The Power of Perspec�ve: A Vision Unbound
Dear Shareholders,
Leaders are o�en defined by their ability to
elevate their perspective. Those that do
navigate with strategic foresight, anticipate
market shifts and spot hidden opportunities.
There is nothing so limiting as viewing
opportunities through the same lens as
yesterday's challenges. A change of perspective
is the spark that ignites accelerated growth.
For nearly four decades, NICE has been
triumphantly navigating the dynamic landscapes
across multiple industries, embracing the winds
of change altering our external business
environment and stirring transformation within
our very core. Fanning the flames of innovation,
harnessing the waves of evolving market
demands and hardwiring a culture of strong
execution have stood as the cornerstones on
which NICE thrives. Our on-going commitment
to proactively shape the future requires a
habitual change in perspective, not just as a
necessity but as an invaluable asset on our
journey forward.
A New Perspective on Market Forces
Enterprise initiatives, investments and projects
in the foreseeable future will be founded on an
amalgamation of three fundamental
technological driving forces: Cloudification,
Digitalization and AI-ization. Conventional
wisdom confines the strength of each of these
forces to its inherently apparent business
potential, squandering opportunities and
overlooking their true transformative potential.
A more sophisticated approach, one that
reevaluates these forces through the prism of an
elevated new perspective, recognizes that they
are fundamentally reshaping the enterprise
software market as we know it, creating an
overarching generational movement.
Cloudification Grand Refactoring
Cloud is typically thought of as a way for
organizations to consume technology in a new
non-localized, standardized and virtualized way.
However, a panoptic perspective on
cloudification uncovers its real impact: Driving a
grand refactoring throughout the entire
enterprise software market, forcing the re-
writing from scratch of billions of lines of code
natively in the cloud and forcing all software
players to modernize their tech stack. This is the
exact reason for the incredible shift we see in
market forces, the rise of new software leaders
and the collapse of once-iconic players who fell
behind.
Digitalization Grand Convergence
For several decades, the so�ware market has
devolved into an endless array of dis�nct
categories, with enterprises unwi�ngly forced
to become the de facto integrators of disjointed
point solu�ons. Digitaliza�on has quickly made
its way to the top of every CIO’s agenda, not as
the presump�ve moderniza�on effort - but
rather as a defiant revolt against this over-
fragmenta�on, forcing a complete blurring of
clear-cut lines between so�ware categories, and
driving a grand convergence.
AI-ization Grand Fusion
The biggest unsolved execution challenge
preventing enterprises to thrive as they scale
remains that of streamlining people, processes
and technology. AI-ization is about to reshape
many aspects of our lives, but when it comes to
organizations, its ultimate role will be a force of
grand fusion, finally bringing these three
constituents together in the most natural and
effortless way.
Our Strategy Beyond the Obvious
The Road Ahead: Fueled by Possibilities
The act of aligning with these three grand
forces: refactoring, convergence and fusion is
rewriting the benchmark for leadership in our
era. When these forces are brought together
and unified in the right way by a company with a
bold vision - the result is epic. Reframing the
NICE journey of the past decade with these
fresh new perspectives in mind, reveals that our
strategy all along was riding directly on top of
these transformations, winning the races across
all our markets.
We were the ones that triggered the
cloudification cycle of our markets, refactoring
all our solutions, building them from the ground
up natively in the cloud. Today we own the
undisputed market leading platforms CXone,
Xceed, X-sight and EvidenCentral.
We continuously led a smart convergence of
adjacent software categories, expanding the
definition of our addressable markets. To name
but a few, we completely reshaped the CX
market, combining buying decisions on ACD,
WEM and Analytics - into one. We coined
FRAML as the standard framework for fighting
financial crime, and we made a market-changing
case-study-worthy move, reimagining the way
evidence is managed across the entire Criminal
Justice system.
We are the major force for AI fusion in our
specific markets, and the only vendor with the
complete set of AI must-have assets: largest
collection of unique historical and current data,
most relevant knowledge elements and
unmatched domain expertise.
This fresh take on our journey and underlying
market forces is also unveiling a grand
opportunity for NICE. We are fortunate to lead
markets of remarkable opportunity. Not only
are they vast and constantly expanding, but they
also manifest unique attributes: we navigate
secular markets, solving critical problems that
transcend economic fluctuations; we tackle
complex challenges, requiring feature-rich
solutions that preclude any chance of
commoditization, giving rise to high barriers of
entry that keep potential competitors at bay; we
enjoy an abundance of opportunities fueled by
the distinctive lag of technology adoption
emblematic to our markets; we are focused on
markets burdened by soaring labor-driven costs
exceeding 90% of total expenditures, ripe for
the massive shift of spend from labor to
automation.
NICE is exceptionally well-positioned to become
the eminent winner of this grand opportunity,
given our sui generis assets: we are categorically
recognized as the top leader in every market we
operate in; we offer the most complete, robust
and dominant platforms; we deliver a wide-
ranging portfolio that is as rich in its breadth as
it is profound in its depth; we own the most
critical data elements that form the
foundational crux for AI; we established a
powerful wide-reaching ecosystem that
envelops the entire world. On top of it all, we
are a highly profitable company, with an
industry-leading balance sheet, a springboard
for our incomparable track record of successful
organic and inorganic growth.
2024 and Onwards:
Growth Pillars Realized
The past year was filled with tremendous
growth and expansion across the board, leading
to record achievements and crossing many
success milestones: 22% cloud revenue growth,
$2.4 billion of total revenue, 70.5% non-GAAP
cloud gross margin, non-GAAP operating margin
of 30%, non-GAAP EPS growth of 15% and
record cash generation of $561 million. Above
all, 2023 will be remembered for two era-
defining landmarks for NICE - taking command
of the digital engagement market and charting
the course of AI in our industries.
As we enter 2024, it is now unmistakably clear
that AI has established itself as an overarching
catalyst, propelling our four vectors of growth.
I.
II.
AI fuels our cloud win rate - with only
20% of our markets shi�ed to the cloud,
we are witnessing an enterprise cloud
inflec�on point, where the lion’s share of
exci�ng large-scale cloud transi�ons is
about to take place. AI is turbo-charging
our differen�a�on, substan�ally
expanding our already high cloud win
rates, as evidenced by the nearly 1,000
new customers added in 2023, displacing
compe�tors with each newly acquired
logo.
AI as the bedrock of rapid expansion into
digital - NICE is a digital trailblazer,
encompassing the en�rety of all digital
engagements. Our disrup�ve AI is a
formidable convergence power, igni�ng a
wave of migra�ons from legacy 1.0
digital vendors to NICE. This is now the
fastest expanding part of our business,
reflected by an astonishing 6X annual
growth in the volume of digital
engagements managed by NICE,
cemen�ng us as the industry’s fastest
growing digital pla�orm.
III.
AI fusion powers our platform adoption –
Enterprise buyers are pivo�ng 180
degrees from mul�ple point solu�ons to
IV.
building and simplifying their tech stack
by standardizing on a single pla�orm.
This trend is now gaining a significant
boost because it is the only viable way to
implement AI that works. Pla�orms don’t
appear overnight. It takes strenuous
planning with ongoing strategic
decisioning, along with a decade-long
engineering investment. The force of this
AI tailwind can be fully observed in our
soaring 200% pla�orm booking growth in
Q4 2023.
AI as endless source for lucrative new
use-cases – We are experiencing a surge
in the number of customers and
prospects approaching us a�er trying to
leverage general purpose genera�ve AI
technologies, unsuccessfully. They come
to us with a clear realiza�on that our
specialized AI, with its thousands of
constantly evolving and expanding
models, based on billions of interac�ons,
is the only viable op�on. NICE is quickly
becoming the AI powerhouse of our
markets as demonstrated by a staggering
375% increase in Q4 2023 Enlighten AI
bookings.
The Wind in NICE’s Sails
The cornerstone of our success lies in our
remarkably diverse and global workforce – our
8,500 NICErs. We are bringing together
passionate individuals from all corners of the
world, a collabora�ve mix of long-�me NICErs,
recent joiners and talent coming from acquired
companies, united by their deep-seeded passion
for innova�on and winning. Together, we are
crea�ng an environment where fresh
perspec�ves interlock, sparking groundbreaking
ideas, allowing us to consistently push
boundaries and be lead the evolu�on in our
markets.
The ripple effect of our unwavering culture
extends far beyond the four walls of our
company. We see ourselves as threads woven
into the global tapestry, and we believe in
strengthening the fabric of the communities in
which we operate. Our passionate NICErs are
generously sharing their time and expertise to
leave a lasting positive footprint through
impactful projects.
I believe that the rules of engagement for public
companies have changed and there’s an
imperative for businesses to play a larger role in
society. As CEO, I feel compelled to use my voice
as a catalyst for positive change, publicly
addressing wide-impacting topics, especially
during moments of critical importance.
We are at the forefront of an exciting new era
with endless possibilities. Leading this
remarkable company is an on-going honor. To
our customers, partners, and shareholders –
your longstanding trust is the fuel that propels
us forward and we thank you for that. Together,
we share a vision, not just for success, but for
shaping the very future of our industry.
Excellence blooms in the fer�le ground of
transformed perspec�ves, nurturing a bright
future for NICE. I am incredibly excited to
con�nue on this journey with you.
Sincerely,
Barak Eilam
Chief Executive Officer
2023 Key milestones
2023
Total revenue of $2.4 billion,
increased 9%
Cloud revenue increased
22%, and represented a
record 67% of total revenue
Exit cloud ARR exceeding
$1.7 billion
Number of AI deals
increased 4x
Record cloud gross margin of
70.5% (Non-GAAP)
Operating margin increased
90 bps to 29.6% (Non-GAAP)
Record operating cash flow of
$561 million, increased 17%
Financial Highlights for 2023
$ in millions except EPS.
TOTAL REVENUE
(Non-GAAP)
CAGR 11%
$1,926
$2,378
$2,181
$1,577
$1,657
59%
67%
53%
47%
38%
CLOUD GROSS MARGIN
(Non-GAAP)
70.0%
70.5%
67.7%
65.6%
61.8%
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Total Revenue
Cloud Revenue as a % of Total Revenue
OPERATING MARGIN
(Non-GAAP)
29.6%
28.4%
28.2%
28.7%
27.5%
NET INCOME (Non-GAAP)
CAGR 14%
$583
$507
$436
$378
$343
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
CASH FROM OPERATIONS
EPS (Non-GAAP)
CAGR 11%
$561
$480
$462
$480
$374
$8.79
CAGR 13%
$7.62
$6.52
$5.73
$5.31
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
Commission file number 0-27466
NICE LTD.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Address of principal executive offices)
Tali Mirsky
Corporate VP, General Counsel and Corporate Secretary
Tel: +972-9-7753151
E-mail: tali.mirsky@nice.com
13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
American Depositary Shares, each
representing
one Ordinary Share, par value one
New Israeli Shekel per share
Trading Symbol
NICE
Name of Each Exchange
On Which Registered
NASDAQ Global Select Market
F-1
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the
annual report: 62,870,669 Ordinary Shares, par value NIS 1.00 per share (which excludes 11,904,158 treasury shares)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15 (d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days:
☐ Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files).
☒ Yes ☐ No
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large Accelerated Filer ☒
Non-Accelerated Filer ☐
Accelerated Filer ☐
Emerging Growth Company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒
☐
☐
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to
follow:
U.S. GAAP
International Financial Reporting Standards as issued by the International Accounting Standards Board
Other
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
F-2
☐ Yes ☒ No
F-3
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F-1
TABLE OF CONTENTS
Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
History and Development of the Company
Unresolved Staff Comments
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures About Market Risk
Description of Securities Other than Equity Securities
PART I
Item 1.
