Nice Ltd (NICE) 2025 Q4 法說會逐字稿

Welcome to the ninth conference call discussing fourth quarter 2025 results and thank you all for holding. (Operator Instructions). As a reminder, this conference is being recorded February 19, 2026. I would now like to turn this call over to Mr. Ryan Gilligan, VP Investor Relations at NiCE. Please go ahead.

Thank you, operator. With me on today's call are Scott Russell, Chief Executive Officer; and Beth Gaspich, Chief Financial Officer. 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 Harbour provisions of the Private Securities Litigation Reform Act of 1,995, please be advised that 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 three of the company's 2024 annual report on Form 20 as filed with the Securities and Exchange Commission on March 19, 2025.

During today's call, we will present a more detailed discussion of fourth quarter and full year 2025 results and the company's guidance for first quarter and full year 2026. You can find our press release as well as PDFs of our financial results on NiCE's Investor Relations website. 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 share-based compensation, amortization of acquired and tangible assets, acquisition-related expenses, amortization of discount on debt and loss from extinguishment of debt, and the tax effects of the non-GAAP adjustments.

The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release. The information in some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties, and assumptions.

I will now turn the call over to Scott.

Thank you, Ryan, and good morning, everyone. I am incredibly proud of what our team accomplished in 2025. We achieved our financial guidance each quarter and for the full year delivered total revenue growth of 8%, cloud revenue growth of 13%, and non-GAAP EPS of $12.30 all at the high end of our guidance range.

Since I joined, we've sharpened our focus on execution and speed. We learned into the AI first platform led strategy and doubled down on international expansion and strategic partnerships.

Our 2025 results reflect strong execution against that strategy. In 2025, we extended our CX AI market leadership with AI ARR increasing 66% to $328 million representing 13% of cloud revenue.

We set records for acquiring new AI logos, growing 300% year over year, and closed a record number of seven-figure ACV deals for CX1 with 100% including AI.

We further strengthened our competitive position with the acquisition of cognitive, the enterprise leader energetic AI making NiCE the only player in the CX market with a fully AI native CX platform.

In our international markets, 2025 was a breakthrough year. We landed our largest international deal ever, and ultimately grew international revenue by 16%, with growth accelerating to 29% in the fourth quarter.

We also expanded our strategic partner ecosystem through deals with ServiceNow, AWS, Snowflake, Salesforce, Deloitte Digital, PWC and RingCentral, as well as several other international SI partners.

Our partners continue to be an incredibly valuable, and exciting part of our growing contribution, and we expect these partnerships to bring even more in the coming years.

Coming out of Q4 with a strong booking momentum and retention, we are entering 2026 on track to re-accelerate cloud revenue growth, which Beth will of course cover in more detail shortly.

None of this would be possible without a healthy core Seas business. We have the leading platform in a growing and healthy market. Seats and interactions on CX1 continued to grow in 2025, and importantly, only about 40% of contact centres have migrated to CCA today, leaving a large and durable on-premise to cloud migration opportunity ahead.

We are delivering real transformative value to our customers, and this is translating into strong performance in our core CAS business.

In Q4, cloud revenue grew 14% year over year over year and excluding NiCE Cognigy grew 12%. Q4 was a record quarter for new cloud ACV bookings, including and excluding Cognigy, driving cloud backlog log growth to 25% including Cognigy and 22% excluding it.

Our win rates continue to improve against key CX competitors as customers increasingly favour holistic, end to end CX platforms over fragmented point solutions. This is reflected in several key deals during the quarter, including a large enterprise win with a leading North American financial services firm.

They selected NiCE in a competitive displacement of a legacy on-prem environment and will adopt NiCE's AI powered CX1 platform, including NiCE cognitive to increase service automation, reduce low value interactions, and deliver more personalized client experiences.

Additionally, we won a seven-figure ACV deal with a leading financial services group in AA, which selected NiCE CX1 to replace a legacy on-premise ACD and consolidate multiple platforms into a unified AI ready CX foundation. With a strong core, we are positioned to capitalize on the significant CX AI opportunity in front of us.

AI is expanding NIA's CX market opportunity beyond the contact center, creating new use cases that are still early in adoption and driving faster expansion as customers scale AI across their organizations. NiCE cognitive strengthens that position.

NiCE Cognigy is ranked number one by industry analysts and was recently recognized as the only conversational AI platform to receive the customer choice distinction in the latest Gartner Peer Insights Voice of the Customer report.

That customer validation extends across our core platform as well, with CX1 also now recognized as the only CCA platform to receive the customer choice distinction.

Combining the market leaders in CCA and Agentic AI for CX into the only AI native CX platform that can operate seamlessly across voice, digital, and AI at enterprise scale allows NIC to be uniquely positioned to seize the significant CX AI opportunity ahead.

Our platform owns the point of engagement and is built on the industry's largest CX data foundation. With decades of CX experience and a platform that supports 20 billion interactions annually, NiCE understands customer experience better than anyone. And this leadership is showing in the results. 2026 is the year that NiCE Cognigy begins to act as a force multiplier.

We recently launched cognitive Simulator, an AI performance lab that allows for faster, scalable and more reliable testing of AI agents, and soon we will expand NiCE co-pilot capabilities with task assist for agents powered by NiCE cognitive.

Later this year, we will complete the integration of NiCE Cognigy into a single fully native CX1 platform, delivering a seamless AI native experience at enterprise scale.

