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NICE Beats on Q1 Earnings & Revenues, Scraps 2020 Guidance

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NICE’s (NICE - Free Report) first-quarter 2020 adjusted earnings of $1.34 per share beat the Zacks Consensus Estimate by 2.3% and also increased 13.6% year over year.

Further, non-GAAP revenues of $411.2 million trumped the consensus mark by 0.3% as well as improved 8.9% year over year.

Recurring revenues increased 400 basis points (bps) on a year-over-year basis to 75%.

Americans revenues were $337 million, up 17%. Moreover, revenues in EMEA were $48 million in the first quarter. APAC revenues increased 7% year over year to $26 million.
 

Nice Ltd. Price, Consensus and EPS Surprise

Nice Ltd. Price, Consensus and EPS Surprise

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

 

Notably, NICE withdrew its previously-issued financial guidance for 2020 due to the adverse COVID-19 impact.

Top-Line Details

Cloud revenues rose 26.9% year over year to $172.6 million. Services revenues inched up 1.3% from the year-ago quarter to $173.2 million.

However, products revenues declined 7.7% from the year-ago quarter to $64.6 million.

Customer engagement revenues were $328 million, up 8% year over year and represented 80% of total revenues. NICE witnessed solid demand for its cloud-based CXone@home solution for customer service space.

Notably, during the quarter, NICE won a seven-digit annual contract value (ACV) deal with a large financial institution that selected CXone with NICE’s full analytics portfolio. The financial institution replaced two incumbents by passing the order to NICE.

NICE’s analytics solution was also chosen by a major telecom player and one of the largest insurance companies in the world during the quarter under review.

The company also launched WM@home solution that comes with advanced remote management capabilities.

Other newly launched solutions included Investigate Xpress, which enables electronic sharing of information, both internally and externally, and even allows quarantined public safety personnel to continue working from home. The KYC Xpress speeds up Know Your Customer (KYC) processes by more than 80%.

Moreover, NICE won two eight-digit orders, one with a large global financial services integrator, and the other with a major federal agency in the reported quarter.

Financial crime and compliance revenues increased 14% to $83 million, representing 20% of total revenues. NICE signed a new strategic partnership with Infosys (INFY - Free Report) for its financial crime and compliance solutions. The partnership makes Infosys a reseller of NICE’s AML (full form) and fraud solutions globally.

Operating Details

Gross margin expanded 30 basis points (bps) year over year to 71% in the reported quarter, driven by higher cloud gross margin.

Research & development (R&D) expenses increased 13.3% year over year to $52.8 million. As a percentage of revenues, R&D expenses were up 50 bps year over year to 12.9%.

Sales & marketing (S&M) expenses were $99.8 million, down 2.2% year over year. As a percentage of revenues, S&M expenses decreased 280 bps to 24.3%.

General & administrative (G&A) expenses jumped 41.5% year over year to $49.1 million. As a percentage of revenues, G&A increased 280 bps on a year-over-year basis to 12%.

Operating margin expanded 60 bps on a year-over-year basis to 14.3%.

Balance Sheet & Other Details

As of Mar 31, 2020, NICE had cash and cash equivalents (including short & long-term investments) worth $1.04 billion compared with $981.5 million as of Dec 31, 2019.

Total debt as of Mar 31, 2020 was $467.2 million compared with $464.9 million as of Dec 31, 2019.

The company’s quarterly cash flow came in at $154.8 million, down 15.1% year over year.

Guidance

For second-quarter 2020, revenues are expected between $387 million and $397 million. Non-GAAP earnings are expected between $1.28 and $1.38 per share.

Zacks Rank & Stocks to Consider

NICE currently carries a Zacks Rank #3 (Hold). Anaplan and NVIDIA (NVDA - Free Report) are some better-ranked stocks in the broader computer and technology sector. While Anaplan sports a Zacks Rank #1 (Strong Buy), NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA and Anaplan are set to report quarterly results on May 21 and 26, respectively.


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