Item 2.
Item 3.
Item 4.
Item 4A.
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.
PART II
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
[Reserved]
Item 13.
Item 14.
Item 15.
Item 16.
Item 16A. Audit Committee Financial Expert
Code of Ethics
Item 16B.
Principal Accountant Fees and Services
Item 16C.
Exemptions from the Listing Standards for Audit Committees
Item 16D.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16E.
Change in Registrant’s Certifying Accountant
Item 16F.
Item 16G.
Corporate Governance
Item 16H. Mine Safety Disclosure
Item 16I.
Item 16K
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Cybersecurity
PART III
Item 17.
Item 18.
Item 19.
Index to Financial Statements
Financial Statements
Financial Statements
Exhibits
F-4
PRELIMINARY NOTE
This annual report contains historical information and forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to NICE’s business, financial condition and results of
operations. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,”
“strategy,” “continue,” “goal” and “target” and similar expressions, as they relate to NICE or its management, are
intended to identify forward-looking statements. Such statements reflect the current beliefs, expectations and
assumptions of NICE with respect to future events and are subject to various risks and uncertainties. The forward-
looking statements relate to, among other things: operating results; anticipated cash flows; gross margins; adequacy
of our resources to fund operations; our ability to maintain our average selling prices despite the aggressive
marketing and pricing strategies of our competitors; our ability to maintain and develop profitable relationships with
our key distribution channels; the financial strength of our key distribution channels; and the market’s acceptance of
our technologies, products and solutions.
In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we
are identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to
differ materially from those contained in any forward-looking statements made by us; any such statement is qualified
by reference to the following cautionary statements. Many factors could cause the actual results, performance or
achievements of NICE to be materially different from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements, including, among others, changes in general economic and
business conditions, competition with existing or new competitors, the success and growth of our cloud Software-as-a-
Service business, successful execution of our growth strategy, difficulties in making additional acquisitions or
effectively integrating acquired operations, dependency on third-party cloud computing platform providers, hosting
facilities and service partners, rapidly changing technology (including Artificial Intelligence), cyber security attacks or
other security breaches, privacy concerns and legislation, our ability to recruit and retain qualified personnel, changes
in currency exchange rates and interest rates, the effects of additional tax liabilities resulting from our global
operations, the effect of unexpected events or geopolitical conditions, such as the conflicts in the Middle East, that may
disrupt our business and the global economy and various other factors, both referenced and not referenced in this
annual report. These risks are more fully described under Item 3, “Key Information – Risk Factors” of this annual
report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, our actual results may vary materially from those described herein as anticipated, believed, estimated,
expected, intended, planned or projected. All forward-looking statements are made only as of the date hereof. NICE
does not intend or assume any obligation to update these forward-looking statements. Investors should bear this in
mind as they consider forward-looking statements and whether to invest or remain invested in NICE’s securities.
In this annual report, all references to “NICE,” “we,” “us,” “our” or the “Company” are to NICE Ltd., a company
organized under the laws of the State of Israel, and its wholly-owned subsidiaries. For a list of our significant subsidiaries,
please refer to Item 4.C, “Organizational Structure” of this annual report.
In this annual report, unless otherwise specified or unless the context otherwise requires, all references to “$” or
“dollars” are to U.S. Dollars, all references to “EUR” are to Euros, all references to “GBP” are to British Pounds, all
references to “CHF” are to Swiss Francs, all references to “NIS” are to New Israeli Shekels, all references to “INR” are to
Indian Rupees, all references to “PHP” are to Philippine peso, all references to “AUD” are to Australian Dollar, all references
to “JPY” are to Japanese Yen, all references to “SGD” are to Singapore Dollar, and all references to “COP” are to Colombian
Peso. Except as otherwise indicated, the financial statements of and information regarding NICE are presented in U.S.
dollars.
F-5
Item 1.
Identity of Directors, Senior Management and Advisers.
PART I
Not Applicable.
Item 2.
Offer Statistics and Expected Timetable.
Not Applicable.
1
Item 3.
Key Information.
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Our business faces significant risks. You should carefully consider all of the information set forth in this annual
report and in our other filings with the Securities and Exchange Commission (“the SEC”), including the following risk factors
which we face, and which are faced by our industry. The risks and uncertainties described below are not the only ones facing
us. Other events, circumstances or factors that we do not currently anticipate or that we currently do not deem to be material
risks may also affect our business, results of operations and financial condition. Our business, financial condition and results
of operations could be materially and adversely affected by any of these risks.
Risks Relating to our Business, Competition and Markets
The markets in which we operate are highly competitive and we may be unable to compete successfully.
The markets for our products, solutions and related services (also referred to elsewhere in this document as our
“offerings”) are, in general, highly competitive. Our competitors include a number of large, established software development
vendors. Some of our principal competitors or potential competitors may have advantages over us, including greater resources,
a broader portfolio of products, applications and services, greater brand recognition, larger patent and intellectual property
portfolios and access to a larger customer base. These potential advantages could enable our competitors to better adapt to new
market trends, emerging technologies including Artificial Intelligence ("AI"), or customer requirements, or devote more
resources to the marketing and sale of their products and services.
Additional competition from existing and new potential entrants to our markets, including new technology vendors
competing in specific areas of our business or specific industry verticals, may lead to the widespread availability and
standardization of some of the products and services we provide, which could result in the commoditization of our products
and services, reduce the demand for our products and services, and drive us to lower our prices.
Additionally, prices of our offerings may decrease throughout the market due to competitive pressures, including by
adoption of different approaches to pricing or different pricing models, which may be necessary in light of the potential of
conversational AI-based solutions to shift the market from agent-based pricing to interaction-based pricing, or alternatively
during times of economic difficulty. This could have a negative effect on our gross profit and results of operations.
In recent years, players in adjacent markets have increased their presence in our markets through internal
development, partnerships and acquisitions. Infrastructure and/or enterprise software vendors, such as Customer Relationship
Management (“CRM”) vendors, as well as Unified Communications as a Service (“UCaaS”), video collaboration providers,
Platform as a Service (“PaaS”) vendors, pure digital as well as pure Conversational-AI vendors, have entered or may decide in
the future to enter our market space, or build or acquire contact center as a Service (“CCaaS”) solutions and compete with us
by offering comprehensive solutions and/or platforms. Moreover, as the investment in, and the shift to the use of Generative
AI technologies continue to grow, we may experience increased competition by vertical solutions’ players expanding their
portfolios in the digital CX market. We may also experience increased competition if large horizontal analytics providers and
domain specific competitors in adjacent markets enter or increase their presence in the Financial Crime and Compliance
markets. Some of these vendors may be well recognized by broadly known brand names, which can serve as an advantage as
they enter or increase their presence in our market space. If we are not able to compete effectively with these market entrants
or other competitors, we may lose market share and our business, financial condition or results of operations could be
adversely affected.
In light of the intense competition in our markets, successful development, positioning and sales execution of our
offerings is a critical factor in our ability to successfully compete and maintain growth. Therefore, we must continue making
significant expenditures on research and development and marketing and sales activities to compete effectively. In addition,
2
our software solutions may compete with software developed internally by potential customers, as well as software and other
solutions offered by competitors. We cannot ensure that the market awareness or demand for our new products, applications or
services will grow as rapidly as we expect, or that the introduction of new products or technological developments or services
by others will not adversely impact the demand for our offerings.
Successful marketing of our offerings to our customers and partners will be critical to our ability to maintain growth
and our competitive positioning. We cannot assure that our offerings or existing partnerships will allow us to compete
successfully. The market for some of our solutions is highly fragmented and includes a broad range of product offerings,
features and capabilities. Consolidation through mergers and acquisitions, or alliances formed, among our competitors in this
market, could substantially influence our competitive position, especially if they will enable our competitors to offer a
competitive comprehensive platform solution.
As we expand into new markets and geographies, we are faced with new challenges, including new competition,
which may possess specific assets, relationships, know-how, technologies, and/or different pricing strategies, that enable our
competitors to better respond to market trends or customer requirements or devote greater resources to the development,
promotion and sale of their products and services.
Our inability to respond to the rapid technological changes and frequent new products, services and business models
introductions in the markets in which we operate and address the related risks, may have a material adverse effect on
our results from operations and/or competitive position.
We operate in several markets, each characterized by rapidly changing technology, new product, services, business
models introductions and evolving industry standards. These changes might exert price pressures on our offerings or render
them obsolete. Our markets are also characterized by consistent demand for state-of-the-art technology and products. Existing
and potential competitors might introduce new and enhanced products and services that could adversely affect the competitive
position of our offerings.
We are making investments in AI based capabilities to enhance our offerings. AI technologies are rapidly evolving
and may present several risks, including factual errors or inaccuracies in the work product developed with AI, ethical risks
related to biases in the algorithm or programming, privacy and security concerns as well as risks related to confidentiality and
intellectual property rights. The use of AI tools or any failure to address the responsible use of AI technology may result in
potential financial or reputational harm.
We believe that our ability to anticipate changes in technology and industry standards and to successfully develop and
introduce new, enhanced and differentiated products and services, on a timely basis, in each of the markets in which we
operate, is a critical factor in our ability to grow our business. As a result, we expect to continue to make significant
expenditures on research and development, particularly with respect to new software applications which are continuously
required in all our business areas, as well as investments in AI and Generative AI related initiatives. In the event that we do not
anticipate changes in technology or industry practices or fail to timely address market needs or not be able to develop new
products and services that are in demand, or should customer adoption of new technologies be slower than we anticipate, or
should our competitors introduce new and enhanced products incorporating AI more rapidly and/or successfully than us, the
competitive position of our offerings may be adversely affected and we may lose market share and our results of operations
may be materially adversely affected.
In addition, some of our offerings must readily integrate with customers' systems of record and data sources,
consumer facing front-office applications and back-office business operations systems. Any changes to these third-party
systems could require us to redesign our products, and any such redesign might not be possible on a timely basis or achieve
market acceptance.
We cannot assure that the market or demand for our offerings will be sustained or grow as rapidly, that we will be
successful in the development, adoption, and implementation of new technologies, products and applications, including in
relation to products incorporating AI, that such new products and applications will achieve market acceptance and be
competitive in technology and price and responsive to customer needs, or that the introduction of new products, services or
technological developments by others, including AI based technologies, will not render our products and services obsolete or
require adjustments in our products and services and/or business model in order to address the impact of such technological
developments in relevant markets. Moreover, the market acceptance of AI-based products and services may expedite certain
AI related trends in those markets. Such trends, if adopted on a large scale, may reduce the demand for certain solutions and
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limit the revenues generated from our offerings. If any of the above occurs, our business, financial condition and results of
operations could be materially adversely affected.
We may not be able to maintain and further expand the growth and/or profitability of our cloud business.
Our Software-as-a-Service (“SaaS”, also referred to as “cloud”) business, in both our Customer Engagement and
Financial Crime and Compliance markets, has grown significantly, and therefore we are more dependent now on the success
of this area of our business. If we are not able to compete effectively, generate significant revenues or maintain the
profitability of our cloud business or if we do not successfully execute our cloud strategy or anticipate the needs of our
customers, including in relation to the pace of adoption of cloud solutions as well as AI-based offerings by large enterprises,
our revenues could decline and our reputation may be adversely affected.
Our cloud offering is generally purchased by customers on a subscription basis. Failure by our customers to renew
their subscriptions for our services or reduction in the number or volume of subscriptions, can impact our revenues,
profitability and results of operations.