As we enter 2026, I am very excited about the significant pipeline growth from our Nice install base that we, and we expect that pipeline to grow as we further integrate NiCE, integrate NiCE's Cognigy into CX1.

While we're incredibly excited about what the future holds for our seamlessly integrated capabilities, NiCE Cognigy is seeing strong momentum today.

More broadly, we continue to see strong AI driven enterprise software demand with customers prioritizing investments that deliver clear ROI and measurable outcomes. In Q4, seven-digit ACV wins included a leading North American consumer services company that expanded its relationship with NiCE by adding cognitive for self-service to its existing CX1 platform.

This expansion will replace an AI solution from a CRM provider, providing, delivering a compounding benefits of a unified platform with improved orchestration, deeper insights, and more seamless experiences across channels. In another large enterprise win, a leading North American energy company and an existing CX1 customer expanded its relationship with NiCE to accelerate AI driven customer engagement.

By adopting cognitive for self-service and co-pilot to support agents on more complex interactions, the customer aims to improve containment and call handle times while scaling efficiently during periods of elevated demand.

The market is still in the early stages of AI adoption, yet it's already driving our growth. But as you heard me say in the capital markets today, we need to make strategic, targeted, and time-bound investments in 2026 to seize this opportunity.

These investments will focus on innovation, including integrating NiCE cognitive and advancing our agentic AI capabilities, while also expanding our go to market and delivery capabilities, so we're able to execute on the significant growth catalysts we see in 2026 and beyond.

These catalysts including driving AI first growth across every customer touchpoint, automating end to end customer journeys with AI agentic AI on our platform, capitalizing on the CCAS cloud migration, accelerating our international expansion and partner ecosystem, and expanding beyond the contact centre.

Before handing it over to Beth, I want to emphasize two points. First, 2026 is all about speed, and we're moving quickly to seize the opportunity in front of us. And secondly, my conviction today is stronger than when I joined, that AI is a clear tailwind for NiCE.

Let me be really clear here. NiCE is an AI company. Enterprise CX AI requires deep domain expertise, unified data, orchestration and governance at scale, and that is what we do. We have the technology, the data, the domain expertise, and the customer base to win, and we will seize this opportunity.

With that, I'll now hand the call over to Beth.

Thank you, Scott. I'm pleased to close out 2025 by sharing our strong fourth quarter and full year results, which reflect continued disciplined execution across our business. Our fourth quarter performance has further strengthened our confidence in the recent financial targets we shared at our Capital Markets Day in November 2025.

Later in my remarks, I will share our first quarter and full year guidance for 2026, which reflects the healthy momentum we experienced exiting 2025. 2025 was a transformative year for NiCE with Scott and our NiCE's across the globe laying the groundwork for accelerating top-line growth in the years ahead.

Before I dive further into the fourth quarter 2025 results, there are several financial accomplishments from last year that I would like to highlight.

First, our full year 2025 results were impressive and came in at the high end of our previously communicated guidance ranges. Full year total revenue was $2945 million representing 8% year over year growth. Your cloud revenue grew 13% year over year and 12% excluding Cognigy.

2025 reflected consistent execution in our core cloud business with 12% cloud revenue growth delivered each quarter, excluding Cognigy. Operating margin tracked as expected while free cash flow margin of 21% exceeded our guidance reflecting disciplined execution while absorbing Cognigy starting in early September.

Second, we completed the acquisition of Cognigy, which was financed entirely with cash on hand, supported by our strong balance sheet and robust organic operating cash flow. Third, we fully repaid $460 million of outstanding debt.

Our balance sheet is now debt-free, providing us with significant financial flexibility to invest prudently in our business and return capital to shareholders. And fourth, we continue to return significant capital to our shareholders through our share repurchase program, underscoring our confidence in the durability of our cash flow generation and long-term value creation.

In 2025 we repurchased $489 million of our shares representing 32% growth year over year and 79% of free cash flow generation, ending the year with approximately $60.4 million shares outstanding. Shifting to fourth quarter financial results, total revenue was $786 million representing 9% year over year growth.

Cloud revenue totaled $608 million growing 14% year over year and represented 77% of total revenue, continuing the steady mix shift toward our cloud first model.

Excluding Cognigy, cloud revenue increased 12% year over year. Cloud growth in the quarter was driven primarily by continued momentum and our CXAI offerings, with AIARR of $328 million up 66% year over year, as customers increasingly adopt our AI powered automation across both self-service and human assisted workflows.

Cloud growth also benefited from ongoing CCA migrations and a very strong international performance, including a modest incremental contribution for an earlier than expected go-live of a large international enterprise deployment originally planned for 2026, as well as a small foreign exchange tailwind of approximately 50 basis points in the quarter.

As we've noticed previously, while AI is already a meaningful contributor to growth, we remain early and fully monetizing its long-term potential. That context is important as we continue to invest in this opportunity today while building operating leverage over time as our AI revenue compounds.

Our cloud net revenue retention for the trailing 12 months was 109%, remaining healthy and stable with the prior quarter, reflecting continued customer retention and expansion activity.

Turning to our business segments.

Customer engagement revenue was $658 million in Q4, representing 84% of total revenue and growing 10% year over year, driven by double-digit cloud revenue expansion across all geographic regions with strong performance internationally, reflecting increased enterprise adoption of CX1 and growing demand for our AI-powered CX solutions.

