NICE Reports Second Quarter 2010 Results; Achieves 21% Growth Year-Over-Year in Revenue; Record Revenue and Backlog
RA'ANANA, Israel, August 3, 2010 /PRNewswire-FirstCall/ -- NICE Systems (NASDAQ: NICE), a leading global provider of intent-based 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 second quarter ending June 30, 2010.
Second Quarter 2010 non-GAAP and Business Highlights Include:
- Revenues at new record of $170 million, up 21% year-over-year
- Operating margin reached 17.6%, net income increased to $26.5 million
- Earnings per fully diluted share increased to $0.41 from $0.36 last
year
- Book-to-bill greater than 1; backlog reaches new record
- Company generated $39 million cash from operations in the quarter
- Enhanced visibility; Company updates annual guidance provided in May
2010
"We are pleased with our performance in the second quarter. Our business continued to demonstrate positive growth momentum and improved profitability, complemented by substantial cash from operations during the quarter. Our book-to-bill ratio was once again greater than one, and we ended the quarter with record revenues and a record backlog. These achievements lead us to update our guidance for the second time this year," said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.
"NICE's growth continues to be driven by the various market trends we have identified - the increasing number of interactions between enterprises and their end-customers across various channels of communications; a growing number of fraud threats; enhanced demand for our holistic and unified, analytics-based integrated security solutions; and compliance with regulations, which is a major growth driver for NICE. All of these needs are addressed by our intent-base business solutions."
"We also announced the recently completed acquisition of eglue, which is highly strategic and complements our business applications offering. Since we closed the transaction, we have announced new integrated solutions for contact centers and back office operations, including the most recent announcement from earlier today. We believe that these new and innovative solutions will constitute additional growth engines for NICE," Mr. Bregman concluded.
Non-GAAP Financial Highlights for the Second Quarter Ended June 30, 2010:
Revenues: Second quarter 2010 non-GAAP revenues increased 21% to $169.5 million from $140.5 million in the second quarter of 2009.
Gross Profit: Second quarter 2010 non-GAAP gross profit and margin increased to $108.3 and 63.9%, respectively, from $88.4 million and 62.9% in the second quarter of 2009.
Operating Income: Second quarter 2010 non-GAAP operating income and margin reached $29.8 million and 17.6%, respectively, up from $24.6 million and compared with 17.5% in the second quarter of 2009.
Net Income: Second quarter 2010 non-GAAP net income increased to $26.5 million, up from $22.1 million in the second quarter of 2009.
Earnings per Fully Diluted Share: Second quarter 2010 non-GAAP earnings per fully diluted share increased to $0.41, up from $0.36 in the second quarter of 2009.
GAAP Financial Highlights for the Second Quarter Ended June 30, 2010:
Revenues: Second quarter 2010 revenues increased 20% to $168.5 million from $140.5 million in the second quarter of 2009.
Gross Profit: Second quarter 2010 gross profit and margin increased to $101.3 million and 60.1%, respectively, up from $83.7 million and 59.6% in the second quarter of 2009.
Operating Income: Second quarter 2010 operating income increased to $13.2 million, compared with $12.2 million in the second quarter of 2009.
Net Income: Second quarter 2010 net income increased to $12.7 million, compared to $11.6 million in the second quarter of 2009.
Earnings per Fully Diluted Share: Earnings per fully diluted share in the second quarter 2010 increased to $0.20, from $0.19 in the second quarter of 2009.
Operating Cash Flow and Cash Balance: Second quarter 2010 operating cash flow was $38.8 million. As of June 30, 2010, total cash and equivalents were $596 million, with no debt.
Updated Fiscal Year 2010 and Introduction of Third Quarter Guidance:
Taking into account the business momentum, record backlog and improved visibility, as well as the completion of the eglue acquisition in mid July, the company is updating its full year 2010 guidance and introducing third quarter guidance as follows:
Fiscal Year 2010: Non-GAAP revenue guidance for the full year is raised to be in the range of $675 and $685 million. Non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $1.67 and $1.75.
