NICE Reports 6% Increase in Non-GAAP Revenue and 21% Increase in Non-GAAP EPS for the Second Quarter 2015

The Company Increases Guidance for Full-Year 2015 Earnings Per Share

Jul 30, 2015, 05:30 ET from NICE

RA'ANANA, Israel, July 30, 2015 /PRNewswire/ -- NICE Systems (NASDAQ: NICE) today announced results for the second quarter and first half of the year ended June 30, 2015.

Second Quarter 2015 Non-GAAP Financial Highlights:            

  • Revenue of $235 million, up 6% year-over-year
  • Product revenue increased 12% year-over-year
  • Operating profit increased to $52 million, up 25% year-over-year
  • Operating margin increased to 22.3% compared to 18.9% last year
  • Fully diluted earnings per share of $0.70, up 21% year-over-year
  • Cash flow from operations more than doubled to $57 million compared to last year

"We are pleased to report another strong quarter," said Barak Eilam, CEO of NICE.  "Excluding the impact of foreign currency exchange rates, revenue growth was 9%.  Earnings per share, which increased 21%, also came in at the high end of our guidance range driven by a significant increase in our operating margin to 22.3%.  As these strong growth rates are all organic, they reflect the continued successful execution of our operational plan to improve both top and bottom line results."

Mr. Eilam continued, "The keys to our success have been accelerated innovation and our ability to rapidly and effectively take our products to market, where we can leverage our strong strategic and competitive position, our market leadership, and our established industry-leading assets, including our customer base, our sales teams and our brand. As we head into the second half of the year, we continue to see many opportunities ahead for further growth and profitability as we continue to implement our strategic plan."

Dividend Declaration   

The Company declared a cash dividend for the second quarter of 2015 of $0.16 per share. The record date will be August 11th, 2015 and the payment date will be August 27th, 2015. Tax will be withheld at a rate of 15%.

Non-GAAP Financial Highlights for the Second Quarter Ended June 30:

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

Revenues: Second quarter 2015 non-GAAP total revenues were $234.8 million, up 6.0% from $221.6 million for the second quarter of 2014.

Gross Profit: Second quarter 2015 non-GAAP gross profit and non-GAAP gross margin increased to $161.2 million and 68.7%, respectively, from $149.0 million and 67.3%, respectively, for the second quarter of 2014.

Operating Income: Second quarter 2015 non-GAAP operating income and non-GAAP operating margin increased to $52.4 million and 22.3%, respectively, from $41.9 million and 18.9%, respectively, for the second quarter of 2014.

Net Income from Continuing Operations: Second quarter 2015 non-GAAP net income and non-GAAP net margin increased to $43.0 million and 18.3%, respectively, from $35.4 million and 16.0%, respectively, for the second quarter of 2014.

Fully Diluted Earnings Per Share from Continuing Operations: Second quarter 2015 non-GAAP fully diluted earnings per share increased 20.7% to $0.70, compared to $0.58 for the second quarter of 2014.

GAAP Financial Highlights for the Second Quarter Ended June 30:

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

Revenues: Second quarter 2015 total revenues increased 6.1% to $234.7 million compared to $221.3 million for the second quarter of 2014.

Gross Profit: Second quarter 2015 gross profit and gross margin increased to $153.7 million and 65.5%, respectively, from $138.5 million and 62.6%, respectively, for the second quarter of 2014.

Operating Income: Second quarter 2015 operating income and operating margin increased to $35.3 million and 15.0%, respectively, from $13.7 million and 6.2%, respectively, for the second quarter of 2014.

Net Income from Continuing Operations: Second quarter 2015 net income and net margin increased to $28.8 million and 12.3%, respectively, compared to $11.9 million and 5.4%, respectively, for the second quarter of 2014.

Fully Diluted Earnings Per Share from Continuing Operations: Fully diluted earnings per share for the second quarter of 2015 was $0.47 compared to $0.19 for the second quarter of 2014.