We rely on cloud computing platforms provided by third parties, including PaaS provided by strategic partners, such
as Amazon and Microsoft. These cloud computing platforms may not continue to provide competitive features and
functionality, or may not be available on commercially reasonable terms. We may be affected by the pricing of certain
infrastructure services, such as in the area of PaaS and network connectivity, which could in turn affect the rates we offer to
our customers.
In addition, some of our customers may not accept the use of such services or particular platform. The inability to use
any of these hardware, software or cloud computing platforms could have a material adverse impact on our business, increase
our expenses and otherwise result in delays in providing our services until equivalent technology is either developed by us, or
obtained through purchase or license and integrated into our services. In addition, to the extent that we suffer periods of
unavailability of our service for reasons related to PaaS providers, we may be contractually obligated to provide our customers
with credits for future services, and in some cases refunds, or be liable for penalties. Any such extended service outages could
harm our reputation, revenue and operating results.
Some of our products and solutions utilize the cloud services of AI accelerators which, due to growing market
demand for AI-based offerings, may become difficult to get access to or to obtain on commercially reasonable terms. The
inability to obtain access to the required capacity for AI processing could limit our ability to deliver and expand growth in our
AI-based offerings. This limitation could also result in deterioration of our cloud profitability.
As we grow our cloud business, we will continue to depend on both existing and new strategic relationships with such
vendors. Our inability to establish and foster these relationships could adversely affect the development of our cloud business,
as well as our growth, reputation and results of operations.
Further, cloud computing may make it easier for new competitors to enter our markets due to the lower up-front
technology costs and easier implementation and for existing market participants to compete with us on a greater scale. Such
increased competition is likely to heighten the pressure on us to decrease our pricing, which could have a negative effect on
our revenues, profitability and results of operations.
We may not be able to compensate for loss of on-premises business with the continued shift to cloud based offerings.
The increasing prevalence of SaaS delivery models offered by us and our competitors may unfavorably impact
pricing and overall demand for our on-premises software products and related services, which could reduce our revenues and
profitability. With the continued shift to cloud-based offerings, we cannot guarantee that revenues generated from our cloud
business will compensate for a loss of business in our on-premises enterprise software business.
We may not be able to successfully execute our growth strategy.
Our strategy is to continue investing in, enhancing and securing our business and operations and growing our
business, both organically and through acquisitions. Investments in, among other things, new markets, products, solutions, and
technologies, research and development, infrastructure and systems, geographic expansion, and additional qualified and
experienced personnel, are critical to achieving our growth strategy. Growth of our revenue depends on the success of all these
factors, including our ability to capture market share, maintain and grow revenues from existing customers, attract new
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customers, develop our strategic partnerships, introduce our offerings to new global markets, strengthen and improve our
offerings through significant investments in research and developments and successfully consummate and integrate
acquisitions.
Our success depends on our ability to execute our growth strategy effectively and efficiently in order to meet our
customers' and market needs. We cannot guarantee that we will be able to sustain our growth in future years. If we are unable
to execute our growth strategy successfully and properly manage our investments and expenditures, our results of operations
and stock price may be materially adversely affected.
Customers’ move to communication channels other than voice could materially and adversely affect the success of our
voice solutions.
Our voice solutions currently generate, and in recent years have generated, a significant portion of our revenues, and
we will continue to rely on the sales of our voice solutions and recurring revenues, such as subscription and maintenance
services, in the next several years. The trend of enterprise customers moving from voice to other means of communication
with the enterprise (such as self-service, e-mail, messaging applications, social media and chat) may result in a reduction in the
demand for our voice platform and applications. Although our product portfolio caters to the changing demands in alternative
communication channels and we have experienced growth in our digital channel solutions, there can be no assurance that
customers will adopt our solution for other communication channels to compensate for such possible decline in demand for
our voice solutions. Therefore, a significant decline in the voice solutions market may have a material adverse effect on
revenues generated from our voice solutions, which may have a material adverse effect on our business, financial condition or
results of operations.
Our business could be materially adversely affected as a result of the risks associated with acquisitions and
investments. In particular, we may not succeed in making additional acquisitions or be effective in integrating such
acquisitions.
As part of our growth strategy, we made a number of acquisitions over the last several years (see Item 5, “Operating
and Financial Review and Prospects - Recent Acquisitions” in this annual report for a description of certain recent
acquisitions), and expect to continue to complete acquisitions and investments in the future. As we continue to evaluate
strategic opportunities, there can be no assurance that we will be successful in closing additional acquisitions. Even if we are
successful in making additional acquisitions, integrating an acquired business into our operations or investing in new
technologies may: (1) result in unforeseen operating difficulties and large expenditures; and (2) absorb significant
management attention that would otherwise be available for the ongoing development of our business, both of which may
result in the loss of key customers or personnel and expose us to unanticipated liabilities.
Other risks commonly encountered with acquisitions include the effect of acquisitions on our financial and strategic
position, the inability to integrate successfully or commercialize acquired technologies and achieve expected synergies or
economies of scale on a timely basis and the potential impairment of acquired assets. Further, we may not be able to retain the
key employees that may be necessary to operate the businesses we acquire and we may not be able to attract, in a timely
manner, new skilled employees and management to replace them.
In recent years, several of our competitors have also completed acquisitions of companies in our markets or in
complementary markets. As a result, it may be more difficult for us to identify suitable acquisitions or investment targets or to
consummate acquisitions or investments once identified on acceptable terms or at all. If we are not able to execute on our
acquisition strategy, we may not be able to achieve our growth strategy, may lose market share, or may lose our leadership
position in one or more of our markets.
We often compete with others to acquire companies, and such competition may result in decreased availability of, or
an increase in price for, suitable acquisition candidates. We also may not be able to consummate acquisitions or investments
that we have identified as crucial to the implementation of our strategy for other commercial or economic reasons. Further, we
may not be able to obtain the necessary regulatory approvals, including those of competition authorities and foreign
investment authorities, in countries where we seek to consummate acquisitions or make investments. For those and other
reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition. Also, even if we
do consummate acquisitions, we may do so on less favorable terms and/or may be subject to certain conditions or
commitments imposed by such authorities and agencies that may impact post-acquisition integration or have an adverse effect
on our business.
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We may require significant financing to complete an acquisition or investment, whether through bank loans, raising
of debt or otherwise. We cannot assure that such financing options will be available to us or on terms we find reasonable. In
addition, if we consummate one or more significant acquisitions in which the consideration consists, in whole or in part, of our
ordinary shares or American Depositary Shares (“ADSs”) representing our ordinary shares, our shareholders may suffer
immediate dilution of their interests in us or the value of their interests in us, or may suffer future dilution if we issue
exchangeable or convertible debt to finance a significant acquisition.
Future acquisitions or investments may also require us to incur contingent liabilities, amortization expenses related to
intangible assets and impairment of goodwill, any of which could have a material adverse effect on our operating results and
financial condition. In addition, we may knowingly enter into an acquisition that will have a dilutive impact on our earnings
per share.
If we are unable to develop or maintain our relationships with existing and new distributors and strategic partners, our
business and financial results could be materially adversely affected.
An important element of our market strategy involves developing our indirect sales, implementation and support
channels, which includes our global network of partners, distributors, resellers and other strategic partners. We have
agreements in place with many distributors, dealers and resellers to market and sell our offerings across the business lines and
geographies in which we operate. Our financial results could be materially adversely affected if our agreements with
distribution channel partners or our other strategic partners were terminated, if our relationship with our distribution channel
partners or our other strategic partners were to deteriorate, or if the financial condition of such partners were to weaken.
In addition, we depend on our channel partners globally to comply with applicable regulatory requirements. To the
extent that they fail to do so, that could have a material adverse effect on our business, operating results, and financial
condition.
The execution of our growth strategy also depends on our ability to create new alliances and enter into strategic
partnerships with certain market players, including technology providers. Additionally, as our market opportunities change and
we grow our business and expand in certain markets and territories, our dependency on particular distribution channels and
strategic partners may increase or we may need to create new strategic partnerships and alliances to address changing market
needs. We may not be successful in maintaining, creating or expanding these channels and partnerships, which may negatively
impact the development of our business, our growth, gross margins and results of operations.
We may also develop dependency on certain strategic partners, and to the extent that we have to find alternatives in
the market, our development efforts and business may be negatively impacted. Also, these partnerships and alliances are
typically not exclusive and our partners may also offer products and services of our competitors or may compete with us
directly. If we are not successful at creating and maintaining strategic partnerships under favorable terms, we may lose sales
opportunities, customers and market share, which may have a material adverse effect on our business and results of operations.
Risks Relating to Our Offerings and Operations
Some of our enhanced services are dependent on leased network connectivity lines, and a significant disruption or
change in these services could adversely affect our business.
A significant portion of our cloud offering is provided to customers through a dedicated network of equipment we
own that is connected through leased network connectivity lines based on Internet protocol with capacity dedicated to us. We
also move a portion of our voice long distance service over this dedicated network.
We lease network connectivity lines and space at co-location facilities for our equipment from third-party suppliers.
These co-location facilities represent the backbone of our dedicated network. If any of these suppliers is unable or unwilling to
provide or, if we desire, expand their current levels of service to us, the services we offer to customers may be adversely
affected. We may not be able to obtain substitute services from other providers at reasonable or comparable prices or in a
timely fashion. Any resulting disruptions in the services we offer that are provided over our dedicated network would likely
result in customer dissatisfaction and adversely affect our operations. Furthermore, pricing increases by any of the suppliers
we rely on for our dedicated network could adversely affect our results of operations if we are unable to pass-through such
pricing increases.
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We rely on multiple internet service providers to provide our customers and their clients with connectivity to our cloud
contact center software. While we have multiple redundancies and backups, a failure by these service providers to
provide reliable services could cause us to lose customers and subject us to claims for credits or damages.
We depend on internet service providers to provide uninterrupted and error-free service through their
telecommunications networks. We exercise little control over these third-party providers, which increases our vulnerability to
problems with the services they provide, including failures relating to internet accessibility in general. When problems occur,
it may be difficult to identify the source of the problem. Service disruption or outages, even if not caused by our products or
services, may result in loss of market acceptance of our offerings and any necessary remedial actions may force us to incur
significant costs and expenses, such as payments of credits or damages to affected customers.
We rely on third-party network service providers to originate and terminate public switched telephone network calls,
and significant failures in these networks could harm our operations.
For our business in the unified communications market, we leverage the infrastructure of third-party network service
providers to provide telephone numbers, public switched telephone network call termination and origination services, and
local number portability for our customers rather than deploying our own network. If any of these network service providers
ceases operations or otherwise terminate the services that we depend on, the delay in switching our technology to another
network service provider, if available, could have an adverse effect on our business, financial condition or operating results.
We rely on software from third parties. If we lose the right to use that software, we will have to spend additional
capital to redesign our existing software to adhere to new third-party providers or develop new software.
We integrate and utilize various third-party software products, which may include Large Language Models (LLMs)
or other AI based-offerings as components of and/ or integration with our products and solutions to enhance their
functionality. Our business could be disrupted if functional versions of these software products were either no longer available
to us or no longer made available to us on commercially reasonable terms. Also, in the event that any of these third-party
vendors is unable to meet our requirements in a timely manner or that our relationship with any such vendor is terminated, we
may experience disruption in our business until an alternative source of supply can be obtained. Any disruption, or any other
interruption in a vendor’s ability to provide components to us, could result in delays in making product deliveries or inability
to deliver, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, some of our third-party vendors use proprietary technology and software code that could require
significant redesign of our products in the case of a change in vendor. If we lost the right to use such third-party software, we
would be required to spend additional capital to either redesign our software to function with alternate third-party software or
develop these components ourselves. As a result, we might be forced to limit the features available in our current or future
products and solutions and the commercial release of our products and solutions could be delayed.