Financial crime and compliance revenue totalled $128 million growing 2% year over year and represented 16% of total revenue. Activism is the clear market leader and is benefiting from the positive momentum we're experiencing in shifting this segment to a higher recurring business with healthy cloud of revenue growth.

From a geographic perspective, the Americas region represented 82% of total revenue, growing 5% year over year, and this performance was supported by double-digit cloud revenue growth in the region alongside the continued evolution of our revenue mix from on-premise related revenue to cloud-based solutions.

AMA revenue, which represented 13% of total revenue, grew to 38% year over year, or 32% on a constant currency basis, and APEC revenue, representing 5% of total revenue, grew 11% year over year, consistent on a constant currency basis. This strong growth is reflective of continued healthy demand in international markets, one of our key growth drivers.

International revenue is now majority cloud, while cloud adoption internationally remains under penetrated, supporting a significant growth runway in 2026 and beyond.

Turning to profitability.

Our total gross margin for the fourth quarter was 69.3%, consistent with our expectations. Our gross margin reflects our continued investments in scaling our global cloud infrastructure and supporting increased AI workloads, particularly as usage expands across regions and use cases.

Operating income for the quarter was $301 million resulting in an operating margin of 31%. Earnings per share for the quarter were $3.24 a 7% increase compared to last year. Cash flow from operations in Q4 was $180 million underscoring the strength of our operating model and our ability to fund growth internally.

Free cash flow was $156 million in Q4, and we ended the year with $417 million in cash and short-term investments. Our strong free cash flow and balance sheet are key strategic assets that provide us flexibility to invest in innovation, support strategic initiatives, and continuing returning capital to shareholders over time. We remain committed to disciplined and thoughtful capital allocation.

To further enhance our financial flexibility, yesterday we entered into a new $300 million revolving credit facility which provides additional liquidity and optionality while maintaining our strong balance sheet.

In addition, we are announcing that our Board has authorized a new $600 million share repurchase program, reinforcing our confidence in the durability of our cash flow generation and our disciplined approach to capital allocation. This brings our total remaining share repurchase authorization to approximately $1 billion.

Before closing with guidance, I do want to spend a few minutes on how we're thinking about 2026, specifically around the cadence of investment and how that should translate into margins throughout the year.

At our Capital Markets Day, we shared a midterm framework for growth, margins, and cash generation. Today we are confirming that framework with additional clarity on timing and cadence. 2026 will be a year of deliberate targeted investment to support our next phase of growth to capitalize on the immense CXAI opportunity.

These investments are focused on three primary areas cost of goods sold, R&D, and sales and marketing. As we've shared, near term margin performance expectations reflect intentional investment choices. These investments are designed to optimize our AI market leading position, drive durable growth, expand our competitive differentiation, and position the business for long-term operating leverage.

While we plan to increase organic investments during 2026, our margins remain industry leading, outperforming our market peers, even with the addition of the focused spend, and we expect to build on this strength with steady margin expansion in 2027.

In tandem with investing for growth acceleration, we're investing in AI internally to enhance productivity and execution across the organization. Within our go to market operations, we're applying AI to accelerate customer quoting and surface key signals from customer interactions, enabling faster deal execution, improved forecast accuracy, and reduced deal risk.

Beyond go to market, we're using AI to improve internal operations, including applying AI to HR knowledge and deploying Cognigy within our internal help desk to resolve IT queries more quickly and with a more human-like experience. These are just a few examples where we're already leveraging AI internally to deliver long-term operational efficiencies.

In 2026, we expect the pace of incremental margin investment to be highest in the first half of the year as we execute against our growth priorities, including integrating Cognigy and scaling its operations, with operating margins improving in the second half.

This positions us to exit 2026 near the upper end of our 25% to 26%. Operating margin range and sets the stage for margin expansion in 2027 and beyond, driven by the benefits of our 2026 investments, including stronger cloud revenue growth, continued scaling of our AI business, and the increasingly accretive contribution from Cognigy.

Cognigy remains on track to be accretive within 18 months of the acquisition close. Now I'll close with our total revenue and non-GAAP, EPS guidance for the full year and first quarter of 2026.

Full year 2026 total revenue is expected to be in a range of $3170 million to $3190 million which represents an increase of 8% at the midpoint. We expect cloud revenue growth in 2026 to be in the range of 14.5% to 15%, with Cognigy expected to contribute approximately 200 basis points.

Turning to financial income, it's important to note that our cash and short-term investment balance was reduced by approximately $1.2 billion in 2025 as we financed the Cognigy acquisition and fully repaid our outstanding debt, which will naturally impact financial income in 2026.

We expect our effective tax rate throughout 2026 to be in the range of 20.5% to 21% due to tax law changes in certain jurisdictions that became effective at the start of this year. Full year 2026 fully diluted earnings per share is expected to be in a range of $10.85 to $11.05.

For the first quarter of '26, we expect total revenue to be in the range of $755 million to $765 million representing an 8.5% year over year growth at the midpoint. We expect the first quarter 2026 fully diluted earnings per share to be in a range of $2.45 to $2.55.

In summary, we exited 2025 from a position of strength anchored by a stabilized and growing cloud business, a differentiated customer experience platform with embedded agentic AI, and a strong balance sheet that supports investment and continued capital returns to our shareholders.

