NICE Ltd

Welcome to NICE conference call discussing third quarter 2021 results and thank you all for holding. All participants are in a listen-only mode. Following management's formal remarks, instructions will be given for the question and answer session. As a reminder, this conference is being recorded November 11th, 2021. I would now like to turn the call over to Mr. Marty Cohen, VP, Investor Relations at NICE. Please go ahead.

Thank you, operator. With me on the call today are Barack Elam, Chief Executive Officer, and Beth Gaspich, Chief Financial Officer. Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company's 2020 Annual Report on Form 20F as filed with the Securities and Exchange Commission on March 23, 2021. During today's call, we will present a more detailed discussion of third quarter 2020 results and the company's guidance for the full year 2021. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations, which differ in certain respects from generally accepted accounting principles, as reflected mainly in accounting for acquisition-related revenues and expenses, amortization of intangible assets, and accounting for stock-based compensation. The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release. I will now turn the call over to Barak.

Thank you, Marty, and welcome, everyone. We are pleased to report a banner quarter with Q3 total revenue just shy of half a billion dollars for the first time in our company's history. The quarter was characterized by continued accelerated growth across the board, underscored by 20% total revenue growth and 29% growth in the cloud. These strong Q2 results reflect the uplift we are receiving from being at the center of four key dynamics that are taking place in our industry. Cloud, digital, AI and the shift to platforms. Specialized applications natively built in the cloud at scale are now taking a central role in organizations' transformations to cloud technology. CX1 has become the premier native cloud specialized platform for customer experience. We built CX1 with the world's largest and most comprehensive customer engagement set of solutions. We are, for the first time ever in this industry, fulfilling CX needs that for decades could not be achieved with the old paradigm of disjointed, on-premise and non-cloud native solutions. Over the past year, we have added a dozen new native CX1 solutions to our portfolio with hundreds of new features. We now have over 725,000 agents in 100 countries using CX1, making us by far the clear market leader. In our go-to-market, We have added 27 new partners so far this year and have expanded CX1 internationally, which I'll talk about later. Consumers' exponential adoption of digital is far outpacing organizations' slow, linear digital evolution. This is the root cause of the rapidly growing friction between consumers and service. Linear evolution will never catch up to exponential growth. Our digital strategy has one goal, to be the next generation engine allowing organizations to radically shift from slow digital evolution and leapfrog ahead of their digital consumers. 2021 is a seminal year in our execution on this strategy, catapulting CX1 to the center of the digital arena. We are already seeing tremendous success and expansion with our digital-first approach with CX1. In Q3, digital revenues grew 78%, the number of cross-sell digital deals grew 34%, and the number of first-time digital-only deals grew 7-fold. Even after decades of investment in productivity, process optimization, and automation tools, 87% of spend in the CX market is still attributed to labor. Artificial intelligence fused with high quality CX data is finally starting to disrupt the axiom that only investment in incremental manpower can deliver great customer service. CX1 with its massive CX data repository is taking giant steps toward becoming the ultimate CX AI hub as organizations shift to automated smart CX with unprecedented return on investment. Data and AI served as a catalyst to CX1 rapid win rate and expansion in Q3. This is reflected in the very strong momentum we continue to see with Enlightened, which is the AI brain and the core of CX1 that is embedded across our entire platform. In Q3, AI drove further demand for Enlightened, as the number of enlightened deals tripled in the quarter compared to last year. Platforms are the only viable way to master complexity at scale. They are the ultimate glue between technology and processes for organizations. Our goal with CX One as a platform is to master the extreme complexity at scale for the CX market. There are no shortcuts in reaching this goal. The only way to achieve it is with a complete, fully unified and open suite. CX One to date has more than 4,000 development many years and decades of domain expertise invested towards this goal. We are the only player in the CX market that possesses all the assets natively built into one platform. In fact, 7 out of 10 organizations adopting CX One today are retiring and three or more separate software solutions. These four dynamics, cloud, digital, AI and platform, provides tremendous long-term growth opportunities and we continue to strategically double down on them. Let me now turn to Q3, where we continue to outperform