NICE Reports 6% Revenue Increase and 17% Non-GAAP Earnings Per Share Increase For The Full-Year 2015

Full-Year Non-GAAP Operating Profit Grows 22%

Full-Year Non-GAAP Operating Margin Reaches 25.4%

11 Feb, 2016, 06:15 ET from NICE Systems

RA'ANANA, Israel, Feb. 11, 2016 /PRNewswire/ -- NICE Systems (NASDAQ: NICE) today announced results for the fourth quarter and the full year ended December 31, 2015.

Fourth Quarter 2015 Non-GAAP Financial Highlights:

  • Revenue of $274 million, up 5% year-over-year
  • Record gross margin of 72.9% compared to 72.4% last year
  • Record operating profit of $81 million, 17% increase year-over-year
  • Record operating margin of 29.7% compared to 26.8% last year
  • Record fully diluted earnings per share of $1.09, up 12% year-over-year

Full Year 2015 Non-GAAP Financial Highlights:

  • Revenue of $927 million, up 6% year-over-year
  • Gross margin of 70.6% compared to 69.4% last year 
  • Record operating profit of $235 million, 22% increase year-over-year
  • Operating margin increased to 25.4% compared to 22.1% last year
  • Record fully diluted earnings per share of $3.18, up 17% year-over-year

"We are pleased to report a strong finish to the year," said Barak Eilam, CEO of NICE. "Excluding foreign currency exchange rates, revenues grew 8.3% for the fourth quarter of 2015, compared to the same period in 2014.  In addition, we reported 12% growth in earnings per share, which was supported by a record 29.7% operating margin."

Mr. Eilam continued, "Ending 2015 as we did, encapsulates what I believe can be characterized as a truly transformative year for NICE.  It was a year in which we managed significant and valuable changes to the business while delivering solid results.  The fundamental changes that we made will continue to benefit NICE for the long term and are part of a broader journey that we expect will have a long-lasting, positive impact on the company both operationally and financially.  As we look forward into 2016, I believe that we are well-positioned for further growth and profitability as we move ahead with our vision and strategic plan in place."

Dividend Declaration

The Company declared a cash dividend for the fourth quarter of 2015 of $0.16 per share. The record date will be February 24th, 2016 and the payment date will be March 9th, 2016. Tax will be withheld at a rate of 15%.

Non-GAAP Financial Highlights for the Fourth Quarter and Full-Year Ended December 31:

The following non-GAAP financial data are from continuing operations, which exclude the results of the Intelligence and Physical Security divisions for both 2015 and 2014.

Revenues: Fourth quarter 2015 non-GAAP total revenues were $273.6 million, up 5.4% from $259.5 million for the fourth quarter of 2014. Non-GAAP total revenues for the full year 2015 increased 6.2% to $927.0 million compared to $872.8 million for the full year 2014.

Gross Profit: Fourth quarter 2015 non-GAAP gross profit and non-GAAP gross margin increased to $199.5 million and 72.9%, respectively, from $188.0 million and 72.4%, respectively, for the fourth quarter of 2014. Full year 2015 non-GAAP gross profit and non-GAAP gross margin increased to $654.4 million and 70.6%, respectively, compared to $605.5 million and 69.4%, respectively, for the same period last year.

Operating Income: Fourth quarter 2015 non-GAAP operating income and non-GAAP operating margin increased to $81.2 million and 29.7%, respectively, from $69.6 million and 26.8%, respectively, for the fourth quarter of 2014. Full year 2015 non-GAAP operating income and non-GAAP operating margin increased to $235.5 million and 25.4%, respectively, compared to $192.5 million and 22.1%, respectively, for the full year 2014. 

Net Income from Continuing Operations: Fourth quarter 2015 non-GAAP net income and non-GAAP net margin increased to $66.9 million and 24.4%, respectively, from $58.9 million and 22.7%, respectively, for the fourth quarter of 2014. Full year 2015 non-GAAP net income and non-GAAP net margin increased to $195.0 million and 21.0%, respectively, compared to $165.5 million and 19.0%, respectively, for the same period last year.