Our large and expanding installed base reflected in healthy cloud net revenue retention, continued growth in cloud backlog from both customer expansion and new large enterprise wins and increasing number of enterprises go-lives gives us confidence in the durability of our growth as we enter 2026.

Our 2026 guidance reflects our excitement about the market opportunity ahead and our confidence in our ability to accelerate top-line growth through our market leadership and unmatched assets.

Together with Scott, we would like to thank all our dedicated teams across NiCE for their disciplined execution, and focus throughout the past year, which drove our strong financial performance. We remain confident in our strategy, our execution, and our ability to deliver durable shareholder value over the long-term.

With that, I'll turn the call back to the operator for questions. Operator?

(Operator Instructions) Rishi Jaluria, RBC.

Hi, this is, Rishi Jaluria. Thank, thanks so much for taking my questions. Nice to see, solid execution to close out the year. It may be two questions if I may first, look, looking at the market, it, it's pretty clear that, the market is scared of AI disrupting and displacing your business.

Clearly, that spread to all of software and something that we've all been dealing with, really in a big way over the past. Couple months, you've made it clear, over the past couple years and at analyst day and now today that you're viewing AI as a real tailwind for NiCE and something that could pick up accelerating momentum in kind of the coming years.

Can you maybe help us understand where is the disconnect? Where do you think the market is wrong and kind of where's your opportunity to kind of disprove those bear cases and kind of prove yourselves as an AI beneficiary, and then I got a quick follow-up.

Sure, thanks Rishi. So let me try to take that, so there is clearly a disconnect between the fears in the market and the reality of what we're seeing in the business. So let me try to break it down if I can. First of all, there's a concern about competition from new AI point solution, and the reality is this, the CXAI market is expanding rapidly, and it's large enough actually to support multiple approaches, but our growth.

The growth of our business is not coming at the expense of those competitors, actually, it's a beneficiary. If you look at NiCE's business, 13% of our cloud revenue is AI. We've already proven that we've embedded it into our core platform, we're able to deliver durable value to our customers. And why is that? Well, CX is complex. And we are domain experts in CX.

You look at what is required from our customers, it requires orchestration, really rich and unified data, governance. It requires deep domain expertise across the customer journey, and so whilst point solutions and some AI solutions can address, Use cases and narrow use cases, they don't actually fulfil the full customer journey, they're, in fact, in some ways they're actually complicating or creating more complexity.

So, a unified platform that is able to deliver across voice, digital and AI is what the market needs and expects, and that's where a combined platform that we offer, which is unique in that we've got the best in class in both cases, helps us, and that, and I guess ultimately we're showing that in the numbers, the growth rates.

I indicated a capital market stage, if you remember Rishi, that we expected our cloud growth in in 2026 to be between 13% to 15%. We're already indicating at the high end of 14.5% to 15%. That's on the back of customer demand, real backlog that's growing at 25%, real pipeline that we're converting into ultimately revenue for NiCE, but ultimately it's value for our customers, so I'm confident that our growth indicators reflect, the tailwind that AI brings, and I'm sure the market ultimately will see a nice in a favourable way.

Alright, thanks, that's a, that's super helpful and maybe just to follow-up on that, in kind of the AI native space you've obviously seen a lot of funding for voice AI startups, and it feels like, maybe piggyback on that early point of conversation.

The market's kind of viewed it as, at least the stock markets viewed it as kind of an either or, but it really feels like there might be opportunities for even partnerships and integrations and kind of, focusing on customer success. Can you maybe talk? About your opportunities, I know, Scott, you've talked a lot about, increasing partner ecosystem traction, et cetera.

But maybe an opportunity to even just have deeper integrations and partnerships with some of these AI natives, just to kind of leave the choice up to the customers even if it may sound potentially competitive because at the end of the day they do need the pipes that you have. They do need the call routing piece maybe help us understand what could that kind of IV or AI partnership look like. Thanks.

Yeah, it's a great question, so I'll break it into two parts. The first is we're an open platform. We've made a very conscious decision, to be a platform that allows the customers to utilize their data, cause it's their data, and all of the billions of interactions that sit on our platform and being able to leverage it.

Across not only the NiCE CX1, but an open stack that supports the use of other tools, and that's why the partnerships with Salesforce, with AWS, with ServiceNow, and many others, are essential to it, and we're, at the enterprise, you're dealing with a complex technology landscape, and so we're able to use that to our advantage, but, let me just zero in on the AI side.

One of the questions that we often get is, hey, these new frontier models, and what does it mean, and is that going to be a disruption to us, and actually it's a benefit, it's actually a significant positive, because if you look at it, the labs, these are frontier models.

They're tremendous advancements in erg etic capability, but we leverage those models, we have partnerships with those AI players. That we can use those models in our stack, but then we've built a purpose-built AI around customer engagement data. And so we differentiate by our specialization.

Those models are really powerful, but then we process it on those billions of interactions, the specific learning loops, the optimization, so the specialization around the customer intent resolution, the compliance heavy workflows, the guard rails that enterprise have, the real-time voice orchestration.

So the reality is, it's not replacing, it's enabling a more powerful and differentiated outcome with the combination of what we bring, and what they bring to give a better outcome for our customers. So it's not replacement, it's actually expansion and ex.

Extension from what we've already done, and it gives us more opportunity to deliver ROI again, that's why we're seeing the backlog and the bookings growth that we're getting, because the customers are voting by their choice of NiCE and we're benefiting that in our revenue outlook.

