NICE Ltd

Welcome to the NICE conference call discussing first quarter 2022 results, and thank you all for holding. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded May 12, 2022. I would now like to turn this call over to Mr. Marty Cohen, Vice President, Investor Relations at NICE. Please go ahead.

Thank you, operator. With me on the call today are Barak Elam, Chief Executive Officer, and Beth Gaspich, Chief Financial Officer. Before we start, I'd 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 2021 Annual Report on Form 20F as filed with the Securities and Exchange Commission on April 5, 2022. During the call, we will present a more detailed discussion of first quarter 2022 results and accompanies guidance for the second quarter and full year 2022. 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 compensations. The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release. We'd also like to remind you that we are hosting our Virtual Investor Day on May 24th in conjunction with our Interactions Live user conference. The program is for analysts and investors, and it will include presentations from NICE executives and product and technology sessions. If you haven't received the registration email, please email us at ir.nice.com. And I'll now turn the call over to Barak.

Thank you, Marty, and welcome, everyone. After a very strong 2021, a year in which our business significantly accelerated, we're happy to report that our momentum continues into 2022 as reflected in our outstanding Q1 results. Total revenue increased by 15%, and cloud revenue grew 28% year-over-year. We continue to drive excellent top-line goals and at the same time further improve our unmatched profitability as demonstrated by a 16% increase in operating income, 17% growth in EPS, and continued strong operating cash flow with a record of $193 million generated in Q1. These stellar Q1 results reflect the strong and durable demand for our solutions. The total value of seven-digit deals increased 93%. The average value of these deals grew 52%, and the total deal value of competitive replacements increased 113%. In addition, our enterprise customers highly value the power of our platform with tightly integrated solutions as reflected by an 89% increase in CX1 add-on new bookings. Moving forward, the pipeline reveals a similar story. Our pipeline is at an all-time record, growing 55% in Q1, and moreover, we are witnessing a strong and increasing pipeline in multiple verticals that are back to or greater than pre-COVID levels. What set us apart from the rest of the industry our three driving forces. Our widening leadership in the large enterprise market, our industry-leading international footprint, and our unparalleled next-gen digital and AI offering. Starting with our increasing leadership in large enterprises, it is far and away our domain. From our vast experience in this market, we know there are two key elements to winning the enterprise. Having a fully integrated and complete enterprise-class platform, and the ability to deliver complexity at scale. We see a clear priority from customers and prospects to invest in CX1 by taking advantage of our full suite of solutions. This is apparent as evidence by more than 100% year-over-year increase in the total value of our portfolio deals, which we define as deals that encompass three or more solutions. In Q1, We signed multiple large CX1 7-digit ACV deals in which the customer selected a portfolio of our CX1 solutions. One such deal included a large and well-known clothing retailer. This customer had a disjointed and siloed architecture in place from a legacy competitor. They wanted a complete cloud platform that could meet and service their consumers wherever they start their journey. without the need to integrate multiple solutions from different vendors. NICE was chosen because we are the only vendor that could offer a fully complete native cloud platform with seamlessly integrated digital and AI at scale. Other large seven-digit deals along these lines included a large regional bank, a Midwest-based life insurance and annuity company, and a leading hospitality platform company. We also signed an eight-digit deal with a large and well-known Fintan company and a seven-digit deal with a large regional bank. International, which is another key driving force for us, is increasingly becoming a stronghold of our business. We already have significant go-to-market assets and a large customer base in all key international markets. Yet, it is still a heavily under-penetrated market in which we see accelerating momentum driven by increasing demand for cloud and digital. Cloud as a percentage of the new booking in our international business increased significantly year-over-year, led by several large cloud deals, and the total number of international CX1 deals more than doubled in Q1. Additionally, there has been significant pipeline generation in our international markets, further expanding into new territories with key wins and multiple meaningful opportunities. We signed our largest APA cloud deal ever, an eight-digit deal for multiple tens of thousands of agents with a large BPO. The incumbent solution could not scale with the BPO's growth, so they chose NICE as we are providing a more robust, scalable, and state-of-the-art solution that will future-proof the needs of the business. other seven-digit international deals, including one of the largest European broadcast companies and a deal with a German-based software company. Our ubiquity in the international markets has extended to the channel, where we have a large and growing ecosystem of partners. Another strategic partner we signed with last quarter is IBM to help enterprise customers digitally transform their businesses with CX1 internationally. Lastly, the third driving force is the extension of CCaaS to the next-gen digital, AI and smart self-service, a growing priority for enterprises of all sizes. The clear differentiation in our digital and smart self-service, which is building a widening chasm between us and the rest of the industry, is our CXI framework that incorporates decades of industry-specific data and purpose-built AI. CXI is driving our digital success and in Q1, the annual recurring revenue of our digital solutions increased by 88%. CXI is quickly becoming an industry standout for the customer engagement market. It is a framework that combines CCaaS, WEM, analytics, digital and self-service in a single native cloud platform fully powered by AI. CXI removes the friction-filled, disjointed, siloed approach that is the blight of Digital 1.0 that you get from our competitors. CX1 is recognized as the trailblazing CX cloud platform in the market and the only one that is capable of delivering the full value of CXI. With CXI, most of our deals with large enterprises now include digital and smart self-service solutions powered by Enlightened AI and delivered in over 35 digital channels seamlessly integrated into CX1. The breadth and depth of our digital solutions are unmatched and include smart web guidance, dynamic knowledge management, virtual agents, and proactive conversational AI. In Q1, we signed a large seven-digit ACV deal with a prominent medical supplier, which is a new logo. They chose CX1 to consolidate their service operation onto a single platform and to provide fully integrated digital and self-service capabilities that will scale and support their growth well into the future. They were also impressed with the ongoing innovation and roadmap at NICE for digital and self-service that they felt was far superior compared to others in the industry. Other seven figure deals led deals in Q1 included a digital deal with a payroll company, payroll platform company, a well-known gaming company, a provider of medical management information systems, and a travel management platform company. We're excited about the momentum we see, powered by the affordments of three driving forces. Our widening leadership in the large enterprise markets, our industry-leading international footprint, and our unparalleled next-gen digital and AI offerings. These drivers, paired with strong and durable demand in our markets, allows us to focus our efforts on executing our long-term strategy to further cement our leadership. Moreover, our exceptional financial profile of double-digit top-line goals combined with best-in-class profitability, outstanding cash generation, and a rock-solid balance sheet provides us the financial fuel to continue to outpace our competitors. I would like to take this opportunity and invite all of you to our annual Investor Day in conjunction with our Interactions User Conference on May 24th. Interactions Live is the CX industry's largest virtual event with over 25,000 customers, prospects, and partners in attendance, and a great lineup of keynote speakers, including former U.S. President George W. Bush and Oscar-winning actor George Clooney. A record number of the world's largest enterprises will share their experience with NiceCX1, including Honeywell, Kroger, T-Mobile, Disney, Verizon, Cambia Health, Telus, and many others. Interactions will also be a great opportunity to see firsthand how CX1 has evolved to become the market's number one CXI platform. We look forward to seeing you there virtually. I will now turn the call over to Beth.