Operating Cash Flow and Cash Balance: Second quarter 2015 operating cash flow was $57.0 million. In the second quarter, $12.1 million was used for share repurchases and $9.5 million for dividends. As of June 30, 2015, total cash and cash equivalents, short term investments and marketable securities were $628.8 million, with no debt.

Third Quarter and Full-Year 2015 Guidance:

Third Quarter 2015: Third quarter 2015 non-GAAP total revenues are expected to be in a range of $236 million to $246 million. Third quarter 2015 non-GAAP fully diluted earnings per share are expected to be in a range of $0.68 to $0.74.

Full-Year 2015: The Company continues to expect full-year 2015 non-GAAP total revenues to be in a range of $985 million to $1,005 million. The Company increased its full-year 2015 non-GAAP fully diluted earnings per share to be in a range of $3.04 to $3.15.

Quarterly Results Conference Call

NICE management will host its earnings conference call today, July 30th, 2015 at 8:30 AM EDT, 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 406 955 17. 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 85892426.

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

Year to date

June 30,

June 30,

2015

2014

2015

2014

Unaudited

Unaudited

Unaudited

Unaudited

Revenue:

Product 

$      80,417

$    71,702

$ 159,394

$139,360

Services

154,314

149,608

302,165

294,633

Total revenue

234,731

221,310

461,559

433,993

Cost of revenue:

Product

19,643

20,419

37,985

39,496

Services

61,340

62,421

120,921

121,930

Total cost of revenue

80,983

82,840

158,906

161,426

Gross profit

153,748

138,470

302,653

272,567

Operating Expenses:

Research and development, net

33,197

33,424

66,550

66,548

Selling and marketing

59,406

60,181

119,064

116,666

General and administrative

22,154

22,764

43,542

41,493

Amortization of acquired intangible assets

3,703

5,400

7,437

11,839

Restructuring expenses

-

3,035

-

3,351

Total operating expenses

118,460

124,804

236,593

239,897

Operating income

35,288

13,666

66,060

32,670

Finance and other income, net

674

655

2,611

1,483

Income from continuing operations before tax

35,962

14,321

68,671

34,153

Taxes on income

7,200

2,401

13,367

4,536

Net income from continuing operations

28,762

11,920

55,304

29,617

Discontinued operation

Income (loss) from discontinued operation

667

(1,650)

4,022

(3,870)

Taxes on income (tax benefit)

172

(122)

832

(361)

Net income (loss) from discontinued operation

495

(1,528)

3,190

(3,509)

Net income

$      29,257

$    10,392

$   58,494

$  26,108

Basic income per share from continuing operations

$          0.48

$        0.20

$      0.93

$     0.50

Basic income (loss) per share from discontinued operation

$          0.01

$       (0.03)

$      0.05

$    (0.06)

Basic income per share

$          0.49

$        0.17

$      0.98

$     0.44

Diluted income per share from continuing operations

$          0.47

$        0.19

$      0.90

$     0.49

Diluted income (loss) per share from discontinued operation

$          0.01

$       (0.02)

$      0.05

$    (0.06)

Diluted income per share

$          0.48

$        0.17

$      0.95

$     0.43

Weighted average number of shares

outstanding used to compute:

Basic income (loss) per share

59,510

59,676

59,441

59,786

Diluted income (loss) per share

61,408

61,210

61,306

61,284

 

 

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

June 30,

June 30,

2015

2014

2015

2014

GAAP revenues

$               234,731

$              221,310

$      461,559

$      433,993

Valuation adjustment on acquired deferred service revenue

53

258

177

645

Non-GAAP revenues

$               234,784

$              221,568

$      461,736

$      434,638

GAAP cost of  revenue

$                 80,983

$                82,840

$      158,906

$      161,426

Amortization of acquired intangible assets on cost of product

(6,839)

(8,322)

(13,663)

(16,650)

Amortization of acquired intangible assets on cost of services

-

-

-

(327)

Cost of product revenue adjustment (1,2)

(138)

(79)

(271)

(209)

