Core Thesis - NICE Ltd. is viewed as a promising investment opportunity in the SaaS sector, particularly due to its strong positioning against AI disruption and its ability to leverage AI for customer support services [2][4]. Financial Performance - As of September 3rd, NICE's share price was $137.29, with trailing and forward P/E ratios of 16.31 and 10.13, respectively [1]. - The company has a market cap of $8.5 billion, generates approximately $792 million in TTM EBITDA, and trades at roughly 10x EBITDA and 3x sales [3]. - NICE has an $800 million buyback program, which is considered accretive at current valuations [3]. Competitive Advantage - NICE provides customer support-as-a-service under long-term contracts with high switching costs, making it less susceptible to AI replacement [2]. - The company has access to extensive databases of customer interactions, allowing for effective AI integration into its platform [3]. - Customer feedback indicates satisfaction with NICE's product, often comparing it favorably to Oracle and Salesforce, but with a more intuitive user interface [3]. Growth Prospects - Projected growth is modest at around 7% annually, which is below investor expectations for software companies, although management has a history of exceeding guidance [4]. - The recent acquisition of Cognigy for $955 million signifies a strategic move towards AI-powered customer engagement [4]. Market Sentiment - NICE's stock has declined approximately 17% since earlier bullish coverage, primarily due to leadership concerns [5]. - The current stock price of $136 is significantly below analyst targets ranging from $200 to $268, indicating potential for upside [4]. Hedge Fund Interest - NICE Ltd. is not among the 30 most popular stocks among hedge funds, with 23 hedge fund portfolios holding NICE at the end of the first quarter, down from 28 in the previous quarter [6].

Core Viewpoint - NICE Ltd. is transitioning from a traditional CCaaS vendor to an enterprise workflow-AI platform, indicating a strategic shift that may enhance its long-term growth potential [1]. Company Summary - The investment thesis for NICE Ltd. is based on its transformation into a more advanced technology provider, which is expected to drive future growth [1]. - The company is viewed as undervalued, with a focus on long-term growth and the potential for compounding earnings and shareholder returns [1].

Group 1 - NiCE has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Contact Center as a Service (CCaaS) [1] - NiCE achieved the furthest position for Completeness of Vision and the highest rating in Ability to Execute within the Leaders Quadrant [1] - This recognition marks the eleventh consecutive year that NiCE has been named a Leader in the CCaaS Magic Quadrant [1] Group 2 - This is the first time NiCE has been positioned furthest and highest on the axes in the Magic Quadrant [1]

Question-and-Answer SessionAnd just given that you recently joined the company, I think it would be great for the audience, a little bit of the background, just for those who maybe didn't know you at SAP? But what are your key priorities? And how do you kind of think about where NICE is in the evolution?Scott RussellChief Executive Officer Sure. So good afternoon. Good to see you. So background, I've obviously been in enterprise technology for a long period of time. Before I joined NICE, I was the Chief Rev ...