Third quarter 2010: Non-GAAP revenue for the third quarter 2010 is expected to be in the range of $171 and $175 million; and non-GAAP EPS, on a fully diluted basis, is expected to be between $0.41 and $0.45.
Quarterly Results Conference Call
NICE management will host a teleconference, today, Aug 3, 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 +1-866-229-7198or +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- 326-9310, 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: NICE and the NICE logo are trademarks or registered trademarks of NICE Systems. All other marks are trademarks of their respective owners. For a full list of NICE Systems' marks, please see: http://www.nice.com/NICETrademarks.html.
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)
Quarter ended Year to date
June 30, June 30,
___________________ _____________________
2009 2010 2009 2010
Unaudited Unaudited Unaudited Unaudited
_________ _________ _________ _________
Revenue
Product $ 65,659 $ 79,058 $134,276 $154,139
Services 74,791 89,471 145,334 174,311
_________ _________ _________ _________
Total revenue 140,450 168,529 279,610 328,450
Cost of revenue
Product 20,469 27,500 40,675 53,541
Services 36,234 39,707 72,135 78,313
_________ _________ _________ _________
Total cost of
Revenue 56,703 67,207 112,810 131,854
_________ _________ _________ _________
Gross profit 83,747 101,322 166,800 196,596
Operating Expenses:
Research and
development,
net 17,535 23,239 36,011 45,466
Selling and
marketing 33,825 41,944 67,879 84,535
General and
administrative 16,547 18,200 33,285 37,852
Amortization
of acquired
intangible
assets 3,647 4,760 7,252 9,491
Total operating _________ _________ _________ _________
expenses 71,554 88,143 144,427 177,344
_________ _________ _________ _________
Operating income 12,193 13,179 22,373 19,252
Financial income,
net 1,828 1,846 4,618 3,708
Other income
(expense), net (26) 2 (73) (32)
_________ _________ _________ _________
Income before taxes
on income 13,995 15,027 26,918 22,928
Taxes on income 2,405 2,318 4,707 4,141
_________ _________ _________ _________
Net income $ 11,590 $ 12,709 $ 22,211 $ 18,787
======== ======== ======== ========
Basic earnings per
share $ 0.19 $ 0.20 $ 0.36 $ 0.30
======== ======== ======== ========
Diluted earnings per
share $ 0.19 $ 0.20 $ 0.36 $ 0.29
======== ======== ======== ========
Weighted average
number of shares
outstanding used to
compute:
Basic earnings per
share 61,104 62,618 61,009 62,362
Diluted earnings per
share 61,780 64,377 61,677 64,154
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, June 30,
2009 2010
_________ _________
Unaudited Unaudited
_________ _________
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 214,811 $ 149,097
Short-term investments 108,850 189,874
Trade receivables 102,147 90,717
Other receivables and prepaid 23,887 33,780
expenses
Inventories 14,445 12,023
Deferred tax assets 8,181 8,732
________ ________
Total current assets 472,321 484,223
________ ________
LONG-TERM ASSETS:
Marketable securities 224,828 257,052
Other long-term assets 29,314 28,836
Property and equipment, net 22,052 21,215
Other intangible assets, net 156,664 152,458
Goodwill 494,498 500,120
________ ________
Total long-term assets 927,356 959,681
________ ________
TOTAL ASSETS
$ 1,399,677 $ 1,443,904
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Trade payables $ 26,342 $ 17,650
Accrued expenses and other
liabilities 261,519 284,104
________ ________
Total current liabilities 287,861 301,754
________ ________
LONG-TERM LIABILITIES:
Deferred tax liabilities 25,899 22,170
Other long-term liabilities 23,163 24,539
________ ________
Total long-term liabilities 49,062 46,709
________ ________
SHAREHOLDERS' EQUITY 1,062,754 1,095,441
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 1,399,677 $ 1,443,904
=========== ===========
