Slide 1: 2019 Second Quarter Results
2019 SECOND QUARTER RESULTS Ended June 30, 2019
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,” “inten
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: Q2 2019 Highlights, Income Statement, Balance Sheet and Cash Flow, Outlook
Q2 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 5: Q2 2019 Highlights (Non-GAAP)
Q2 2019 Highlights (Non-GAAP) Cloud revenue Recurring Product revenue Total revenue increased 30%; revenue increased 25% increased 11%; to and increased to increased to 72% $381M 38% of total revenue Gross margin Operating margin EPS increased Company increased to increased to 26.6%; 14%; to $1.25 i
Slide 6: Income Statement
Q2 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 7: Solid Growth and Execution
Solid Growth and Execution TOTAL REVENUES (Non-GAAP, $M) 381 344 • Total revenue grew 11% YoY • Cloud revenue increased 30% and product revenue increase 25% 11% • Recurring revenue represented 72% of total revenue • Cloud revenue represented 38% of total revenue in Q2 2019 compared to 32% in Q2 2018
Slide 8: GAAP and Non-GAAP Income Statement
GAAP and Non-GAAP Income Statement $M (except EPS) Q2 2019 Q2 2018 GAAP revenue 380.4 342.0 Valuation adjustment on acquired deferred product revenue 0.0 0.0 Valuation adjustment on acquired deferred service revenue 0.0 0.2 Valuation adjustment on acquired deferred cloud revenue 1.0 1.4 Non-GAAP rev
Slide 9: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q2 2019 Q2 2018 GAAP taxes on income 10.7 9.2 Tax adjustment re non-GAAP adjustments 11.1 9.3 Non-GAAP taxes on income 21.8 18.5 GAAP net income 42.0 34.2 Valuation adjustment on acquired deferred revenue 0.9 1.7 Valuation adjustment on acqu
Slide 10: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q2 2019 Q2 2018 (1) Shared-based Compensation Cost of product revenue (0.1) - Cost of services revenue (2.0) (1.9) Cost of cloud revenue (0.9) (0.6) Research and development (1.6) (1.8) Sales and marketing (5.7) (6.9) General and administrat
Slide 11: Q2 2019 Revenue Breakdown by Region (Non-GAAP)
Q2 2019 Revenue Breakdown by Region (Non-GAAP) 80% 13% AMERICAS EMEA $307M, +16% YoY $48M, +0% YoY 7% APAC $26M, -14% YoY 11
Slide 12: Q2 2019 Revenue Breakdown by Business Unit (Non-GAAP)
Q2 2019 Revenue Breakdown by Business Unit (Non-GAAP) 18% FINANCIAL CRIME & COMPLIANCE $68M, +10% YoY 82% CUSTOMER ENGAGEMENT $313M, +11% YoY 12
Slide 13: Gross Profit and Gross Margin Q2 2019 (Non-GAAP)
Gross Profit and Gross Margin Q2 2019 (Non-GAAP) 100.0% $330 95.0% $271M $280 90.0% $242M 85.0% $230 80.0% Axis Title 75.0% $180 70.9% 70.0% 70.5% $130 65.0% 60.0% $80 55.0% 50.0% $30 Q2 18 Q2 19 Gross Profit Gross Margin Gross margin improved due to the mix of product and the continued expansion of
Slide 14: Gross Margin Q2 2019 (Non-GAAP)
Gross Margin Q2 2019 (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 92.6%| +500bp 71.0%| +40bp 61.4%| -120bp Service GM Service GM Product GM 71.0% 92.6% 70.6% Product GM 87.6% Cloud GM Cloud 62.6% GM 61.4% Q2 18 Q2 19 Q2 18 Q2 19 Q2 18 Q2 19 • Product gross margin increased due to product m
Slide 15: Operating Income and Operating Margin Q2 2019 (Non-GAAP)
Operating Income and Operating Margin Q2 2019 (Non-GAAP) $110 34.0% $101M $100 32.0% $89M $90 30.0% $80 Axis Title 28.0% 26.6% $70 26.0% $60 25.8% 24.0% $50 22.0% $40 20.0% $30 Q2 18 Q2 19 Operating Income Operating Margin 15
Slide 16: Cost Ratios Q2 2019 (Non-GAAP)
Cost Ratios Q2 2019 (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue S&M R&D R&D 24.1% S&M G&A 14.3% 14.1% 23.4% 9.2% G&A 2.2%* 8.4% 2.3%* 12.1% 11.8% Q2 18 Q2 19 Q2 18 Q2 19 Q2 18 Q2 19 * R&D capitalization 16
Slide 17: Balance Sheet and Cash Flow Analysis
Q2 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 18: Balance Sheet
Balance Sheet June 30, 2019 Assets ($M) 06/30/2019 12/31/2018 Equity & Liabilities ($M) 06/30/2019 12/31/2018 Cash and cash equivalents 236.3 242.1 Trade payables 30.9 29.6 Short term investments 273.0 243.7 Deferred revenue and advances from customers 280.6 221.4 Trade receivables 269.0 287.9 Curre
Slide 19: Cash Flow From Operations
Cash Flow From Operations $M Q2 19* Q2 18 %∆ H1 19 H1 18 %∆ Cash flow from operations 18.0 63.8 (72%) 200.4 200.7 (0.1%) - Capital expenditure 6.6 8.2 (20%) 15.0 13.6 10% - Capitalization of software development 8.9 7.7 16% 17.4 15.5 12% Cash flow from operations after capex & software capitalizatio
Slide 20: Cash Movement and Liquidity
Cash Movement and Liquidity June 30, 2019 Operating CF Acquitions $200 Proceeds from Option Exercises -$26 Capex $3 Other $6 -$32 Buyback Liquidity 06/30/19 -$15 $867 Liquidity 12/31/18 $731 * CAPEX movement includes R&D capitalization 20
Slide 21: Outlook
Q2 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 22: Outlook (Non-GAAP)
Outlook* (Non-GAAP) Q3 2019 FY 2019 Revenue ($M) 380-390 1,563-1,583 EPS ($) 1.23-1.33 5.13-5.33 The outlook is provided as of August 8, 2019. 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
Slide 23: NICE
23 NICE