Very helpful. Thank you so much.

Samad Samana, Jefferies.

Hi, good morning. And great to see the solid 40 results and appreciate you taking my questions. Maybe first, just one of the guidance, I think we're all happy to see the upward revision to the 2026. Cloud revenue growth forecast.

I was curious, Beth, or Scott, if you guys could break down what led to the upward revision. Is it the core organic cloud revenue? Is it Cognigy doing better than expected? Because if we assume Cognigy is at 200 basis points of revenue growth contribution that kind of implies an acceleration for the organic business, just help us unpack that and then I have one follow-up. Thank you.

Yeah, thanks for the question, Sammad, and I'll take that, and Scott, feel free to chime here. I think generally, as a starting point, we feel confident that both will contribute to that mix and give us that confidence as we step into 2026. Scott has already highlighted the strength of the backlog.

We had a record in terms of new cloud ACV booking. In the fourth quarter that led to that strength of the 25% growth in our cloud backlog looking ahead. So that's a mix of both the strength of that AI force that we see inclusive of both our own homegrown AI and of course amplified by the addition of Cognigy. So when we look both at the core.

What you've seen was consistent at a 12% growth throughout each and every quarter this year. We feel confident that there is an opportunity to accelerate growth both in that core as well as continue to drive that growth through cognitive, which had a very strong fourth quarter showing as well. So it comes from a combination of both those places.

Great. And then Scott, a follow-up for you, and I know that this this topic came up at the at the capital markets day as well. I think it's, appreciated by investors that the company is putting the foot on the gas with AI being this massive opportunity, right? You guys are literally putting.

Your money where your mouth is -- I'm curious maybe as you think about deploying new investments and how that's going inside the organization and are you starting to see a shift inside of the sales organization whether it's win rates, whether it's productivity as maybe the accelerated investment enthusiasm in the organization as well.

Yeah, it's good question. So first of all, there is a, I guess a positive energy and momentum that we're seeing in the business, and that's obviously on the back of the bookings and the backlog generated in Q4, the momentum that we've been able to generate.

But also the pipeline and what we see, what was interesting is, the cognitive business, continues to grow remarkably, on a standalone basis, just acquisition of new market where NiCE has no footprint at all, and our ability to be able to go and compete and win in that new marketplace where they don't have a need for a CCA, but they really want an AI CX platform as a leadership.

That's given a real positive energy inside of our of our sales organization, combined with the obvious, opportunity that we see with existing install base, the large customer base that we have, and our ability to be able to serve that. So I think, first on the positive momentum, fantastic.

I think the other point, and Beth touched on this in her opening comments, we're embracing the use of AI inside of our business as much as we expect our customers to.

We're living and breathing that reality, so for our sales teams, being able to use it to be able to get better understanding of customer signals, intent, our ability to automate quoting and being able to do fast turnaround, for business, for our customers when we're competing.

These tools, we're deployed and we're up and running, so I think our go to market are also seeing higher productivity that allows them to get more [at-bate] to be able to get more customers engaged and ultimately improve our win rates, so, you need to do both, you need to have a great capability that you take in a market, but you've go to walk the talk, and we're definitely doing that.

Great. Thank you so much, Scott.

Arjun Bhatia, William Blair and Company.

Perfect. Thank you so much. Scott, maybe the one for you to start out with, obviously it's good to see the continued traction in your AI and self-service are, I imagine the distribution of customers in that group of those that are advanced versus those that are still starting is quite wide.

But when you're looking at your more sort of advanced customers, what are you seeing in terms of seat dynamics there? Has that changed at all over the past couple of quarters, or? Is it still like something that's being contemplated for, years or quarters in the future in terms of what they do with their, seat counts and, agent counts.

Yeah, that's a great question, Arjun. So I think there's a couple of things to maybe highlight here. As I mentioned in my opening comments, our core CX CCA platform, is really strong, and to Beth's earlier comment, we see reacceleration and in our outlook for 26 and beyond.

Why is that? Well, I guess I'll best answer it by discussions that I've been having. This week I had a number of meetings with customers, CEO, CTO, and we were just talking about their CX environment and their existing use of their contact centre, and right now, they both had indicated that their contact centres are capacity constrained.

They're not overstaffed, and so they plan to use AI to actually free up their agents for higher value engagement, proactive outreach, more revenue generation or more value orientated, so rather than elimination of roles, they're using it as an efficiency driver so that people can be driving more value-added. Activities and so they had no plans to reduce agents in the short to midterm.

Now that's not to say that as we continue to build out our platform that we don't see the opportunity to be able to reduce the human capacity as the AI picks up, but we, that's why in these complex environments, because remember, 6 is tough.

You've got to have accuracy of data at high volume, the guardrails, the domain expertise, and ultimately, it's got a fulfil a great consumer experience for the brand. And so what they don't want is a point solution that gives them a bit of automation, but then increases the complexity, when it has to interoperate with their AI agents, and I think we've really seized upon this, what we see at the top end, Is that customers value a unified, customer engagement platform, we call it the front door.

So the, whether it's voice, whether it's digital, whether it's AI or what is most likely to be a combination of all three at the same time, real time, enterprises at the top end, they need a platform that can give that in a scalable, reliable way, and obviously we differentiate on that basis, so It's interesting about the, I guess the perceived concerns that you're going to see this erosion of the seats. We, the data does not support that assertion, but we're growing on both levers and we continue to expect to do so.

