
6,003
  
Tax adjustments re non-GAAP adjustments
    
14,991
      
6,009
  
Non-GAAP taxes on income
  
$
16,653
    
$
12,012
  
                 
GAAP net income
  
$
17,289
    
$
35,257
  
Valuation adjustment on acquired deferred revenue
    
2,427
      
142
  
Valuation adjustment on acquired deferred cost of service of revenue
    
(431
)
    
-
  
Amortization of acquired intangible assets
    
31,106
      
8,798
  
Share-based compensation (1)
    
12,562
      
6,360
  
Re-organization expenses (2)
    
-
      
1,308
  
Acquisition related expenses (3)
    
-
      
3,736
  
Amortization of discount on long term debt
    
7,165
      
-
  
Tax adjustments re non-GAAP adjustments
    
(14,991
)
    
(6,009
)
Non-GAAP net income
  
$
55,127
    
$
49,592
  
                 
GAAP diluted earnings per share
  
$
0.28
    
$
0.58
  
                 
Non-GAAP diluted earnings per share
  
$
0.89
    
$
0.81
  
                 
Shares used in computing GAAP diluted earnings per share
    
61,751
      
60,851
  
                 
Shares used in computing Non-GAAP diluted earnings per share
    
61,751
      
60,851
  
 
NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
 
 
(1
)
Share-based Compensation
            
          
Quarter ended
  
          
March 31,
  
           
2017
      
2016
  
     
Cost of product revenue
  
$
(175
)
  
$
(121
)
     
Cost of service revenue
    
(1,875
)
    
(1,118
)
     
Cost of cloud revenue
    
(769
)
    
(6,360
)
     
Research and development
    
(2,211
)
    
(856
)
     
Sales and marketing
    
(5,646
)
    
(2,859
)
     
General and administrative
    
(1,886
)
    
(1,118
)
          
$
(12,562
)
  
$
(12,432
)
 
 
(2
)
Re-organization expenses
                
       
Quarter ended
  
          
March 31,
  
           
2017
      
2016
  
                       
     
Cost of service revenue
  
$
-
    
$
(198
)
     
Research and development
    
-
      
(1,102
)
     
General and administrative
    
-
      
(8
)
          
$
-
    
$
(1,308
)
 
 
(3
)
Acquisition related expenses
                
                       
          
Quarter ended
  
          
March 31,
  
           
2017
      
2016
  
                       
     
Research and development
  
$
-
    
$
(24
)
     
Sales and marketing
    
-
      
(487
)
     
General and administrative
    
-
      
(3,225
)
          
$
-
    
$
(3,736
)
 
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
   
March 31,
    
December 31,
  
   
2017
    
2016
  
   
Unaudited
    
Unaudited
  
             
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
266,751
    
$
157,026
  
Short-term investments
    
42,394
      
30,287
  
Trade receivables
    
205,683
      
260,220
  
Prepaid expenses and other current assets
    
68,964
      
57,966
  
Current assets of discontinued operations
    
2,182
      
3,734
  
                 
Total current assets
    
585,974
      
509,233
  
                 
LONG-TERM ASSETS:
                
Long-term investments
    
79,571
      
98,726
  
Other long-term assets
    
20,338
      
18,701
  
Property and equipment, net
    
97,309
      
87,678
  
Deferred tax assets
    
14,732
      
14,093
  
Other intangible assets, net
    
587,749
      
618,735
  
Goodwill
    
1,284,760
      
1,284,710
  
                 
Total long-term assets
    
2,084,459
      
2,122,643
  
                 
TOTAL ASSETS
  
$
2,670,433
    
$
2,631,876
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Current maturities of long term loan
  
$
-
    
$
21,164
  
Trade payables
    
25,548
      
25,634
  
Current portion of deferred revenues and advances from customers
    
194,813
      
149,801
  
Accrued expenses and other liabilities
    
246,645
      
273,134
  
Current liabilities of discontinued operations
    
574
      
3,077
  
                 
Total current liabilities
    
467,580
      
472,810
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues and advances from customers
    
29,117
      
22,710
  
Deferred tax liabilities
    
126,346
      
146,952
  
Long-term debt
    
441,504
      
444,016
  
Other long-term liabilities
    
34,728
      
34,056
  
                 
Total long-term liabilities
    
631,695
      
647,734
  
                 
SHAREHOLDERS' EQUITY
    
1,571,158
      
1,511,332
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
2,670,433
    
$
2,631,876
  
 

NICE LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands

   
Quarter ended
  
   
March 31,
  
   
2017
    
2016
  
   
Unaudited
    
Unaudited
  
             
Operating Activities
            
             
Net income
  
$
17,289
    
$
35,140
  
Adjustments to reconcile net income to net cash provided by operating activities
                
Depreciation and amortization
    
39,143
      
12,916
  
Stock based compensation
    
12,562
      
6,431
  
Amortization of premium and discount and accrued interest on marketable securities
    
190
      
969
  
Deferred taxes, net
    
(11,671
)
    
(3,586
)
Changes in operating assets and liabilities:
                
Trade Receivables
    
56,299
      
39,568
  
Prepaid expenses and other current assets
    
(6,787
)
    
13,036
  
Trade payables
    
(112
)
    
861
  
Accrued expenses and other current liabilities
    
(31,299
)
    
(26,714
)
Deferred revenue
    
50,664
      
35,688
  
Long term liabilities
    
(747
)
    
74
  
Amortization of discount on long term debt
    
7,165
      
-
  
Other
    
49
      
117
  
                 
  Net cash provided by operating activities
    
132,745
      
114,500
  
                 
Investing Activities
                
                 
Purchase of property and equipment
    
(10,414
)
    
(7,059
)
Purchase of Investments
    
(24,999
)
    
(27,952
)
Proceeds from Investments
    
32,016
      
39,118
  
Capitalization of software development costs
    
(6,938
)
    
(1,061
)
Payments for business acquisitions, net of cash acquired
    
-
      
(150,453
)
  Net cash used in investing activities
    
(10,335
)
    
(147,407
)
                 
Financing Activities
                
                 
Proceeds from issuance of shares upon exercise of share options
    
3,733
      
7,514
  
Purchase of treasury shares
    
(8,429
)
    
(22,673
)
Dividends paid
    
(9,637
)
    
(9,517
)
Repayment of long term debt
    
(260,000
)
    
-
  
Proceeds from issuance of exchangeable notes
    
260,842
      
-
  
  Net cash used in financing activities
    
(13,491
)
    
(24,676
)
                 
Effect of exchange rates on cash and cash equivalents
    
806
      
1,365
  
                 
Net change in cash and cash equivalents
    
109,725
      
(56,218
)
Cash and cash equivalents, beginning of period
    
157,026
      
325,931
  
                 
Cash and cash equivalents, end of period
  
$
266,751
    
$
269,713
  
 
*Certain comparative figures have been reclassified to conform to the current year presentation.