NICE Reports First Quarter 2010 Results; Achieves 17% Year-over-Year Non-GAAP Revenue Growth and Record Backlog
Company Invites Institutional Investors and Analysts to its Investor and Analyst Day
RA'ANANA, Israel, May 11, 2010 /PRNewswire-FirstCall/ -- NICE Systems (NASDAQ: NICE), a leading global provider of advanced solutions that enable enterprises and security organizations to extract Insight from Interactions, transactions and surveillance to drive business performance, reduce risk and ensure safety, today announced results for the first quarter ending March 31, 2010.
First Quarter 2010 non-GAAP Highlights Include:
- Revenues increased 17% year-over-year to $163 million
- Earnings per fully diluted share increased to $0.38, up from $0.35 in
the first quarter of 2009
- Record first quarter bookings with 40% year-over-year growth;
book-to-bill greater than 1 and backlog reaches new record
- Company raises its preliminary annual guidance provided in February
2010
Zeevi Bregman, President and Chief Executive Officer, NICE Systems commented: "In the first quarter of 2010, NICE successfully demonstrated solid performance as we achieved results exceeding our expectations in most parameters. Although the first quarter is traditionally a seasonally softer quarter in our industry, we achieved significant year-over-year growth in bookings, and ended the quarter with a record backlog. NICE continues to benefit from the market trends that position the company for future growth. Organizations are facing an ever-growing amount of data related to customer interactions, transactions and surveillance. To better understand their customers, and enhance business performance, ensure compliance with the growing number of regulations, and enable safety and security, they seek solutions to help capture, manage, analyze and act in real-time. We believe that with our large install base and intent-based business solutions, NICE is best positioned to leverage on these market trends".
"These positive factors, led us to raise our preliminary guidance for 2010," Mr. Bregman concluded.
Financial Highlights for the First Quarter Ended March 31, 2010:
Revenues: First quarter 2010 non-GAAP revenues reached $162.6 million, up 17% from $139.2 million in the first quarter of 2009.
Gross Profit: First quarter non-GAAP gross profit increased to $104.2 million, or 64.1% gross margin, up from $88.0 million, or 63.2% in the first quarter of 2009.
Operating Income: First quarter non-GAAP operating income increased to $27.1 million, or 16.6% operating margin, up from $23.3 million and compared to 16.8% in the first quarter of 2009.
Net Income: First quarter 2010 non-GAAP net income reached $24.2 million, up from $21.4 million, in the first quarter of 2009.
Earnings Per Fully Diluted Share: Non-GAAP earnings per fully diluted share in the first quarter were up at $0.38 from $0.35 in the first quarter of 2009.
GAAP Financial Highlights for the First Quarter Ended March 31, 2010:
Revenues: First quarter 2010 revenues increased to $159.9 million, up 15% from $139.2 million in the first quarter of 2009.
Gross Profit: First quarter gross profit increased to $95.3 million, or 59.6% gross margin, up from $83.1 million and compared to 59.7% gross margin in the first quarter of 2009.
Operating Income: First quarter operating income was $6.1 million, compared to $10.2 million in the first quarter of 2009.
Net Income: First quarter 2010 net income was $6.1 million, compared to $10.6 million in the first quarter of 2009.
Earnings Per Fully Diluted Share: Earnings per fully diluted share in the first quarter were $0.09, compared to $0.17 per share, for the first quarter of 2009.
Operating Cash Flow and Cash Balance: First quarter 2010 operating cash flow was $30.5 million. Total cash and equivalents as of March 31, 2010 were $564.3 million, with no debt.
Updated Fiscal Year 2010 and introduction of Second Quarter Guidance:
The Company is updating its guidance for fiscal year 2010 and introduces second quarter 2010 guidance. Non-GAAP revenue for the full year is expected to be between $665 and $680 million, and non-GAAP EPS guidance, on a fully diluted basis, is expected to be in the range of $1.67 and $1.75. Non-GAAP revenue for the second quarter 2010 is expected to be between $164 and $170 million, and non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $0.38 and $0.42.