Undetected errors or malfunctions in our products or services could impact demand for our products and services, and
we could face potential product liability claims directly impairing our financial results.
Despite extensive testing by us and by our customers, our products and services may include errors, inaccuracies,
defects, failures, bugs or other weaknesses that could result in unanticipated downtime for our customers, product returns, loss
of or delay in market acceptance of our products and services, loss of competitive position, or claims by customers or others.
In addition, ethical issues, inaccurate content, or unintentional bias may derive from the use of our AI incorporated products or
unauthorized use of AI technologies and may also result in potential legal or reputational harm. In addition, our customers
may inadvertently use our services in ways that may cause a disruption in services for other customers attempting to use our
services. Moreover, our customers could incorrectly implement or misuse our products or services, which could result in client
dissatisfaction and harm our reputation and brand. Correcting and repairing such errors, inaccuracies, failures, misleading
content or bugs could entail significant costs and could cause interruptions, delays or cessation of our products and services.
As our customers use our offerings for important aspects of their business, any errors, defects, disruptions in service
or other performance problems could significantly damage our customers’ businesses and ultimately harm our reputation. As a
result, customers could elect not to renew our services or delay or withhold payment to us. We could also lose future sales or
customers may make warranty or other liability claims against us, which may harm our business and adversely affect our
results. In particular, some of our customers, including financial institutions, may suffer significant damages as a result of a
failure of our solutions to perform their functions. The occurrence of any of these events could result in our inability to attract
or retain customers, and adversely affect our revenues, financial condition and results of operations.
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Although we attempt to limit any potential exposure through quality assurance programs, validation of content,
insurance and contractual terms, we cannot assure that we will be able to eliminate or successfully limit our liability for any
failure of, or inaccuracies in, our solutions, including with respect to responsible use of products and services incorporating AI
capabilities. Any product liability insurance we carry may not be sufficient to cover our losses resulting from any such product
liability claims. The successful assertion of one or more large product liability claims against us could have a material adverse
effect on our results of operations and financial condition.
We provide certain service level commitments to our customers, which could cause us to provide credits for future
services if the stated service levels are not met for a given period and could adversely impact our revenue.
Our customer agreements for cloud services provide service level commitments. If we are unable to meet the stated
service level commitments or suffer extended periods of unavailability for our service, including for reasons related to PaaS
providers or other third parties, we may be contractually obligated to provide these customers with credits for future services,
and in some cases refunds, or be liable for penalties. Our revenue could be adversely impacted if we suffer unscheduled
downtime that exceeds the allowed downtimes under our agreements with our customers. Any such extended service outages
could harm our reputation, revenue and operating results.
Risks Relating to Information and Product Security and Intellectual Property
If our security and cybersecurity measures or those of our third-party hosting facility providers, cloud computing
platform providers, or third-party service partners are compromised, and unauthorized access is obtained to
customers’ data, our data or our IT systems, our reputation may be harmed, and we may incur significant legal and
financial exposure and liabilities.
Our products and services involve the storage and transmission of customers’ and their end users’ proprietary and
other sensitive or confidential information, including financial information and other personally identifiable information. In
addition, some of our customers use our products and services to compile and analyze highly sensitive or confidential
information, and we may encounter or store such information or data, including when we perform service or maintenance
functions for our customers. Security incidents could expose us to a risk of loss or unauthorized use of this information,
investigations and enforcement actions, litigation and possible liability. Additionally, we may have contractual and other legal
obligations to notify customers or other relevant parties of security incidents. While we have security measures in place, we
are regularly subject to probes by hackers and from time to time we may be subject to security incidents, including as a result
of intentional misconduct, or fraud by computer hackers, employee error, malfeasance or otherwise which may result in
someone obtaining unauthorized access to, or use of, our systems, products and services, our customers’ data or our data,
including our intellectual property and other confidential business information, in order to derive a financial benefit or for
other purposes. In addition, while we have internal policies and procedures in connection with the performance of services
involving our customers’ confidential information, the perception or fact that any of our employees has improperly handled
sensitive information of a customer or a customer’s end user could negatively affect our business.
Cyber security attacks are becoming increasingly sophisticated, including by way of frequent changes in the
techniques used to obtain unauthorized access, and, in many cases, may not be identified until after a security incident occurs.
If we fail to recognize and deal with such security attacks and threats, or if we fail to update our systems, products and services
and prevent such threatened attacks in real time to protect our customers’ or other parties’ sensitive information, whether
retained in our systems or by our customers using our products and services, our business and reputation will be harmed. The
costs of recognizing and addressing security attacks and threats and updating our systems, products and services, may be
significant.
Our offerings, including our cloud services, may be vulnerable to cyber-attacks, even if they do not contain defects.
Such vulnerability may further increase as a result of the use of products and services incorporating AI capabilities. If there is
a successful cyber-attack on one of our products or services, even absent a defect or error, it may also result in questions
regarding the integrity of our offerings generally, which could cause adverse publicity and impair their market acceptance and
could have a material adverse effect on our results or financial condition.
Third parties may attempt to attack our security measures or inappropriately take advantage of our solutions,
including our cloud services, through computer viruses, electronic break-ins and other disruptions. Additionally, third parties
may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames,
passwords or other information to gain access to our customers’ data, our data or our systems. Furthermore, our customers
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may authorize third-party technology providers to access their customer data, and some of our customers may not have
adequate security measures in place to protect their data that is stored on our services. Because we do not control our
customers or third-party technology providers, or the processing of such data by third-party technology providers, we cannot
ensure the integrity or security of such transmissions or processing. Malicious third parties may also conduct attacks designed
to temporarily deny customers access to our services. Any security incident could result in a loss of confidence in the security
of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability.
While we maintain insurance coverage to protect us against a broad range of risks, including in relation to security
incidents and cyber security attacks, we could still be subject to risks of losses that might be beyond the limits, or outside the
scope, of coverage of our insurance and that may limit or prevent indemnification under our insurance policies. This potential
insufficiency of insurance coverage could result in an adverse effect on our business, financial position, profit, and cash flows.
Interruptions or delays in our services through security incidents, failures, or disruptions could impede on our ability
to deliver services, harm our reputation and our relationships with customers and partners, adversely affect our results
of operation and subject us to liability.
Any interruptions or delays to our services, whether as a result of error or security incidents, and whether accidental
or willful, could harm our reputation and our relationships with customers and partners, subject us to liability, and adversely
affect our business and results of operations. In the event of damage or interruption, our insurance policies may not adequately
compensate us for any losses that we may incur.
We currently serve our customers using third-party data center hosting facilities and cloud computing platform
providers. While we have security measures in place that are aligned with applicable industry standards, they may be breached
due to third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise,
and result in someone obtaining unauthorized access to our or our third-party vendors’ systems and infrastructure. Moreover,
such facilities and platforms may be vulnerable to interruptions resulting from power or network connectivity issues, criminal
acts and other misconduct. Occurrence of such damage or interruptions could result in disruptions in our services. Despite
precautions such vendors are required to take, the occurrence of such damage or interruption or other unanticipated problems
at these facilities, could result in lengthy interruptions in our services, subject us to liability and require the issuance of credits
or payment of penalties pursuant to our customer agreements, and/or cause customers to terminate their subscriptions and
adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenues. Also, we
may not be entitled to indemnification or to recoup any such loss or damage from such service providers, which may result in
us bearing the burden of any such liability or losses.
In addition, we are also dependent on our computer databases, billing systems and accounting computer programs,
network and computer hardware that houses these systems to effectively operate our business and market our services. Our
customers may become dissatisfied by any failures of such systems that interrupt our ability to deliver our services. Therefore,
significant disruption or failure in the operation of these systems could adversely affect our business and results of operations.
Furthermore, we provide some of our services through computer hardware that we own and that is currently located
in third-party web hosting co-location facilities and data centers maintained and operated in various locations globally. Our
hosting providers do not guarantee that our customers’ access to our solutions will be uninterrupted, error-free or secure. Our
operations depend on our providers’ ability to protect their and our systems in their facilities against such damage or
interruption. Our back-up computer hardware and systems may not have sufficient capacity to recover all data and services in
the event of an outage occurring simultaneously at all facilities. In the event that our hosting arrangements are terminated, or
there is a lapse of service or accidental or willful damage to such facilities, we could experience lengthy interruptions in our
service as well as delays and/or additional expense in arranging new facilities and services. Any or all of these events could
cause interruptions in our services.
We may face risks relating to inadequate intellectual property protection and liability resulting from infringement by
our products or solutions of third-party proprietary rights.
Our success is dependent, to a significant extent, upon our proprietary technology. We currently hold 529 U.S.
patents and 40 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have
206 patent applications pending in the United States and other countries. We rely on a combination of patent, trade secret,
copyright and trademark law, together with non-disclosure and non-competition agreements, as well as third-party licenses to
establish and protect the technology used in our offerings. However, we cannot assure that such measures will be adequate to
protect our proprietary technology, that competitors will not develop products with features based upon, or otherwise similar
to our products, that intellectual property ownership and third-party licenses, including copyrights of AI output, will be
9
available to us or that we will prevail in any proceeding instituted by us in order to enjoin competitors from selling similar
products. In most of the areas in which we operate, third parties also have patents which could be found applicable to our
technology and products. Such third parties may include competitors, as well as large companies, which heavily invest in their
patent portfolios, regardless of their actual field of business. Although we believe that our products and solutions do not
infringe upon the proprietary rights of third parties, we cannot assure that one or more third parties will not make a claim or
that we will be successful in defending such claim.
We generally distribute our software products and services under license terms that restrict the use of our products
and services by terms and conditions prohibiting unauthorized reproduction or transfer of the software products or proprietary
technology or data. However, effective copyrights and other intellectual property rights protection may be inadequate or
unavailable to us in every country in which our software products are available, and the laws of some foreign countries may
not be as protective of intellectual property rights as those in the United States. Consequently, we may be unable to prevent
our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or
require costly efforts to protect our technology. Policing the unauthorized use of our products, trademarks and other
proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or
defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary
rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could
harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or
misappropriating our intellectual property.
From time to time third parties allege or claim patent infringements. In defending ourselves against any such claims
or actions we may be subject to substantial costs and diversion of management resources.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with
respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which
may not be available on reasonable terms. Any of these may have a material adverse impact on our business or financial
condition.
We face risks relating to our use of certain “open source” software tools.
Certain of our software products contain open source code and we may use more open source code in the future. In
addition, certain third-party software that we embed in our products contains open source code. Open source code is code that
is covered by a license agreement that permits the user to liberally use, copy, modify and distribute the software without cost,
provided that users and modifiers abide by certain licensing requirements. The original developers of the open source code
provide no warranties on such code.
As a result of our use of open source software, we could be subject to suits by parties claiming ownership of what we
believe to be open source code and we may incur expenses in defending claims that we did not abide by the open source code
license. In addition, third-party licensors do not provide intellectual property protection with respect to the open source
components of their products, and therefore we may not be indemnified by such third-party licensors in the event that we or
our customers are held liable in respect of the open source software contained in such third-party software. If we are not
successful in defending against any such claims that may arise, we may be subject to injunctions and/or monetary damages or
be required to remove the open source code from our products. Such events could disrupt our operations and the sales of our
offerings, which would negatively impact our revenues and cash flow.
