Company Reports

Narrow-moat Nice's shares rose 9% after it reported strong fourth-quarter 2023 results. Fourth-quarter numbers and fiscal 2024 guidance were generally above FactSet consensus and our estimates. We are encouraged to hear CXOne bookings with enterprise customers are picking up, in line with our view. This is largely related to artificial intelligence demand as having a seamlessly integrated platform like Nice’s CXOne is necessary to fully leverage AI capabilities. We don’t expect to make a material change to our $265 fair value estimate. Nice shares are up 60% since November 2023, but we still think they look undervalued.

We’re maintaining our $265 fair value estimate for narrow-moat Nice after incorporating third-quarter results and the LiveVox acquisition. Shares jumped 9% on peer-leading cloud growth of 22% and good indications that Nice’s artificial intelligence offerings are gaining traction with customers. Furthermore, 2023 guidance was raised modestly and an initial outlook for 2024 was provided, which likely soothed investor concerns given recent uncertainty over AI and a weaker market for small and mid-size customers. Despite the positive price reaction, we continue to think the shares look undervalued.

Narrow-moat Nice reported second-quarter revenue and EPS figures that were generally in line, and guidance for the third quarter was similarly within expectations. Nevertheless, the shares closed down 8% on the day. We surmise the share price reaction is due to slightly lower-than-expected growth in cloud revenue, which may further decline somewhat in the second half of the year. We’ve trimmed our cloud growth expectations slightly for the next few years, which reduces our fair value estimate by around 5% to $265 from $280. Furthermore, we continue to think the shares are undervalued.

Nice provides cloud and on-premises software solutions that primarily serve the customer engagement market as well as the financial crime and compliance, or FC&C, market. The majority of revenue is generated in the U.S., but international expansion has become a bigger priority.

Narrow-moat Nice delivered generally solid first-quarter results, beating the FactSet consensus and the high end of management guidance on revenue and EPS. Furthermore, cloud revenue growth remained strong at 25% year over year with the cloud gross margin increasing 140 basis points to 70%, both slightly ahead of our estimates. Guidance for the full year was also increased slightly. Despite these seemingly positive results, the market was less enthused with shares closing down nearly 6% on the day. Regardless, we don’t see anything that would alter our long-term thesis, and our 2023 estimates remain within the new guidance range. Consequently, we don’t expect to make a material change to our $280 fair value estimate. At current levels, the shares look significantly undervalued.

After a fresh look at Nice, we’re raising our fair value estimate to $280 from $265 due to slightly better growth expectations as we are optimistic that Nice will capture a meaningful portion of the nascent enterprise market for contact center software as a service, or CCaaS. We’re maintaining our narrow economic moat rating but amending our moat trend rating to stable from positive as we don’t think network effects are material at this stage given lack of monetization. Our growth forecast is slightly above the FactSet consensus. Consequently, the shares look undervalued at current levels with a 4-star rating.

Nice provides cloud and on-premises software solutions that primarily serve the customer engagement market as well as the financial crime and compliance, or FC&C, market. The majority of revenue is generated in the U.S., but international expansion has become a bigger priority.

Narrow-moat Nice reported good fourth-quarter results slightly above our revenue expectations and above the high end of adjusted EPS guidance. It also provided its first-quarter and full-year 2023 outlooks, which were both slightly below our at-consensus expectations. Impressively, the company is not experiencing the same kind of demand slowdown we see across most of our software group. Because of this consistency, we have generally maintained our estimates throughout 2022, but in an effort for conservatism in a choppy environment, we are modestly lowering our growth and profitability estimates over the next several years. As a result, we are lowering our fair value estimate to $265, from $296 previously. We see shares as attractive and believe that Nice is emerging as the clear leader in cloud contact center solutions.

Nice provides software solutions that serve the customer engagement market, primarily, as well as the financial crime and compliance (FC&C) market. Within customer engagement, Nice’s cloud-based CXOne platform delivers solutions focused on contact center software and workforce engagement management. We expect CXOne will become increasingly critical for enabling omnichannel interactions amid a move to digital-first customer engagement. In turn, we expect narrow-moat Nice’s market-leading offerings to benefit and support healthy long-term growth.

Narrow-moat Nice reported good third-quarter results at or above the high end of guidance for both revenue and adjusted EPS. Nice modestly raised its full-year 2022 outlook, thereby effectively guiding in line for the fourth quarter, backed by continued demand for holistic cloud solutions coupled with the firm’s proven ability to drive margin expansion at-scale. Nice is not seeing the same macro pressure on demand as many of our other software companies, which is impressive. Currency was a little worse than anticipated and should remain so near term. We balance near-term risks with solid long-term fundamentals and accordingly maintain our fair value estimate of $296. With shares trading around $204, we see upside to shares but prefer some of our wide-moat names given macro turmoil. We continue to view Nice as a leader in cloud contact center solutions that is uniquely positioned to displace fragmented legacy systems with its extensive cloud-native portfolio.

Narrow-moat Nice reported good second-quarter results that exceeded the top end of guidance and FactSet consensus for revenue and adjusted earnings per share. Management provided solid guidance for the third quarter and raised its full-year outlook, backed by stout demand for holistic cloud solutions accompanied by the firm’s demonstrated ability to drive profitability at scale. Management noted no change in buying behavior and is not seeing sales cycles elongate, which could pose a risk to second-half results should Nice begin to experience what many other enterprise software companies are already seeing. We balance these risks with encouraging near-term results and guidance and accordingly maintain our $296 fair value estimate. We find the negative reaction to good results as out of sync with no obvious weakness, and we view the shares as attractive.