Alright, perfect, yes, that's super helpful color, and then, Beth, I had one for you just in terms of the investments that you're making, I think, I fully appreciate, right, it's the right time to sort of lean in, given the precipice of the tech change here, but, how are you just monitoring. You know that you're making the sort of the right investments and you're allocating capital, appropriately like what are the ROI signals you're looking for or is it just, continued sort of revenue reacceleration here.

Yeah, thank you. We're very excited about the opportunity ahead of us, and we absolutely believe this is the appropriate time to lean in. We really have at a fenced investment approach where we are very closely monitoring, very tightly the exact areas that we plan to invest which we've talked a lot about.

It's around the go to market. It's bringing in more, integration of Cognigy into the platform, agentic capabilities, as well as using additional AI technologies internally, accelerating ours. Delivery timeline. All of those areas are very intentional, and we are very much closely monitoring that the dollars are being spent in the right places.

In parallel, as a general muscle that we have in NiCE, we are constantly also driving initiatives that drive long-term operating leverage. Scott talked about the use of AI. There are other initiatives as well that we're always putting in place. So, we're also monitor.

Monitoring the effectiveness and seeing that we get the ROI from those initiatives and investments through key specific metrics. And when you add all of those together, ultimately the big test is that we see that we are delivering on the growth that we've signed up for on the topline. And so those are a combination of all of the things we monitor very closely to ensure we're on track and that we're getting the ROI from those investments.

Okay. Understood. Perfect, thank you.

Tyler Radke, Citi.

Hi, this is [Kylie] on for Tyler. It was great to see the significant acceleration in international revenue, and I'd be curious to hear how you'd expect that trend to continue into FY26 and, what maybe any color on what would be embedded in the total revenue guidance on a constant currency basis. Thanks.

So let me cover the international expansion. So first of all, I need to highlight, I've inherited, a beneficiary from a significant investment that had been made and, in our international expansion, so the footprint of our data centres, the sovereign cloud, the capacity in key markets in UK, Europe, in parts of Asia.

So what we saw in '25 was a real breakthrough in terms of our, obviously our bookings and the backlog. We saw in Q4 a significant acceleration of our revenue that you saw in those results. And so for '26 and beyond, I, what we see is expansion opportunity, and if I give you a couple of data points to cover.

First is the CCAS shift in the international markets is not as progressive as what it is in in North America, so there are more opportunities with our platform to be able to win, the on-prem to cloud migration, leveraging those investments, leveraging our momentum.

The second is they're doing it with AI from the get-go. They're not doing this in a two-part move or, sequential, they're doing it at the same time. So the unified platform where we can embed cognitive and our AI entity capabilities in that, in those deals, gives us competitive edge.

But it also allows us to be able to accelerate, revenue because the AI adoption time frames are faster, whilst often the CCAS, migration is a complex one-time undertaking. And then the last one I would say is those international markets are benefiting from our investments in the ecosystem.

Practically all of our go to market in international, is through our partners and so the strategic ecosystem, is part of the reason why our international expansion is performing strongly because we've, really made sure our go to market motions, with both SI partners, resellers, technology partners internationally be the core vehicle that we use, and that gives us reach that goes beyond the four walls of the nice, capability, we really do leverage their breadth and strength in those international markets, so, it is you you'll, you can expect to see continued momentum in that area.

And then I would just quickly, Kylie address on the currency side, I think, first of all I'll start with the overall outlook for NiCE in totality. I think it's important to highlight that in total NiCE is still predominantly concentrated in terms of mix out of the Americas, which is mostly USD denominated. So 82% for example of our revenue in the fourth quarter was coming from the Americas, mostly USD.

Any impact that we may see within the international business, which is thriving and growing for us, has been considered and it's factored in. We're always looking at the environment generally on a macro for exchange rates and other factors as well.

That is inclusive in the expectations that we're looking at again, you may see that more, noticeable as you've seen in the fourth quarter in terms of the impact on the international markets, but not any expectation that is not already baked into our expectation for the full year.

Understood. And then regarding the better together story with NiCE and Cognigy, the ability to win more deals as a combined seat cast and AI domain expert, how did the joint go to Martian market motion play out, in 4Q? I know it's early, but I, also how to think about. The cognology opportunities from current CX1 customers versus sales to customers on competitor C cap platforms as well. Thank you.

I, I'll let me take that one. So, I was really pleased. I've got to say that. Despite it being, we, with, cognity coming, into the NiCE family at the, in September, coming into our busiest, and most hectic quarter of the year, it was remarkable to see two things. One, cognitive and our ability to win and grow as a stand-alone AI market leading platform, it was fantastic.

But then secondly, our, I, I've got a give it to our, the NiCE go to market team, we were able to, quickly pivot, and so the fourth quarter performance also on a better together where we were able to embed it into our big wins and the strong performance we had in the fourth quarter.

Cognigy was well and truly a part of that, which is why, by the way, 100% of our seven-digit deals included AI and that pretty much nearly all of them was inclusive of cognitive, so, the early, collaboration was really strong.

What we're really now focused on is how do we then capitalize and expanding on that, rapidly in '26. So, we're very early days in the AI expansion, we see obviously new competitors with AI point solutions, we've got a differentiated offer.

So really we're doubling down on the, better together, unified platform, but also winning and competing in the AI only market where the situation, exist and being able to win and win well, so competitive win rates were good.