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter ended Year to date
June 30, June 30,
_____________________ ___________________
2009 2010 2009 2010
Unaudited Unaudited Unaudited Unaudited
___________________________________________
Cash flows from
operating activities:
Net income $ 11,590 $ 12,709 $ 22,211 $ 18,787
Adjustments required
to reconcile net
income to net cash
provided by
operating activities:
Depreciation and
amortization 11,001 13,843 21,946 27,442
Stock based
compensation 4,469 4,553 7,411 10,258
Excess tax
shortfall (benefit)
from share-based
payment arrangements (28) (8) 1 (195)
Accrued severance
pay, net (484) (102) (1,046) (461)
Amortization of
discount (premium)
and accrued interest
on marketable securities 438 1,733 665 1,706
Loss (gain) on
marketable securities
sold, called or impaired 15 (258) (697) (794)
Deferred taxes, net (2,428) (2,798) (4,882) (5,465)
Decrease (increase)
in trade receivables 2,408 (4,821) 21,099 11,387
Decrease (increase)
in other receivables
and prepaid expenses 746 (7,601) (388) (9,031)
Decrease in inventories 37 1,463 1,289 2,004
Increase (decrease)
in trade payables 4,002 1,805 (2,990) (8,595)
Increase (decrease)
in accrued expenses
and other liabilities (2,473) 18,180 (2,280) 21,951
Other (125) 101 275 163
__________ __________ __________ _________
Net cash provided by
operating activities 29,168 38,799 62,614 69,157
__________ __________ __________ _________
Cash flows from
investing activities:
Purchase of property
and equipment (1,377) (2,494) (3,925) (5,041)
Proceeds from sale
of property
and equipment 24 10 31 8
Investment in
marketable securities (40,629) (80,431) (106,121) (207,307)
Proceeds from maturity
,call and sale of
marketable securities 55,945 22,341 101,615 63,148
Investment in short
-term bank deposits (62,000) - (79,000) -
Proceeds from short
-term bank deposits 8,413 9,000 52,450 30,019
Capitalization of
software development
costs (369) (432) (556) (738)
Purchase of
intangible assets - - (1,000) -
Payments for
acquisitions (4,435) (5,001) (4,444) (26,066)
__________ __________ __________ _________
Net cash used
in investing
activities (44,428) (57,007) (40,950) (145,977)
__________ __________ __________ _________
Cash flows
from financing
activities:
Proceeds from
issuance of shares
upon exercise of
share options
and ESPP, net 1,164 2,541 3,999 11,673
Excess tax benefit
(shortfall) from
share-based
payment arrangements 28 8 (1) 195
__________ __________ __________ _________
Net cash provided by
financing activities 1,192 2,549 3,998 11,868
__________ __________ __________ _________
Effect of exchange
rate changes on cash 1,946 (536) 66 (762)
__________ __________ __________ _________
Increase (decrease)
in cash and cash equivalents (12,122) (16,195) 25,728 (65,714)
Cash and cash equivalents
at beginning of period 182,226 165,292 144,376 214,811
__________ __________ __________ _________
Cash and cash
equivalents at
end of period $ 170,104 $ 149,097 $170,104 $149,097
========== ========== ========== =========
NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except per share amounts)
Quarter ended Year to date
June 30, June 30,
2009 2010 2009 2010
_________ _________ _________ _________
GAAP revenues $ 140,450 $ 168,529 $ 279,610 $ 328,450
Valuation adjustment
on acquired deferred
product revenue - 450 - 941
Valuation adjustment
on acquired deferred
service revenue 8 565 88 2,752
_________ _________ _________ _________
Non-GAAP revenues $ 140,458 $ 169,544 $ 279,698 $ 332,143
========= ========= ========= =========
GAAP cost of revenue $ 56,703 $ 67,207 $ 112,810 $ 131,854
Amortization of
acquired intangible
assets on cost of product (4,025) (5,637) (8,099) (11,080)
Valuation adjustment on
acquired deferred
cost of services - 216 - 435
Cost of product
revenue adjustment (1,2) (114) (100) (229) (202)
Cost of services
revenue adjustment (1,2) (457) (397) (1,139) (1,302)
