Slide 1: 2020 Second Quarter Results
2020 SECOND QUARTER RESULTS Ended June 30, 2020
Slide 2: Forward Looking Statements Disclaimer
Forward Looking Statements Disclaimer This presentation 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,” “inte
Slide 3: Explanation of Non-GAAP measures
Explanation of Non-GAAP measures Non-GAAP financial measures are included in this presentation. 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 disco
Slide 4: Q2 2020 Highlights, Income Statement, Balance Sheet and Cash Flow, Outlook
Q2 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 5: Q2 2020 Highlights
Q2 2020 Highlights* Total revenue Cloud revenue Q2 cloud gross Recurring revenue increased 4%; to increased 30% margin increased increased to 80% $395M compared compared to Q2 430 bps to 65.7%; of total revenue; to Q2 2019 2019; and to 47% compared to compared to 72% of total revenue; 61.4% in Q2 la
Slide 6: Income Statement
Q2 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 7: Solid Growth and Execution
Solid Growth and Execution REVENUES (Non-GAAP, $M) • Growth in total revenue driven by 30% 381 395 increase in cloud revenue in Q2 • Cloud revenue of $186M represented 47% of total revenue in Q2 4% • Recurring revenue accounted for 80% of total revenue for Q2 compared to 72% last year Q2 19 Q2 20 EA
Slide 8: GAAP and Non-GAAP Income Statement
GAAP and Non-GAAP Income Statement $M (except EPS) Q2 2020 Q2 2019 GAAP revenues 393.2 380.4 Valuation adjustment on acquired deferred cloud revenue 2.0 1.0 Non-GAAP revenues 395.1 381.4 GAAP Cost of revenue 135.7 130.8 Amortization of acquired intangible assets on cost of product (1.1) (1.0) Amorti
Slide 9: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q2 2020 Q2 2019 GAAP finance & other expense (income), net (0.4) 0.7 Amortization of discount on long term debt (2.5) (2.1) Non-GAAP finance & other expense (income), net (2.9) (1.4) GAAP taxes on income 12.0 10.7 Tax adjustments re non-GAAP
Slide 10: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q2 2020 Q2 2019 (1) Shared-based Compensation Cost of product revenue 0.0* 0.1 Cost of services revenue 1.7 2.0 Cost of cloud revenue 0.9 0.9 Research and development 2.4 1.6 Sales and marketing 8.8 5.8 General and administrative 11.3 8.0 25
Slide 11: Q2 2020 Revenue Breakdown by Region (Non-GAAP)
Q2 2020 Revenue Breakdown by Region (Non-GAAP) 80.4% 11.3% AMERICAS EMEA $317M, +3% YoY $45M, -8% YoY* 8.3% APAC $33M, +28% YoY * EMEA growth at constant currency is -5%
Slide 12: Q2 2020 Revenue Breakdown by Business Unit (Non-GAAP)
Q2 2020 Revenue Breakdown by Business Unit (Non-GAAP) 18% FINANCIAL CRIME & COMPLIANCE $72M, +6% YoY 82% CUSTOMER ENGAGEMENT $323M, +3% YoY
Slide 13: Gross Profit and Gross Margin Q2 2020 (Non-GAAP)
Gross Profit and Gross Margin Q2 2020 (Non-GAAP) 100.0% $330 95.0% $281M $271M $280 90.0% 85.0% $230 80.0% Axis Title 75.0% $180 71.0% 70.0% 70.9% $130 65.0% 60.0% $80 55.0% 50.0% $30 Q2 19 Q2 20
Slide 14: Gross Margin Q2 2020 (Non-GAAP)
Gross Margin Q2 2020 (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 89.6%| -300bp 72.6%| +160bp 65.7%| +430bp Product GM Service GM 92.6% Product GM 72.6% Cloud 89.6% Service GM GM 71.0% 65.7% Cloud GM 61.4% Q2 19 Q2 20 Q2 19 Q2 20 Q2 19 Q2 20 • Product gross margin declined due to different
Slide 15: Operating Income and Operating Margin Q2 2020 (Non-GAAP)
Operating Income and Operating Margin Q2 2020 (Non-GAAP) $120 34.0% $111M $110 32.0% $101M $100 30.0% $90 28.2% $80 Axis Title 28.0% $70 26.0% 26.6% $60 24.0% $50 22.0% $40 20.0% $30 Q2 19 Q2 20 Operating Income Operating Margin • Operating income increased as a result of strong operating leverage
Slide 16: Cost Ratios Q2 2020 (Non-GAAP)
Cost Ratios Q2 2020 (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue R&D R&D 15.4% S&M G&A 14.1% 23.4% S&M 9.2% 2.4%* 22.5% 2.3%* G&A 13.0% 7.4% 11.8% Q2 19 Q2 20 Q2 19 Q2 20 Q2 19 Q2 20 • G&A decreased primarily due to reduced travel * R&D capitalization
Slide 17: Balance Sheet and Cash Flow Analysis
Q2 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 18: Balance Sheet
Balance Sheet June 30, 2020 Assets ($M) 06/30/2020 12/31/2019 Equity & Liabilities ($M) 06/30/2020 12/31/2019 Cash and cash equivalents 344.1 228.3 Trade payables 27.7 30.3 Short term investments 758.9 210.8 Deferred revenues and advances from customers 276.8 245.8 Trade receivables 302.0 319.6 Curr
Slide 19: Cash Flow From Operations
Cash Flow From Operations $M Q2 20 Q2 19 %∆ H1 20 H1 19 %∆ Cash flow from operations 59.6 18.0 231% 214.4 200.4 7% - Capital expenditure 7.8 6.6 18% 17.5 15.0 17% - Capitalization of software development 9.9 8.9 11% 19.2 17.4 10% Cash flow from operations after capex & software capitalization 41.9 2
Slide 20: Cash Movement and Liquidity
Cash Movement and Liquidity June 30, 2020 Proceeds from Option Exercises Operating CF $7 Acquitions Other $214 -$51 Capex $17 -$37 Buyback Liquidity 06/30/20 -$28 $1,103 Liquidity 12/31/19 $981 * CAPEX movement includes R&D capitalization
Slide 21: Outlook
Q2 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 22: Outlook (Non-GAAP)
Outlook* (Non-GAAP) Q3 2020 Revenue ($M) 403-413 EPS ($) 1.33-1.43 The outlook is provided as of August 6, 2020. There is no guarantee that the Company will change or update these figures in this presentation should a need arise in the future to update the outlook. This is in addition to the forward
Slide 23: NICE
NICE