Slide 1: 2020 Third Quarter Results
2020 THIRD QUARTER RESULTS Ended September 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,” “inten
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: Q3 2020 Highlights, Income Statement, Balance Sheet, Outlook
Q3 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 5: Q3 2020 Highlights
Q3 2020 Highlights* Total revenue Cloud revenue Q3 cloud gross Recurring revenue increased 7%; to increased 35% margin increased increased to 81% $412M compared and to 50% of to 65.6%; of total revenue; to Q3 2019 total revenue; compared to compared to 74% compared to 39% 61.9% in Q3 last in Q3 last
Slide 6: Income Statement
Q3 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) 412 • Growth in total revenue driven by record 35% 387 increase in cloud revenue • Cloud revenue reached 50% of total revenue 7% • Recurring revenue continue to increase and accounted for 81% of total revenue for Q3 compared to 74% last year Q3 19 Q
Slide 8: GAAP and Non-GAAP Income Statement
GAAP and Non-GAAP Income Statement (USD in thousands except EPS) Quarter ended Year to date September 30, September 30, 2020 2019 2020 2019 GAAP revenues $ 409,827 $ 386,263 $ 1,213,435 $ 1,143,704 Valuation adjustment on acquired deferred product revenue - - - 15 Valuation adjustment on acquired de
Slide 9: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) (USD in thousands except EPS) Quarter ended Year to date September 30, September 30, 2020 2019 2020 2019 GAAP financial and other expense/(income), net $ 1,032 $ (252) $ 2,259 $ 3,890 Amortization of discount on debt (3,070) (2,377) (7,944) (6,847) Non-GAAP
Slide 10: GAAP and Non-GAAP Income Statement (cont.)
GAAP and Non-GAAP Income Statement (cont.) (USD in thousands) (1) Share-based Compensation Quarter ended Year to date September 30, September 30, 2020 2019 2020 2019 Cost of product revenue $ 69 $ 97 $ 205 $ 304 Cost of services revenue 1,677 2,106 4,957 6,251 Cost of cloud revenue 809 358 2,601 2,1
Slide 11: Revenue Breakdown by Region (Non-GAAP)
Q3 2020 Revenue Breakdown by Region (Non-GAAP) 83% 11% AMERICAS EMEA $343M, +10% YoY $44M, -5% YoY 6% APAC $25M, -8% YoY
Slide 12: Revenue Breakdown by Business Unit (Non-GAAP)
Q3 2020 Revenue Breakdown by Business Unit (Non-GAAP) 18% FINANCIAL CRIME & COMPLIANCE $75M, +4% YoY 82% CUSTOMER ENGAGEMENT $337M, +7% YoY
Slide 13: Gross Profit and Gross Margin Q3 2020 (Non-GAAP)
Gross Profit and Gross Margin Q3 2020 (Non-GAAP) 100.0% $330 95.0% $293M $274M $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 Q3 19 Q3 20
Slide 14: Gross Margin Q3 2020 (Non-GAAP)
Gross Margin Q3 2020 (Non-GAAP) PRODUCT MARGIN SERVICES MARGIN CLOUD MARGIN 89.1%| -370bp 73.4%| +190bp 65.6%| +370bp Product GM Service GM 92.8% 73.4% Cloud Product GM Service GM 89.1% 71.5% GM 65.6% Cloud GM 61.9% Q3 19 Q3 20 Q3 19 Q3 20 Q3 19 Q3 20 • Product gross margin declined due to different
Slide 15: Operating Income and Operating Margin Q3 2020 (Non-GAAP)
Operating Income and Operating Margin Q3 2020 (Non-GAAP) $130 34.0% $117M $120 32.0% $106M $110 $100 30.0% 28.3% $90 Axis Title 28.0% $80 27.4% 26.0% $70 $60 24.0% $50 22.0% $40 20.0% $30 Q3 19 Q3 20 Operating Income Operating Margin • Operating income increased as a result of strong operating lever
Slide 16: Cost Ratios Q3 2020 (Non-GAAP)
Cost Ratios Q3 2020 (Non-GAAP) R&D S&M G&A As % of revenue As % of revenue As % of revenue R&D R&D 15.2% 14.2% S&M 22.9% S&M 2.3%* 22.2% G&A 8.6% 2.2%* G&A 7.7% 12.8% 12.0% Q3 19 Q3 20 Q3 19 Q3 20 Q3 19 Q3 20 • G&A decreased primarily due to reduced travel * R&D capitalization
Slide 17: Balance Sheet and Cash Flow Analysis
Q3 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 18: Balance Sheet
Balance Sheet (USD in thousands) September 30, December 31, September 30, December 31, 2020 2019 2020 2019 Unaudited Audited Unaudited Audited CURRENT LIABILITIES: ASSETS Trade payables $ 33,685 $ 30,376 Deferred revenues and advances from customers 260,059 245,792 CURRENT ASSETS: Current maturities
Slide 19: Cash Flow From Operations
Cash Flow From Operations $M Q3 19 Q3 20 %∆ 9M 19 9M 20 %∆ Cash flow from operations 82.3 99.0 20% 282.7 313.4 11% - Capital expenditure 6.5 4.2 (35%) 21.5 21.7 0.9% - Capitalization of software development 8.5 9.6 13% 25.9 28.8 11% Cash flow from operations after capex & software capitalization 67.
Slide 20: Liquidity and Cash Movement
Liquidity and Cash Movement September 30, 2020 Convertible Issuance Option Exercises Acquitions $451 $8 -$147 Other $15 Capex Buyback Liquidity 09/30/20 -$50 -$28 $1,543 Operating CF $313 Liquidity 12/31/19 $981 * CAPEX movement includes R&D capitalization
Slide 21: Outlook
Q3 2020 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Slide 22: Outlook (Non-GAAP)
Outlook* (Non-GAAP) FY 2020 Revenue ($M) 1,645-1,655 EPS ($) 5.63-5.73 The outlook is provided as of November 12, 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
Slide 23: NICE
NICE