Fully Diluted Earnings Per Share from Continuing Operations: Fourth quarter 2015 non-GAAP fully diluted earnings per share increased 12.4% to $1.09, compared to $0.97 for the fourth quarter of 2014. Full year 2015 non-GAAP fully diluted earnings per share increased to $3.18, up 16.9% from $2.72 for the full year 2014.

GAAP Financial Highlights for the Fourth Quarter and Full-Year Ended December 31:

The following GAAP financial data, excluding cash flow and cash balance, are from continuing operations, which exclude the results of the Intelligence and Physical Security divisions for both 2015 and 2014.

Revenues: Fourth quarter 2015 total revenues increased 5.5% to $273.6 million compared to $259.4 million for the fourth quarter of 2014. Full year 2014 total revenues increased 6.3% to $926.9 million compared to $872.0 million for the full year 2014.

Gross Profit: Fourth quarter 2015 gross profit and gross margin increased to $191.5 million and 70.0%, respectively, from $179.7 million and 69.3%, respectively, for the fourth quarter of 2014. Full year 2015 gross profit and gross margin increased to $623.3 million and 67.2%, respectively, from $568.5 million and 65.2%, respectively, for the same period last year.

Operating Income: Fourth quarter 2015 operating income and operating margin increased to $63.7 million and 23.3%, respectively, from $55.7 million and 21.5%, respectively, for the fourth quarter of 2014. Full year 2015 operating income and operating margin increased to $166.1 million and 17.9%, respectively, compared to $106.3 million and 12.2%, respectively, for the full year 2014.

Net Income from Continuing Operations: Fourth quarter 2015 net income and net margin increased to $56.9 million and 20.8%, respectively, compared to $48.5 million and 18.7%, respectively, for the fourth quarter of 2014. Full year 2015 net income and net margin increased to $140.6 million and 15.2%, respectively, compared to $100.2 million and 11.5%, respectively, for the full year 2014.

Fully Diluted Earnings Per Share from Continuing Operations: Fully diluted earnings per share for the fourth quarter of 2015 increased 16.3% to $0.93, compared to $0.80 for the fourth quarter of 2014. Fully diluted earnings per share for the full year 2015 were $2.29 compared to $1.64 for the full year 2014.

Operating Cash Flow and Cash Balance: Fourth quarter 2015 operating cash flow was $53.8 million. Full year cash flow from operations reached $244.7 million. In the fourth quarter, $20.0 million was used for share repurchases and $9.6 million for dividends. As of December 31, 2015, total cash and cash equivalents, short term investments and marketable securities were $828.4 million, with no debt.

First Quarter and Full-Year 2016 Guidance:

First Quarter 2016: First quarter 2016 non-GAAP total revenues are expected to be in a range of $220 million to $230 million. First quarter 2016 non-GAAP fully diluted earnings per share are expected to be in a range of $0.71 to $0.77.

Full-Year 2016: Full-year 2016 non-GAAP total revenues are expected to be in the range of $995 million to $1,015 million. Full-year 2016 non-GAAP fully diluted earnings per share are expected to be in a range of $3.38 to $3.52. Full year guidance includes the acquisition of Nexidia, which is expected to close by the end of Q1.

Quarterly Results Conference Call

NICE management will host its earnings conference call today, February 11th, 2016 at 8:30 AM EST, 13:30 GMT, 15:30 Israel, to discuss the results and the company's outlook. To participate in the call, please dial in to the following numbers: United States 1-866-804-8688 or +1-718-354-1175, International +44(0)1296-480-100, United Kingdom 0-800-783-0906, Israel 1-809-242-041. The Passcode is 469 670 43. Additional access numbers can be found at http://www.btconferencing.com/globalaccess/?bid=54_attended. The call will be webcast live on the Company's website at http://www.nice.com/news-and-events/ir-events. An online replay will also be available approximately two hours following the call. A telephone replay of the call will be available for 7 days after the live broadcast, and may be accessed by dialing: United States 1-877-482-6144, International +44(0)20-7136-9233, United Kingdom 0-800-032-9687. The Passcode for the replay is 451 563 12.