Cost of services revenue adjustment (1,2)

(463)

(1,911)

(1,224)

(3,042)

Non-GAAP cost of  revenue

$                 73,543

$                72,528

$      143,748

$      141,198

GAAP gross profit

$               153,748

$              138,470

$      302,653

$      272,567

Gross profit adjustments

7,493

10,570

15,335

20,873

Non-GAAP gross profit

$               161,241

$              149,040

$      317,988

$      293,440

GAAP operating expenses

$               118,460

$              124,804

$      236,593

$      239,897

Research and development (1,2)

(324)

(1,063)

(838)

(1,654)

Sales and marketing (1,2)

(2,477)

(3,471)

(5,190)

(7,177)

General and administrative (1,2)

(2,745)

(4,488)

(5,567)

(7,209)

Amortization of acquired intangible assets

(3,703)

(5,400)

(7,437)

(11,839)

Acquisition related expenses (3)

-

(213)

-

(213)

Settlement and related expenses

(390)

-

(390)

-

Restructuring expenses

-

(3,060)

-

(3,351)

Non-GAAP operating expenses

$               108,821

$              107,109

$      217,171

$      208,454

GAAP taxes on income

$                  7,200

$                  2,401

$        13,367

$          4,536

Tax adjustments re non-GAAP adjustments

2,888

4,823

6,408

10,562

Non-GAAP taxes on income

$                 10,088

$                  7,224

$        19,775

$        15,098

GAAP net income (loss) from continuing operations

$                 28,762

$                11,920

$        55,304

$        29,617

Valuation adjustment on acquired deferred revenue

53

258

177

645

Amortization of acquired intangible assets

10,542

13,722

21,100

28,816

Share-based compensation (1)

6,147

7,139

13,090

14,638

Re-organization expenses (2)

-

3,873

-

4,653

Acquisition related expenses (3)

-

213

-

213

Restructuring expenses

-

3,060

-

3,351

Settlement and related expenses

390

-

390

-

Tax adjustments re non-GAAP adjustments

(2,888)

(4,823)

(6,408)

(10,562)

Non-GAAP net income (loss) from continuing operations

$                 43,006

$                35,362

$        83,653

$        71,371

GAAP diluted earnings (loss) per share from continuing operations

$                    0.47

$                    0.19

$            0.90

$            0.49

Non-GAAP diluted earnings per share from continuing operations

$                    0.70

$                    0.58

$            1.36

$            1.16

Shares used in computing GAAP diluted earnings (loss) per share

61,408

61,210

61,306

61,284

Shares used in computing Non-GAAP diluted earnings per share

61,408

61,210

61,306

61,284

 

 

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

June 30,

June 30,

2015

2014

2015

2014

Cost of product revenue

$                    (138)

$                     (79)

$            (271)

$            (209)

Cost of service revenue

(463)

(1,331)

(1,224)

(2,406)

Research and development

(324)

(1,063)

(838)

(1,654)

Sales and marketing

(2,477)

(3,425)

(5,190)

(6,558)

General and administrative

(2,745)

(1,241)

(5,567)

(3,811)

$                 (6,147)

$                 (7,139)

$       (13,090)

$       (14,638)

(2)

Re-organization expenses

Quarter ended

Year to date

June 30,

June 30,

2015

2014

2015

2014

Cost of service revenue

$                       -

$                    (580)

$               -

$            (636)

Sales and marketing

-

(46)

-

(619)

General and administrative

-

(3,247)

-

(3,398)

$                       -

$                 (3,873)

$               -

$         (4,653)

(3)

Acquisition related expenses

Quarter ended

Year to date

June 30,

June 30,

2015

2014

2015

2014

Sales and marketing

$                       -

$                       (2)

$               -

$               (2)

General and administrative

-

(211)

-

(211)

$                       -

$                    (213)

$               -

$            (213)

 