Yeah, I feel very good about the fast integration, and it's a credit to Philipp Heltewig and the cognitive team and the way they've really embraced and come into the NiCE team and led the way.

Siti Panigrahi, Mizuho.

Great, thanks for taking my question. If I look at your cloud backlog that, excluding cognitive, it's organic cloud backlog, now 22% growth, that is quite a step up from 13% in Q3. So, few things like what's the composition like for that step up and you guys earlier talked about it takes longer to convert, to recognize revenue. So how should we think about the lag from the backlog to cloud revenue growth over the next two or three years? Two three quarter.

Yeah, thanks for the question. I would start and just say that, when you think about the 25% growth we had in the backlog, you highlighted the 22% growth that we had excluding Cognigy. When you think about how that will play out in the coming years and months, essentially the substantial majority of that. Will actually be recognized in the next 24 months.

It is not, however, linear, of course. It is dependent upon various go-lives that happen throughout that period. So the expectation and as we continue to shift that from the backlog over into recognized revenue, you should see that gradual expansion playing out in the cloud revenue growth over that period.

Okay, thanks. And then on the cognitive side, but you talked about before exiting Q4 $85 million error, is that still, does that still holds good based on what you're guiding, for the year.

It is. We had a very nice performance of Cognigy since the start of the acquisition and the close. So yes, very much on track and looking forward and excited about our ongoing opportunity during the course of '26.

Great. Thank you.

Jamie Reynolds, Morgan Stanley.

Great, thanks. This is, Jamie on for Elizabeth, and, congrats on the strong quarter. It's just the first question. It, it'd be great to just unpack a little bit more about how that, displacement with the CRM vendor materialized, what capabilities did NiCE bring where that vendor fell short.

Yeah, it, it's, I'll answer this one, Jamie, so there's a couple of factors here. First of all, Customers, the customer that we're referring to, had a need of an integrated customer engagement platform. What they didn't want is one platform to handle the AI piece, another platform to handle digital, and another platform to handle voice, because what it did was it created, friction in their engagement and it was actually impacting a positive customer experience.

What they wanted was the data, the operational flows, the process to be orchestrated end to end, so it was more about, clear conscious strategy for customers, and we're seeing this more and more where they're distinguishing a customer engagement platform.

The front door to the enterprise by their customers in a unified single, approach, rather than fragmented through differing technologies. Now that's not to say that they don't need an orchestrate with the CRM because you still want your sales data, your commerce data, your other information, your customer data that you've got there, but when it comes to the interaction.

And understanding the customer's intent, and then having a simple way of being able to orchestrate between a human agent and AI agent, synchronous, asynchronous, inbound and outbound, they wanted it on a single stack, and obviously we see the benefits of that.

Ultimately they chose it because it will deliver better ROI, better, customer experience, and it was one customer example, we've got many others that are doing the same journey.

Got it, thanks. That's helpful. And then just as a quick follow-up, it'd be great to get any color on how the performance among the more seasonal customers kind of trended in the fourth quarter relative to your expectations.

Yes, thanks. When we looked at the seasonality, we had highlighted that we had a strong bar to climb when compared to the fourth quarter of 2024, but we were quite pleased with the seasonality that we experienced in the fourth quarter this year.

I did highlight a couple of things in my formal remarks around, we had about a 50 basis points tailwind coming into the cloud revenue in the fourth quarter coming. From a foreign exchange that was included there we also ended up having a go live of a very large international deal earlier than anticipated that came into that.

So those also kind of triggered some health in the quarter, but generally we were pleased with the seasonality that we saw, which was healthy for our 4th quarter across, our diversified and vertical customer base.

Great. Thank you so much.

Michael Funk, Bank of America.

Yeah, hi, good morning. Thank you for the questions. So Scott, earlier you mentioned, I think you mentioned that only 40% of enterprise have moved from on-prem into the cloud. So I, I'd love to hear more color around the pace of that migration and then, net new, versus, migration internally and the increase that you see in TCV when customers do migrate internally.

Yeah, so as I mentioned, there's a significant market in front of us, the international side, Michael, is particularly, strong because you, they, they've not progressed in the migration compared to the Americas, so just from a geographic standpoint, we see, real momentum on the international side, and obviously we're benefiting from it.

I think what if I take a step back, what, what's happening in the market is customers were previously forced to choose, do they do the on-prem, the cloud migration, do they do an AI move, they had to distinguish between their methods. Now we give them the choice to do that as well.

But what we've now seen, and the and the results are undeniable around all of our big wins, all of our CCAS moves are embedding AI in -- so what we're seeing now is, they're using AI to be able to drive the automation capability, give them fast return, early deployment while they're doing, still doing their CCA shift, and that is able to help make sure that they've got early return on investment.

It gives us a competitive differentiation because we unify the journey of not just the on-prem to cloud and the and the AI but it's combined together, so it actually has given us a really significant differentiation compared to where we were a year ago, where we were obviously able to still capitalize on that.

The last comment I would make is the routes that customers are choosing will that they will migration paths will continue to be, a key part of the differentiator. What costs aren't prepared to do on the on the CCA migration is long, time to transition, so the other thing that we've really focused on is reducing the time to turn up or the time to value, we improved, our delivery time frames are, and by 20% during 2025.