Moreover, under certain conditions, the use of open source code to create derivative code may obligate us to make the
resulting derivative code available to others at no cost. The circumstances under which our use of open source code would
compel us to offer derivative code at no cost are subject to varying interpretations. If we are required to publicly disclose the
source code for such derivative products or to license our derivative products that use an open source license, our previously
proprietary software products may be available to others without charge. If this happens, our customers and our competitors
may have access to our products without cost to them, which could harm our business.
We monitor our use of such open source code to avoid subjecting our products to conditions we do not intend. The
use of such open source code, however, may ultimately subject some of our products to unintended conditions so that we are
required to take remedial action that may divert resources away from our development efforts.
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Risks Relating to Regulatory Environment
Privacy and data protection concerns, legislation and other regulations may limit the use and adoption of our offerings,
adversely affect our business, increase compliance costs and expose us to increased liability.
Governments and other international organizations in various jurisdictions around the world (such as the legislative
and regulatory institutions of the European Union) have enacted and are continuing to adopt new laws, regulations and
guidelines addressing data privacy and protection, including the processing (collection, storage, use, etc.) of personal
information, cyber security, breach notification, risk management and reporting. These laws, regulations and guidelines may
be inconsistent across jurisdictions and are subject to evolving and differing (sometimes conflicting) interpretations. In some
cases, different sets of data privacy laws and regulations, such as the European Union’s General Data Protection Directive
(“GDPR”), local laws and regulations and certain state laws in the U.S. on privacy and data protection, such as the California
Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act ("CPRA"), the Colorado Privacy Act, the
Connecticut Data Privacy Act, the Utah Consumer Privacy Act, and the Virginia Consumer Data Protection Act, as well as the
Israeli Privacy Law and the regulations promulgated thereunder (the “Israeli Privacy Law”), also govern the processing of
personal information. Additionally, new state privacy laws may also apply. While we invest in ensuring our compliance with
applicable data privacy and protection laws, rules and regulations, these and other regulatory requirements may slow the pace
at which we close sales or procurement transactions, restrict our ability to store, transfer and process data or, in some cases,
impact our ability to offer some of our solutions and services for use in relation to data subjects that reside in certain locations
or our customers’ ability to deploy our solutions globally. Compliance with these regulatory requirements may be onerous,
time consuming and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction or where
the jurisdictional reach of certain requirements is not clearly defined or seeks to reach across national borders.
Should we, or any party on our behalf, fail to comply with privacy legislation or procedures or other required or
agreed security measures, we may incur substantive civil liability to government agencies, customers, shareholders and
individuals whose privacy may have been compromised. As privacy legislation is increasing globally, and more government
agencies are granted with authority to fine organizations for non-compliance with applicable data privacy laws and
regulations, and require companies to take certain steps to remediate such non-compliance, we may find ourselves forced to
pay damages penalties, fines, remediation costs, reimbursement of customer costs and other significant expenses due to our (or
our subcontractors' or vendors’) non-compliance with data privacy laws and regulations. Moreover, even the perception that
the privacy of personal information that we process or control is not adequately protected or does not meet regulatory
requirements could damage our reputation, inhibit sales of our products or services and could limit adoption of our offerings.
In addition to legal and regulatory requirements, we are contractually obligated to certain customers, and may in the
future be expected by prospective customers, to meet certain information security certifications or other standards established
by third parties, such as the ISO 27001:2013 on information security management certification. If we are unable to obtain or
maintain these certifications or meet these standards, it could harm our business and subject us to liability.
Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific
laws, regulations, interpretive positions or standards could harm our business.
Our customers and potential customers conduct business in a variety of industries, including financial, insurance,
telecommunications and healthcare services. We also serve customers in the public safety and other government entities.
Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the
use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-
specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce
overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support
certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have
imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises
to obtain regulatory approval prior to outsourcing certain functions. Other example may include customers’ requirements with
respect to sovereign cloud platform. If we are unable to comply with these guidelines or controls, or if our customers are
unable to obtain regulatory approval to use our services where required, our business may be harmed. If in the future we are
unable to achieve or maintain industry specific certifications or other requirements or standards relevant to our customers, it
may harm our business and adversely affect our results.
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Our revenues would be adversely affected if we fail to adapt our offerings to changes in rules and regulations
applicable to the business of certain customers, such as rules and regulations regarding securities trading, broker sales
compliance and anti-money laundering, which could have an impact on their need for our products and services.
In certain industries in which we operate, there may be regulations or guidelines for use of SaaS, hosting and cloud-
based services that mandate specific controls or require enterprises to obtain certain approvals prior to outsourcing certain
functions. In addition, we may be limited in our ability to transfer or outsource business to certain jurisdictions and may be
limited in our ability to undertake development activity in certain jurisdictions, which may impede on our efficiency and
adversely affect our business results of operations.
Changes in the legal and regulatory environment could materially and adversely affect our business, results of
operations and financial condition.
Our business, results of operations and financial condition could be materially and adversely affected if laws,
regulations or standards relating to our business, products and services, our operation or our employees (including labor laws
and regulations) are changed or new ones are implemented. Such implemented laws and regulations include requirements in
the United States, Europe, U.K. and other territories in relation to data privacy and protection, AI, anti-bribery and anti-
corruption, foreign investment, import and export, sanctions, labor, tax and environmental and social issues. For information
on the market risks relating to data privacy and protection, please see Item 3, “Risks Relating to Regulatory Environment" in
this annual report.
Certain states and countries have already taken steps towards, proposed, or implemented, laws and regulations
relating to AI, including in the United States and the upcoming regulations of the European Parliament. As the regulatory
landscape continues to evolve, our investment in products and services incorporating AI may result in enhanced governmental
or regulatory scrutiny. Compliance with the regulatory requirements, as well as with related requirements by our customers,
may be onerous, time consuming and expensive and may require adjustments in our products and services. Any failure to
comply with such requirements may result in reputation or financial harm and may affect our business, financial condition or
results of operations.
While we attempt to prepare in advance for such new or changed requirements and standards, we cannot assure that
we will be successful in our efforts, that such changes will not negatively affect the demand for our products and services, or
that our competitors will not be more successful or prepared than us.
Alternatively, any substantial changes resulting in a reduction in the implementation or elimination of rules and
regulations that apply to a certain sector of our business, such as deregulation in the area of compliance, could result in a
decrease in demand by customers, which could materially and adversely affect our business and results of operations.
Risks Relating to Our Financial Condition
Our quarterly results may be volatile at times, which could cause us to miss our forecasts.
We generally provide forecasts as to expected future revenues and profitability in the coming fiscal quarters and fiscal
year. Our revenue and operating results can vary and have varied in the past, sometimes substantially, from one quarter to
another. These forecasts are based on management estimation and expectations, our then-existing pipeline and backlog, and an
analysis of assumptions and assessments that may not materialize or end up being inaccurate. We may not meet our
expectations or those of industry analysts in a particular future quarter. Our quarterly operating results may be subject to
significant fluctuations due to the following factors: the timing and size of customer orders, delays in issuance or shifting of
customer orders (as often happens when customers postpone their buying decisions to the end of the budgetary year),
variations in distribution channels, mix of products and services, new product introductions and competitive pressures.
Our cloud offering is generally purchased by customers on a subscription basis and revenues from these offerings are
generally recognized ratably over the term of the subscriptions. In cases where our cloud offering is purchased on a usage-
based model, there may be seasonality in the usage of our offering, including macroeconomic factors that may impact
customer usage of our solutions, which would impact our ability to predict and forecast revenues and result in fluctuations in
our quarterly results. Therefore, the continued growth of our cloud business could adversely affect our results of operations
and our ability to forecast our quarterly results.
Our revenue and operating profit growth depends on the continued growth of demand for our products and services,
and our business is affected by general economic, business, and geopolitical conditions worldwide, including inflation and
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rising interest rates. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or
global economies, may result in decreased revenue or growth.
In addition, we derive a substantial portion of our sales through indirect channels, making it more difficult for us to
predict revenues because we depend partially on estimates of future sales provided by third parties. Changes in our
arrangements with our network of channel partners or in the products they offer, such as the introduction of new support
programs for our customers, which combines support from our channel partners with back-end support from us, could affect
the timing and volume of orders. Furthermore, our expense levels are based, in part, on our expectations as to future revenues.
If our revenue levels are below expectations, our operating results could be adversely affected.
Fluctuations in our results of operations may result from, among other things, our ability to retain and increase sales
to existing customers, attract new customers and satisfy our customers’ requirements, the timing and success of new product
and solution introductions and enhancements or product initiation by our competitors, the purchasing and budgeting cycles of
our customers and general economic, industry and market conditions.
While seasonality and other factors mentioned above are common in the software and technology industry, this
pattern should not be considered a reliable indicator of our future revenue or financial performance. Many other factors,
including general economic conditions, may also have an impact on our business and financial results.
In addition, changes in non-core business factors including taxes and foreign exchange may also cause variation in
quarterly results.
We face foreign exchange currency risks.
Exchange rate fluctuations affect our operations. We experience risks from fluctuations in the value of the NIS, EUR,
GBP, INR, PHP and other currencies compared to the U.S. dollar, the functional currency in our financial statements. A
significant portion of the expenses associated with our Israeli ,Indian and Philippines operations, including personnel and
facilities related expenses, are incurred in NIS, INR and PHP, respectively, whereas most of our business and revenues are
generated in dollars, and to a certain extent, in GBP, EUR and other currencies. If the value of the dollar decreases against
these foreign currencies, our earnings may be negatively affected. As a result, we may experience an increase in the costs of
our operations, as expressed in dollars, which could adversely affect our earnings. In addition, certain balance sheet items are
denominated in currencies other than U.S. dollar. Fluctuations in the value of the U.S. dollar exchange rate compared to these
currencies, can result in unfavorable balance sheet revaluation at the reporting period.
We monitor foreign currency exposure and may use various instruments to preserve the value of sales transactions,
expenses and commitments, however this cannot assure our full protection against risks of currency fluctuations that could
affect our financial results. As part of our efforts to mitigate these risks, we use foreign currency hedging mechanisms, which
may be ineffective in protecting us against adverse currency fluctuations and can also limit opportunities to profit from
exchange rate fluctuations that would otherwise be favorable. For information on the market risks relating to foreign exchange,
please see Item 11, “Quantitative and Qualitative Disclosures about Market Risk” in this annual report.
We currently benefit from local government programs as well as international programs and local tax benefits that
may be discontinued or reduced, or may result in liabilities if underlying conditions are not met.
We derive and expect to continue to derive benefits from various programs, including Israeli tax benefits relating to
our “Preferred Technology Enterprise” programs, and certain other grants and tax benefits, including grants from the Israel
Innovation Authority (formerly known as the Office of the Chief Scientist of the Ministry of Economy) of the State of Israel
(the “IIA”), for research and development.
To be eligible for tax benefits as a Preferred Technology Enterprise, we must continue to meet certain conditions.
While we believe that we have met and continue to meet the conditions that entitle us to previously obtained Israeli tax
benefits, there can be no assurance that we will in the future or that the Israeli Tax Authorities will agree.
To be eligible for IIA-related grants and benefits, we must continue to meet certain conditions, including conducting
the research, development, manufacturing of products developed with such IIA grants in Israel, and providing the IIA with an
undertaking that the know-how to be funded, and any derivatives thereof, is wholly-owned by us, upon its creation. In
addition, we are prohibited from transferring to third parties the know-how developed with these grants without the prior
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approval of a governmental committee and, possibly, paying a fee. See Item 4, “Information on the Company—Research and
Development” in this annual report, for additional information about IIA programs.
