NICE Reports Third Quarter 2010 Results; Record Non-GAAP Revenues of $176 Million, EPS up at $0.45
RA'ANANA, Israel, October 27, 2010 /PRNewswire-FirstCall/ -- NICE Systems (NASDAQ: NICE), the worldwide leader of intent-based solutions that extract insight to impact business performance, reduce financial risk and ensure safety and security, today announced results for the third quarter ending September 30, 2010.
Third Quarter 2010 non-GAAP Highlights Include:
- Revenues at new all time high of $176 million, up 21% year-over-year
- Operating income at a record of $32 million, up 28% year-over-year
- Earnings per fully diluted share increased to $0.45 from $0.38 last
year
- Strong cash flow from operations; crossed $100 million in first three
quarters
- Company increases its annual guidance for 2010
"We are pleased with our performance in both the third quarter and year-to-date. Our business continued to demonstrate growth and improved profitability. We ended the quarter with record revenues, record operating income, strong cash from operations, and healthy backlog and pipeline. These achievements, combined with our current forecast for a strong fourth quarter, lead us to update once again our guidance for the year," said Zeevi Bregman, President and Chief Executive Officer, NICE Systems.
"We continued to execute on our strategy to provide enterprise-wide intent-based solutions. Our customers use our analytics offerings to obtain insight on their business and transform it into impact. We believe that our ability to provide real-time impact solutions across our businesses is a clear differentiator of NICE. It enables our customers to significantly improve their business performance and customer experience and to ensure safety and compliance," Mr. Bregman concluded.
Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:
Revenues: Third quarter 2010 non-GAAP revenues increased 21% to a record $176.2 million, up from $146.1 million in the third quarter of 2009.
Gross Profit: Third quarter 2010 non-GAAP gross profit and margin increased, reaching a record $115.9 and 65.8%, respectively, from $91.8 million and 62.9% in the third quarter of 2009.
Operating Income: Third quarter 2010 non-GAAP operating income and margin increased to $31.8 million and 18.1%, respectively, from $24.9 million and 17.0% in the third quarter of 2009.
Net Income: Third quarter 2010 non-GAAP net income reached $28.7 million, up from $24.0 million in the third quarter of 2009.
Earnings per Fully Diluted Share: Third quarter 2010 non-GAAP earnings per fully diluted share increased to $0.45, up from $0.38 in the third quarter of 2009.
GAAP Financial Highlights for the Third Quarter Ended September 30, 2010:
Revenues: Third quarter 2010 revenues increased 21% to $174.9 million from $144.7 million in the third quarter of 2009.
Gross Profit: Third quarter 2010 gross profit and margin increased to $107.9 million and 61.7%, respectively, up from $85.4 million and 59.0% in the third quarter of 2009.
Operating Income: Third quarter 2010 operating income increased to $12.6 million, compared with $4.8 million in the third quarter of 2009.
Net Income: Third quarter 2010 net income increased to $12.5 million, compared to $7.8 million in the third quarter of 2009.
Earnings per Fully Diluted Share: Earnings per fully diluted share in the third quarter 2010 increased to $0.20, from $0.12 in the third quarter of 2009.
Operating Cash Flow and Cash Balance: Third quarter 2010 operating cash flow was $30.9 million. As of September 30, 2010, total cash and equivalents were $611 million, with no debt. This follows the approximately $26 million that were paid for acquisitions and compares to $596 million as of June 30, 2010.
Updated Fiscal Year and Fourth Quarter 2010 Guidance:
Fiscal Year 2010: Non-GAAP revenue guidance for the full year is raised to be in the range of $685 and $690 million. Guidance for Non-GAAP EPS, on a fully diluted basis, is raised to be in the range of $1.71 and $1.75.
Fourth Quarter 2010: Non-GAAP revenue guidance for the fourth quarter is in the range of $177 and $182 million. Non-GAAP EPS, on a fully diluted basis, is expected to be in the range of $0.47and $0.51.