I mentioned that that was a focus area at the beginning of last year, and I think the more we're able to show that we can do a time, time-bound, efficient migration while capitalizing on the AI capability, we're going to be able to seize, an acceleration of those CCA moves, as the customers evaluate the use of this technology in their landscape.

Thank you, Scott. Maybe one more if I could quickly. Financial crime and compliance business, love to hear your thoughts on the operating and strategic benefits of owning that business versus, maybe some strategic alternatives.

Yeah, it's such a great business, you know what makes me smile is, it continues to be seen and perceived and understood as the market leader, we serve the most sophisticated financial institutions, with a level of trust that honestly it is a joy.

I meet with banking executives and our clients, and the first thing they tell me is, we trust Actimize, we rely upon it, we need your help to continue to support, our ability to fight financial crime, fraud, and compliance factors.

So from a brand point of view and from a trust point of view of that segment, which is, it's also a big segment inside of our CX business, it really does enhance our, the trust position that we have as a company, so, great business, strong performance, really profitable, and yeah, we're proud for it to be a part of the NiCE family.

Great, thank you so much.

Thomas Blakey, Cantor Fitzgerald.

Hi, good morning, everyone. Thanks for squeezing me in here. Maybe just the first one, Scott, just wanted to talk about these increased win rates that you, you're talking about and obviously evidenced by the increase in, backlog.

If you could maybe, in answering, another, way about the increased win rates on pricing and any leverage you might have there with regard to your to Cognigy or other, kind of consumption-based AI, leverage that you have here in the market, that'd be helpful.

Yeah, I, I'll try to answer it simply that you, we're definitely seeing customers being more astute in their expectations of ROI. And that leads to more quantifiable outcome. Now they're not buying outcome-based pricing, but they're negotiating and understanding proven ROI that we're able to deliver.

One of the advantages we obviously have is that we understand their volumes, their interactions on their existing seats, how efficient their platform is, we use data to inform them about what the automation that AI can do to improve upon that.

And then how that then delivers measurable return and we put that into our offers, so, look, we've seen, our pricing continues to be effective in terms of, profitable business for nice, but also as a differentiator, but we're watching it closely.

I think the market in AI will continue to be, scrutinize the promise versus the reality. It's easy to come in with an AI solution and say we'll build you a bunch of AI agents, but if it doesn't deliver the real value, they go to vendors and partners that have proven to deliver that before, and we leverage that, there is no doubt that we're using our historical strength and benefits, to our advantage, and if that means updating our pricing models, we'll do so.

Yeah, no, that, that's helpful, and you're definitely balancing that well in terms of the backlog of growth. Maybe for Beth, I think you've broken out in the past the consumption-based, AIARR. I don't know if it's something you'd want to help with here and just understanding the increase in backlog and the jump in AIARR in total. Wanted to know if consumption is driving that and when we can kind of expect.

You, as folks are finding value here, looking into, to expand AI in terms of the CX role internally, NRR to start, maybe expanding, it was that more of a '26 or more of a kind of an out year kind of environment when you kind of look at your contracts and backlog wins that'd be helpful.

Thank you.

Yeah, sure. So I think I would start with, where Scott just led to, which is we have a flexible pricing model that allows that fluidity and we're driving more and more increasingly towards interaction and consumption-based pricing, which is demonstrated in our overall AIAAR growth where we're leaning in more and more towards pricing which is coming from that increasing and ongoing expansion of interactions that we see with respect to our backlog.

We actually, it demonstrates we have even further upside when we look at our backlog we're actually only including there our minimum contractual commitments. So our pricing model and the way we commercialize with our customers generally is on a subscription basis over a multi-year period.

So that's what's being reflected in our model. We're still in the very early stages of deployment with a lot of those enterprise customers. So as we continue to see those interactions increasing, that's further upside that we have even beyond what's already captured in our backlog.

Super helpful. Thank you, Beth.

Patrick Walravens, Citizens.

Oh, great. Thank you so much and let me add my congratulations. I was wondering if you could, give us an update on your $200 million dollar deals. I think you had one that was in AA and one was that was in am and Beth, maybe you commented on that when you talked about something that went live. So what's the state of those two now? And then, are there anything else? Are there any more this big that are in the pipeline?

Yes, so I'll take the first part, which is, thanks for the question. Those, both of those deals that were internationally driven are actually within our recognized revenue. They've both gone live. We're very excited about them. We're delivering to the customers, I would also add that, there are additional. Opportunities those customers are continuing to look to do more with us, so we're often at a great start of those relationships and we'll have more to come, but yes, they're already alive and contributing to our revenue.

Yeah, and in terms of the outlook, look, I guess you're getting a sense on this call. Both with our backlog but our optimism, there is some big, opportunities that are in front of us. It's highly competitive out there, but I think we're proving that we've got a differentiated ability to win those, and so I look forward to being able to share, more significant wins going forward, both internationally but also in North America.

All right, fantastic.

Thank you. That concludes our question-and-answer session. I will now turn the call back over to Scott for closing remarks.

Look, I just wanted to, first of all, thank everybody for, the engagements, not only today but throughout '25. It was a year of clear transition, but we're really excited about what we've delivered, but also about the future in front of us, and I, and in particular, I just wanted to thank all the nice employees, the nicest all around the world, our partners and our customers that contributed towards this. We've got exciting times ahead. It is an exciting market, but we've got the momentum to be able to seize upon it, which we will do. So I appreciate the time everyone today.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.