If the local and international grants, programs and benefits available to us or the laws, rules and regulations under
which they were granted are eliminated or their scope is further reduced, or if we fail to meet the conditions of existing grants,
programs or benefits and are required to refund grants or tax benefits already received (together with interest and certain
inflation adjustments) or fail to meet the criteria for future Israeli Preferred Technology Enterprises, our business, financial
condition and results of operations could be adversely affected.
Additional tax liabilities resulting from our global operations could materially adversely affect our results of operations
and financial condition.
As a global corporation, we are subject to income, non-income and transactional tax regimes in the United States,
Israel, India and various other jurisdictions, which are unsettled and may be subject to significant change. Our effective tax
rate could be materially affected by changes in tax rulings, tax laws, regulations, administrative practices, principles,
applicability of special tax regimes, or changes in interpretations of existing tax laws, including changes to the global tax
framework, in the jurisdictions in which we do business. Such changes could come about as a result of economic, political, and
other conditions. Additionally, our effective tax rate could be affected by changes in the mix of earnings in countries with
differing statutory tax rates, changes in the valuations of our deferred tax assets and liabilities, tax implications of acquisitions,
expansion into new territories, intercompany transactions, changes in foreign currency exchange rates, changes in our stock
price and uncertain tax positions.Although we believe that our provision for income taxes and our tax estimates are reasonable,
tax authorities may disagree with certain positions we have taken. From time to time, we are subject to income and other tax
audits in various jurisdictions, the timing of which is unpredictable. We regularly assess the likelihood of an adverse outcome
resulting from these examinations to determine the adequacy of our tax accruals. While we believe we comply with applicable
tax laws and have adequate balance sheet reserves related to tax positions, there can be no assurance that a governing tax
authority will not have a different interpretation of the law and assess us with additional taxes, which we may dispute and
litigate. If we are assessed additional taxes or if additional taxes are imposed on us, such additional taxes could have a material
adverse effect on our results of operations and financial condition.
The Organization for Economic Co-operation and Development, an international association of 38 countries
including the United States, has proposed changes to numerous long-standing tax principles, namely, its Pillar Two
framework, which imposes a global minimum corporate tax rate of 15%. In December 2022, the EU member states adopted a
directive that complements the Pillar Two framework. Certain countries in which we operate have enacted legislation to adopt
the Pillar Two framework (e.g., United Kingdom), and several other countries are also considering changes to their tax laws to
implement this framework. The first component of the Pillar Two framework is expected to be effective for us in calendar year
2024 with a second component expected to be effective in fiscal year 2025. When and how this framework is adopted or
enacted by the various countries in which we do business could increase tax complexity and uncertainty and may adversely
affect our provision for income taxes in the United States and other non-U.S. jurisdictions.
Further, there are proposals to introduce further amendments to the U.S. federal tax regime, applicable to
corporations. As of the date of filing, it remains unclear what legislation, if any, would be enacted. If the draft legislation
currently being discussed is enacted, it could create the potential for added volatility in our provision for income taxes and
might have an adverse impact on our future income tax provision and tax rate.
We might recognize a loss with respect to our financial investments.
We invest most of our cash through a variety of financial investments. If the obligor of any of our financial
investments defaults or undergoes reorganization in bankruptcy, we may lose a portion of such investment and our assets and
income may decrease. In addition, a downturn in the credit markets or the downgrading of the credit rating of our investments
could result in a reduction in the market value of our holdings and reduce the liquidity of our investments, which could require
us to recognize a loss at the time of credit impairment and would adversely affect our assets and income.
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Our debt could adversely affect our financial condition and impact our business needs and plans.
We incurred indebtedness pursuant to the issuance of the 2020 Notes (as defined in Item 10, "Additional Information
- Material Contracts - Notes and Indenture”). The debt incurred could have adverse consequences to our financial condition
and business.
Our ability to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability
to continue to generate cash in the future. This is subject to general economic, financial, competitive, business, regulatory and
other factors that may be beyond our control. We cannot assure that our business will continue to generate sufficient cash flow
from operations or that future financing will be available to us in an amount sufficient to enable us to service our debt, or to
fund our other liquidity needs or execute on our strategic plans.
Any required prepayment or exchange of our 2020 Notes, including as a result of an optional redemption, event of
default or fundamental change triggering such right, would lower our current cash on hand such that we would not have those
funds available for use in our business, which could adversely affect our operating results.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a
material effect on our reported financial results.
For our 2020 Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture”), on
December 31, 2021, we irrevocably elected that all conversions occurring on or after December 31, 2021 will be settled
pursuant to Combination Settlement (as defined in the 2020 Indenture) with a Specified Dollar Amount (as defined in the 2020
Indenture) no less than $1,000 per $1,000 principal amount of 2020 Notes. Generally, under this settlement method, the
conversion value corresponding to the principal amount will be converted in cash, and the conversion value over the principal
amount will be settled, at the Company’s election, in cash or shares or a combination thereof. Given the adoption of ASU No.
2020-06 on January 1, 2022, there will be an impact to earnings per share as a result of the adoption based on the if-converted
method if the Company's average share price will exceed the conversion price of the 2020 Notes. In addition, if such cash is
not available, we may be required to sell other assets or enter into alternate financing arrangements at terms that may or may
not be desirable.
If we fail to maintain effective internal controls over financial reporting and operations, it could have a material
adverse effect on our business, operating results, and the price of our ordinary shares and ADSs.
Effective internal controls are necessary for us to provide reliable financial reports and prepare consolidated financial
statements for external reporting purposes in accordance with U.S. GAAP and U.S. securities laws, as well as to effectively
prevent material fraud. Because of inherent limitations, even effective internal control over financial reporting may not prevent
or detect every misstatement. In addition, if we fail to maintain the adequacy of our internal controls, we may not be able to
ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting and
operations. Furthermore, as we grow our business or acquire businesses, our internal controls may become more complex and
we may require significantly more resources to ensure they remain effective. In addition, we may identify material weaknesses
or significant deficiencies in our internal control over financial reporting. Failure to maintain effective internal control over
financial reporting and operations could result in investigation or sanctions by regulatory authorities and could have a material
adverse effect on our business and operating results, investor confidence in our reported financial information, and the market
price of our ordinary shares and ADSs.
Current and future accounting pronouncements and other financial reporting standards and principles might have a
significant impact on our financial position and negatively impact our financial results.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These principles are subject to
interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in
these principles can have a significant effect on our reported results and may even retroactively affect previously reported
transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes
to our systems, processes and controls. Changes resulting from these new standards may result in materially different financial
results and may require that we change how we process, analyze and report financial information and that we change financial
reporting controls.
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We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements
and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their
interpretation, we might be required to change our accounting policies.
This could lead to risks associated with our ability to react in a timely manner to new accounting pronouncements and
financial reporting standards and unpredictable changes in interpretation of standards. Any one or more of these events could
have an adverse effect on our business, financial position, and profit.
Risks Relating to our Securities
The market price of each of our ADSs, ordinary shares and the Notes is volatile and may decline.
Numerous factors, some of which are beyond our control, may cause the market price of our ADSs, ordinary shares
and the Notes to fluctuate significantly. These factors include, among other things:
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Quarterly variations in our operating results;
Changes in expectations as to our future financial performance, including financial estimates by securities;
Perceptions of our company held by analysts and investors;
Additions or departures of key personnel;
Announcements related to dividends and share repurchase plans;
Development of or disputes concerning our intellectual property rights;
Announcements of technological innovations;
Material orders of our products or services by customers and business partners;
New products and services by us or our competitors;
Acquisitions or investments by us or by our competitors and partners;
Security breaches or other incidents impacting our customers’ or their end users’ data and security breaches
of companies that provide solutions or services similar to ours;
The exchangeability of the 2020 Notes for ADSs;
Hedging or arbitrage trading activity involving ADSs by holders of the 2020 Notes;
Currency exchange rate fluctuations;
Earnings releases by us, our partners or our competitors;
General financial, economic and market conditions;
Political changes, unrest in regions (including the ongoing war in Israel), natural catastrophes;
Market conditions in the industry and the general state of the securities markets, with particular emphasis on
the technology and Israeli sectors of the securities markets; and
General stock market volatility.
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Our ADSs and ordinary shares are traded on different markets and this may result in price variations.
Our ADSs have been listed on The NASDAQ Stock Market since 1996 and our ordinary shares have been traded on
the Tel Aviv Stock Exchange, or the “TASE,” since 1991. Trading in our securities on these markets takes place in different
currencies (our ADSs are traded in U.S. dollars and our ordinary shares are traded in New Israeli Shekels), and at different
times (resulting from different time zones, different trading days and different public holidays in the United States and Israel).
As a result, the trading prices of our securities on these two markets may differ due to these factors. In addition, any decrease
in the price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other
market.
Substantial future sales or the perception of sales of our ADSs or ordinary shares, or the exchange, or conversion of a
substantial amount of 2020 Notes, or perception thereof, could cause the price of our ADSs or ordinary shares to
decline.
Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that these sales
could occur, could adversely affect the price of our ADSs and ordinary shares and could impair our ability to raise capital
through the sale of additional shares. Such sales may also make it more difficult for us to sell equity or equity-related securities
in the future at a time and at a desirable price.
Additionally, the issuance of ADSs upon future exchanges or conversions of the 2020 Notes for ADSs, or the
perception that these exchanges or conversions may occur, could dilute shareholders and reduce the market price of the
ordinary shares or ADSs. This could also impair NICE’s abilities to raise additional capital through the sale of its securities.
The market price of the ordinary shares and the ADSs, which may fluctuate significantly, will directly affect the
market price for the 2020 Notes.
We expect that the market price of the ordinary shares and the ADSs will affect the market price of the 2020 Notes.
This may result in greater volatility in the market price of the 2020 Notes than would be expected for non-exchangeable notes.
The market price of the ordinary shares and the ADSs will likely fluctuate in response to a number of factors, many of which
are beyond our control. Holders who receive ADSs upon exchange of the 2020 Notes will therefore be subject to the risk of
volatility and depressed prices of ADSs. In addition, we expect that the market price of the 2020 Notes will be influenced by
yield and interest rates in the capital markets, our creditworthiness and the occurrence of certain events affecting us that do not
require an adjustment to the exchange rate. Fluctuations in yield rates in particular may give rise to arbitrage opportunities
based upon changes in the relative values of the Notes and ADSs. Any such arbitrage could, in turn, affect the market prices of
ADSs and the Notes.
The fundamental change and make-whole fundamental change provisions of the 2020 Notes may delay or prevent an
otherwise beneficial attempt to acquire our company.
The fundamental change prepayment rights of the noteholders under the 2020 Notes, which would allow noteholders
to require that we prepay all or a portion of their 2020 Notes upon the occurrence of a fundamental change, and the provisions
under the 2020 Notes requiring an increase to the exchange rate for exchanges in connection with a make-whole fundamental
change, in certain circumstances may delay or prevent an acquisition of NICE that would otherwise be beneficial to our
shareholders.
It may be difficult to enforce a U.S. judgment against us and our officers and directors in Israel or the United States, or
to serve process on our officers and directors.
Service of process upon us, our Israeli subsidiaries, directors and officers, and Israeli advisors, if any, named in this
annual report, may be difficult to obtain within the United States. Additionally, it may be difficult to enforce civil liabilities
under U.S. federal securities law in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a
violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim. In addition, even if an
Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is
found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly
process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing
these matters.
