Group 1 - The core thesis is that NICE Ltd. is positioned to benefit from the expanding Total Addressable Market (TAM) in the Contact Center industry [1] - The investment strategy focuses on identifying undervalued companies with long-term growth potential, emphasizing a blend of value investing principles [1] - The approach involves purchasing quality companies at a discount to their intrinsic value and holding them for long-term compounding of earnings and shareholder returns [1]

Core Viewpoint - NICE has underperformed in the market, with shares down 25.6% over the past twelve months, contrasting with the Zacks Internet-Software industry's increase of 17.8% and the broader Computer & Technology sector's rise of 13.7% [1][4] Financial Performance - In Q4 2024, NICE reported revenues of $721.6 million, reflecting a 16% year-over-year increase, primarily driven by the strength of its cloud business and customer base expansion [2] - Cloud revenues reached $534 million in Q4 2024, marking a 24% year-over-year increase and accounting for 74% of total revenues [6] - For Q1 2025, NICE anticipates non-GAAP revenues between $693 million and $703 million, indicating a 6% year-over-year growth at the mid-point [10] - 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 mid-point [11] Client Base and Market Position - NICE has seen an increase in large enterprise customers, with over 400 clients generating more than $1 million in annual recurring revenue in Q4 2024 [7] - The company’s partnerships with AT&T and Microsoft have been significant in attracting new customers, particularly the integration of its compliance solutions into the Microsoft Azure Marketplace [9] Competitive Landscape - NICE faces strong competition from players like Five9, Salesforce, and 8X8, which are expanding their portfolios in the customer experience (CX) market [1][14] - Five9's recent launch of AI-driven CX solutions on Google Cloud Marketplace poses a direct challenge to NICE's market position [15] Growth Drivers - NICE's focus on cloud offerings, especially the CXone platform, has been a major growth driver, supported by a growing demand for AI-driven customer service interactions [5][8] - The company expects a 12% year-over-year growth in cloud revenue for 2025 [10] Valuation - NICE shares are currently trading at a forward 12-month price-to-sales ratio of 3.07X, which is below the industry average of 4.52X, indicating that the stock may be undervalued [16] Investment Outlook - The continued growth in NICE's cloud business and AI domain, along with platform innovation and an expanding client base, makes the stock attractive for long-term investors [19]

Core Viewpoint - NICE reported strong financial results for the fourth quarter of 2024, with adjusted earnings and revenues exceeding consensus estimates, driven by growth in its cloud business and customer base expansion [1][2][3]. Financial Performance - Adjusted earnings per share (EPS) for Q4 2024 were $3.02, beating the Zacks Consensus Estimate by 2.03% and increasing 28% year over year [1]. - Non-GAAP revenues reached $721.6 million, surpassing the consensus mark by 1.20% and rising 16% year over year [2]. - Cloud revenues, which constitute 74% of total revenues, amounted to $533.9 million, reflecting a 24% year-over-year increase despite missing the consensus estimate by 0.06% [4]. - Service revenues were $149.7 million, accounting for 20.7% of total revenues, down 7.8% year over year and missing the consensus by 0.98% [4][5]. - Product revenues of $38 million, making up 5.3% of total revenues, exceeded the consensus estimate by 37.61% and increased 19.4% year over year [5]. Market and Growth Drivers - The growth in revenues was primarily attributed to the strength of the cloud business and the expansion of NICE's customer base, with over 400 enterprise cloud customers generating more than $1 million in annual recurring revenue (ARR) [4][6]. - NICE's focus on cloud solutions, particularly the CXone Mpower platform, is enhancing operational efficiency and customer experience [6]. Operating Metrics - Non-GAAP gross margin contracted by 50 basis points to 71.4% [7]. - Operating expenses as a percentage of revenues decreased by 200 basis points year over year to 39.9%, while the non-GAAP operating margin expanded by 150 basis points to 31.5% [8]. Balance Sheet and Cash Flow - As of December 31, 2024, NICE had cash and cash equivalents of $1.62 billion, an increase from $1.52 billion as of September 30, 2024 [9]. - The company allocated $95.2 million for share repurchases in Q4 2024 [10]. Guidance - For Q1 2025, NICE expects non-GAAP revenues between $693 million and $703 million, indicating a 6% year-over-year growth at the midpoint [11]. - For the full year 2025, projected non-GAAP revenues are between $2.92 billion and $2.94 billion, implying a 7% year-over-year growth at the midpoint [11].

This presentation contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements may be identified by words such as "believe", "expect", "seek", "may", "will", "intend", "should", "project", "anticipate", "plan", and similar expressions. Forward-looking statements are based on the current beliefs, expectations and assumptions of the Company's management regarding the future of the Company's business, performance, ...