Nice provides software solutions that serve the customer engagement market, primarily, as well as the financial crime and compliance, or FC&C, market. Within customer engagement, Nice’s cloud-based CXOne platform delivers solutions focused on contact center software and workforce engagement management. We expect CXOne to become increasingly critical for enabling omnichannel interactions amid a secular acceleration of digital-first customer engagement. In turn, we expect narrow-moat Nice’s market-leading offerings to benefit and support healthy long-term growth.

Nice hosted its annual investor day on May 24, highlighting a new five-year plan focused on AI-enabled digital customer engagement, which reiterates the company’s long-term profitability-focused financial expectations and an accelerating move to the cloud. While the conference shed additional light on Nice’s increasingly differentiated positioning within its core verticals of customer engagement, financial crime and compliance (FC&C), and public safety, we believe our model already considers robust top-line growth and margin expansion in line with management’s discussion. As such, we are maintaining our $296 fair value estimate for narrow-moat Nice. With shares trading around $190 following a broad selloff of software stocks in 2022, we believe current valuation presents an attractive buying opportunity for investors looking to capitalize on the migration of contact centers to the cloud and the cloudification of the financial-services industry with a company shrewdly positioned at the intersection of legacy-like upmarket reach and best-of-breed native cloud capabilities.

Narrow-moat Nice reported strong first-quarter results that exceeded both the high end of guidance and FactSet consensus expectations for revenue and adjusted EPS. Management issued higher-than-expected second-quarter guidance and raised its full-year 2022 outlook, which we view as appropriate as the company generated a record pipeline in the first quarter, up 55% from the year-ago period. We balance higher-than-expected near-term results with marginally higher long-term investment needs and accordingly are maintaining our fair value estimate of $296 per share. With shares trading around $190 per share, we view Nice as an attractive buying opportunity for investors seeking to capitalize on the cloudification of the contact center with a company shrewdly positioned at the intersection of legacy-like upmarket reach and best-of-breed native cloud capabilities.

Nice provides software solutions that serve the customer engagement market, primarily, as well as the financial crime and compliance, FC&C, market. Within customer engagement, Nice’s cloud-based CXOne platform delivers solutions focused on contact center software and workforce engagement management. We expect CXOne to become increasingly critical for enabling omnichannel interactions amid a secular acceleration of digital-first customer engagement. In turn, we expect narrow-moat Nice’s market-leading offerings to benefit and support healthy long-term growth.

Nice provides software solutions that serve the customer engagement market, primarily, as well as the financial crime and compliance market. We believe Nice offers a compelling value proposition for investors looking to capitalize on the migration of contact centers to the cloud and the cloudification of the financial-services industry. Our fair value estimate for Nice is $296 per share, down from $320 as we model lower profitability toward the end of our explicit forecast. With shares trading around $220, we view the narrow-moat, positive moat trend company as an attractive buying opportunity.

Nice provides software solutions that serve the customer engagement market, primarily, as well as the financial crime and compliance (FC&C) market. Within customer engagement, Nice’s cloud-based CXOne platform delivers solutions focused on contact center software and workforce engagement management. We expect CXOne to become increasingly critical for enabling omnichannel interactions amid a secular acceleration of digital-first customer engagement. In turn, we expect narrow-moat Nice’s market-leading offerings to benefit and support healthy long-term growth.

Narrow-moat NICE reported good fourth-quarter results with both revenue and adjusted earnings exceeding the midpoint of implied guidance. The company saw strong revenue performance across its portfolio and geographies as the push to the cloud continues. Management was as confident as ever about the pipeline into 2022. NICE continues to benefit from consumer-led accelerating digital adoption, with the integration of contact center as a service, or CCaaS, and digital customer experience, or CX, driving a powerful value proposition. We see a path for continued strong growth from analytics customers becoming AI customers, on-premises conversions, and an acceleration of financial compliance cloud adoption. While results skewed positive, we see no meaningful changes to our long-term model and are thus maintaining our fair value estimate of $320 per share. As is the case with many software names, we see shares as attractively valued.

Narrow-moat NICE reported strong third-quarter results with both revenue and adjusted earnings exceeding guidance and our above-FactSet consensus expectations. NICE continues to benefit from consumer-led accelerating digital adoption, with the integration of contact center as a service, or CCaaS, and digital customer experience, or CX, driving a powerful value proposition. From a competitive standpoint, we believe the data-informed artificial intelligence CXOne offers is a clear leader in the CCaaS industry, and we expect this holistic digital solution to accelerate adoption of NICE’s cloud-based CXOne platform. Based on results, a long growth runway, and a raised 2021 outlook, we are raising our fair value estimate to $320 from $283. With shares up 7% since the release to around $310, we view shares as fairly valued.

Nice provides contact-center-as-a-service solutions to support call center operations and improve customer engagement, as well as financial compliance solutions to financial-services institutions. As its offerings become increasingly critical for customer communications and business operations, we believe narrow-moat Nice will exhibit healthy long-term growth.