5th Annual Investor and Analyst Day
NICE management will host its annual Institutional Investor and Analyst Day in New York City, on Tuesday, May 25, 2010, 8:30 am to 1:30 pm EST. For further details on the event please click on the event banner on our website at http://www.nice.com or email us at [email protected].
Quarterly Results Conference Call
NICE management will host a teleconference, today, May 11 17, 2010 at 8:30 ET, 15:30 Israel, to discuss the results and the company's outlook. Please call the following dial-in numbers to participate in the call: United States +1-888-407-2553 or +1-888-668-9141, International +972-3- 9180609, Israel 03- 9180609. This call will be webcast live on http://www.nice.com at http://www.nice.com/investor_relations/calendar.php. An online replay will also be available approximately three hours following the call. A telephone replay of the call will be available for 72 hours after the live broadcast, and may be accessed by dialing: United States +1-888-295-2634, International +972-3-9255927, Israel 03-925 5927.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigned to that liability should be based on its fair value at the date of acquisition. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income.
About NICE
NICE Systems (NASDAQ: NICE) is the leading provider of Insight from Interactions solutions and value-added services, powered by advanced analytics of unstructured multimedia content - from telephony, web, radio and video communications. NICE's solutions address the needs of the enterprise and security markets, enabling organizations to operate in an insightful and proactive manner, and take immediate action to improve business and operational performance and ensure safety and security. NICE has over 24,000 customers in more than 150 countries, including more than 80 of the Fortune 100 companies. More information is available at http://www.nice.com/.
Trademark Note: 360 degrees View, Alpha, ACTIMIZE, Actimize logo, Customer Feedback, Dispatcher Assessment, Encorder, eNiceLink, Executive Connect, Executive Insight, FAST, FAST alpha Blue, FAST alpha Silver, FAST Video Security, Freedom, Freedom Connect, IEX, Interaction Capture Unit, Insight from Interactions, Investigator, Last Message Replay, Mirra, My Universe, NICE, NICE logo, NICE Analyzer, NiceCall, NiceCall Focus, NiceCLS, NICE Inform, NICE Learning, NiceLog, NICE Perform, NiceScreen, NICE SmartCenter, NICE Storage Center, NiceTrack, NiceUniverse, NiceUniverse Compact, NiceVision, NiceVision Alto, NiceVision Analytics, NiceVision ControlCenter, NiceVision Digital, NiceVision Harmony, NiceVision Mobile, NiceVision Net, NiceVision NVSAT, NiceVision Pro, Performix, Playback Organizer, Renaissance, Scenario Replay, ScreenSense, Tienna, TotalNet, TotalView, Universe, Wordnet are trademarks and/or registered trademarks of NICE Systems Ltd. All other trademarks are the property of their respective owners.
Forward Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including the statements by Messer Bregman, are based on the current expectations of the management of NICE-Systems Ltd. (the Company) only, and are subject to a number of risks and uncertainties that could cause the actual results or performance of the Company to differ materially from those described herein, including but not limited to the impact of the global economic environment on the Company's customer base (particularly financial services firms) and the resulting uncertainties; changes in technology and market requirements; decline in demand for the Company's products; inability to timely develop and introduce new technologies, products and applications; difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel; loss of market share; pressure on pricing resulting from competition; and inability to maintain certain marketing and distribution arrangements. For a more detailed description of the risk factors and uncertainties affecting the company, refer to the Company's reports filed from time to time with the Securities and Exchange Commission, including the Company's Annual Report on Form 20-F. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company undertakes no obligation to update or revise them, except as required by law.
