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NiCE cut its full-year cloud-revenue growth forecast to about 12% from 13% to 15%, even as it raised its adjusted earnings outlook after third-quarter revenue rose 8% to $790.7 million, slightly above its forecast. The Israeli-founded customer-service software company also detailed a restructuring that will cut about 5% of its global workforce and produce a $15 million to $20 million pre-tax charge, mainly in the fourth quarter.
Adjusted diluted earnings were $2.84 a share, above the top of the company’s prior $2.73 to $2.83 range, according to its November 4 earnings release. Revenue had been expected to range from $780 million to $790 million.
For investors, the report combines a small forecast beat and a higher annual profit target with lower profit than a year earlier. For employees, it adds the expected cost and timing of a job-cut plan already reported Tuesday, not a separate new round of 500 cuts.
NiCE shares traded at $92.11 at 7:12 a.m. Eastern Wednesday, down $14.16, or 13.32%, from Tuesday’s $106.27 close, according to CNBC’s extended-hours Nasdaq quote. The move came before the U.S. regular session and after the results were released.
Revenue grows, but profit falls
Cloud revenue increased 10.6% to $622.7 million, compared with 12.6% growth in the second quarter. AI annual recurring revenue reached $392 million, up 46% from a year earlier. That recurring-revenue measure describes the annualized scale of the AI business; it is not an additional $392 million of revenue earned during the quarter.
The revenue figures included an unusual $10 million customer credit. NiCE said total revenue would have grown 9.4% without it, compared with the reported 8% increase. About $9 million of the credit reduced non-CXone cloud revenue; cloud growth would have been 12.2% without the credit, close to the prior quarter’s 12.6%. The credit therefore explains much of the reported quarterly slowdown.
Higher sales did not translate into higher earnings. GAAP net income fell to $95.1 million from $144.9 million, while GAAP diluted earnings declined to $1.60 a share from $2.29. Adjusted diluted earnings of $2.84 were also below the $3.18 reported a year earlier.
Adjusted operating margin narrowed to 27% from 31.5%. The adjusted figures exclude items specified by the company and should be read alongside its GAAP results, not as a replacement for them.
Cloud-growth outlook cut, earnings target raised
NiCE now expects full-year adjusted diluted earnings of $11.12 to $11.32 a share. It reiterated adjusted revenue guidance of $3.17 billion to $3.19 billion, with approximately 12% growth in cloud revenue expected for the year. That is below the 13% to 15% cloud-growth range in its August 5 company outlook.
CEO Scott Russell said international revenue grew 33% in the quarter. He described a market in which personal AI agents could increase customer interactions and demand for software that coordinates service across people and AI. Those are the company’s growth expectations, not a guarantee of future sales.
Job-cut plan was already reported Tuesday
CTech reported November 3 that the company planned about 500 global job cuts, citing a workforce of roughly 10,000, including around 1,000 employees in Israel. The Israeli figure describes the local workforce, not the number of jobs to be eliminated there.
Wednesday’s release confirms an approximately 5% global reduction as NiCE cuts management layers and simplifies decision-making. It also specifies the expected $15 million to $20 million restructuring charge, which will be excluded from adjusted results. NiCE says it will continue investing in AI, customer delivery and sales capabilities.
The release does not provide a country-by-country breakdown of the cuts. CTech’s earlier report cited estimates of limited impact in Israel; that remains an estimate, rather than a detailed allocation announced in the earnings release.
The results were released before the U.S. regular trading session. Management’s earnings call is scheduled for 8:30 a.m. Eastern.
JBizNews Desk | New York
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