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Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company,
which could prevent a change of control, even when the terms of such a transaction are favorable to us and our
shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds,
establishes a high ownership threshold to squeeze out minority shareholders in a full tender offer, requires special approvals
for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to
these types of transactions.
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders
whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. These and
other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such
an acquisition or merger would be beneficial to us or to our shareholders.
See Item 10, “Additional Information—Mergers and Acquisitions” in this annual report, for additional discussion
regarding anti-takeover effects of Israeli law.
General Risk Factors
Conditions and changes in the local and global economic environments may adversely affect our business and financial
results.
Adverse economic conditions in markets or regions in which we operate can harm our business. Our results of
operations can be affected by adverse changes in local and global economic conditions, slowdowns, inflation, recessions and
economic instability. To the extent that our business suffers as a result of such unfavorable economic and market conditions,
our operating results may be materially adversely affected.
In particular, enterprises may reduce spending in connection with their contact centers, financial institutions may
reduce spending in relation to trading floors, compliance and operational risk management (as IT-related capital expenditures
are typically lower priority in times of economic slowdowns), and generally our customers may prioritize other expenditures
over our solution, including a possible slowdown resulting from a shift or reduction in expenditures driven by AI and
Generative AI solutions. If any of the above occurs, and our customers or partners do not adopt our solutions, significantly
reduce their spending, or significantly delay or fail to make payments to us, our business, results of operations, and financial
condition could be materially adversely affected.
In addition, our operations may be subject to the effects of the rising rate of inflation. If our costs were to become
subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our
inability or failure to do so could harm our business, financial condition and results of operations.
Some of our customers, and in particular customers in the banking sector, may suffer from liquidity concerns and
possibly go out of business due to disruption to the global economy, which may adversely impact our business and results of
operations.
Disruption to the global economy could also result in a number of follow-on effects in addition to a slow-down in our
business and increased costs, including a possible (i) negative impact on our liquidity, financial condition and share price,
which may impact our ability to raise capital in the market, obtain financing and secure other sources of funding in the future
on terms favorable to us, and (ii) decrease in the value of our assets that are deemed to be other than temporary, which may
result in impairment losses.
We face risks relating to our global operations.
We sell our offerings throughout the world and intend to continue to increase our penetration of international markets.
Our future results could be materially adversely affected by a variety of factors relating to international transactions, including:
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governmental controls and regulations, including import or export license requirements, trade protection
measures, sanctions, telecommunication authorization and licenses and changes in tariffs;
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compliance with applicable international and local laws, regulations and practices, including those related to
trade compliance, anticorruption, data privacy and protection, tax, labor, employee benefits, customs,
currency restrictions and other requirements;
fluctuations in currency exchange rates;
longer payment cycles in certain countries in our geographic areas of operations;
potential adverse tax consequences, variations in effective income tax rates and tax policies among countries
where we conduct business, including the complexities of foreign value added tax systems;
political instability, armed conflicts, terrorism and security concerns, including instability and disruption
resulting from the war in Israel and related conflicts in the Middle East and restrictions related to the conflict
between Russia and Ukraine;
reduced or limited protection for intellectual property rights in some countries; and
general difficulties in managing our global operations.
Geopolitical risks, including those arising from political tension, terrorist activity or acts of civil or international
hostility, are increasing. Conflicts, including the war in Israel and related conflicts in the Middle East and the conflict between
Russia and Ukraine, could result in geopolitical instability and adversely affect the global economy or specific markets. The
intensity and duration of these conflicts are difficult to predict.
Changes in the political or economic environments, credit rating and the availability and cost of capital in the
countries in which we operate, especially in Israel and the U.S., including the impact of such changes on foreign currency rates
and interest rates, could have a material adverse effect on our financial condition, results of operations and cash flow.
As a result of our global presence, especially in emerging markets, we face increasing challenges that could adversely
impact our results of operations, reputation and business.
In light of our global presence, especially in emerging markets such as those in Asia, Eastern Europe and Latin
America, we face a number of challenges in certain jurisdictions that provide reduced legal protection, including poor
protection of intellectual property, inadequate protection against crime (including bribery, corruption and fraud) and breaches
of local laws or regulations, unstable governments and economies, governmental actions that may inhibit the flow of goods
and currency, challenges relating to competition from companies that already have a local presence in such markets and
difficulties in recruiting sufficient personnel with appropriate skills and experience.
Local business practices in jurisdictions in which we operate, and particularly in emerging markets, may be
inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery laws and regulations
(including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act) to which we are subject. Although we implement
policies and procedures designed to ensure compliance with these laws, we cannot guarantee that none of our employees,
contractors, partners and agents, as well as those companies to which we outsource certain of our business operations, will not
violate our policies or applicable law. Any such violation could have an adverse effect on our business and reputation and may
expose us to criminal or civil enforcement actions, including penalties and fines.
Furthermore, the increased presence of our global operations in emerging markets, including outsourcing of certain
operations to service providers in such markets (such as India and the Philippines), could impact the control over our
operations, as well as create dependency on such external service providers. This method of operation may impact our
business and adversely affect our results of operation.
Our business, facilities or operations could be adversely affected by events outside of our control, such as natural
disasters or health epidemics.
Natural disasters or other unexpected events that adversely affect the business climate in any of our markets could
have a material adverse effect on our business, financial condition and results of operations. Our business operations may be
subject to a disruption or failure of our systems or operations because of a natural disaster, such as a major earthquake,
weather event, fire, power shortages, telecommunications failures, pandemics and epidemics, cyberattack, terrorist attack or
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other catastrophic event or event beyond our control, which could cause delays in completing sales, providing services, or
performing other critical functions. Although we maintain disaster recovery and business continuity plans, such events could
make it difficult or impossible for us to deliver our products and services to our customers, and could decrease the demand for
our offerings.
The occurrence of regional epidemics or a global pandemic, such as COVID-19, may adversely affect our operations,
financial condition, and results of operations. The extent to which global pandemics impact our business going forward will
depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions in response
to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability.
We depend on our ability to recruit and retain qualified personnel.
In order to compete, we must recruit and retain executives and other key employees. Hiring and retaining qualified
executives and other key employees is critical to our business, and competition for highly qualified and experienced managers
in our industry is intense. There is no guarantee that key management members will not leave the Company, or if they do, that
we will be able to identify and hire qualified replacements, or that the transition of new personnel will not cause disruption in
our business.
In addition, due to our growth, or as a result of regular recruitment, we will be required to hire and integrate new
employees. Recruiting and retaining qualified engineers and computer programmers to perform research and development and
to commercialize our offerings, as well as qualified personnel to market and sell the offerings, are critical to our success.
There is competition to recruit and retain highly skilled employees in the technology industry due to market
conditions and the millennial workforce continuing to value multiple company experiences over long tenure. As a result, we
may be required to offer exclusive compensation packages in order to retain and recruit certain key employees with particular
expertise.
In certain locations in which we have development centers, including low-cost countries such as India, the rate of
attrition is typically higher than other locations and could have a negative impact on our ability to retain our employees in such
centers, timely develop our products and solutions, and/or service our customers.
An inability to attract and retain highly qualified employees may have an adverse effect on our ability to develop new
products and solutions and enhancements for our offerings and to successfully market such offerings, all of which would likely
have a material adverse effect on our results of operations and financial position. Our success also depends, to a significant
extent, upon the continued service of key management, sales, marketing and development employees, the loss of any of whom
could materially adversely affect our business, financial condition and results of operations.
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Item 4.
Information on the Company.
Item 4.A
History and Development of the Company.
NICE was founded on September 28, 1986, as Neptune Intelligent Computer Engineering Ltd., with the vision to
digitize unstructured data previously captured using analog means. On October 14, 1991, the Company was renamed NICE-
Systems Ltd., expanding its mission to the Customer Service market, becoming a leading global provider of Workforce
Optimization software applications, as well as adding solutions for the Public Safety and Justice sector. With the increased
quantity of available data and the growing need to generate meaningful business insight, NICE launched Interaction
Analytics solutions - allowing organizations to quickly understand and operationalize their interaction data. In 2007, NICE
acquired Actimize, a leader in Financial Crime and Compliance analytics solutions, aimed to help prevent market abuse,
financial fraud and money laundering, transforming the company into an enterprise software analytics leader. Since 2014,
NICE has emerged as a leader in cloud, analytics, digital and AI through innovations and strategic acquisitions. In 2016,
NICE acquired inContact, a leading provider of cloud contact center software and agent optimization tools, enabling the
industry’s first fully integrated and complete cloud contact center solution platform. Subsequently, NICE became an industry
leader, helping organizations innovate with AI-powered cloud platforms, designed to unify all data and capabilities for
ultimate business results. Since 2019, as consumer expectations dramatically shifted to digital CX, NICE vastly extended the
reach of its offering with a series of acquisitions of leading Digital & AI Customer Experience solutions, expanding its
business reach beyond the contact center, providing organizations with AI-powered digital and self-service solutions to
address customers’ evolving needs.
On June 6, 2016, the Company was renamed NICE Ltd., which is its legal and commercial name. Today, NICE is an
enterprise software leader in cloud, analytics, digital and AI in both the Customer Engagement and Financial Crime and
Compliance markets. We possess the complete set of must-have AI assets necessary to command our markets: largest
collection of unique historical and current data, most relevant knowledge elements and unmatched domain expertise. Our
solutions help organizations of all sizes create extraordinary and trusted customer experiences, prevent financial crime, and
improve criminal justice evidence management.
NICE is a company limited by shares organized under the laws of the State of Israel. Our Israeli offices are located
at 13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel (Tel. +972-9-775-3151). Our subsidiary, NICE Systems, Inc.
has been appointed as our Agent for Service in the United States, and is located at 221 River Street, Hoboken, New Jersey
07030.
The Securities and Exchange Commission ("SEC") maintains an Internet site that contains reports, proxy and
information statements, and other information that is filed electronically with the SEC at http://www.sec.gov. Our website
address is at https://www.nice.com/company/investors/. Information contained, or that can be accessed through, our website
does not constitute a part of this annual report and is not incorporated by reference herein, and we have included our website
address in this annual report solely for informational purposes.
Principal Capital Expenditures
In the last three fiscal years, our principal capital expenditures were the acquisition of other businesses and
repurchases of our American Depositary Receipts (“ADR”). For information regarding our acquisitions and ADR share
repurchases, please see Item 5, “Operating and Financial Review and Prospects – Recent Acquisitions,” and “Operating and
Financial Review and Prospects – Liquidity and Capital Resources,” in this annual report. For additional information
regarding our ADR share repurchases, please also see Item 16E, “Purchases of Equity Securities by the Issuer and Affiliated
Purchasers,” in this annual report.
Item 4.B
Business Overview
Breakdown of Revenues
For a breakdown of total revenues by business model (cloud, products and services) and by geographic markets for
each of the last three years, please see Item 5, “Operating and Financial Review and Prospects – Results of Operations,” in
this annual report.
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About NICE
NICE is a global enterprise software leader, providing AI-powered cloud platforms that serve two main markets:
Customer Engagement and Financial Crime and Compliance. Our core mission is to transform experiences to be
extraordinary and trusted and create a frictionless and safe digital-first consumer reality where every interaction is intelligent,
meaningful and effortless. Our solutions are used by organizations of all sizes and are offered in multiple delivery models,
including cloud and on-premises.
