NICE Reports Record Non-GAAP Revenues, Operating Margin and EPS for the Third Quarter 2011
Company Announces New Share Repurchase Plan
RA'ANANA, Israel, November 3, 2011 /PRNewswire/ --
NICE Systems (NASDAQ: NICE) today announced results for the third quarter ending September 30, 2011.
Third Quarter 2011 non-GAAP Financial and Business Highlights Include:
• Record revenues of $200.4 million, up 14% year over year
• Operating margins reached a record 19.4%, up from 18.1% last year
• Fully diluted earnings per share increased 20% to a record $0.54
• Company completed its acquisition of Fizzback in October
• Company increases EPS guidance for 2011
"We are pleased with our strong performance for the third quarter of 2011 as NICE reported another quarter of record revenues, surpassing $200 million for the first time," said Zeevi Bregman, President and CEO of NICE Systems. "Moreover, we continued to drive profitable growth through operating leverage, reaching a record operating margin and EPS."
"Coming off a solid third quarter with a strong backlog and a healthy pipeline, we expect a strong fourth quarter, resulting in another year of additional growth and increased profitability. We see good demand for our solutions resulting from increasing compliance and regulatory requirements, rising security threats and the need to improve business performance. Our customers need to analyze vast amounts of unstructured and structured data to give them better insight into their businesses, and we believe that NICE is best positioned to capture these market opportunities," Mr. Bregman concluded.
Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2011:
Revenues: Third quarter 2011 non-GAAP revenues reached a record $200.4 million, up 13.7% from $176.2 million for the third quarter of 2010.
Gross Profit: Third quarter 2011 non-GAAP gross profit and non-GAAP gross margin were $129.5 million and 64.6%, respectively, compared to $115.9 million and 65.8%, respectively, for the third quarter of 2010.
Operating Income: Third quarter 2011 non-GAAP operating income and non-GAAP operating margin reached a record $38.9 million and 19.4%, respectively, increasing from $31.8 million and 18.1%, respectively, for the third quarter of 2010.
Net Income: Third quarter 2011 non-GAAP net income and non-GAAP net margin increased to $34.5 million and 17.2%, respectively, from $28.7 million and 16.3%, respectively, for the third quarter of 2010.
Fully Diluted Earnings Per Share: Third quarter 2011 non-GAAP fully diluted earnings per share increased to a record $0.54, up 20.0% from $0.45 for the third quarter of 2010.
GAAP Financial Highlights for the Third Quarter Ended September 30, 2011:
Revenues: Third quarter 2011 revenues reached a record $199.5 million, up 14.1% from $174.9 million for the third quarter of 2010.
Gross Profit: Third quarter 2011 gross profit and gross margin were $121.8 million and 61.1%, respectively, compared to $107.9 million and 61.7%, respectively, for the third quarter of 2010.
Operating Income: Third quarter 2011 operating income and operating margin were $20.4 million and 10.2%, respectively, increasing from $12.6 million and 7.2%, respectively, for the third quarter of 2010.
Net Income: Third quarter 2011 net income and net margin increased to $18.3 million and 9.2%, respectively, compared to $12.5 million and 7.2%, respectively, for the third quarter of 2010.
Fully Diluted Earnings Per Share: Fully diluted earnings per share for the third quarter 2011 increased 45% to $0.29 compared to $0.20 for the third quarter of 2010.
Operating Cash Flow and Cash Balance: Third quarter 2011 operating cash flow was $17.9 million. As of September 30, 2011, total cash and cash equivalents, short term investments and marketable securities were $599.5 million, with no debt.
Share Repurchase Program
In the third quarter of 2011, the Company bought back 1.9 million shares for $59 million at an average price of $30.57. In the nine months period ended September 30th, 2011, the Company bought back 2.8 million shares for $90 million at an average price of $32.07.
The Company also announced that its Board of Directors has authorized a new program to repurchase up to $100 million of its issued and outstanding ordinary shares and ADRs. Repurchases may be made from time to time in the open market or in privately negotiated transactions and will be in accordance with applicable securities laws and regulations. The timing and amount of the repurchase transactions will be determined by management and may depend on a variety of factors, including market conditions, alternative investment opportunities and other considerations. The program does not obligate the Company to acquire any particular amount of ordinary shares and ADRs and the program may be modified or discontinued at any time without prior notice.
Fourth Quarter and Full Year 2011 Guidance:
Fourth Quarter 2011: non-GAAP revenue for the fourth quarter is expected to be in a range of $208 million to $218 million. Fourth quarter non-GAAP fully diluted earnings per share are expected to be in a range of $0.55 to $0.59.
Full Year 2011: non-GAAP revenue for the full year is expected to be in a range of $792 million to $802 million. The range for full year non-GAAP fully diluted earnings per share was increased and is now expect to be in a range of $2.05 to $2.09.
