Nice going: Nice presents promising quarter, positive annual forecast
Nice going: Nice presents promising quarter, positive annual forecast
The Israeli software company concluded the second quarter with a 10% growth in revenues to $581.1 million, with revenues from cloud activity jumping by 23%
Israeli software company Nice is maintaining its positive trend, albeit with slower growth than before, but one which investors will readily overlook in exchange for improved profitability.
Nice, which trades at a value of around $13 billion, grew by 10% in the second quarter and reached revenues of $581.1 million. The operating profit grew at a faster rate of 24% and amounted to $105 million.
The improvement in results was recorded thanks to the increase in the share of Nice’s cloud activity, the revenues from which jumped by 23% in the last quarter. Nice recorded a net profit of $87.4 million, a jump of 33% compared to the corresponding quarter in 2022. The profit rate increased by 12.4% to 15% both due to the operational improvement and due to interest income of $9 million on the company's cash reserves which reached $1.7 billion. The company's cash flow was $65.3 million and it used most of it to buy back its own shares.
Against the background of these results, which close a positive first half for the company, Nice is raising its forecast for 2023, similar to most Israeli software companies in the current reporting season.
Nice now predicts that its revenues will amount to $2.35-$2.37 billion and will reflect an annual growth rate of 8%. This is a very slight increase compared to the previous forecast provided by Nice at the beginning of the year and it reflects the same annual growth rate.
In the first half of 2023, the company has already recorded revenues of $1.15 billion, so if it sticks to its current pace, it will have no difficulty meeting the updated forecast.
In the third quarter, Nice expects a relatively moderate increase in revenues to $590-$600 million, that is, a single-digit growth rate of 7%.
The annual profit before accounting expenses is expected to reach $8.4-$8.6 per share, an increase of 12% compared to 2022. This profit forecast is based on the continuation of the program to buy back shares, which increases the profit per share by reducing the number of shares in the market. Buybacks in total should reach a quarter of a billion dollars on an annual basis.
“Our second quarter results were marked by a strong financial performance across the board with 10% total revenue growth driven by a 23% increase in cloud revenue. Additionally, our industry-leading profitability continued unabated with further expansion in our cloud gross margin along with double-digit growth in operating income and earnings per share,” said Barak Eilam, CEO of Nice.
Eilam continued, “The market is characterized by a fast-moving transition to the cloud by large enterprises coupled with strong demand to incorporate AI into their customer service organizations. NICE is well positioned to leverage these dynamics as we have been smartly investing over the past several years in both the cloud and AI to deliver the industry-leading, AI powered cloud platform in CXone. Supported by a robust capital structure and industry-best profitability, our investments continue to deliver results highlighted by 70% growth in digital bookings and a record bookings quarter for Enlighten, our AI foundation, that underlies the entire CXone platform.”