Summary of NICE Conference Call Company Overview - **Company**: NICE - **Industry**: Contact Center as a Service (CCaaS) and AI-driven customer engagement solutions Key Points and Arguments Leadership and Strategic Vision - Scott Russell, the newly appointed CEO, emphasizes his experience in enterprise technology, particularly at SAP, where he helped double cloud revenue from $8 billion to $17 billion over four years [2][3] - The focus is on leading the industry transition to AI, which is seen as a pivotal evolution in the CCaaS space [4][5] AI Growth and Market Position - NICE has achieved a 42% growth in AI-related revenue, which now constitutes 11% of total cloud revenue [4][12] - The company aims to leverage AI to automate customer interactions significantly, enhancing engagement without relying solely on human agents [3][4] Partnerships and Ecosystem Expansion - NICE is expanding partnerships with major players like Salesforce, ServiceNow, and Amazon Web Services to enhance market reach and interoperability [4][5] - The integration of AI capabilities with these partners is crucial for seamless customer interactions [4][16] International Expansion - NICE is investing in sovereign cloud capabilities and has secured significant wins in international markets, such as the UK and Australia [5][39] - The international market for CCaaS is still underdeveloped compared to the U.S., presenting substantial growth opportunities [5][39] Cognigy Acquisition - The acquisition of Cognigy is aimed at enhancing NICE's capabilities in agentless interactions and conversational AI [24][26] - Cognigy's platform allows customers to self-build workflows, which is a significant advantage in scaling AI solutions [25][26] Customer Interaction Dynamics - The volume of customer interactions is increasing across all channels, necessitating more sophisticated solutions to manage complexity [8][10] - NICE emphasizes the importance of handling complex customer cases that require deep understanding and tailored solutions [9][10] Future Pricing Models - There is a potential shift towards value-based pricing models, but currently, the focus remains on session-based pricing for AI interactions [19][22] - Customers are interested in ensuring that AI integration does not compromise service quality [20][21] Competitive Landscape - NICE positions itself as a market leader in CCaaS, emphasizing the need for inherent AI capabilities to remain competitive [48][49] - The company views recent funding rounds for competitors as a recognition of the market's attractiveness but believes that lacking native AI capabilities could hinder their future success [48][49] Long-term Growth Strategy - The strategic moves made by NICE are aimed at sustainable, long-term cloud growth, with a focus on AI as a key driver [51][52] - The company is committed to enhancing its technology capabilities and expanding its market presence to capitalize on the evolving landscape [51][52] Additional Important Insights - NICE's approach to AI is not just about automation but also about improving customer experience through a unified platform that integrates various functionalities [16][17] - The company acknowledges the challenges of transitioning to AI while maintaining service quality, emphasizing a gradual approach to cloud migration [44][45] This summary encapsulates the critical insights from the NICE conference call, highlighting the company's strategic direction, growth opportunities, and competitive positioning in the evolving CCaaS and AI landscape.