Quarterly Results Conference Call
NICE management will host its earnings conference call at 8:30 AM EDT, 12:30 PM GMT, 2:30 PM Israel, to discuss the results and the company's outlook. To participate in the call, please dial the following dial-in numbers: United States 1-866-229-7198 or 1-888-668-9141, International +972-3-9180609, United Kingdom 0-800-917-5108 Israel 03-9180609. The call will be webcast live on http://www.nice.com at http://www.nice.com/news-and-events/ir-events . An online replay will also be available approximately three hours following the call. A telephone replay of the call will be available for 72 hours after the live broadcast, and may be accessed by dialing: United States 1-888-782-4291, International +972-3-9255900, United Kingdom 0-800-917-4256 Israel 03-9255900.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share-based compensation expenses, as well as certain business combination accounting entries 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 leader of intent-based solutions that capture and analyze interactions and transactions, realize intent, and extract and leverage insights to deliver impact in real time. Driven by cross-channel and multi-sensor analytics, NICE solutions enable organizations to improve business performance, increase operational efficiency, prevent financial crime, ensure compliance, and enhance safety and security. NICE serves over 25,000 organizations in the enterprise and security sectors, representing a variety of sizes and industries in more than 150 countries, and including over 80 of the Fortune 100 companies. http://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.
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 Messer Bregman, are based on the current expectations of the management of NICE-Systems Ltd. (the Company) only, and 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) and the resulting uncertainties; 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; pressure on pricing resulting from competition; and inability to maintain certain marketing and distribution arrangements. 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
September 30, September 30,
-------------------- ---------------------
2011 2010 2011 2010
Unaudited Unaudited Unaudited Unaudited
Revenue:
Product $ 88,677 $ 83,556 $257,831 $237,695
Services 110,784 91,300 322,378 265,611
--------- -------- --------- ---------
Total revenue 199,461 174,856 580,209 503,306
Cost of revenue:
Product 29,394 26,061 85,129 79,603
Services 48,265 40,944 140,531 119,257
--------- -------- --------- ---------
Total cost of revenue 77,659 67,005 225,660 198,860
--------- -------- --------- ---------
Gross profit 121,802 107,851 354,549 304,446
Operating Expenses:
Research and development, net 27,065 25,481 79,820 70,947
Selling and marketing 45,963 44,050 144,941 128,585
General and administrative 22,528 20,717 68,618 58,569
Amortization of acquired
intangible assets 5,818 4,968 17,262 14,459
--------- -------- --------- ---------
Total operating expenses 101,374 95,216 310,641 272,560
--------- -------- --------- ---------
Operating income 20,428 12,635 43,908 31,886
Finance and other income, net 2,075 3,377 7,454 7,054
--------- -------- --------- ---------
Income before taxes on income 22,503 16,012 51,362 38,940
Taxes on income 4,181 3,474 9,344 7,615
--------- -------- --------- ---------
Net income $ 18,322 $ 12,538 $ 42,018 $ 31,325
========= ======== ========= =========
Basic earnings per share $ 0.29 $ 0.20 $ 0.66 $ 0.50
========= ======== ========= =========
Diluted earnings per share $ 0.29 $ 0.20 $ 0.65 $ 0.49
========= ======== ========= =========
Weighted average number of shares
outstanding used to compute:
Basic earnings per share 62,824 62,711 63,325 62,478
Diluted earnings per share 64,002 63,720 64,661 64,009
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
September 30, September 30,
---------------------- ---------------------
2011 2010 2011 2010
--------- --------- --------- -----------
GAAP revenues $ 199,461 $ 174,856 $ 580,209 $ 503,306
Valuation adjustment on
acquired deferred product
revenue 607 638 3,010 1,579
Valuation adjustment
on acquired deferred
service revenue 362 713 865 3,465
--------- --------- --------- ----------
Non-GAAP revenues $ 200,430 $ 176,207 $ 584,084 $ 508,350
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP cost of revenue $ 77,659 $ 67,005 $ 225,660 $ 198,860
Amortization of
acquired intangible
assets on cost of product (6,390) (6,146) (20,397) (17,226)
Valuation adjustment on
acquired deferred
cost of services 133 205 466 640
Cost of product
revenue adjustment (1,2,4) (79) (113) (307) (315)
Cost of services
revenue adjustment (1,2,3) (378) (670) (1,770) (1,972)