Quarterly Results Conference Call
NICE management will host a teleconference, today, Oct 27, 2010 at 8:30 ET, 14:30 Israel, to discuss the results and the company's outlook. Please call the following dial-in numbers to participate in the call: United States +1-866-229-7198 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/news-and-events/ir-events. 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 1-888-269-0005, International +972-3-9255930, Israel 03-9255930.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share based compensation expenses, realized gain on previously impaired marketable securities 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 is the worldwide leader of intent-based solutions that capture and analyze interactions and transactions, realize intent, and extract and leverage insights to deliver impact in real time. Driven by cross-channel and multi-sensor analytics, NICE solutions enable organizations to improve business performance, increase operational efficiency, prevent financial crime, ensure compliance, and enhance safety and security. NICE serves over 25,000 organizations in the enterprise and security sectors, representing a variety of sizes and industries in more than 150 countries, and including over 80 of the Fortune 100 companies. 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/nice-trademarks.
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
September 30, September 30,
--------------------- -----------------------
2009 2010 2009 2010
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Revenue
Product $ 69,233 $ 83,556 $203,509 $237,695
Services 75,451 91,300 220,785 265,611
--------- --------- --------- ---------
Total revenue 144,684 174,856 424,294 503,306
Cost of revenue
Product 22,648 26,061 63,323 79,603
Services 36,612 40,944 108,747 119,257
--------- --------- --------- ---------
Total cost of revenue 59,260 67,005 172,070 198,860
--------- --------- --------- ---------
Gross profit 85,424 107,851 252,224 304,446
Operating Expenses:
Research and
development, net 19,454 25,481 55,465 70,947
Selling and marketing 35,116 44,050 102,995 128,585
General and administrative 21,964 20,717 55,249 58,569
Amortization of acquired
intangible assets 4,077 4,968 11,329 14,459
--------- --------- --------- ---------
Total operating expenses 80,611 95,216 225,038 272,560
--------- --------- --------- ---------
Operating income 4,813 12,635 27,186 31,886
Financial income, net 1,622 3,474 6,240 7,183
Other expense, net (27) (97) (100) (129)
--------- --------- --------- ---------
Income before taxes on
income 6,408 16,012 33,326 38,940
Taxes on income (1,388) 3,474 3,319 7,615
--------- --------- --------- ---------
Net income $ 7,796 $ 12,538 $ 30,007 $ 31,325
========= ========= ========= =========
Basic earnings per share $ 0.13 $ 0.20 $ 0.49 $ 0.50
========= ========= ========= =========
Diluted earnings per share $ 0.12 $ 0.20 $ 0.48 $ 0.49
========= ========= ========= =========
Weighted average number of
shares outstanding used to
compute:
Basic earnings per share 61,332 62,711 61,118 62,478
Diluted earnings per share 62,887 63,720 62,082 64,009
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
September 30, September 30,
____________________ ___________________
2009 2010 2009 2010
____________________ ___________________
GAAP revenues $ 144,684 $ 174,856 $ 424,294 $ 503,306
Valuation adjustment
on acquired deferred
product revenue 480 638 480 1,579
Valuation adjustment
on acquired deferred
service revenue 887 713 975 3,465
_________ _________ _________ _________
Non-GAAP revenues $ 146,051 $ 176,207 $ 425,749 $ 508,350
========= ========= ========= =========
GAAP cost of revenue $ 59,260 $ 67,005 $ 172,070 $ 198,860
Amortization of
acquired intangible
assets on cost of
product (4,330) (6,146) (12,429) (17,226)
Valuation adjustment
on acquired deferred
cost of services - 205 - 640
Cost of product
revenue adjustment(1,2) (10) (113) (239) (315)
Cost of services revenue
adjustment (1,2) (703) (670) (1,842) (1,972)
_________ _________ _________ _________
Non-GAAP cost of
revenue $ 54,217 $ 60,281 $ 157,560 $ 179,987
========= ========= ========= =========
