NICE’s NICE fourth-quarter 2020 adjusted earnings of $1.61 per share beat the Zacks Consensus Estimate by 4.6% and also increased 1.9% year over year.
Further, non-GAAP revenues of $438.4 million trumped the consensus mark by 1.1% and inched up 1.7% year over year. The top line was primarily driven by stellar growth in the company’s cloud business.
Revenues in Americas (83% of revenues) were $364 million, up 11% year over year. Revenues in EMEA (11% of revenues) were $48 million in the reported quarter, down 15%. APAC revenues (6% of revenues) plunged 43% year over year to $26 million
Top-Line Details
Cloud revenues (50.4% of revenues) rose 31.2% year over year to $219 million.
NICE exited 2020 with an annual run rate of more than $900 million in cloud revenues. The solid uptick in cloud revenues was primarily aided by the ongoing digital transformation on the robust adoption of the CXone cloud platform and an expanding enterprise clientele.
Moreover, growing traction for NICE ENLIGHTEN, NICE Investigate, and the Evidencentral cloud platform boosted client wins during the reported quarter. Also, increasing customer acceptance of the X-Sight and Xceed cloud platforms was a major positive.
Service revenues declined 5% from the year-ago quarter to $174 million. In addition, product revenues plummeted 48.1% from the year-ago quarter to $41.5 million.
Customer-engagement revenues were $361 million, which increased 8% year over year and represented 82% of total revenues.
Financial crime and compliance revenues declined 19% year over year to $78 million, representing 18% of total revenues.
Operating Details
On a non-GAAP basis, gross profit came in at $316.7 million, up 0.9% year over year. Gross margin contracted 60 basis points (bps) year over year to 72.2% in the reported quarter. However, cloud gross margin jumped 388 bps to 67.6%.
Research & development (R&D) expenses flared up 7.7% year over year to $56.2 million. As a percentage of revenues, R&D expenses increased 80 bps year over year to 12.9%.
Sales & marketing (S&M) expenses were $112.1 million, up 5.5% year over year. However, as a percentage of revenues, S&M expenses shrunk 110 bps to 25.8%.
General & administrative (G&A) expenses decreased 3% year over year to $45.4 million. As a percentage of revenues, G&A declined 40 bps on a year-over-year basis to 10.5%.
On a non-GAAP basis, operating income was $132 million, up 1.5% year over year. However, operating margin shrunk 10 bps on a year-over-year basis to 30.1%.
Balance Sheet & Other Details
As of Dec 31, 2020, NICE had cash and cash equivalents (including short term investments) worth $1.46 billion compared with $1.54 billion as of Sep 30, 2020.
Long-term debt as of Dec 31, 2020, was $421.3 million compared with $633.6 million as of Sep 30, 2020.
The company’s cash flow from operations in the fourth quarter came in at $166.9 million compared with the previous quarter’s $99 million and the year-ago quarter’s $91.4 million.
Guidance
For first-quarter 2021, NICE projects non-GAAP revenues between $445 million and $455 million. Non-GAAP earnings are estimated in the $1.42-1.52 per share band.
For full-year 2021, non-GAAP revenues are expected between $1.79 billion and $1.81 billion. Non-GAAP earnings are anticipated between $6.12 and $6.32 per share.
NICE sees solid growth in the cloud business on the ongoing cloud migration across enterprises and increasing contribution of cloud revenues to total revenues to keep fueling top-line growth.
In particular, strength in the company’s CXone cloud platform is likely to continue driving customer wins. Apart from this, the top line is likely to benefit from growing demand for the Xceed cloud platform, further aided by the company’s partnership with Finastra.
Zacks Rank & Key Picks
NICE currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Zoom ZM, Workday (NASDAQ:WDAY) WDAY and Magnite MGNI. All three stocks carry a Zacks Rank of #2 (Buy), currently. You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Magnite, Workday and Zoom are scheduled to report their quarterly numbers on Feb 24, Feb 25 and Mar 1, respectively.
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