NICE Ltd

Welcome to the NICE conference call discussing first quarter 2024 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 16, 2024. I would now like to turn this 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 Alon, 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 current actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause action results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the Company's 2023 Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 27, 2024. During today's call, we will present a more detailed discussion of first quarter 2024 results and the company's guidance for the second quarter and full year of 2024. You can find our press release as well as PDFs of our financial results on NICE's investor relations website. 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 share-based compensation, amortization of acquired intangible assets, acquisition related and other expenses, amortization of discount on debt and loss from extinguishment of debt, and the tax effect of the non-GAAP adjustments. Differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press report. The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties, and assumptions. We'd also like to remind you that we're hosting our Investor Day on June 11th in conjunction with our Interactions User Conference in Las Vegas. The special program for analysts and investors will include presentations from NICE executives and access to the Innovations Hall where you'll see several or many different types of demos. If you haven't received the registration email, please email us at iratnice.com. And I'll now turn the call over to Barak.

Thank you, Marty, and welcome, everyone. Earlier today, we reported strong first quarter results, starting the year on a high note. We also announced my planned transition as the CEO of NICE. This decision has not been easy for me. as leading this incredible team and serving our customers, partners and investors for the past 10 years has been one of the greatest privileges of my life. With the company poised for continued success and after 25 years at NICE, I believe it is the right time for me to step down. The board and I have initiated a search process for my successor to ensure that NICE will continue on our journey of leadership, growth and profitability. Nice has been my home for more than half of my life, and I will continue to lead the company with the same passion as I did for my entire career until the end of this year, as well as to support a smooth transition to my successor. And now to our first quarter earnings. We are thrilled to start the year with a positive momentum, evidenced by robust performance across the board while continuing to outpace the market. We reported a total revenue of $659 million, which reached the high end of our guidance range and represented an increase of 15% from the same quarter one year ago. Our industry-leading cloud growth remained the driving force behind our strong top-line performance, showing an increase of 27% year-over-year. We also continue to deliver great profitability as demonstrated by a 170 basis point increase in our operating margin, which ended the quarter at 30.3%, marking a significant milestone in our continued delivery of profitable growth. We far exceeded the high end of our guidance for EPS, finishing the quarter at $2.58, which was an increase of 27% compared to one year ago. Completing the exceptional first quarter execution, we once again demonstrated superior cash flow generation, totaling a record $254 million in operating cash for the quarter, an increase of 30% year-over-year. Our continuous strong performance over the past several years, as well as in the first quarter, are attributed to our unmatched platform strategy. Building a best-in-class platform that is as comprehensive as CX1 demands years of focused effort and massive investments. It cannot be done overnight or mimicked by stitching together siloed and disconnected point solutions. This is even more profound pronounced in CX because it is a market that is highly specialized and where the barrier of entry is nearly insurmountable. Anticipating the future trajectory of the CX market, our proven strategy, and meticulously architecting CX1 from day one to excel as the premier CX platform, combined with unwavering, consistent execution, is now driving our market leadership with the ultimate trifecta. The industry's highest cloud win rate, trailblazing digital convergence, and fully leveraging the tremendous CX AI opportunity. Let me elaborate and provide a few examples on each. CX-1's dominance as the most enterprise-ready cloud platform is fueling nicest unmatched win rates. In every evaluation or RFP, CX-1 stands out as the most complete, is exemplified for its ease and speed to migration tool, its best-in-class CMS-less integrated portfolio of solution, and boasts unparalleled scalability. In Q1, we once again continue to win the enterprise market as evidenced by the volume of portfolio deals indicating a rising trend of enterprises choosing CX1 as their future cloud platform over their legacy on-premise or disparate cloud point solutions. For example, in a seven-digit deal, one of the world's largest healthcare companies is continuing to move more of its point solutions due to the scalability of CX1 further displacing multiple incumbent legacy vendors. In another deal that showcases the completeness of CX1, a large pharmacy outsourcer turned to NICE to simplify CX and deliver to its customers a better experience offered by a unified platform. In the process, they eliminated point solution providers. A large retail supply company was also looking to unify their tech stack because their existing disjointed infrastructure was breaking down. In this deal, the customer selected CX1 over the competition due to