Slide 1: 2018 Fourth Quarter and Full Year Results
2018 FOURTH QUARTER AND FULL YEAR RESULTS Ended December 31, 2018
Slide 2: Forward Looking Statements Disclaimer
Forward Looking Statements Disclaimer 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,” “inte
Slide 3: Explanation of Non-GAAP measures
Explanation of Non-GAAP measures 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 expe
Slide 4: Agenda
Q4 and Full Year 2018 Highlights Income Statement (Including 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606) Balance Sheet and Cash Flow Analysis Outlook
Slide 5: Q4 and Full Year 2018 Highlights
Q4 and Full Year 2018 Highlights* Q4 Cloud FY Recurring Q4 and FY cloud Record revenue for revenue revenue increased revenue: Q4 and FY: $420M increased 29% to 70% of total represented 32% and $1,463M, to $134M revenue of total revenue respectively compared to Q4 compared to 65% vs. 26% in Q4 17 las
Slide 6: Income Statement (Including 2018 Quarterly Reconciliation)
Q4 and Full Year 2018 Highlights Income Statement (Including 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606) Balance Sheet and Cash Flow Analysis Outlook
Slide 7: Solid Growth and Execution
Solid Growth and Execution* REVENUES (Non-GAAP, $M) 1463 1346 • Record revenue in Q4 and FY 2018 • Cloud revenue increased 29% and 27% in Q4 and FY 2018, respectively 9% • Cloud revenue represented 32% of total 396 420 revenue in Q4 and FY 2018 compared to 26% 6% and 27% in Q4 and FY 2017, respectiv
Slide 8: GAAP and Non-GAAP Income Statement
GAAP and Non-GAAP Income Statement* $M (except EPS) Q4 2018 Q4 2017 FY 2018 FY 2017 GAAP revenue 410.8 392.2 1,444.5 1,332.2 Valuation adjustment on acquired deferred product revenue - 0.0 0.0 0.3 Valuation adjustment on acquired deferred service revenue 0.0 0.8 0.6 4.7 Valuation adjustment on acqui
Slide 9: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement* (cont.) $M (except EPS) Q4 2018 Q4 2017 FY 2018 FY 2017 GAAP finance & other expense, net 1.8 3.7 10.9 20.4 Amortization of discount on long term debt (2.2) (2.1) (8.7) (13.5) Non-GAAP finance & other expense (income), net ASC 605 (0.3) 1.5 2.2 6.9 GAAP taxes on i
Slide 10: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement* (cont.) $M (except EPS) Q4 2018 Q4 2017 FY 2018 FY 2017 (1) Shared-based Compensation Cost of product revenue (0.1) (0.2) (0.4) (0.7) Cost of services revenue (1.9) (2.1) (7.6) (7.7) Cost of cloud revenue (0.9) (0.8) (3.0) (3.0) Research and development (1.6) (2.4
Slide 11: 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606
2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606 $M (except EPS) Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 GAAP revenue 335.4 342.0 356.2 410.8 1,444.5 Valuation adjustment on acquired deferred product revenue 0.0 0.1 0.0 - 0.1 Valuation adjustment on acquired deferred service revenue 0.3 0.2 0.1 0
Slide 12: 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606 (continued)
2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606 (continued) $M (except EPS) Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 GAAP finance & other expense, net 4.0 2.9 2.2 1.9 10.9 Amortization of discount on long term debt (2.2) (2.1) (2.2) (2.2) (8.7) Non-GAAP finance & other expense (income), net ASC 6
Slide 13: 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606 (continued)
2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606 (continued) $M (except EPS) Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 (1) Shared-based Compensation Cost of product revenue (0.2) - (0.1) (0.1) (0.4) Cost of services revenue (1.7) (1.9) (2.1) (1.9) (7.6) Cost of cloud revenue (0.8) (0.6) (0.7) (0.9)
Slide 14: Q4 2018 Revenue Breakdown by Region
Q4 2018 Revenue Breakdown by Region* (Non-GAAP) 79% 13% AMERICAS EMEA $332M, +6% YoY $55M, +1% YoY 8% APAC $33M, +17% YoY * All numbers presented are Non-GAAP under ASC 605 14
Slide 15: Full Year 2018 Revenue Breakdown by Region
Full Year 2018 Revenue Breakdown by Region* (Non-GAAP) 78% 14% AMERICAS EMEA $1,140M, +9% YoY $209M, +9% YoY 8% APAC $114M, +7% YoY * All numbers presented are Non-GAAP under ASC 605 15
Slide 16: Q4 2018 Revenue Breakdown by Business Unit
