NICE's CEO Discusses Q2 2012 Results - Earnings Call Transcript

NICE Systems Ltd. (NICE)

Q2 2012 Results Earnings Call

August 1, 2012 8:30 AM ET


Marty Cohen – VP, Investor Relations

Zeevi Bregman – President and CEO

Dafna Gruber – Chief Financial Officer

Eran Liron – EVP, Corporate Development


Daniel Ives – FBR

Shyam Patil – Raymond James

Daniel Meron – RBC Capital Markets

David Kaplan – Barclays Capital

Mark Strouse – JPMorgan

Jonathan Ho – William Blair

Michael Kim – Imperial Capital



Good day, ladies and gentlemen. And welcome to the NICE Systems Q2 2012 Earnings Call. My name is Stephanie, and I’m your event manager. During the presentation, your lines will remain on listen-only. (Operator Instructions)

I would like to advise all parties, this conference is being recorded. And now I’d like to hand the call over to Marty Cohen, VP, Investor Relations at NICE. Thank you.

Marty Cohen

Thank you, Operator. With me on the call today are Zeevi Bregman, President and Chief Executive Officer; Dafna Gruber, Chief Financial Officer; and Eran Liron, Executive Vice President, Corporate Development.

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 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 2010 annual report on Form 20-F, is filed with the Securities and Exchange Commission on March 29, 2012.

During today’s call, we will present a more detailed discussion of second quarter 2012 results and the company’s guidance for the third quarter and the full year. 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 -- acquisition-related revenues and expenses, amortization of intangible assets and accounting for stock-based compensation. The difference between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today’s press release.

And I’ll now turn it over to Zeevi.

Zeevi Bregman

Thank you, Marty. And welcome everyone to our second quarter 2012 earnings call. Today we reported full results for the second quarter. Non-GAAP total revenues were $213 million, up 10% compared to the second quarter of 2011. Non-GAAP EPS for Q2 were $0.57, representing an increase of 14% compared to the second quarter of last year. Our book-to-bill ration was 1 and our backlog is strong at more than two quarters of revenue.

At the same time, the macro environment is causing longer sale cycle. This is resulting in slower than expected growth in both our [core] and our analytics based advanced application businesses.

Therefore, we are lowering the range of our 2012 total revenue guidance. However, we are committed to profitability and for effective cost control we expect a minimal impact at operating margin. We believe that the second half of 2012 which will be weighted more to our Q4. We will continue to deliver growth in booking, backlog, revenues and profitability.

We continue to see strong demand for our solutions, driven by the need for organization to improve operational efficiency, enhance the customer experience, increase customer satisfaction, drive revenues and show compliance, and safeguard people and assets.

We saw strong growth in our analytics based advanced applications business in the first half of 2012 and we believe that it will be continue to be a major catalyst for our future growth.

A key driver of the growth in our analytics based advanced application is that organization increasingly understand that they are now sufficiently prepared to meet the challenges of the opportunity presented to them the big data.

For several years, NICE has provided best-in-class analytic solutions to help our customers extract value from structured and non-structured data. Our solutions capture and analyze data for multiple channel, such as voice, text, chat, email, social media, video and financial transaction.

More recently, we have extended our solution portfolio with additional internal analytics capabilities enabling our customer to own the decisive moment of each interactional event. Analytics based advanced applications now represent over 40% of our overall non-recurring revenue.

Let me move on to our customer interaction business where we continue to see strong growth in our analytics based solution.

We believe that the best way to help our customer achieve their business goal into real-time cross channel analytics which deliver not only insight but also recommendation for the next best action to be taken.

Our development efforts are focused on deeper integration between all parts of our portfolio to provide a streamline user experience and the consolidated view of the customers across different parts of the organization.

We would like to share with you few use cases of our solutions, which demonstrate the way our solution help our customers achieve their business goals. One example is our interactional analytics are being deployed to ensure compliance with the requirement of the Dodd-Frank Act for transaction investigation.

During the second quarter we received orders from two of the top U.S. banks for operating [call] recording and analytics. These banks are getting ahead of the expected requirement to monitor all interactions, search the basic transaction and be able to better reconstruct the channel using for investigation. We have been with other major banks in the pipeline as the Dodd-Frank Act has elevated the level of global interest to our solutions.

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