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share amounts)
Three months ended
March 31,
----------------------
2009 2010
Unaudited Unaudited
---------- ----------
Revenue
Product $ 68,617 $ 75,081
Services 70,543 84,840
---------- ----------
Total revenue 139,160 159,921
Cost of revenue
Product 20,206 26,042
Services 35,901 38,606
---------- ----------
Total cost of revenue 56,107 64,648
---------- ----------
Gross profit 83,053 95,273
Operating Expenses:
Research and development, net 18,476 22,227
Selling and marketing 34,054 42,591
General and administrative 16,738 19,652
Amortization of acquired intangible assets 3,605 4,731
---------- ----------
Total operating expenses 72,873 89,201
---------- ----------
Operating income 10,180 6,072
Financial income, net 2,790 1,863
Other expenses, net (47) (34)
---------- ----------
Income before taxes on income 12,923 7,901
Taxes on income 2,302 1,823
---------- ----------
Net income $ 10,621 $ 6,078
========== ==========
Basic earnings per share $ 0.17 $ 0.10
========== ==========
Diluted earnings per share $ 0.17 $ 0.09
========== ==========
Weighted average number of shares
outstanding used to compute:
Basic earnings per share 60,905 62,513
Diluted earnings per share 61,564 64,338
NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
Quarter Ended March 31,
2009 2010
---------- ----------
GAAP revenues $ 139,160 $ 159,921
Valuation adjustment on acquired deferred
product revenue - 491
Valuation adjustment on acquired deferred
service revenue 80 2,187
---------- ----------
Non-GAAP revenues $ 139,240 $ 162,599
========== ==========
GAAP cost of revenue $ 56,107 $ 64,648
Amortization of acquired intangible
assets on cost of product (4,074) (5,443)
Valuation adjustment on acquired deferred
cost of services - 219
Cost of product revenue adjustment (1,2) (115) (102)
Cost of services revenue adjustment (1,2) (682) (905)
---------- ----------
Non-GAAP cost of revenue $ 51,236 $ 58,417
========== ==========
GAAP gross profit $ 83,053 $ 95,273
Gross profit adjustments 4,951 8,909
---------- ----------
Non-GAAP gross profit $ 88,004 $ 104,182
========== ==========
GAAP operating expenses $ 72,873 $ 89,201
Research and development (1,2,3) (1,403) (1,419)
Sales and marketing (1,2) (2,079) (1,750)
General and administrative (1,2,3) (1,130) (3,644)
Amortization of acquired intangible assets (3,605) (4,731)
Acquisition related expenses - (537)
---------- ----------
Non-GAAP operating expenses $ 64,656 $ 77,120
========== ==========
GAAP finance & other income (expense) $ 2,743 $ 1,829
Re-organization expenses 52 -
---------- ----------
Non-GAAP finance & other income (expense) $ 2,795 $ 1,829
========== ==========
GAAP taxes on Income $ 2,302 $ 1,823
Tax adjustments re non-gaap adjustments 2,490 2,901
---------- ----------
Non-GAAP taxes $ 4,792 $ 4,724
========== ==========
GAAP net income $ 10,621 $ 6,078
Valuation adjustment on acquired deferred
revenue 80 2,678
Valuation adjustment on acquired deferred
cost of sales - (219)
Amortization of acquired intangible assets 7,679 10,174
Acquisition related compensation expense (3) 306 311
Share-based compensation (1) 2,942 5,705
Re-organization expenses (2) 2,213 1,804
Acquisition related expenses - 537
Tax adjustments re non-gaap adjustments (2,490) (2,901)
---------- ----------
Non-GAAP net income $ 21,351 $ 24,167
========== ==========
GAAP diluted earnings per share $ 0.17 $ 0.09
========== ==========
Non-GAAP diluted earnings per share $ 0.35 $ 0.38
========== ==========
Shares used in computing US GAAP diluted
earnings per share (in thousands) 61,564 64,338
Shares used in computing Non-GAAP diluted
earnings per share (in thousands) 61,550 64,338
NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
(1) Share-based Compensation
Quarter Ended March 31,
2009 2010
---------- ----------
Cost of product revenue $ (114) $ (102)
Cost of service revenue (362) (619)
Research and development (244) (1,108)
Sales and marketing (1,278) (1,243)
General and administrative (944) (2,633)
---------- ----------
$ (2,942) $ (5,705)
========== ==========
(2) Re-organization expenses
Quarter Ended March 31,
2009 2010
---------- ----------
Cost of product revenue $ (1) $ -
Cost of service revenue (320) (286)
