NICE shares have surged by 4.3% in the past month, outperforming the Zacks Computer & Technology sector, which experienced a decline of 2.2%. This positive performance can be attributed to NICE’s diverse portfolio, which is attracting new customers. Several solutions, including Actimize, Evidencentral, CXone, and Inform Elite, have gained significant traction. NICE’s strategic focus on its Evidencentral platform has been a major catalyst for its growth.
Recently, NICE announced that the Pinal County Attorney’s Office in Arizona would be adopting its NICE Justice digital evidence management solution. This solution, part of the AI-driven Evidencentral platform, aims to revolutionize how the office handles digital evidence. It offers a streamlined, cloud-based system that enhances efficiency and service delivery. With its AI-powered features for object detection, automated case building, and evidence management, NICE Justice will lighten the workload of Pinal County’s legal professionals, allowing them to prioritize their core mission of providing exceptional legal representation and ensuring community safety.
While NICE’s strong portfolio and expanding clientele are undoubtedly positive indicators, it’s essential to consider its fundamentals to assess its attractiveness as an investment. NICE’s expanding portfolio has been a primary driver of its success. In August, NICE announced that the Augusta (Georgia) Judicial Circuit DA’s Office would deploy NICE Justice to expedite case processing and enhance digital evidence management. NICE’s partnerships with AT&T and Microsoft have been instrumental in its growth. The company recently expanded its collaboration with AT&T to offer a unified incident capture and data analytics solution for NextGen 9-1-1 centers, showcasing it at APCO 2024. The deepening partnership with Microsoft is another noteworthy development. NTR-X Compliance Recording and Assurance Solution has achieved transactable solution status in Microsoft’s Azure Marketplace.
NICE’s expanding cloud offerings, particularly its CXone platform, are a significant advantage. During the second quarter of 2024, NICE reported cloud revenues of $482 million, reflecting a 26% year-over-year increase. NICE’s policy of consistently updating its portfolio has been crucial in its ability to outmaneuver competitors from other industry players such as Five9, Salesforce, and 8×8, who are also expanding their portfolios in the CX market. In June, Five9 announced an enhanced collaboration with Salesforce, integrating AI-powered solutions to improve customer experiences in contact centers.
NICE’s efforts to enhance its customer experience with its robust cloud solutions are expected to drive top-line growth. For the third quarter of 2024, NICE projects non-GAAP revenues to be between $676 million and $686 million, indicating a 13% year-over-year growth at the midpoint. Non-GAAP earnings are estimated in the $2.62-2.72 per share band, suggesting an 18% year-over-year growth at the midpoint. The Zacks Consensus Estimate for revenues is pegged at $682.67 million, indicating a 13.52% year-over-year growth. The consensus mark for earnings is pegged at $2.68 per share, increased by a penny over the past 30 days, indicating an 18.06% year-over-year increase.
Despite NICE’s strong portfolio and growing client base, investors should be aware of the foreign exchange headwinds in the APAC market and the stiff competition it faces. The forward 12-month Price/Sales ratio for NICE stands at 4.18, higher than its Zacks Computers – IT Services sector’s 2.99, reflecting a stretched valuation. NICE currently carries Zacks Rank #3 (Hold), which suggests that it may be prudent to wait for a more favorable entry point in the stock.
