3. Nice Ltd. (NASDAQ:NICE)
Forward Price-to-Earnings Ratio: 13.28
Average Upside Potential: 60.71%
Number of Hedge Fund Holders: 29
Nice Ltd. (NASDAQ:NICE) specializes in customer relations management software, AI, and digital and workforce engagement management. It’s a global leader in customer experience solutions, providing a comprehensive suite of software and technology solutions that help companies improve customer interactions, optimize operations, and drive growth.
The company primarily focuses on Customer Engagement and Financial Crime and Compliance. In Customer Engagement, it offers solutions to enhance customer experience through advanced analytics, AI, and automation, serving industries like telecommunications, finance, healthcare, and retail. In Financial Crime and Compliance, it provides tools to detect and prevent financial crimes. The company is a leader in both areas, present in 150+ countries.
It recorded 14.33% year-over-year revenue growth in the second quarter of 2024, making $664.40 million in total revenue. The earnings per share at the time were $2.64. The cloud segment accounted for 71% of total revenue, growing 27% year-over-year.
Bookings for autopilot and copilot together soared 134%. The number of deals greater than $1 million ACV that included AI jumped 100% year-over-year due to the AI deals signed in Q2 (five eight-digit ACV deals).
Its CXone platform is a leading solution in the customer engagement industry, offering a comprehensive suite of AI-powered solutions that improve employee performance and provide personalized customer experiences. With its ability to handle 100 million customer interactions per month, CXone’s scale and data advantage creates a significant barrier to entry for competitors.
It signed several significant deals, replacing incumbents with CXone. Key factors included functional AI advantages and the platform’s comprehensive AI portfolio. Customers appreciated CXone’s AI capabilities, data repository, and seamless architecture.
With an estimated 80% of the customer experience market yet to migrate to the cloud, Nice Ltd.’s (NASDAQ:NICE) growth potential makes it an attractive investment option.
TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding NICE Ltd. (NASDAQ:NICE) in its Q2 2024 investor letter:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that closely tie to increasing shares of corporate IT budgets. We witnessed shares in NICE Ltd. (NASDAQ:NICE) slide by -34%. A cloud-based contact center software and compliance systems provider, NICE reported better-than-expected results. While earnings guidance was increased, projections for revenues were maintained. The market’s reaction seemed tied to overall weakness among software companies and NICE’s announcement that its CEO for the past decade plans to step down at the end of 2024. We see NICE benefiting from continued adoption of its new services, including AI-enabled ones, though want more information on the future CEO before rebuilding the position.”
