NICE Ltd 2026 Q2 Earnings Call

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 Harbor provisions of the Private Securities Litigation Reform Act of 1995, 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 3 of the company's 2025 Annual Report on Form 20-F as filed with the Securities and Exchange Commission on February 26, 2026. During today's call, we will present a more detailed discussion of second quarter 2026 results and the company's guidance for the third quarter and full year 2026.

A copy of today's press release and investor presentation can be found 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 intangible assets, acquisition and divestiture related expenses, gains on intercompany foreign currency transactions, amortization of deferred financing costs, amortization of discount on debt, the tax effect of the non-GAAP adjustments, and the tax rate impact resulting from the non-U.S. intercompany transaction. 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'm encouraged by our execution in the second quarter as we continue to strengthen our leadership position in the CXAI market. We're still in the early stages of our growth opportunity, and our second quarter results reinforce that underlying demand trends in our business continue to build strong momentum. In Q2, we delivered total revenue of $782 million above the high end of our guidance range and non-GAAP EPS of $2.70 at the high end of the range. Cloud revenue grew to a 12.6% year-over-year as customers increasingly consolidate around a single enterprise CXAI platform that powers seamless experiences across every channel. That trend reflects a broader reality. Customer engagement is a category in its own right.

It connects with broader enterprise workflows, it remains a distinct system of engagement where every interaction happens in real-time and every customer experience matters. It requires a different level of specialization than enterprise workflow automation or AI-only interaction models, that's exactly where NICE has built its leadership. As customer interactions continue to grow with AI interactions growing even faster, customer engagement is becoming a more strategic capability for the enterprise. That shift is driving enterprises to scale customer engagement and AI across their organizations, expanding their investment in NICE. This is reflected in continued CXone seat growth, a record Q2 for new cloud ACV bookings, including another record quarter for AI bookings, a strong cloud backlog growth of 19%, and AI backlog growth of 72%. One additional point, these backlog metrics do not include our recently signed HMRC deal.

Had HMRC been included, cloud backlog growth would have been similar to last quarter, while AI backlog growth would have accelerated above Q1. In Q2, nearly every CXone enterprise deal included AI. Customers are choosing NICE Cognigy because of its proven success operating at enterprise scale. AI deal volumes and average deal sizes continue to grow substantially, we're seeing our install base increasingly choose NICE Cognigy. Win rates are very high with existing CXone customers as these enterprises view NICE as a trusted partner and see the benefit of a single CXAI platform. The beauty of NICE Cognigy is it also continues to compete well on a stand-alone basis. AI ARR increased 52% year-over-year, and AI now represents 15% of cloud revenue. Within that, our Agentic AI solutions grew even faster. As enterprises scale AI across their organizations, adoption naturally ramps over time.

While the technology can be implemented quickly, customers are preparing their data governance and operating models before scaling AI across mission-critical workflows. Our full deployed engineers and NICE Labs engagement models proactively help our customers accelerate that journey. Importantly, virtually all of our AI revenue already comes from production deployments rather than pilots where customers are achieving meaningful results at scale. International is another area of strength. In Q2, international revenue increased 22% year-over-year, and our recently announced HMRC win is another example of the large-scale enterprise transformations we're increasingly winning. Cloud migrations, our expanding partner ecosystem, and growing demand for sovereign cloud deployments, particularly in Europe, are creating multiple durable drivers of international growth. Broadly speaking, our Q2 results reinforce what we recently discussed with customers and partners at NICE World Orlando and NICE World London.

Attendance at both events increased more than 20% year-over-year, evidence of the growing interest in our fully AI-native CX platform. It is clear enterprises are no longer evaluating AI based on what it can demonstrate. They're evaluating it based on what it can deliver in production. Accuracy, governance, scalability, measurable business outcomes are now the criteria that matter. As a result, customers are moving away from fragmented point solutions towards a single platform that orchestrates every customer experience across voice, digital, human, and AI. That plays directly to NICE's leadership with a unified operating platform. We're continuing to strengthen that platform advantage through innovation. At NICE World, we announced that Cognigy is now fully native to CXone, ahead of schedule, making it the platform's foundational conversational agentic AI engine. One application, one shared data layer, one deployment experience.