Q4 2018 Revenue Breakdown by Business Unit* (Non-GAAP) 23% FINANCIAL CRIME & COMPLIANCE $98M, +5% YoY 77% CUSTOMER ENGAGEMENT $322M, +6% YoY 16 * All numbers presented are Non-GAAP under ASC 605
Slide 17: Full Year 2018 Revenue Breakdown by Business Unit
Full Year 2018 Revenue Breakdown by Business Unit* (Non-GAAP) 20% FINANCIAL CRIME & COMPLIANCE $297M, +6% YoY 80% CUSTOMER ENGAGEMENT $1,166M, +9% YoY 17 * All numbers presented are Non-GAAP under ASC 605
Slide 18: Gross Profit and Gross Margin (Non-GAAP)
Gross Profit and Gross Margin* (Non-GAAP) $1,200 $350 $304 $1,041 90.0% $293 $300 90.0% $964 $1,000 $250 $800 80.0% 80.0% $200 $600 74.2% $150 72.4% 71.6% 71.1% $400 70.0% 70.0% $100 $200 $50 60.0% $- 60.0% $- Q4 17 Q4 18 FY 17 FY 18 Gross Income Gross Margin Gross Income Gross Margin The decrease i
Slide 19: Gross Margin Q4 2018 (Non-GAAP)
Gross Margin Q4 2018* (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 93.8%| -110bp 68.8%| +70bp 58.9%| -190bp Product GM Product GM 94.9% 93.8% Service GM Service GM 68.8% 68.1% Cloud GM Cloud 61.7% GM 59.8% Q4 17 Q4 18 Q4 17 Q4 18 Q4 17 Q4 18 • Product gross margin decreased as a result of
Slide 20: Gross Margin Full Year 2018 (Non-GAAP)
Gross Margin Full Year 2018* (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 91.2%| -50bp 69.2%| +160bp 61.8%| +50bp Product GM Product GM 91.7% 91.2% Service GM Service GM 69.2% 67.6% Cloud Cloud GM GM 61.3% 61.8% FY 17 FY 18 FY 17 FY 18 FY 17 FY 18 • Increase in service margin is due to the
Slide 21: Operating Income and Operating Margin (Non-GAAP)
Operating Income and Operating Margin* (Non-GAAP) 40.0% $130 40.0% $430 $119M $120 $379M $380 35.0% $112M 35.0% $110 $336M $330 $100 30.0% 28.4% 28.3% 30.0% $280 $90 25.9% 25.0% Axis Title Axis Title Axis Title Axis Title 25.0% $80 25.0% $230 $70 $180 20.0% 20.0% $60 $130 $50 15.0% 15.0% $80 $40 10.
Slide 22: Cost Ratio Q4 2018 (Non-GAAP)
Cost Ratio Q4 2018* (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue S&M 25.5% S&M 24.4% R&D G&A 13.8% 9.0% R&D 13% G&A 1.7%** 8.2% 2.2%** 12.1% 10.8% Q4 17 Q4 18 Q4 17 Q4 18 Q4 17 Q4 18 • Increase in G&A is primarily due to acquisition expense related to the acquisition of Mat
Slide 23: Cost Ratio Full Year 2018 (Non-GAAP)
Cost Ratio Full Year 2018* (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue S&M 25.1% S&M R&D R&D 24.4% 14.9% 14.2% G&A G&A 8.9% 2.1%** 8.7% 2.2%** 12.8% 12.0% FY 17 FY 18 FY 17 FY 18 FY 17 FY 18 • The increase in G&A is due to acquisition expense related to the acquisition of
Slide 24: Balance Sheet and Cash Flow Analysis
Q4 and Full Year 2018 Highlights Income Statement (Including 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606) Balance Sheet and Cash Flow Analysis Outlook
Slide 25: Balance Sheet
Balance Sheet* December 31, 2018 Assets ($M) 12/31/2018 12/31/2017 Equity & Liabilities ($M) 12/31/2018 12/31/2017 Cash and cash equivalents 242.1 328.3 Trade payables 29.6 29.4 Short term investments 243.7 64.0 Deferred revenue and advances from customers 221.4 184.6 Trade receivables 287.9 230.7 A
Slide 26: Cash Flow From Operations
Cash Flow From Operations $M Q4 18 Q4 17 %∆ FY 18 FY 17 %∆ Cash flow from operations 108.9 86.6 26% 396.6 394.7 0.5% - Capital expenditure 9.9 8.5 16% 31.4 39.9 (21%) - Capitalization of software development 9.3 6.9 35% 32.2 27.9 15% Cash flow from operations after capex & software capitalization 89
Slide 27: Cash Movement and Liquidity
Cash Movement and Liquidity December 31, 2018 Proceeds from Option Exercises Operating CF Acquitions $19 $397 -$105 Other Capex -$15 -$64 Buyback -$26 Liquidity21/31/18 $731 Liquidity 12/31/17 $525 * CAPEX movement includes R&D capitalization 27
Slide 28: Outlook
Q4 and Full Year 2018 Highlights Income Statement (Including 2018 Quarterly Reconciliation GAAP to non-GAAP ASC 606) Balance Sheet and Cash Flow Analysis Outlook
Slide 29: Outlook (Non-GAAP)
Outlook* (Non-GAAP) Q1 2019 FY 2019 Revenue ($M) $370-$380 $1,558-$1,582 EPS ($) $1.05-$1.15 $5.08-$5.28 * The outlook presented is non-GAAP under ASC 606 The outlook is provided as of February 14, 2019. There is no guarantee that the Company will change or update these figures in this presentation
Slide 30: NICE
30 NICE