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, restructures expenses, share-based compensation, certain business combination accounting entries, settlement and related expenses and tax adjustment re non-GAAP adjustments. 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 worldwide leading provider of software solutions that enable organizations to take the next best action in order to improve customer experience and business results, ensure compliance, fight financial crime, and safeguard people and assets. NICE's solutions empower organizations to capture, analyze, and apply, in real time, insights from both structured and unstructured Big Data. This data comes from multiple sources, including phone calls, mobile apps, emails, chat, social media, video, and transactions. NICE solutions are used by over 25,000 organizations in more than 150 countries, including over 80 of the Fortune 100 companies. 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

Investors

Marty Cohen, +1 212 574 3635, ir@nice.com, ET Yisca Erez, +972 9 775-3798, ir@nice.com, CET

Media Contact

Erik Snider, +1 877 245 7448, erik.snider@nice.com

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 Mr. Eilam, are based on the current beliefs, expectations and assumptions of the management of NICE-Systems Ltd. (the Company).  In some cases, such forward-looking statements can be identified by terms such as believe, expect, may, will, intend, project, plan, estimate or similar words.  Forward-looking statements 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) potentially impacting our business and financial condition; competition; 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; an inability to maintain certain marketing and distribution arrangements; and the effect of newly enacted or modified laws, regulation or standards on the Company and our products. 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 December 31,

Year to date December 31,

2015

2014

2015

2014

Unaudited

Unaudited

Unaudited

Unaudited

Revenue:

Product

$ 110,079

$ 109,101

$ 317,900

$ 289,560

Services

163,479

150,281

608,967

582,435

Total revenue

273,558

259,382

926,867

871,995

Cost of revenue:

Product

19,125

17,609

66,363

63,919

Services

62,916

62,065

237,219

239,592

Total cost of revenue

82,041

79,674

303,582

303,511

Gross profit

191,517

179,708

623,285

568,484

Operating Expenses:

Research and development, net

35,566

31,197

128,485

123,141

Selling and marketing

63,599

69,483

225,817

231,097

General and administrative

26,062

19,712

90,349

83,360

Amortization of acquired intangible assets

2,560

3,644

12,528

19,157

Restructuring expenses

-

-

-

5,435

Total operating expenses

127,787

124,036

457,179

462,190

Operating income

63,730

55,672

166,106

106,294

Finance and other income, net

1,188

1,278

5,304

3,765

Income from continuing operations before tax

64,918

56,950

171,410

110,059

Taxes on income

8,034

8,405

30,832

9,909

Net income from continuing operations

56,884

48,545

140,578

100,150

Discontinued operation

Gain on disposal and (loss) income from dicontinued operations

(1,621)

2,027

152,459

4,965

Taxes on income (tax benefit)

(2,130)

497

34,206

2,040

Net income on discontinued operations

509

1,530

118,253

2,925

Net income

$ 57,393

$ 50,075

$ 258,831

$ 103,075

Basic earnings per share from continuing operations

$ 0.95

$ 0.82

$ 2.36

$ 1.69

Basic earnings per share from discontinued operations

$ 0.01

$ 0.03

$ 1.99

$ 0.05

Basic earnings per share

$ 0.96

$ 0.85

$ 4.35

$ 1.74

Diluted earnings per share from continuing operations

$ 0.93

$ 0.80

$ 2.29

$ 1.64

Diluted earnings per share from discontinued operations

$ 0.01

$ 0.03

$ 1.93

$ 0.05

Diluted earnings per share

$ 0.94

$ 0.83

$ 4.22

$ 1.69

Weighted average numbers of shares

outstanding used to compute:

Basic earnings per share

59,651

58,951

59,552

59,362

Diluted earnings per share

61,092

60,551

61,281

60,895

 

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

December 31,

December 31,

2015

2014

2015

2014

GAAP revenues

$ 273,558

$ 259,382

$ 926,867

$ 871,995

Valuation adjustment on acquired deferred service revenue

117

177

794

Non-GAAP revenues

$ 273,558

$ 259,499

$ 927,044

$ 872,789

GAAP cost of revenue

$ 82,041

$ 79,674

$ 303,582

$ 303,511

Amortization of acquired intangible assets on cost of product

(6,558)

(6,994)

(27,097)