Customers can activate AI faster, eliminate integration complexity, and build AI agents directly on CXone data. The native integration of Cognigy is also accelerating innovation across CXone in ways that simply aren't possible when AI and customer engagement sit on separate platforms. At NICE World, we showcased Agentic Analytics, which continually analyzes data across the platform to identify new automation opportunities and improve existing automations. We also introduced the Agentic Engagement Plane, purpose-built for an emerging hybrid workforce, enabling human and AI agents to operate together seamlessly. This capability is unique to NICE and our single natively integrated platform. Combined with learning loops and Guardian AI, these innovations continually improve AI performance while giving enterprises the governance, control, and operational confidence required to scale AI across every customer interaction.

To sustain that pace of innovation, we also launched NICE Labs, our dedicated AI lab focused on furthering agentic customer experience through advanced research, rigorous benchmarking, and rapid prototyping. Working closely with customers and partners, NICE Labs is designed to help close the gap between what's possible with AI and what enterprises can reliably deploy in production. Importantly, we built that innovation without sacrificing flexibility for our customers. Our platform is model agnostic, allowing enterprises to take advantage of proprietary, open weight, and future models as they evolve, without locking themselves into a single LLM. That gives customers the freedom to adopt the best models for each use case while protecting long-term flexibility and cost efficiency. Ultimately, our strategy is delivering measurable results for our customers.

TripAdvisor, an existing CXone customer, deployed NICE Cognigy AI agents, moving from concept to its first live automated voice calls in just two and a half months. Today, its AI agent delivers a 90% customer sentiment score, well above the 71% achieved by human agents. GXBank, Malaysia's first operational digital bank with over 1 million customers, built its customer experience operation on CXone, where the platform now delivers 95% customer satisfaction and 95% first contact resolution, while AI autonomously resolves 70% of customer chat interactions. These outcomes are not isolated success stories. They reflect a broader pattern that we're seeing across our customer base. Enterprises achieving measurable business outcomes with AI in production. We're translating these outcomes into continued competitive momentum. Our CCaaS win rates remained strong in Q2 and improved year-over-year as more enterprises selected NICE to modernize customer engagement with AI.

In Q2, we secured an 8-digit ACV win with HMRC, making it the largest CXone deal and largest Cognigy deal ever. Delivered in partnership with Capgemini, HMRC selected NICE's unified CXAI platform to help modernize and enhance citizen engagement at scale. We also secured another 8-digit ACV win with one of the largest healthcare organizations in the U.S., which selected NICE CXone and Cognigy to advance customer engagement on a unified AI platform. Working together with Accenture, the customer chose NICE to accelerate AI adoption and scale while enhancing member experiences and driving greater operational efficiency. Standalone Cognigy also continues to compete favorably. Recent wins including displacing an AI native point solution at a large multinational utility, where our platform delivered stronger automation performance while giving the customer greater flexibility and faster time to market for new use cases.

We also replaced an incumbent AI-native solution at a large insurance company after winning a competitive evaluation against an AI-native solution and a large enterprise software platform. Together, these wins across both our unified platform and standalone AI offerings underscore the strength of our strategy, the competitive differentiation of NICE Cognigy, and the growing leverage of our global partner ecosystem in driving large-scale enterprise transformation. Speaking of our partners, our partner ecosystem continues to be an increasingly important driver of our success. ACV booked through our GSI partners in Q2 was multiples higher than the prior year. With AWS, customers are leveraging AWS Marketplace and committed cloud spend programs as a part of their procurement processes with NICE, making it easier to adopt our platform while expanding our commercial reach across both new customer deployments and renewals. We've also expanded our long-standing partnership with RingCentral.