Nice Ltd. ((NICE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Nice Ltd. presented a generally positive outlook, with significant growth in cloud revenue and successful strategic initiatives taking center stage. Despite some concerns regarding operating margin contraction and a decline in services revenue, the overall sentiment was optimistic, driven by strong future growth potential indicated by the cloud backlog and international performance.
Strong Cloud Revenue Growth
Nice Ltd. reported a robust increase in cloud revenue, reaching $563 million, which marks a 13% year-over-year growth. This surge was primarily driven by advancements in AI and self-service offerings, with the annual recurring revenue (ARR) accelerating to an impressive 49%.
Successful Integration of Cognigy
The early completion of the Cognigy acquisition has been a pivotal factor in enhancing Nice Ltd.’s cloud revenue growth. This strategic move has bolstered the company’s AI capabilities, setting a promising trajectory for future growth.
International Revenue Growth
International markets have shown strong performance, with revenue from EMEA increasing by 7% and APAC by 19% year-over-year. Overall, international revenue saw an 11% increase, underscoring the company’s expanding global footprint.
Financial Stability and Growth
Nice Ltd. achieved total revenue of $732 million, reflecting a 6% year-over-year increase. Operating income rose by 5% to $231 million, while earnings per share (EPS) saw a 10% increase, reaching $3.18.
Positive Cloud Backlog Indications
The company reported a 15% year-over-year increase in cloud backlog, signaling strong future growth potential and continued demand for its offerings.
Operating Margin Contraction
Despite the positive growth, the acquisition of Cognigy has led to a slight contraction in operating margin, contrary to previous expectations of expansion.
Decline in Services Revenue
There was a noted decline in services-related revenue, attributed to customers migrating from maintenance to cloud solutions, reflecting a shift in the company’s revenue streams.
Forward-Looking Guidance
Looking ahead, Nice Ltd. has provided optimistic guidance for the full year 2025. The company expects total revenue to be between $2.932 billion and $2.946 billion, representing a 7% year-over-year increase. Cloud revenue growth is projected at 12% to 13%, with the Cognigy acquisition contributing significantly in Q4. Non-GAAP EPS is anticipated to rise by 10% at the midpoint, ranging from $12.18 to $12.32.
In summary, Nice Ltd.’s earnings call conveyed a positive outlook with strong growth in cloud and international revenues, despite some challenges in operating margins and service revenues. The company’s strategic initiatives and robust backlog indicate promising future growth, making it an attractive prospect for investors.