Core Insights - NICE is experiencing growth due to its strong cloud business, expanding customer base, and AI-driven solutions [1][4] - The company reported cloud revenues of $526.3 million in Q1 2025, a 12% year-over-year increase, contributing to overall revenue growth [2][9] - NICE has expanded its partnership with Salesforce to enhance AI-driven customer experiences through deeper integration [2][3] Financial Performance - For Q2 2025, NICE expects non-GAAP revenues between $709 million and $719 million, indicating a 7% year-over-year growth at the midpoint [7] - Non-GAAP earnings for Q2 are estimated to be between $2.93 and $3.03 per share, suggesting a 13% year-over-year growth at the midpoint [7] - For the full year 2025, NICE projects non-GAAP revenues between $2.92 billion and $2.94 billion, implying a 7% year-over-year growth at the midpoint [8][9] Strategic Partnerships - NICE has extended its partnership with RingCentral to market and sell RingCentral Contact Center powered by NICE CXone Mpower [5] - A strategic collaboration with Snowflake was announced, allowing CXone Mpower to utilize Snowflake Secure Data Sharing for centralized customer interaction data [6] - The company’s diverse portfolio, including solutions like Actimize and CXone, is attracting new customers and enhancing its market position [4]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 reached $727 million, reflecting a 9% year-over-year increase, driven by a 12% growth in cloud revenue [19][24] - Earnings per share for Q2 were $3.1, a 14% increase compared to the previous year [24] - Cloud revenue contributed $541 million, representing 74% of total revenue, with a net revenue retention (NRR) rate of 111% [19][20] Business Line Data and Key Metrics Changes - Customer Engagement revenue, which accounted for 82% of total revenue, was $597 million, increasing 8% year-over-year [23] - Financial Crime and Compliance revenue, representing 18% of total revenue, grew to $130 million, a 19% increase year-over-year [23] - AI and self-service annual recurring revenue (ARR) grew 42% year-over-year to $238 million, now constituting 11% of cloud revenue [19][20] Market Data and Key Metrics Changes - EMEA revenue increased 115% on a constant currency basis year-over-year, while APAC revenue rose 17% [21][22] - International revenue contribution increased 13% year-over-year, with significant growth opportunities in underpenetrated markets [22] Company Strategy and Development Direction - The company is focused on leading the AI transformation in customer experience, with a commitment to integrating AI capabilities into its CXone mPOWER platform [6][11] - Strategic partnerships with industry leaders like ServiceNow, AWS, and Salesforce are emphasized to enhance market presence and capabilities [13][17] - The acquisition of Cognigy is expected to further strengthen AI capabilities and customer experience offerings [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 12% growth target for cloud revenue for the full year, despite some short-term challenges with LiveVox [32][60] - The company anticipates continued strong performance in AI and self-service solutions, contributing to overall growth [20][27] - Management highlighted the importance of maintaining profitability while investing in growth initiatives [24][27] Other Important Information - The company plans to hold a Capital Markets Day in October to provide further insights into future financial targets and the Cognigy acquisition [18][27] - Total cash and investments stood at $1.632 billion, with total debt at $460 million, resulting in a net cash position of $1.2 billion [25] Q&A Session Summary Question: Investment levels and operating margins - Management indicated that investments in cloud infrastructure are intentional to drive growth, with expectations of a 50 basis point increase in operating margins year-over-year [30][31] Question: Confidence in cloud growth target - Management reiterated confidence in achieving the 12% growth target for cloud revenue, citing solid performance in the first half of the year [32][60] Question: Cloud gross margin outlook - Management acknowledged that cloud gross margins were slightly below 70% due to AI investments but expect to see improvements in the second half of the year [39][41] Question: LiveVox underperformance - Management noted that LiveVox experienced higher-than-expected churn, impacting overall growth, but remains optimistic about its long-term potential [51][53] Question: Large deal pipeline - Management confirmed a strong pipeline of large deals, indicating continued demand for their solutions in the enterprise segment [61][62] Question: AI migration demand - Management observed an increased demand for cloud solutions that leverage AI capabilities, indicating a shift in customer evaluation criteria [68][70] Question: Customer expectations on agent growth - Management reported that customers are leveraging AI capabilities while maintaining a balance with human agents, with no significant shifts in agent numbers anticipated [74][75] Question: Seasonality expectations - Management does not foresee any softness in seasonality for Q4, maintaining a diversified customer base across multiple verticals [95][96]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 reached $727 million, reflecting a 9% year-over-year increase, driven by a 12% growth in the cloud business [5][20] - Earnings per share for Q2 were $3.1, a 14% increase compared to the previous year [27] - Cloud revenue contributed $541 million, representing 74% of total revenue, with a net revenue retention (NRR) of 111% [20][21] Business Line Data and Key Metrics Changes - Customer Engagement revenue, which accounted for 82% of total revenue, increased by 8% year-over-year to $597 million [26] - Financial Crime and Compliance revenue, representing 18% of total revenue, grew by 19% year-over-year to $130 million [26] - AI and self-service annual recurring revenue (ARR) grew by 42% year-over-year to $238 million, now constituting 11% of cloud revenue [20][21] Market Data and Key Metrics Changes - International revenue increased by 13% year-over-year, with EMEA revenue up 111% on a constant currency basis [24][25] - APAC revenue grew by 17% year-over-year, also on a constant currency basis [25] - The company secured significant contracts, including a landmark agreement with the Department of Work and Pensions valued over $100 million [15] Company Strategy and Development Direction - The company is focused on leading the AI transformation in customer experience, emphasizing the integration of AI capabilities into its CXone mPOWER platform [5][10] - Strategic partnerships with industry leaders like ServiceNow, AWS, and Salesforce are being leveraged to enhance market presence and product offerings [12][18] - The acquisition of Cognigy is expected to further strengthen AI capabilities and customer engagement solutions [17][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 12% growth target for cloud revenue for the full year, despite some short-term challenges with LiveVox [34][61] - The company anticipates continued strong performance in AI and self-service solutions, which are expected to drive future growth [5][21] - Management highlighted the importance of maintaining operational rigor while investing in growth opportunities [18][27] Other Important Information - The company repurchased shares totaling $31 million in Q2, maintaining a robust balance sheet with total cash and investments of $1.632 billion [27][28] - The planned acquisition of Cognigy is expected to close in 2025, pending regulatory approval [29][30] Q&A Session Summary Question: How is the company thinking about the level of investment and operating margins? - Management indicated that investments are focused on international expansion and cloud growth, expecting a 50 basis point increase in operating margins year-over-year [32][33] Question: What gives confidence in the 12% growth target for cloud revenue? - Management noted solid performance in Q1 and Q2, with expectations to maintain the 12% growth in Q3, despite some challenges with LiveVox [34][61] Question: Can you elaborate on the renewed partnership with RingCentral? - The partnership renewal was seen as beneficial for both companies, leveraging strengths in CCaaS and UCaaS to provide integrated solutions for customers [47][51] Question: What is causing the underperformance in LiveVox? - Management cited higher-than-expected churn in LiveVox's customer base, leading to dilution in organic growth [52][53] Question: Are there any signs of softness in the fourth quarter? - Management stated they do not see signs of softness and expect continued strong performance across a diversified customer base [95][96] Question: What is the outlook for large deals in the pipeline? - Management confirmed a strong pipeline of large deals, indicating ongoing demand for integrated AI capabilities in customer experience solutions [64][66]