our 2021 plan by expanding upmarket to the enterprise, expanding to international markets Expanding our reach through partnerships and expanding our leadership in digital. Our decade-long expertise and go-to-market experience with large enterprises, which we define as organizations with at least 750 agents, is reflected in the great success we are having at the high end of the market with CX1. Overall, CX1 new bookings in Q3 grew 100% year-over-year, and the number of seven-digit and above deals grew 46% in Q3 versus last year. One example was an 8-digit ACV deal with one of the largest retail brokerages in the world. This customer, which was with an on-premise incumbent for many years, evaluated the cloud solution of the incumbent and selected CX1 for its overall superiority, its seamless integration and the breadth and depth of the platform. Another large signing for CX1 included a 7-digit ACV deal with a major interactive gaming company as the incumbent provider was unable to support their needs. Taking into account the large seasonality shifts in their business, they needed a platform that was highly flexible and elastic. We also signed a 7-digit ACV deal with a very large federal government agency. Other large deals for the quarter at the high end of the market included an 8-digit deal with an existing customer, a very large financial services organization that added multiple new solutions. We signed a 7-digit deal with one of the largest airlines in the world. The airline is now able to apply sophisticated analytics to 100% of their interaction volume up from 10% to effectively understand the interactions with their customers. Other 7-digit deals with large enterprises focus on modernizing their CX platforms, including a well-known provider of human capital management solutions and a very large pharmacy company. Another growth vector in our 2021 execution plan is international, where we see tremendous opportunities as many organizations are beginning to adopt cloud and digital at faster pace. In Q3, The number of new international CX logos as well as international bookings of CX1 grew 48% compared to the same period last year, driven by major expansion with our international channel partners. International deals for CX1 included a well-known Canadian-based logistics and shipping company, which was a competitive replacement. The company is focused on cloud and digital transformation to help make interactions with their customers seamless, and with the support of self-service. Other large international CX1 deals included a major university located in the APAC region, a large Brazilian-based bank and a large suppliers of industrial products based in Australia. Two years of rapid innovation combined with key strategic acquisitions in digital and AI has significantly widened the gap in our competitive differentiation in 2021 and significantly increase our win rates in Q3. Our success in digital and AI has two main drivers. The first is organizations who choose to move from legacy, omnichannel solutions to our next-gen digital CX platform. In these cases, we are experiencing a doubling of the ACV with the adoption of digital. A few of these examples, included in the US-based BPO, an international insurance broker, a financial services organization specialized in retirement planning, a well-known vitamin and herb company, a beauty care products company, and several others. The second driver is the transition to AI-powered self-service as organizations realize that this is the only way to address the need of their digital consumers. Some of the Q3 deals include a large waste management company, a well-known healthcare company and a large energy infrastructure company. The exact same dynamics I discussed earlier, cloud digital AI and the shift to platforms are fueling the accelerated growth in our financial common compliance segment as evidenced by the year-over-year 21% revenue growth in Q3. We signed an 8-digit deal with a very large German bank, which selected NICE due to the scalability of the solution and breadth of functionality. In a 7-digit deal with a large European bank, they purchased a portfolio for our solutions to modernize their financial compliance platform in a fast-evolving digital environment. Other large 7-digit deals included a major bank based in the UK, one of the largest US insurance companies, and two of the world's largest banks. In summary, we have taken a central role and are leading the market in shaping the four dynamics taking place in CX – cloud, digital, AI and the shift to platforms. Up until a few quarters ago, NICE was a single-digit total revenue growth company executing on its transition to the cloud. 2021 clearly reflects the dramatic change in our financial profile as we have quickly shifted to a company that is now growing its total annual revenue in double digits, delivering fast growth in the cloud with a run rate of over $1 billion and demonstrating consistent profitability of nearly 30%. With the tremendous opportunities ahead of us, and our commitment to continued solid execution, we believe that the shift that we've seen in 2021 is paving the way for continued success and expanded market leadership. Thank you, and I will turn it over to Beth.