its proven ease of migration as provided by multiple references. For nearly three decades, there was a clear separation in the CX space between voice solution providers and digital interaction providers. Conversely, CX1 was built as the first and only customer-centric platform, natively converging all touchpoints and all interactions, triggering a rapid paradigm shift in the market over the past couple of years. This shift is now removing the line between these siloed subcategories, resulting in enterprises consolidating their legacy digital CX into CX1. Our digital convergence star is evidenced by a staggering eight out of every ten new enterprise customers selecting CX1 over the last two years to manage all the customer interactions, including multiple digital touchpoints, and by the exceptional five-fold growth in the volume of digital interactions managed by CX1. In Q1, we signed a seven-digit deal with a large state credit union which is a great example of the digital convergence CX1 is driving. This existing customer began its journey by migrating from a legacy incumbent into CX1 and is now leveraging the platform to consolidate several of its siloed digital point solutions into CX1. In another 7-digit deal, a well-known consumer loan company is consolidating its CX and forging their digital strategy on CX1 through the adoption of our digital and AI portfolio to rely increasingly on self-service to help improve customer experience. While fusing AI and CX is undoubtedly revolutionary, its impact is quite different than commonly held perceptions. Everything considered simple in CX such as checking your account balance, password research, returns and refunds, as well as thousands of other services and inquiries are already fully automated. Today's 15 million CX agents around the globe are dealing with the most complex and unconventional service scenarios, almost all of which are non-repetitive tasks. There is a heightened understanding among enterprises that the next level of CX automation can only be achieved by a highly specialized AI platform. This is the exact reason why CX1, with its unparalleled extensive repository of crucial data, knowledge, and interaction, is the platform of choice for a growing number of small and large enterprises. Accordingly, we saw a remarkable 200% year-over-year surge in the number of enlightened AI deals in Q1. We're seeing numerous examples of how the adoption of even just one use case of AI increases the customer R pool by 40% or more, demonstrating the tremendous monetization potential as we further expand our AI leadership with both existing and new customers. Moreover, in the first quarter, Every CX deal above $1 million ACV included AI. For example, in a 7-digit deal, a large agricultural manufacturing company is moving away from its disparate set of point solutions to CX-1 to unify its technology stack, and in the process, developing a CX AI strategy as evident by the purchase of a portfolio of our AI solutions, including Enlightened Autopilot, and others. A similar impetus was behind a seven-digit deal with a large Canadian telecommunication company, a deal in which we won against several competitors and which the breadth and depth of CX-1 AI made nice the obvious choice. We also won a seven-digit deal with a very large UK-based bank, which selected CX-1 first and foremost as the cornerstone for the CX-AI strategy and we see significant expansion opportunities. In this deal, we replace the long-standing incumbent AI pure PlayPoint solution provider. AI innovation is flourishing on CX1 as evidenced by rapidly expanding enlightened AI portfolio, including co-pilot for agents and supervisor, autopilot, autosummary, actions, XO and others. in addition to the thousands of CX1 AI models. The speed of AI innovation on CX1 is allowing us to deliver capabilities at a record pace. A good example is the recently released Enlighten XM, which went from inception to general availability in three months. Moreover, the innovation to customer adoption curve is the shortest we've ever seen. As an example, we introduced Enlightened Co-Pilot less than a year ago at Interactions 2023, and in just a few months, we signed dozens of new and existing enterprise customers who are already using it today. In summary, Q1 was marked by significant financial achievements, multiple large customer wins, and rapid innovation, all of which were sourced from the platform power of CX1. Our years of massive investments Building CX1 as the leading platform in the CX market continues to drive our success for 2024 and beyond. We are operating in a market that is still nascent in the areas of cloud, digital and AI. Given that these areas still hold considerable growth potential and coupled with the power of CX1 platform, we see significant long-term opportunities for sustained growth and profitability. Before I finish, I would like to share that we are very excited for our annual user conference, the largest in the CX industry, taking place in Las Vegas, which is only a few weeks away. It is a perfect opportunity for all attendees to witness the platform power of CX One from our own experts, as well as from an impressive list of leading enterprises. Our agenda features marquee customers that adopted CX One as they migrated to the cloud, converged all CX assets and are already seeing the benefits of NICE's CX AI, including Sony, Hunter Douglas, The Standout, Henry Schein, Tyatt, Fifth World Bank, LexisNexis, Hyundai Capital, Consumer Cellular, Realtor.com, KeyBank, Banco de Brazil, United Way, Google, Concentrix, Chewy, PayPal, and many, many others. I would like to take this opportunity and invite all of you to our annual Investor Day on June 11, which is taking place in conjunction with Interactions. We look forward to seeing you there. I will now turn the call over to Beth.