GAAP gross profit $ 85,424 $ 107,851 $ 252,224 $ 304,446
Gross profit
adjustments 6,410 8,075 15,965 23,917
_________ _________ _________ _________
Non-GAAP gross profit $ 91,834 $ 115,926 $ 268,189 $ 328,363
========= ========= ========= =========
GAAP operating
expenses $ 80,611 $ 95,216 $ 225,038 $ 272,560
Research and
development (1,2,3) (1,633) (978) (3,861) (3,720)
Sales and marketing
(1,2) (1,654) (1,738) (4,972) (4,561)
General and
administrative
(1,2,3) (2,244) (2,450) (5,513) (8,523)
Amortization of
acquired intangible
assets (4,077) (4,968) (11,329) (14,459)
Acquisition related
expenses (4) (4,069) (980) (4,069) (1,599)
_________ _________ _________ _________
Non-GAAP operating
expenses $ 66,934 $ 84,102 $ 195,294 $ 239,698
========= ========= ========= =========
GAAP finance & other
income, net $ 1,595 $ 3,377 $ 6,140 $ 7,054
Realized gain on
previously impaired
marketable securities - (625) - (625)
Re-organization expenses - - 52 -
Acquisition related
expenses (4) - 97 - 97
_________ _________ _________ _________
Non-GAAP finance &
other income, net $ 1,595 $ 2,849 $ 6,192 $ 6,526
========= ========= ========= ==========
GAAP taxes on Income $ (1,388) $ 3,474 $ 3,319 $ 7,615
Tax adjustments re
non-gaap adjustments 3,898 2,539 8,371 8,229
_________ _________ _________ _________
Non-GAAP taxes $ 2,510 $ 6,013 $ 11,690 $ 15,844
========= ========= ========== =========
GAAP net income $ 7,796 $ 12,538 $ 30,007 $ 31,325
Valuation adjustment
on acquired deferred
revenue 1,367 1,351 1,455 5,044
Valuation adjustment
on acquired deferred
cost of services - (205) - (640)
Amortization of acquired
intangible assets 8,407 11,114 23,758 31,685
Share-based
compensation (1) 5,528 5,638 12,939 15,896
Re-organization
expenses (2) - - 2,213 2,262
Acquisition related
compensation expense (3) 716 311 1,327 933
Acquisition related
expenses (4) 4,069 1,077 4,069 1,696
Realized gain on
previously impaired
marketable securities - (625) - (625)
Tax adjustments re
non-gaap adjustments (3,898) (2,539) (8,371) (8,229)
_________ _________ _________ __________
Non-GAAP net income $ 23,985 $ 28,660 $ 67,397 $ 79,347
========= ========= ========= =========
GAAP diluted earnings
per share $ 0.12 $ 0.20 $ 0.48 $ 0.49
========= ========= ========= =========
Non-GAAP diluted
earnings per share $ 0.38 $ 0.45 $ 1.09 $ 1.24
========= ========= ========= =========
Shares used in
computing US GAAP
diluted earnings per
share 62,887 63,720 62,082 64,009
Shares used in computing
Non-GAAP diluted
earnings per share 62,792 63,720 62,051 64,009
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
September 30, September 30,
_______ ______ ______ ______
2009 2010 2009 2010
_______ ______ ______ ______
Cost of product revenue $ (10) $ (113) $ (238) $ (315)
Cost of service revenue (703) (670) (1,522) (1,686)
Research and development (1,194) (667) (2,096) (2,787)
Sales and marketing (1,654) (1,738) (4,171) (4,054)
General and
administrative (1,967) (2,450) (4,912) (7,054)
_______ ______ ______ ______
$ (5,528)$ (5,638)$ (12,939)$ (15,896)
======= ====== ====== =======
(2) Re-organization expenses
Quarter ended Year to date
September 30, September 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 - - (48) (1,469)
Other expense - - (52) -
_______ ______ ______ ______
$ - $ - $(2,213) $ (2,262)
======= ====== ====== =======
(3) Acquisition related compensation expense
Quarter ended Year to date
September 30, September 30,
_______ ______ ______ ______
2009 2010 2009 2010
_______ ______ ______ ______
Research and development $ (439) $ (311) $ (774) $ (933)
General and
administrative (277) - (553) -
_______ ______ ______ ______
$ (716) $ (311) $ (1,327) $ (933)
======= ====== ====== =======
(4) Acquisition related expense
Quarter ended Year to date
September 30, September 30,
_______ ______ ______ ______
Research and development $ - $ (72) $ - $ (73)
Sales and marketing - (77) - (77)
General and
administrative (4,069) (831) (4,069) (1,449)
Other expense, net - (97) - (97)
_______ ______ ______ _______
$ (4,069) $ (1,077)$ (4,069) $ (1,696)
======= ====== ====== =======
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, September 30,