Financial Data and Key Metrics Changes - For Q4 2024, total revenue reached a record $722 million, reflecting a 16% year-over-year growth, primarily driven by strong cloud revenue performance [31][32] - Cloud revenue grew 24% year-over-year to $534 million, representing 74% of total revenue, marking a significant milestone for the company [32][34] - Operating income increased by 22% to $227 million, with an operating margin expansion of 150 basis points to 31.5% [41][42] - Earnings per share (EPS) for Q4 was $3.02, a 28% increase compared to the same quarter last year [42] - Free cash flow for 2024 totaled $733 million, exceeding the target of $700 million [42][43] Business Line Data and Key Metrics Changes - Customer Engagement revenues, which accounted for 83% of total revenue in Q4, increased 14% year-over-year to $596 million, driven by cloud revenue growth [38] - Financial Crime and Compliance revenues, representing 17% of total revenue, grew 24% year-over-year, totaling $126 million [39] - Services revenue decreased year-over-year to $150 million due to the transition of large enterprise on-premise customers to the cloud [34] Market Data and Key Metrics Changes - The Americas region contributed 85% of total revenue in Q4, growing 17% year-over-year [35] - EMEA region represented 10% of total revenue, increasing 11% year-over-year, while APAC region accounted for 5% of total revenue, growing 4% year-over-year [36] Company Strategy and Development Direction - The company aims to capitalize on the growing market for agentic AI, with expectations that by 2028, 33% of enterprise software applications will include agentic AI [24] - NICE plans to enhance its market leadership by expanding the CXone Mpower platform and increasing strategic partnerships to drive growth [26][27] - The focus will be on delivering real-time customer experiences through the integration of AI capabilities with existing solutions [79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's growth potential, particularly in the SaaS and AI sectors, and emphasized the importance of customer experience [116] - The company anticipates a modest 12% growth in cloud revenue for 2025, with a focus on maintaining profitability while investing in innovation [47][48] - Management highlighted the need for transparency in financial disclosures and plans to enhance communication with investors [51][130] Other Important Information - The company repurchased shares totaling $95 million in Q4 and $369 million for the full year 2024, reflecting a 28% increase year-over-year [43] - Total cash and investments at the end of December amounted to $1.622 billion, with debt standing at $450 million [44] Q&A Session Summary Question: Can you provide background on the cloud growth rate and the impact of LiveVox? - Management acknowledged the positive market outlook and the need for transparency in financial disclosures, noting that LiveVox's growth rate has some headwinds factored into guidance [50][51][57] Question: When did the trend of delayed revenue recognition start, and could it reverse? - Management indicated that longer deployment times for large enterprise deals are expected but emphasized ongoing efforts to accelerate revenue recognition [60][64][70] Question: What are the assumptions behind the 12% cloud growth guidance? - Management highlighted seasonality and the gradual ramp-up of large enterprise deals as key factors influencing the guidance [73][115] Question: How does NICE view the balance between investing in AI and driving profitability? - Management expressed confidence in the potential of agentic AI and the importance of investing in customer experience while maintaining profitability [78][84] Question: What is the current status of net retention rate for CXone customers? - Management confirmed that the net retention rate remains healthy and is not expected to deteriorate, with opportunities for expansion in 2025 [126][129]

Revenue Growth - Total revenue for Q4 2024 was $721.6 million, representing a 16% year-over-year increase[3] - Cloud revenue for Q4 2024 reached $533.9 million, up 24% year-over-year[3] - Full-year 2024 total revenue was $2,735.3 million, a 15% increase compared to 2023[4] - Full-year 2024 cloud revenue grew by 25% to $1,984.2 million[4] - Total revenue for Q4 2024 reached $721.6 million, a 15.8% increase from $623.2 million in Q4 2023[28] - Cloud revenue grew to $533.9 million, up 24.5% from $429.0 million year-over-year[28] - Full-year 2025 non-GAAP total revenues are expected to be between $2,918 million and $2,938 million, indicating a 7% year-over-year growth[18] - Full-year 2025 guidance includes an anticipated 12% year-over-year growth in cloud revenue[18] Profitability Metrics - Non-GAAP fully diluted EPS for Q4 2024 was $3.02, a 28% increase year-over-year[16] - Operating margin for full-year 2024 was 20.0%, up from 18.3% in 2023[4] - Non-GAAP operating margin for full-year 2024 reached 31.1%, compared to 29.6% in 2023[14] - Net income for Q4 2024 was $99.5 million, representing a 21.8% increase compared to $81.7 million in Q4 2023[28] - Operating income increased to $154.3 million, a 25.8% rise from $122.7 million in the same quarter last year[28] - Non-GAAP net income for the year 2024 was $728.4 million, up 25.1% from $582.7 million in 2023[30] - Non-GAAP diluted earnings per share increased to $11.12 in 2024, compared to $8.79 in 2023, reflecting a 26.8% growth[30] - The company reported a GAAP net income of $442.6 million for the year 2024, a 30.8% increase from $338.3 million in 2023[30] Cash Flow and Assets - Operating cash flow for full-year 2024 increased by 48% to $832.6 million[5] - The company reported a net cash provided by operating activities of $249.5 million for Q4 2024, compared to $180.5 million in Q4 2023[29] - Total cash provided by operating activities for the year 2024 was $832.6 million, compared to $561.4 million in 2023, marking a 48.2% increase[34] - Free cash flow for Q4 2024 was $225.1 million, a 40.3% increase from $160.5 million in Q4 2023[34] - Cash and cash equivalents decreased to $481.7 million from $511.8 million at the end of Q4 2023[29] - Total current assets increased to $2.5 billion, up from $2.3 billion year-over-year[27] - Total long-term assets slightly decreased to $2.79 billion from $2.80 billion in the previous year[27] - Total liabilities increased to $1.69 billion, compared to $1.76 billion in Q4 2023[27] - Shareholders' equity rose to $3.6 billion, an increase from $3.4 billion year-over-year[27] Expenses - Operating expenses on a GAAP basis for Q4 2024 were $334.9 million, a 11.8% increase from $299.6 million in Q4 2023[30] - Research and development expenses for the year 2024 totaled $28.8 million, down from $31.4 million in 2023, indicating a 8.3% reduction[31] Gross Profit and EBITDA - GAAP gross profit for the year 2024 was $1.83 billion, representing a 13.4% increase from $1.61 billion in 2023[30] - Non-GAAP EBITDA for the year 2024 was $933.1 million, up 20.5% from $774.8 million in 2023[33]