--------- --------- --------- ----------
Non-GAAP cost of
revenue $ 70,945 $ 60,281 $ 203,652 $ 179,987
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP gross profit $ 121,802 $ 107,851 $ 354,549 $ 304,446
Gross profit adjustments 7,683 8,075 25,883 23,917
--------- --------- --------- ----------
Non-GAAP gross profit $ 129,485 $ 115,926 $ 380,432 $ 328,363
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP operating
expenses $ 101,374 $ 95,216 $ 310,641 $ 272,560
Research and
development (1,2,3) (861) (978) (3,142) (3,720)
Sales and marketing
(1,2,3) (1,796) (1,738) (6,083) (4,561)
General and
administrative (1,2,3) (1,519) (2,450) (6,596) (8,523)
Amortization of
acquired intangible
assets (5,818) (4,968) (17,262) (14,459)
Acquisition related
expenses (4) (793) (980) (6,199) (1,599)
--------- --------- --------- ----------
--------- --------- --------- ----------
Non-GAAP operating
expenses $ 90,587 $ 84,102 $ 271,359 $ 239,698
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP finance &
other income, net $ 2,075 $ 3,377 $ 7,454 $ 7,054
Realized gain on
previously impaired
marketable securities - (625) - (625)
Acquisition related
expenses (4) - 97 - 97
--------- --------- --------- ----------
Non-GAAP finance &
other income, net $ 2,075 $ 2,849 $ 7,454 $ 6,526
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP taxes on Income $ 4,181 $ 3,474 $ 9,344 $ 7,615
Tax adjustments re
non-gaap adjustments 2,318 2,539 10,139 8,229
--------- --------- --------- ----------
Non-GAAP taxes on income $ 6,499 $ 6,013 $ 19,483 $ 15,844
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP net income $ 18,322 $ 12,538 $ 42,018 $ 31,325
Valuation adjustment
on acquired deferred
revenue 969 1,351 3,875 5,044
Valuation adjustment
on acquired deferred
cost of services (133) (205) (466) (640)
Amortization of
acquired intangible
assets 12,208 11,114 37,659 31,685
Share-based compensation
(1) 4,285 5,638 15,273 15,896
Re-organization
expenses (2) - - 910 2,262
Acquisition related
compensation expense (3) 345 311 1,706 933
Acquisition
related expenses (4) 796 1,077 6,208 1,696
Realized gain on
previously impaired
marketable securities - (625) - (625)
Tax adjustments re
non-gaap adjustments (2,318) (2,539) (10,139) (8,229)
--------- --------- --------- ----------
Non-GAAP net income $ 34,474 $ 28,660 $ 97,044 $ 79,347
--------- --------- --------- ----------
--------- --------- --------- ----------
GAAP diluted earnings
per share $ 0.29 $ 0.20 $ 0.65 $ 0.49
--------- --------- --------- ----------
--------- --------- --------- ----------
Non-GAAP diluted
earnings per share $ 0.54 $ 0.45 $ 1.50 $ 1.24
--------- --------- --------- ----------
--------- --------- --------- ----------
Shares used in
computing US GAAP
diluted earnings per
share 64,002 63,720 64,661 64,009
Shares used in computing
Non-GAAP diluted earnings
per share 64,002 63,720 64,661 64,009
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
September 30, September 30,
------------------- ---------------------
2011 2010 2011 2010
--------- -------- ---------- ---------
Cost of product revenue $ (76) $ (113) $ (238) $ (315)
Cost of service revenue (362) (670) (1,654) (1,686)
Research and development (640) (667) (2,085) (2,787)
Sales and marketing (1,743) (1,738) (5,750) (4,054)
General and administrative (1,464) (2,450) (5,546) (7,054)
--------- -------- ---------- ---------
$ (4,285) $ (5,638) $ (15,273) $ (15,896)
========= ======== ========== =========
(2) Re-organization expenses
------------------------
Quarter ended Year to date
September 30, September 30,
------------------- ---------------------
2011 2010 2011 2010
--------- -------- ---------- ---------
Cost of product revenue $ - $ - $ (60) $ -
Cost of service revenue - - - (286)
Research and development - - (141) -
Sales and marketing - - - (507)
General and administrative - - (709) (1,469)
--------- -------- ---------- ---------
$ - $ - $ (910) $ (2,262)
========= ======== ========== =========
(3) Acquisition related compensation expense
----------------------------------------
Quarter ended Year to date
September 30, September 30,
------------------- ---------------------
2011 2010 2011 2010
--------- -------- ---------- ---------
Cost of service revenue $ (16) $ - $ (116) $ -
Research and development (221) (311) (916) (933)
Sales and marketing (53) - (333) -
General and administrative (55) - (341) -
--------- -------- ---------- ---------
$ (345) $ (311) $ (1,706) $ (933)
========= ========= =========== =========
(4) Acquisition related expenses
----------------------------
Quarter ended Year to date
September 30, September 30,
------------------- ---------------------
2011 2010 2011 2010
--------- -------- ---------- ---------