Financial Performance & Market Position - NiCE boasts over $2.8 billion in total revenue[10] - The company has $2.5 billion in recurring revenue[10] - NiCE's cloud revenue exceeds $2.1 billion[10] - Cash from operations amounts to $755 million[10] Customer & Partner Ecosystem - NiCE serves over 3,300 customers[10] - The company has a broad partner ecosystem with over 400 global CX partners[32] - Partners are involved in 75% of NiCE's wins[32] - NiCE has over 85% Fortune 100 customers[10] Product & Technology Leadership - NiCE is recognized as a leader in the Contact Center as a Service (CCaaS) market by Gartner and Forrester[26, 29] - NiCE Actimize is a market leader in Enterprise Fraud Management Solutions, according to Forrester[49] - NiCE's Evidencentral is recognized as a leading Public Safety & Justice AI Cloud Platform[64]

Core Viewpoint - Analysts project that Nice (NICE) will report quarterly earnings of $2.99 per share, reflecting a year-over-year increase of 13.3%, with revenues expected to reach $713.92 million, a 7.5% increase from the same quarter last year [1]. Earnings Projections - The consensus EPS estimate has been revised downward by 0.2% in the past 30 days, indicating a reassessment by covering analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts expect 'Revenue by Business Model- Cloud' to be $539.96 million, indicating a year-over-year change of +12.1% [5]. - The estimated 'Revenue by Business Model- Services' is projected at $142.15 million, reflecting a year-over-year decline of -3.7% [5]. - 'Revenue by Business Model- Product' is anticipated to be $31.80 million, suggesting a year-over-year decrease of -9.4% [5]. Geographic Revenue Projections - 'Geographic Revenues- Americas' are expected to reach $603.87 million, showing a year-over-year increase of +7.5% [6]. - 'Geographic Revenues- Asia Pacific' is projected at $39.19 million, indicating a significant year-over-year increase of +18.7% [6]. - 'Geographic Revenues- EMEA' is estimated to be $72.11 million, reflecting a year-over-year change of +3% [6]. Stock Performance - Over the past month, shares of Nice have decreased by -4%, while the Zacks S&P 500 composite has increased by +2.7% [7]. - Nice currently holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [7].