Research and development (991) -
Sales and marketing (801) (507)
General and administrative (48) (1,011)
Other expense (52) -
---------- ----------
$ (2,213) $ (1,804)
========== ==========
(3) Acquisition related compensation expense
Quarter Ended March 31,
2009 2010
---------- ----------
Research and development $ (168) $ (311)
General and administrative (138) -
---------- ----------
$ (306) $ (311)
========== ==========
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, March 31,
2009 2010
------------ ------------
Unaudited Unaudited
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 214,811 $ 165,292
Short-term investments 108,850 123,058
Trade receivables 102,147 86,589
Other receivables and prepaid expenses 23,887 26,080
Inventories 14,445 13,673
Deferred tax assets 8,181 8,523
------------ ------------
Total current assets 472,321 423,215
------------ ------------
LONG-TERM ASSETS:
Marketable securities 224,828 275,917
Other long-term assets 29,314 28,956
Property and equipment, net 22,052 21,623
Other intangible assets, net 156,664 158,210
Goodwill 494,498 498,695
------------ ------------
Total long-term assets 927,356 983,401
------------ ------------
TOTAL ASSETS $ 1,399,677 $ 1,406,616
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 26,342 $ 15,893
Accrued expenses and other liabilities 261,519 265,665
------------ ------------
Total current liabilities 287,861 281,558
------------ ------------
LONG-TERM LIABILITIES:
Deferred tax liabilities 25,899 23,291
Other long-term liabilities 23,163 23,394
------------ ------------
Total long-term liabilities 49,062 46,685
------------ ------------
SHAREHOLDERS' EQUITY 1,062,754 1,078,373
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,399,677 $ 1,406,616
============ ============
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Three months ended
March 31,
-------------------------
2009 2010
Unaudited Unaudited
-------------------------
Cash flows from operating activities:
Net income $ 10,621 $ 6,078
Adjustments required to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization 10,944 13,599
Stock based compensation 2,942 5,705
Excess tax shortfall (benefit) from
share-based payment arrangements 29 (187)
Accrued severance pay, net (562) (365)
Amortization of discount (premium) and
accrued interest on marketable securities 226 (28)
Gain on marketable securities sold, called
or impaired (712) (535)
Deferred taxes, net (2,453) (2,667)
Decrease in trade receivables 17,745 15,971
Increase in other receivables and prepaid
expenses (1,096) (1,568)
Decrease in inventories 1,317 573
Decrease in trade payables (7,007) (10,366)
Increase (decrease) in accrued expenses
and other liabilities (440) 4,259
Other 401 63
------------ ------------
Net cash provided by operating activities 31,955 30,532
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (2,541) (2,555)
Proceeds from sale of property and equipment 4 -
Investment in marketable securities (65,492) (126,875)
Proceeds from maturity, call and sale of
marketable securities 45,671 40,807
Investment in short-term bank deposits (17,000) -
Proceeds from short-term bank deposits 44,036 21,018
Capitalization of software development costs (187) (306)
Purchase of intangible assets (1,000) -
Payments for acquisitions (10) (21,065)
------------ ------------
Net cash provided by (used in) investing
activities 3,481 (88,976)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of shares upon exercise
of share options and ESPP, net 2,835 9,132
Excess tax benefit (shortfall) from
share-based payment arrangements (29) 187
------------ ------------
Net cash provided by financing activities 2,806 9,319
------------ ------------
Effect of exchange rate changes on cash (392) (394)
------------ ------------
Increase (decrease) in cash and cash equivalents 37,850 (49,519)
Cash and cash equivalents at beginning of period 144,376 214,811
------------ ------------
Cash and cash equivalents at end of period $ 182,226 $ 165,292
============ ============
Corporate Media
Galit Belkind NICE Systems +1-877-245-7448
[email protected]
Investors
Daphna Golden NICE Systems +1-877-245-7449
[email protected]
SOURCE NICE Systems Ltd.
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