Company Performance - Nice (NICE) closed at $173.87, marking a +0.42% move from the prior day, outperforming the S&P 500 which gained 0.36% [1] - Over the past month, shares of Nice gained 4.48%, surpassing the Computer and Technology sector's growth of 0% and the S&P 500's gain of 2.11% [1] Upcoming Earnings - Nice is projected to report earnings of $2.96 per share, representing year-over-year growth of 25.42% [2] - The revenue forecast for Nice is $713.01 million, indicating a 14.41% growth compared to the same quarter of the previous year [2] Analyst Projections - Recent shifts in analyst projections for Nice are important as they indicate changing near-term business trends [3] - Upbeat changes in estimates reflect analysts' favorable outlook on the company's business health and profitability [3] Valuation Metrics - Nice has a Forward P/E ratio of 14.08, which is a discount compared to the industry average Forward P/E of 31.23 [5] - The company has a PEG ratio of 0.97, significantly lower than the Internet-Software industry's average PEG ratio of 2.34 [6] Industry Ranking - The Internet-Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 73, placing it within the top 30% of over 250 industries [6] - The Zacks Rank system, which evaluates the average Zacks Rank of individual stocks, shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Group 1 - The current market presents challenges in identifying undervalued software stocks, particularly when applying the Rule of 40, which evaluates a SaaS company's health through its combined revenue growth rate and free cash flow or EBITDA margin [1] - The investment strategy described combines fundamental analysis with options trading, focusing on various approaches such as income-oriented investments, growth at a reasonable price, deep value, and dividend aristocrats [1] - The analyst employs 20-25 different options strategies for purposes including hedging, bullish substitutes, neutral trades, volatility trading, and earnings-related trades [1] Group 2 - The analyst has a beneficial long position in NICE shares, indicating a personal investment interest in the company [2] - The article reflects the analyst's personal opinions and is not influenced by compensation from any company mentioned [2]

Group 1 - NICE Ltd. (NASDAQ: NICE) is a company that provides customer experience (CX) and financial crime & compliance (FCC) solutions, with a minor focus on public safety (PS) solutions [1] - The company is not frequently mentioned in financial news, but it may represent an undervalued investment opportunity [1] - The analysis emphasizes the importance of quantitative methods and numerical data over narrative in assessing a company's prospects [1] Group 2 - The author has been investing since 2013 and has gained knowledge from extensive reading on stock market strategies [1] - The article does not indicate any current or planned investment positions in NICE or related companies by the author [2] - The views expressed in the article are personal opinions and do not reflect any business relationships with the companies mentioned [3]

Company Overview - NICE Ltd is well-positioned to benefit from the large and growing Total Addressable Market (TAM) in Contact Center as a Service (CCaaS) and conversational AI [1] - The company has long-term growth potential and is considered a quality investment opportunity [1] Investment Thesis - The investment thesis for NICE Ltd is based on its strong position in the CCaaS and conversational AI markets, which are expected to grow significantly [1] - The analysis does not assume multiples expansion, indicating a conservative valuation approach [1] Analyst's Perspective - The analyst has a strong foundation in fundamental analysis and focuses on identifying undervalued companies with long-term growth potential [1] - The investment approach combines value investing principles with a focus on long-term growth, aiming to buy quality companies at a discount to their intrinsic value [1]