Cost of product revenue $ (3) $ - $ (9) $ -
Research and development (49) (72) (81) (73)
Sales and marketing 27 (77) (2,180) (77)
General and administrative (771) (831) (3,938) (1,449)
Other expense, net - (97) - (97)
--------- -------- ---------- ---------
$ (796) $ (1,077) $ (6,208) $ (1,696)
========= ======== ========== =========
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, December 31,
2011 2010
-------------- ------------
Unaudited Unaudited
-------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 122,156 $ 109,526
Short-term investments 185,416 242,593
Trade receivables 120,965 99,257
Other receivables and prepaid expenses 45,842 31,924
Inventories 13,007 10,861
Deferred tax assets 6,501 6,798
-------------- ------------
Total current assets 493,887 500,959
-------------- ------------
LONG-TERM ASSETS:
Marketable securities 291,896 311,081
Other long-term assets 31,789 31,118
Property and equipment, net 27,144 22,014
Other intangible assets, net 128,996 141,632
Goodwill 569,308 527,614
-------------- ------------
Total long-term assets 1,049,133 1,033,459
-------------- ------------
TOTAL ASSETS $ 1,543,020 $ 1,534,418
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 21,187 $ 20,019
Accrued expenses and other liabilities 335,302 307,031
-------------- ------------
Total current liabilities 356,489 327,050
-------------- ------------
LONG-TERM LIABILITIES:
Deferred tax liabilities 17,311 19,705
Other long-term liabilities 26,420 26,903
-------------- ------------
Total long-term liabilities 43,731 46,608
-------------- ------------
SHAREHOLDERS' EQUITY 1,142,800 1,160,760
-------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,543,020 $ 1,534,418
============== ============
NICE SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
U.S. dollars in thousands
Quarter ended Year to date
September 30, September 30,
-------------------------------------------
2011 2010 2011 2010
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ----------
Operating Activities
Net income $ 18,322 $ 12,538 $ 42,018 $ 31,325
Adjustments to reconcile
net income to net cash from
operations:
Depreciation, amortization
and other 16,080 14,747 48,908 42,222
Stock based compensation 4,285 5,638 15,273 15,896
Excess tax shortfall (benefit)
from share-based payment
arrangements 102 (204) (367) (399)
Net recognized losses (gains)
on investments and derivatives 329 (471) 1,616 (727)
Deferred taxes, net (1,807) (991) (8,732) (6,457)
Changes in operating
assets and liabilities:
Trade Receivables (9,325) (2,156) (17,210) 9,194
Other receivables and
prepaid expenses 1,526 3,672 811 (4,387)
Inventories 1,169 (825) (1,457) 1,357
Trade payables 2,761 (2,309) (238) (10,864)
Accrued expenses and other
current liabilites (15,390) 1,372 19,955 24,002
Other long-term liabilities (110) (101) 504 (547)
--------- --------- --------- ----------
Net cash provided by
operating activities 17,942 30,910 101,081 100,615
--------- --------- --------- ----------
Investing Activities
Purchase of property
and equipment (5,689) (3,463) (13,181) (8,550)
Proceeds from sale of
property and equipment 62 4 81 15
Purchase of investments (51,132) (97,240) (170,375) (304,546)
Proceeds from investments 73,628 26,422 229,959 119,597
Capitalization of software
development costs (311) (313) (850) (1,051)
Purchase of intangible assets (3,000) - (3,000) -
Payments for acquisitions,
net of cash acquired - (26,201) (64,947) (52,267)
--------- --------- --------- ----------
Net cash provided by (used in)
investing activities 13,558 (100,791) (22,313) (246,802)
--------- --------- --------- ----------
Financing Activities
Proceeds from issuance of
shares upon exercise of share
options and ESPP 3,099 3,677 18,080 15,351
Purchase of treasury shares (54,019) - (84,991) -
Excess tax benefit (shortfall)
from share-based payment
arrangements (102) 204 367 399
--------- --------- --------- ----------
Net cash provided by (used in)
financing activities (51,022) 3,881 (66,544) 15,750
--------- --------- --------- ----------
Effect of exchange rates on
cash and cash equivalents (928) 1,530 406 253
--------- --------- --------- ----------
Net change in cash and
cash equivalents (20,450) (64,470) 12,630 (130,184)
Cash and cash equivalents,
beginning of period 142,606 149,097 109,526 214,811
--------- --------- --------- ----------
Cash and cash equivalents,
end of period $ 122,156 $ 84,627 $122,156 $ 84,627
========= ========= ========= ==========
Corporate Media Contact
Galit Belkind, +1-877-245-7448, [email protected]
Investors
Marty Cohen, +1-212-574-3635, [email protected], ET
Anat Earon-Heilborn, +972-9-775-3798, [email protected], CET
SOURCE NICE Systems Ltd.
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