NICE Ltd

As a reminder, this conference is being recorded February 23rd, 2023. I would now like to turn the 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 Barack Alam, 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 5th, 2022. During today's call, we will present a more detailed discussion of fourth quarter and full year 2022 results and the company's guidance for the first quarter and full year 2023. 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 revenue 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, and I'll now turn the call over to Barak.

Thank you, Marty, and welcome, everyone. We're happy to report another quarter of outstanding results with profitable growth momentum. 2022 was another landmark year as we crossed significant milestones, highlighting our success and paving the way for future growth. We crossed $2 billion in total revenue, achieved 60% in cloud revenue as a percent of total revenue, continued to move swiftly toward the 30% plus operating margin, witnessed a massive expansion in AI adoption and had the best year ever for both new customer acquisition and new partner onboarding. The strong finish to the year led to a full year 2022 total revenue growth of 30% and 14% in constant currency. Driving these strong results is our continued excellent execution in the cloud as cloud revenue increased 27% for the full year 2022 and similarly in Q4. Our strategy has always been to execute on the top line while expanding profitability, and this continued throughout 2022, ending the year with a robust growth in profitability. For the full year 2022, our gross margin increased 50 basis points to 73.1%. Our operating margin was 50 basis points to an industry-leading 28.7%, and we reported earnings per share of $7.62, representing growth of 17%. Much of this growth in profitability was driven by further expansion in our cloud gross margin, which increased 230 basis points to 70% in 2022, demonstrating the superiority of our cloud architecture that makes us unique in our market. Moreover, for the full year 2022, we generated $480 million in operating cash and ended the year with a total cash position of more than $1.5 billion, giving us the capital flexibility that is unparalleled in our market. NICE is by far in the best competitive position in our industry, operationally, innovatively, and financially, providing us significant opportunities ahead to capture a large and expanding market. These opportunities fall into four categories, as we say today. Cloud expansion in a vastly under-penetrated enterprise market, accelerating demand for complete platform as the market standard, the rise of AI, and the financial distress of our competitors. Let me expand on all four. First, cloud. While CX Cloud adoption reached 20%, it is extremely nascent in the large enterprise market. Over the next two years, we expect to see enterprises make a meaningful shift to the cloud. However, the high end of the market is a completely different ballgame. It requires the ability to address both complexity and scale, and this can only be addressed with our true native seamlessly integrated platform, CX One. And that brings me to the next opportunity, which is platform as the new market standard. Superior CX is all about the ability to serve the consumer in the most fluent and seamless way. Enterprises are now realizing that this cannot be achieved by loosely integrating dozens of siloed point solutions, which is the common approach promoted by vendors in our industry. The only way to achieve ultimate CX success is by adopting of cloud platform that was purposely built natively from the ground up with full suite of solutions. And this is exactly what we have done over the last seven years as we invested more than 12,000 engineering many years building CX1 to become the leading CX platform. The third opportunity is the rise of AI. In the upcoming decade, the most valuable companies will no longer be software companies, but those that transform into AI companies. Organizations are reaching the limit in their ability to achieve further operational gains with the simple automation offered by current enterprise software solutions. AI is the next transformational wave. To become an AI leader, software companies must have three key assets. a cloud platform that has been widely adopted, massive amounts of historical data, and industry-specific domain expertise. Nice is the only one in our industry with these three assets. We have spent the last several years building and deploying Enlighten, fully embedded in CX1, transforming it from a software platform to an AI platform, and creating an unbridgeable gap in our AI leadership. Just a few weeks ago, We're the first to release a groundbreaking integration between Enlightened AI and Chet GPT, pioneering human-like interactions in CX conversational AI, demonstrating our unparalleled innovation. The fourth opportunity related to our ability to capitalize on the financial distress that many of our competitors are experiencing. The CX competitive landscape is split between legacy incumbents that are struggling to service tremendous debt and small players who are dependent on continuous difficult to obtain capital injection. This situation is raising growing concerns with enterprises who want to partner with a vendor that offer both long-term financial viability as well as significant commitment to rapid innovation. NICE is the only vendor in the CX markets that is extremely profitable, investing heavily in R&D, and at the same time has a net cash position of more than a billion dollars. Our strong financial position gives us great flexibility to innovate and acquire to further fuel growth while continuing to drive increasing profitability. These four opportunities were all apparent in our Q4 deals. We signed an eight-digit deal with one of the largest banks in Latin America, which adopted a large part of our CX1 portfolio and was a replacement of three legacy on-premise competitors. We are highly recognized by this customer for our success with large enterprise implementations, our extensive digital and self-service capabilities, and the ability to deliver their future needs on single, scalable platforms. we signed another 8-digit deal with one of the largest Canadian insurance companies. We replaced the legacy incumbent as this customer is moving from an on-premise architecture to a full cloud implementation and selected Nice due to the completeness and native functionality of our digital and self-service capabilities in CX1, providing this customer the ability to grow their digital footprint with a single vendor. In yet another 8-digit deal, a large US-based cellular company is consolidating their complicated on-premise tech stack provided by multiple legacy vendors with CX1 as their unified cloud platform. This customer chose Nice for our market leadership and financial stability. We signed a multitude of seven-digit deals in Q4, including a large insurance company who is moving to the cloud with CX1 and one of the largest US independent mortgage providers, replacing their on-premise legacy vendor that has recently announced the sunset of several of their solutions. In another seven-digit deal, we extended our portfolio of digital solution at a well-known online bank. We won the deal over a digital pure play vendor as a result of the CX1 unified agent experience across multiple channels, which is a distinct competitive advantage of the CX1 platform. We also signed multiple seven-digit deals in international markets, demonstrating the growing demand for cloud in EMEA and APAC. One deal was with a UK-based energy company who was displeased with an existing inflexible on-premise solution proving increasingly costly to maintain. We won with CX1 for the platform's superior functionality and support for digital customer journeys, demonstrating faster ROI and operational efficiencies. In the APAC region, we signed our largest CX1 deal to date, which was a seven-digit deal with a multinational Asia-based technology company. The rapid growth required a next-gen digital platform that was more scalable, and provides full conversational AI. In summary, 2022 was a year in which we surpassed significant milestones and continued to outperform on all financial measures. We operate in markets with an abundance of short-term and long-term opportunities. Our platforms are serving the most mission-critical processes of small and large enterprises across multiple verticals. Through our financial strength and rapid innovation over the past several years, we opened an unbridgeable gap versus our competitors. We look forward to leveraging our leading position to capture additional market share in 2023 and in the years to come. Before I close, I want to thank our employees for another great year. It is because of your ardent dedication and passionate desire to succeed that we continue to take NICE to another level of achievement. We are fully energized and ready to charge forward in 2023 and look forward to another excellent year. I will now turn the call over to Beth.