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NICE Q3 Earnings Top Estimates, Cloud Revenues Drive Top Line

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NICE (NICE - Free Report) reported adjusted earnings of $2.27 per share in third-quarter 2023, which beat the Zacks Consensus Estimate by 5.58% and increased 18% year over year.

Non-GAAP revenues of $601.3 million trumped the consensus mark by 1.14% and grew 8% year over year.

Revenues in Americas were $502 million, up 10% year over year. Revenues in EMEA were $60 million in the reported quarter, down 2%. APAC revenues increased 10% year over year to $39 million.

Top-Line Details

Cloud revenues (67.1% of revenues) of $403.3 million beat the Zacks Consensus Estimate by 0.37% and rose 22% year over year.

Nice Price, Consensus and EPS Surprise

 

Nice Price, Consensus and EPS Surprise

Nice price-consensus-eps-surprise-chart | Nice Quote

 
Product revenues (6.3% of revenues) of $37.8 million beat the consensus mark by 5.09% but declined 36% from the year-ago quarter’s levels.

Service revenues (26.6% of revenues) of $160.2 million beat the consensus mark by 2.18% but dropped 3% from the year-ago quarter’s figure.

Customer Engagement revenues increased 10% year over year to $498 million.

Financial Crime & Compliance remain unchanged year over year at $103 million.

On a non-GAAP basis, the gross margin contracted 130 basis points (bps) to 72.2% in the reported quarter. Product margin contracted 370 bps to 86.1% in the reported quarter. Services margin inched down 40 bps to 73.6%.

Cloud margin held steady year over year at 0 bps, maintaining a level of 70.4%.

Research & development (R&D) expenses, as a percentage of revenues, increased 80 bps year over year to 14.1%. Sales & marketing (S&M) expenses, as a percentage of revenues, contracted 460 bps to 24%.

General & administrative (G&A) expenses, as a percentage of revenues, increased 30 bps on a year-over-year basis to 11.3%.

On a non-GAAP basis, operating expenses, as a percentage of revenues, dropped 320 bps year over year to 41.7%.

The operating margin expanded 190 bps on a year-over-year basis to 30.6%.

Balance Sheet & Other Details

As of Sep 30, 2023, NICE had cash and cash equivalents (including short-term investments) worth $1.65 billion.

Long-term debt, as of Sep 30, 2023, was $456.6 million.

The company’s cash flow from operations in the third quarter came in at $120.6 million.

Guidance

For 2023, NICE projects non-GAAP revenues to be between $2,359 million and $2,379 million.

Non-GAAP earnings are estimated in the $8.58-8.78 per share band.

Zacks Rank & Key Picks

NICE currently carries a Zacks Rank #3 (Hold).

NICE’s shares have gained 1.4% compared with the Zacks Computer and Technology sector’s rise of 43.9% in the year-to-date period.

Synopsys (SNPS - Free Report) , Asana (ASAN - Free Report) and Snowflake (SNOW - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Synopsys’ shares have surged 66% year to date. SNPS is set to report its fourth-quarter fiscal 2023 results on Nov 29.

Asana’s shares have rallied 52.4% year to date. ASAN is set to report its third-quarter fiscal 2024 results on Dec 5.

Snowflake’s shares have returned 12.1% year to date. SNOW is set to report its third-quarter fiscal 2024 results on Nov 29.


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