Slide 1: 2019 Third Quarter Results
2019 THIRD QUARTER RESULTS Ended September 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: Q3 2019 Highlights
Q3 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 5: Q3 2019 Highlights (Non-GAAP)
Q3 2019 Highlights (Non-GAAP) Cloud revenue Recurring Total revenue increased 27%; revenue increased 8%; to and increased to increased to 74%; $387M 39% of total Compared to 70% revenue last year Operating margin EPS increased 8%; Company increased to 27.4%; to $1.30 increased full compared to 27.0%
Slide 6: Income Statement
Q3 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) 387 359 • Total revenue grew 8% YoY • Cloud revenue increased 27% • Cloud revenue represented 39% of total revenue in 8% Q3 2019 compared to 33% in Q3 2018 • Recurring revenue represented 74% of total revenue compared to 70% in Q3 2018 Q3 18 Q
Slide 8: GAAP and Non-GAAP Income Statement
GAAP and Non-GAAP Income Statement $M (except EPS) Q3 2019 Q3 2018 GAAP revenue 386.3 356.2 Valuation adjustment on acquired deferred product revenue 0.0 0.0 Valuation adjustment on acquired deferred service revenue 0.0 0.1 Valuation adjustment on acquired deferred cloud revenue 0.8 2.3 Non-GAAP rev
Slide 9: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q3 2019 Q3 2018 GAAP taxes on income 10.9 5.2 Tax adjustment re non-GAAP adjustments 13.3 15.3 Non-GAAP taxes on income 24.2 20.5 GAAP net income 45.0 39.3 Valuation adjustment on acquired deferred revenue 0.9 2.4 Valuation adjustment on acq
Slide 10: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q3 2019 Q3 2018 (1) Shared-based Compensation Cost of product revenue 0.1 0.1 Cost of services revenue 2.1 2.1 Cost of cloud revenue 0.4 0.7 Research and development 2.0 1.6 Sales and marketing 7.7 8.9 General and administrative 9.0 3.9 21.3
Slide 11: Q3 2019 Revenue Breakdown by Region (Non-GAAP)
Q3 2019 Revenue Breakdown by Region (Non-GAAP) 81% 12% AMERICAS EMEA $313M, +10% YoY $47M, -5% YoY 7% APAC $27M, +13% YoY 11
Slide 12: Q3 2019 Revenue Breakdown by Business Unit (Non-GAAP)
Q3 2019 Revenue Breakdown by Business Unit (Non-GAAP) 19% FINANCIAL CRIME & COMPLIANCE $72M, +2% YoY 81% CUSTOMER ENGAGEMENT $315M, +9% YoY 12
Slide 13: Gross Profit and Gross Margin Q3 2019 (Non-GAAP)
Gross Profit and Gross Margin Q3 2019 (Non-GAAP) 100.0% $330 95.0% $274M $280 90.0% $255M 85.0% $230 80.0% Axis Title 75.0% $180 71.0% 70.9% 70.0% $130 65.0% 60.0% $80 55.0% 50.0% $30 Q3 18 Q3 19 Gross Profit Gross Margin 13
Slide 14: Gross Margin Q3 2019 (Non-GAAP)
Gross Margin Q3 2019 (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 92.8%| +380bp 71.5%| +20bp 61.9%| +30bp Service GM Service GM Product GM 71.3% 71.5% Product GM 92.8% 89.0% Cloud Cloud GM GM 61.6% 61.9% Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 • Product gross margin increased due to product mi
Slide 15: Operating Income and Operating Margin Q3 2019 (Non-GAAP)
Operating Income and Operating Margin Q3 2019 (Non-GAAP) $110 $106M 34.0% $97M $100 32.0% $90 30.0% $80 27.4% Axis Title 28.0% $70 26.0% 27.0% $60 24.0% $50 22.0% $40 20.0% $30 Q3 18 Q3 19 Operating Income Operating Margin Operating income increased as a result of an increase in revenue coupled with
Slide 16: Cost Ratios Q3 2019 (Non-GAAP)
Cost Ratios Q3 2019 (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue R&D 14.6% R&D S&M 14.2% S&M 22.7% 22.9% G&A G&A 2.0%* 8.7% 8.6% 2.2%* 12.6% 12.0% Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 * R&D capitalization 16
Slide 17: Balance Sheet and Cash Flow Analysis
Q3 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 18: Balance Sheet
Balance Sheet September 30, 2019 Assets ($M) 09/30/2019 12/31/2018 Equity & Liabilities ($M) 09/30/2019 12/31/2018 Cash and cash equivalents 220.8 242.1 Trade payables 22.6 29.6 Short term investments 226.0 243.7 Deferred revenue and advances from customers 242.2 221.4 Trade receivables 260.0 288.0
Slide 19: Cash Flow From Operations
Cash Flow From Operations $M Q3 19 Q3 18 %∆ 9M 19 9M 18 %∆ Cash flow from operations 82.3 87.0 (5%) 282.7 287.7 (2%) - Capital expenditure 6.5 8.0 (19%) 21.5 21.5 - - Capitalization of software development 8.5 7.5 13% 25.9 22.9 13% Cash flow from operations after capex & software capitalization 67.3
Slide 20: Cash Movement and Liquidity
Cash Movement and Liquidity September 30, 2019 Proceeds from Option Exercises Operating CF $5 Acquitions Capex Other $283 -$26 -$47 $4 Buyback Liquidity 09/30/19 -$23 $927 Liquidity 12/31/18 $731 * CAPEX movement includes R&D capitalization 20
Slide 21: Outlook
Q3 2019 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 22: Outlook (Non-GAAP)
Outlook* (Non-GAAP) FY 2019 Revenue ($M) 1,563-1,583 EPS ($) 5.15-5.35 The outlook is provided as of November 14, 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 is in addition to the
Slide 23: NICE
23 NICE