(30,771)

Amortization of acquired intangible assets on cost of services

-

-

-

(326)

Cost of product revenue adjustment (1,2)

(132)

(134)

(502)

(475)

Cost of services revenue adjustment (1,2)

(1,244)

(1,024)

(3,291)

(4,671)

Non-GAAP cost of revenue

$ 74,107

$ 71,522

$ 272,692

$ 267,268

GAAP gross profit

$ 191,517

$ 179,708

$ 623,285

$ 568,484

Gross profit adjustments

7,933

8,269

31,068

37,038

Non-GAAP gross profit

$ 199,450

$ 187,977

$ 654,353

$ 605,522

GAAP operating expenses

$ 127,787

$ 124,036

$ 457,179

$ 462,190

Research and development (1,2)

(1,426)

(620)

(3,618)

(2,483)

Sales and marketing (1,2)

(3,168)

(2,877)

(11,266)

(12,917)

General and administrative (1,2)

(2,394)

(2,458)

(10,521)

(12,847)

Amortization of acquired intangible assets

(2,560)

(3,644)

(12,528)

(19,157)

Acquisition related expenses (3)

-

4,002

-

3,789

Settlement and related expenses

-

(75)

(390)

(75)

Restructuring expenses

-

-

-

(5,435)

Non-GAAP operating expenses

$ 118,239

$ 118,364

$ 418,856

$ 413,065

GAAP taxes on income

$ 8,034

$ 8,405

$ 30,832

$ 9,909

Tax adjustments re non-GAAP adjustments

7,503

3,557

14,934

20,791

Non-GAAP taxes on income

$ 15,537

$ 11,962

$ 45,766

$ 30,700

GAAP net income

$ 56,884

$ 48,545

$ 140,578

$ 100,150

Valuation adjustment on acquired deferred revenue

-

117

177

794

Amortization of acquired intangible assets

9,118

10,638

39,625

50,254

Share-based compensation (1)

7,808

6,879

27,660

28,547

Re-organization expenses (2)

556

234

1,538

4,846

Acquisition related expenses (3)

-

(4,002)

-

(3,789)

Restructuring expenses

-

-

-

5,435

Settlement and related expenses

-

75

390

75

Tax adjustments re non-GAAP adjustments

(7,503)

(3,557)

(14,934)

(20,791)

Non-GAAP net income

$ 66,863

$ 58,929

$ 195,034

$ 165,521

GAAP diluted earnings per share

$ 0.93

$ 0.80

$ 2.29

$ 1.64

Non-GAAP diluted earnings per share

$ 1.09

$ 0.97

$ 3.18

$ 2.72

Shares used in computing GAAP diluted earnings per share

61,092

60,551

61,281

60,895

Shares used in computing Non-GAAP diluted earnings per share

61,092

60,551

61,281

60,895

 

 

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

December 31,

December 31,

2015

2014

2015

2014

Cost of product revenue

$ (132)

$ (134)

$ (502)

$ (475)

Cost of service revenue

(1,207)

(987)

(3,210)

(3,998)

Research and development

(907)

(620)

(2,161)

(2,483)

Sales and marketing

(3,168)

(2,905)

(11,266)

(12,367)

General and administrative

(2,394)

(2,233)

(10,521)

(9,224)

$ (7,808)

$ (6,879)

$ (27,660)

$ (28,547)

(2)

Re-organization expenses

Quarter ended

Year to date

December 31,

December 31,

2015

2014

2015

2014

Cost of service revenue

$ (37)

$ (37)

$ (81)

$ (673)

Research and development

(519)

-

(1,457)

-

Sales and marketing

-

28

-

(550)

General and administrative

-

(225)

-

(3,623)

$ (556)

$ (234)

$ (1,538)

$ (4,846)

(3)

Acquisition related expenses

Quarter ended

Year to date

December 31,

December 31,

2015

2014

2015

2014

General and administrative

-

4,002

-

3,789

$ -

$ 4,002

$ -

$ 3,789

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

December 31,

December 31,

2015

2014

Unaudited

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$ 325,931

$ 187,497

Short-term investments

99,195

65,744

Trade receivables

177,323

155,628

Other receivables and prepaid expenses

37,363

33,288

Inventories

6,198

6,969

Current assets of discontinued operations

9,142

36,351

Total current assets

655,152

485,477

LONG-TERM ASSETS:

Long-term investments

403,249

246,721

Other long-term assets

17,175

18,921

Property and equipment, net

39,213

40,170

Deferred tax assets

14,130

18,853

Other intangible assets, net

69,582

109,509

Goodwill

651,112

659,657

Long-term assets of discontinued operations

-

53,644

Total long-term assets

1,194,461

1,147,475

TOTAL ASSETS

$ 1,849,613

$ 1,632,952

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables

$ 11,719

$ 9,088

Deferred revenues and advances from customers

151,345

122,528

Accrued expenses and other liabilities

223,041

192,240

Current liabilities of discontinued operations

12,744

54,357

Total current liabilities

398,849

378,213

LONG-TERM LIABILITIES:

Deferred tax liabilities

15,040

14,176

Other long-term liabilities

18,166

19,004

Long-term liabilities of discontinued operations

2,409

8,103

Total long-term liabilities

35,615

41,283

SHAREHOLDERS' EQUITY

1,415,149

1,213,456

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 1,849,613

$ 1,632,952

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

Quarter ended

Year to date

December 31,

December 31,

2015

2014

2015

2014

Unaudited

Unaudited

Unaudited

Unaudited

Operating Activities

Net income

$ 57,393

$ 50,075

$ 258,831

$103,075

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

Depreciation and amortization

13,294

16,146

57,964

73,349

Stock based compensation

7,774

7,219

28,451

29,814

Excess tax benefit from share-based payment arrangements

(3,553)

(522)

(7,595)

(1,205)

Amortization of premium and discount and accrued interest on marketable securities

856

455

2,799

2,071

Deferred taxes, net

14,604

(13,877)

10,576

(27,785)

Changes in operating assets and liabilities:

Trade Receivables

(41,346)

(12,685)

(56,363)

4,807

Other receivables and prepaid expenses

824

2,054

(5,590)

2,283

Inventories

1,581

581

4,108

(327)

Trade payables

(9,478)

(6,194)

2,166

(13,781)

Accrued expenses and other current liabilities

8,233

41,355

38,488

9,335

Deferred revenue

1,739

(18,281)

54,914

3,424

Gain on sale and loss on disposal of discontinued operations

1,094

-

(147,334)

-

Other

737

(2,166)

3,318

(2,791)

Net cash provided by operating activities

53,752

64,160

244,733

182,269

Investing Activities

Purchase of property and equipment

(5,630)

(3,909)

(16,600)

(16,759)

Proceeds from sale of property and equipment

-

1

4

37

Purchase of Investments

(59,749)

(38,447)

(287,593)

(143,688)

Proceeds from Investments

29,388

55,774

92,542

153,141

Capitalization of software development costs

(677)

(204)

(1,380)

(908)

Payments for business acquisitions, net of cash acquired

-

-

(1,500)

(748)

Proceeds from sales of discontinued operations

(1,038)

-

186,134

-

-

Net cash provided by (used in) investing activities

(37,706)

13,215

(28,393)

(8,925)

Financing Activities

Proceeds from issuance of shares upon exercise of share options and ESPP

4,521

14,020

27,532

29,526

Purchase of treasury shares

(20,000)

(12,689)

(68,384)

(94,267)

Dividends paid

(9,559)

(9,441)

(38,239)

(38,142)

Excess tax benefit from share-based payment arrangements

3,553

522

7,595

1,205

Earnout payments related to acquisitions

(11)

-

(297)

(158)

Net cash used in financing activities

(21,496)

(7,588)

(71,793)

(101,836)

Effect of exchange rates on cash and cash equivalents

(1,349)

(1,227)

(6,113)

(3,556)

Net change in cash and cash equivalents

(6,799)

68,560

138,434

67,952

Cash and cash equivalents, beginning of period

332,730

118,937

187,497

119,545

Cash and cash equivalents, end of period

$ 325,931

$ 187,497

$ 325,931

$187,497

 

SOURCE NICE Systems