_________ _________ _________ _________
Non-GAAP cost of revenue $ 52,107 $ 61,289 $ 103,343 $ 119,705
========= ========= ========= =========
GAAP gross profit $ 83,747 $ 101,322 $ 166,800 $ 196,596
Gross profit adjustments 4,604 6,933 9,555 15,842
_________ _________ _________ _________
Non-GAAP gross profit $ 88,351 $ 108,255 $ 176,355 $ 212,438
========= ========= ========= =========
GAAP operating expenses $ 71,554 $ 88,143 $ 144,427 $ 177,344
Research and development
(1,2,3) (825) (1,323) (2,228) (2,742)
Sales and marketing
(1,2) (1,239) (1,073) (3,318) (2,823)
General and administrative
(1,2,3) (2,139) (2,429) (3,269) (6,073)
Amortization of acquired
intangible assets (3,647) (4,760) (7,252) (9,491)
Acquisition related expenses - (81) - (619)
_________ _________ _________ _________
Non-GAAP operating expenses $ 63,704 $ 78,477 $ 128,360 $ 155,596
========= ========= ========= =========
GAAP finance & other
income, net $ 1,802 $ 1,848 $ 4,545 $ 3,676
Re-organization expenses - - 52 -
_________ _________ _________ _________
Non-GAAP finance
& other income, net $ 1,802 $ 1,848 $ 4,597 $ 3,676
========= ========= ========= =========
GAAP taxes on Income $ 2,405 $ 2,318 $ 4,707 $ 4,141
Tax adjustments re
non-gaap adjustments 1,983 2,789 4,473 5,690
_________ _________ _________ _________
Non-GAAP taxes $ 4,388 $ 5,107 $ 9,180 $ 9,831
========= ========= ========= =========
GAAP net income $ 11,590 $ 12,709 $ 22,211 $ 18,787
Valuation adjustment
on acquired
deferred revenue 8 1,015 88 3,693
Valuation adjustment
on acquired deferred
cost of services - (216) - (435)
Amortization of
acquired intangible
assets 7,672 10,397 15,351 20,571
Acquisition related
compensation expense (3) 305 311 611 622
Share-based
compensation (1) 4,469 4,553 7,411 10,258
Re-organization
expenses (2) - 458 2,213 2,262
Acquisition related
expenses - 81 - 619
Tax adjustments re
non-gaap adjustments (1,983) (2,789) (4,473) (5,690)
_________ _________ _________ _________
Non-GAAP net income $ 22,061 $ 26,519 $ 43,412 $ 50,687
========= ========= ========= =========
GAAP diluted earnings
per share $ 0.19 $ 0.20 $ 0.36 $ 0.29
========= ========= ========= =========
Non-GAAP diluted
earnings per share $ 0.36 $ 0.41 $ 0.70 $ 0.79
========= ========= ========= =========
Shares used in computing
US GAAP diluted earnings
per share (in thousands) 61,104 64,377 61,009 64,154
Shares used in computing
Non-GAAP diluted
earnings per
share (in thousands) 61,812 64,377 61,681 64,154
NICE SYSTEMS LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (continued)
U.S. dollars in thousands
(1) Share-based Compensation
Quarter ended Year to date
June 30, June 30,
2009 2010 2009 2010
_________ _________ _________ __________
Cost of product revenue $ (114) $ (100) $ (228) $ (202)
Cost of service revenue (457) (397) (819) (1,016)
Research and development (658) (1,012) (902) (2,120)
Sales and marketing (1,239) (1,073) (2,517) (2,316)
General and administrative (2,001) (1,971) (2,945) (4,604)
_________ _________ _________ __________
$ (4,469) $ (4,553) $ (7,411) $ (10,258)
========= ========= ========= ==========
(2) Re-organization expenses
Quarter ended Year to date
June 30, June 30,
2009 2010 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 - (458) (48) (1,469)
Other expense - - (52) -
_________ _________ _________ __________
$ - $ (458) $ (2,213) $ (2,262)
========= ========= ========= ==========
(3) Acquisition related compensation expense
Quarter ended Year to date
June 30, June 30,
2009 2010 2009 2010
_________ _________ _________ __________
Research and development $ (167) $ (311) $ (335) $ (622)
General and administrative (138) - (276) -
_________ _________ _________ __________
$ (305) $ (311) $ (611) $ (622)
========= ========= ========= ==========
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
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