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands 

June 30,

December 31,

2015

2014

Unaudited

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents 

$         236,292

$      187,497

Short-term investments

70,319

65,744

Trade receivables

143,964

166,047

Other receivables and prepaid expenses

40,956

33,545

Inventories

11,614

10,510

Deferred tax assets

22,816

22,798

Current assets of discontinued operation

41,398

20,295

Total current assets

567,359

506,436

LONG-TERM ASSETS:

Long-term investments

322,145

246,721

Other long-term assets

31,191

29,912

Property and equipment, net

40,345

40,999

Other intangible assets, net

90,701

112,089

Goodwill

689,385

689,043

Long-term assets of discontinued operation

-

16,891

Total long-term assets

1,173,767

1,135,655

TOTAL ASSETS

$      1,741,126

$   1,642,091

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables

$           16,609

$        10,856

Deferred revenues and advances from customers

185,842

134,810

Accrued expenses and other liabilities

194,047

200,227

Current liabilities of discontinued operation

34,157

32,353

Total current liabilities

430,655

378,246

LONG-TERM LIABILITIES:

Deferred tax liabilities

18,579

23,690

Other long-term liabilities

21,808

21,850

Long-term liabilities of discontinued operation

-

4,849

Total long-term liabilities

40,387

50,389

SHAREHOLDERS' EQUITY

1,270,084

1,213,456

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$      1,741,126

$   1,642,091

 

 

NICE SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

U.S. dollars in thousands

Quarter ended

Year to date

June 30,

June 30,

2015

2014

2015

2014

Unaudited

Unaudited

Unaudited

Unaudited

Operating Activities

Net income 

$   29,257

$   10,392

$   58,494

$  26,108

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

Depreciation and amortization

15,255

19,395

30,331

40,080

Stock based compensation

6,063

7,216

13,275

14,904

Excess tax benefit from share-based payment arrangements

(1,376)

(163)

(2,014)

(288)

Amortization of premium and discount and accrued interest on marketable securities

567

519

1,213

1,017

Deferred taxes, net

(2,888)

(4,824)

(6,408)

(10,562)

Changes in operating assets and liabilities:

Trade Receivables

(17,872)

(7,120)

18,448

16,085

Other receivables and prepaid expenses

862

3,185

(765)

(423)

Inventories

116

(1,231)

(1,712)

(1,959)

Trade payables

6,651

(11)

7,791

(2,247)

Accrued expenses and other current liabilities

14,239

495

(12,608)

(30,371)

Deferred revenue

3,580

(1,642)

52,506

32,635

Other

2,562

(264)

2,599

(632)

  Net cash provided by operating activities

57,016

25,947

161,150

84,347

Investing Activities

Purchase of property and equipment

(4,741)

(4,718)

(7,960)

(9,055)

Proceeds from sale of property and equipment

-

4

-

20

Purchase of Investments

(38,164)

(72,309)

(124,147)

(85,583)

Proceeds from Investments

11,560

58,897

42,542

73,488

Capitalization of software development costs

(212)

(234)

(212)

(476)

Payments for business acquisitions, net of cash acquired

(1,500)

119

(1,500)

(748)

-

  Net cash used in investing activities

(33,057)

(18,241)

(91,277)

(22,354)

Financing Activities

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

8,118

3,082

17,133

11,830

Purchase of treasury shares

(12,096)

(22,699)

(18,384)

(49,179)

Dividends paid

(9,528)

(9,558)

(19,114)

(19,264)

Excess tax benefit from share-based payment arrangements

1,376

163

2,014

288

Earnout payments related to acquisitions

-

(133)

(262)

(153)

  Net cash used in financing activities

(12,130)

(29,145)

(18,613)

(56,478)

Effect of exchange rates on cash and cash equivalents

1,972

333

(2,465)

571

Net change in cash and cash equivalents

13,801

(21,106)

48,795

6,086

Cash and cash equivalents, beginning of period

222,491

146,737

187,497

119,545

Cash and cash equivalents, end of period

$ 236,292

$ 125,631

$ 236,292

$125,631

 

 

 

SOURCE NICE



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