2009 2010
--------- ---------
Unaudited Unaudited
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 214,811 $ 84,627
Short-term investments 108,850 227,768
Trade receivables 102,147 96,797
Other receivables and prepaid expenses 23,887 32,312
Inventories 14,445 13,099
Deferred tax assets 8,181 9,316
--------- ---------
Total current assets 472,321 463,919
--------- ---------
LONG-TERM ASSETS:
Marketable securities 224,828 298,831
Other long-term assets 29,314 32,335
Property and equipment, net 22,052 22,054
Other intangible assets, net 156,664 153,933
Goodwill 494,498 526,903
--------- ---------
Total long-term assets 927,356 1,034,056
--------- ---------
TOTAL ASSETS $ 1,399,677 $ 1,497,975
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 26,342 $ 16,302
Accrued expenses and other liabilities 261,519 300,334
--------- ---------
Total current liabilities 287,861 316,636
--------- ---------
LONG-TERM LIABILITIES:
Deferred tax liabilities 25,899 22,419
Other long-term liabilities 23,163 26,443
--------- ---------
Total long-term liabilities 49,062 48,862
--------- ---------
SHAREHOLDERS' EQUITY 1,062,754 1,132,477
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,399,677 $ 1,497,975
========= =========
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter ended Year to date
September 30, September 30,
------------------- --------------------
2009 2010 2009 2010
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Cash flows from operating activities:
Net income $ 7,796 $ 12,538 $ 30,007 $ 31,325
Adjustments required to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization 11,831 14,650 33,776 42,092
Stock based compensation 5,528 5,638 12,939 15,896
Excess tax benefit from
share-based payment arrangements (633) (204) (632) (399)
Accrued severance pay, net (301) (101) (1,347) (570)
Amortization of discount (premium)
and accrued interest
on marketable securities 728 (157) 1,394 281
Gain on marketable securities sold, (126) (410) (823) (1,204)
called or impaired
Deferred taxes, net (2,213) (991) (7,095) (6,457)
Decrease (increase) in trade
receivables (3,072) (2,156) 16,895 9,194
Decrease (increase) in other
receivables and prepaid expenses (3,162) 3,672 (4,003) (4,387)
Decrease (increase) in inventories 18 (825) 1,111 1,357
Decrease in trade payables (5,314) (2,309) (8,328) (10,864)
Increase in accrued expenses and
other liabilities 17,432 1,372 16,296 24,003
Other (164) 193 112 348
--------- --------- --------- ---------
Net cash provided by operating
activities 28,348 30,910 90,302 100,615
--------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment (2,095) (3,463) (6,012) (8,550)
Proceeds from sale of property and
equipment 3 4 38 15
Investment in marketable
securities (17,398) (97,240) (123,519) (304,546)
Proceeds from maturity, call and
sale of marketable securities 48,025 16,420 149,640 79,568
Investment in short-term bank
deposits (31,021) - (110,021) -
Proceeds from short-term bank
deposits 17,014 10,002 69,464 40,029
Capitalization of software
development costs (387) (313) (943) (1,051)
Purchase of intangible assets - - (1,000) -
Payments for acquisitions (80,459) (26,201) (84,903) (52,267)
--------- --------- --------- ---------
Net cash used in investing
activities (66,318)(100,791) (107,256) (246,802)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of shares
upon exercise of share options
and ESPP, net 11,551 3,677 15,550 15,351
Excess tax benefit from
share-based payment arrangements 633 204 632 399
--------- --------- --------- ---------
Net cash provided by financing
activities 12,184 3,881 16,182 15,750
--------- --------- --------- ---------
Effect of exchange rate
changes on cash 367 1,530 1,081 253
--------- --------- --------- ---------
Increase (decrease) in cash
and cash equivalents (25,419) (64,470) 309 (130,184)
Cash and cash equivalents at
beginning of period 170,104 149,097 144,376 214,811
--------- --------- --------- ---------
Cash and cash equivalents
at end of period $ 144,685 $ 84,627 $144,685 $ 84,627
========= ======== ======== =========
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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