Our strategy is based on serving rapidly expanding, specialized markets that require feature-rich solutions, with
robust, comprehensive cloud platforms that are spearheaded by AI as an overarching catalyst, propelling our unique AI-
driven vectors of growth: using AI differentiation to expand our cloud win rates, positioning AI as the bedrock for driving
rapid expansion into digital, utilizing AI to fuel massive platform-adoption and leveraging AI as a lucrative source for new
domain-specific use-cases.
In the Customer Engagement market, we enable organizations to transform experiences with specialized AI-powered
solutions aimed at augmenting employee activities with smart copiloting capabilities, delivering seamless automated
customer self-service using conversational AI, orchestrating journeys across multiple channels and intents, meeting
consumers wherever they choose to begin their journey, providing them with the knowledge element they need, and creating
smarter personalized customer interactions. We help organizations transform their workforce experience with AI-powered
solutions aimed at guiding and engaging employees, optimizing operations and automating processes to deliver seamless
transition between automated service and human-assisted interactions. We are also digitally transforming the evidence
process from police investigators and district attorneys to court and correction facilities, providing a single, streamlined view
of the truth as the core of our Public Safety and Justice business, which is part of our Customer Engagement segment.
In the Financial Crime and Compliance market, we protect financial services organizations, with solutions that
identify risks and help prevent money laundering and fraud, as well as help ensure financial markets compliance in real-time.
With our holistic, data and entity-centric approach, we help financial services organizations address the new dynamic of
financial crime threats, which are significantly growing in the digital era.
NICE is at the forefront of several industry technological disruptions that have greatly accelerated in the last several
years: the growing acceptance and adoption of specialized AI-powered solutions combining domain-specific use-cases,
Generative AI and LLMs, the adoption of cloud platforms by organizations of all sizes and verticals, the shift of consumer
and organizational preferences towards digital-centric services and experiences, an increase in consumer cross channel, self-
service usage and the need to manage, optimize and engage a diverse workforce while retaining and attracting top talent. Our
suite of integrated solutions, based on our unique domain expertise, enables customer service, financial crime prevention and
criminal justice organizations to innovate and thrive with industry-leading cloud platforms that use domain-specific data and
AI powered solutions.
We rely on multiple key assets to drive our growth:
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Our market-leading open cloud platforms which natively embed AI, analytics and automation, and are
purpose-built for our specific domains, scale up to any sized organization, offer a comprehensive
application suite for complete functionality, and are protected by a broad array of patents.
Our extensive portfolio of applications that address organizational needs across all our areas of domain
expertise.
Our broad array of proprietary technologies and algorithms in the domains of Generative AI, LLMs,
automation, analytics, machine learning, speech-to-text, natural language processing, personality-based
routing and others. Our native AI models are based on years of industry-specific data and domain expertise,
consistently using machine learning for generating actionable insights.
Our access to vast amount of CX data, derived from billions of domain-specific interactions of all types,
enriching our applications and enabling us to build hundreds of CX purpose-built AI models.
Our unique digital capabilities that are critical for organizations of all sizes and across all industries in
dealing with the exponential adoption of digital in consumer preferences, banking transactions and justice
agencies operations.
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Our advanced data security and compliance capabilities that deliver trusted enterprise software across all
our markets, including FedRAMP authorization to the relevant business lines, with 30 authorized
applications, native PCI, supported by the most advanced SOC in the industry.
Our flexible delivery model that allows our customers to benefit from a wide range of both cloud and on-
premises solutions.
Our solutions' market coverage of all segments, from small and mid-sized businesses to large scale Fortune
100 enterprises.
The mission critical nature of our solutions to the operations of our customers and our cloud platforms that
are essential for enabling a scalable and sustainable work-from-anywhere environment.
Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness for our
solutions in our areas of operation.
Our broad partner ecosystem that enables us to reach and serve a large number of customers across many
countries.
Our loyal customer base of more than 25,000 organizations in over 150 countries, across many industries,
including 85 of the Fortune 100 companies.
Our strong profitability and free cash flow that allows us to invest in innovative solutions and product
development and fuels strategic acquisitions.
Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and trends,
which we introduce to the market through our direct sales force and distribution network.
Our skilled employees and domain expertise in our core markets allow us to bring our customers the right
solutions to address key business challenges and build strong customer partnerships.
Our customer support and operations, which enable our customers to quickly enjoy the benefits of our
solutions, with multiple deployment models in the cloud or on-premises throughout the world and support
for full value realization and customer success.
Our outcome-oriented white-glove services that enable our customers achieve greater efficiency, higher
revenue, and lower operating costs with our solutions.
Industry and Technology Trends
Following are the key cross-industry trends that we have identified as driving demand for our solutions:
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AI is disrupting businesses across all industries. AI is reshaping the way organizations are conducting
their businesses across all functions, allowing them to increase the velocity of strategic decision-making to
overcome complexity. Recent advancements in AI technology, have made AI a strategic imperative for
organizations of all sizes. Those advancements include conversational AI that enables intelligent human-
friendly communication, fully aligned with brand values and knowledge, and Generative AI that is forging
new frontiers in content and code creation while democratizing once highly specialized skills across the
organization. AI is also turbo-charging employee capabilities to amplify skilled labor, and creating
personalized, humanized connections, infusing real-time decisioning and predictive tools.
Large Language Models are transforming interfaces and interactions, changing the way knowledge is
accessed and used by consumers and impacting how employees conduct day to day tasks. Generative AI
enables new use-cases helping create smart, personalized, and timely consumer and employee experiences.
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Consumers and organizations are embracing digital transformation at an accelerated pace. To remain
competitive, organizations need to provide digital solutions to address consumers' digital interactions and
self-service needs, digital banking compliance challenges, and digitalization of evidence management.
Digital transformation is driving a convergence of siloed systems and disjointed technology stacks,
replacing them with a single infrastructure based on an open foundational platform that provides complete
functionality and seamlessly integrated workflows.
Organizations of all sizes are adopting open cloud platforms as the foundation for their applications
to allow faster innovation cycles and better business agility. In recent years, we are seeing acceleration
in cloud transformation while organizations are moving to an agile mode of operation to enable flexibility
and lower operational costs.
Organizations are replacing complex, siloed legacy point solutions with cloud platforms that offer a
complete suite of applications. An underlying cloud native platform at scale as the foundation for a
comprehensive suite of integrated applications opens up opportunities for creating innovative process
workflows and gain centralized, valuable business insights from the efficient sharing of their own data
among different suite functions.
Customer Engagement trends that are driving demand for our solutions:
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Growing demand for domain-specific AI-infused solutions that create better customer experiences,
while maintaining enterprise-grade security and scalability standards. AI solutions purpose-built for
CX use-cases, while also incorporating Generative AI technology and LLMs, play a pivotal role in
revolutionizing the CX domain, particularly in elevating the efficiency of customer service agents, and
delivering smarter, more engaging self-service experiences. By incorporating AI-powered products,
organizations empower their agents with tools that automate routine tasks, allowing them to allocate more
time and attention to complex customer issues. Generative AI enables agents and customers to access
dynamic and context-aware information, enabling quicker and more accurate responses. AI-driven
intelligent conversational bots provide self-service capabilities, which improve customer experience as well
as reduce the cost to service consumers.
Customer service organizations are looking for AI-powered solutions that automate work processes
in order to increase efficiency and productivity while reducing costs. These solutions significantly
reduce the number of manual and time-consuming tasks agents and employees need to perform, freeing
them to spend time in added-value activities. Organizations are looking for smart ways to identify
opportunities to fully automate both human-assisted and autonomous processes at scale.
Knowledge Management (KM) is becoming increasingly critical in AI management, serving as a
foundational element that ensures AI systems are effectively guided and aligned with an organization's
brand identity and values. By integrating KM practices, organizations can establish robust guardrails for
AI, ensuring that these technologies operate within predefined parameters that reflect the brand's ethos and
customer engagement strategies. KM enables organizations to continuously refine and update AI models
with relevant, accurate information, ensuring AI solutions remain responsive to evolving customer needs
and market trends.
Increased use of advanced digital channels, especially self-service, as first choice by consumers for
interaction with organizations. The nature of these advanced digital channels such as chats, web, mobile
engagement and social media applications, is different from voice and traditional digital channels due to the
asynchronous response times and ability to carry the conversation for extended periods of time.
Organizations need to make sure they offer seamless, effective and human-like self-service capabilities
leveraging conversational intelligent virtual agents (IVAs) that deliver an integrated and high-quality
experience, while maintaining the appropriate levels of staffing, quality management and internal
efficiencies.
Organizations need to enable their employees the flexibility to work from anywhere and keep them
highly engaged, while enabling supervisors to monitor the performance of their agents. To do that
successfully, organizations are continually looking for ways to simplify daily employee activities, engage
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and motivate them to ensure their productivity and satisfaction is maintained, while supervisors gain
visibility and are able to plan, evaluate, coach and drive performance, in ways that allow transparency and
increase productivity.
Proactive (outbound) customer engagement interactions are growing relative to reactive (inbound)
customer engagement interactions. Amid rising consumer expectations and growing economic changes,
there exists a point of inflection when customer experience becomes proactive. This need for proactivity is
a key element in an overarching customer engagement strategy for many organizations. AI-driven customer
service enables organizations to proactively engage with consumers, solving issues before they occur or to
solve basic service problems for contact centers.
CX markets remain focused on reducing labor costs. Service organizations are burdened by soaring
labor-driven costs, often exceeding 90% of total expenditures, and are therefore ripe for a massive shift of
spend from labor to technology, replacing manual labor with specialized AI automation solutions.
Growing volume of digital evidence, contained in multiple disjointed systems, labor intensive
processes and staffing challenges are all impacting the ability of government agencies to deliver on
the promise of timely justice. Government agencies of all types - from police and first responders to
prosecutors, defense attorneys and courts - are looking to digital transformation as a way to overcome the
challenges of digital evidence silos and disjointed work processes. Through digital transformation,
stakeholders can work smarter and more efficiently within their own agency, and effectively share digital
evidence throughout the criminal justice system.
With Emergency Communications becoming more complex, and staff turnover at an all-time high,
digital transformation is becoming critical. Emergency communications managers spend much of their
time handling manual, time-consuming tasks related to daily operations, quality assurance, reporting,
training, development, hiring, staff supervision and fulfilling emergency incident evidence reproduction
requests. Training new staff to handle the wide range of emergency calls is a significant cost burden.
Digitally transforming and automating quality assurance, incident reconstruction and performance metrics
tracking frees up managers to spend more time engaging with and coaching staff. This helps improve and
retain employees, resulting in more effective emergency incident handling, higher staff retention, and lower
turnover-related costs.
Financial Crime and Compliance trends that are driving demand for our solutions:
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Growing demand for embedded AI across all fraud, financial crime and risk management controls.
Financial services organizations are transforming to ensure safer and more unhindered customer access to
accounts across all channels and enable safe and secure transactions. At the forefront of these initiatives is
the need to leverage purpose-built advanced AI to ensure regulatory compliance and provide exceptional
customer experiences while stopping financial fraud and preventing the laundering of illicit funds.
Generative AI and LLMs are being sought out and tested to streamline and further automate
financial crime investigation processes and tasks where it may not be necessary to have as much
human involvement. This frees up investigators from low value, high volume manual tasks so that they
may better focus on more important and strategic work. This leads to better resource utilization, increased
accuracy and productivity, and improved return on investment.
Preventing
financial crime and ensuring stringent compliance with evolving regulatory
environments. Regulatory scrutiny of financial institutions continues to apply pressure on organizations to
adopt more advanced regulatory compliance and risk management technology. Furthermore, regulators
have been expanding their focus from the largest financial institutions to a broader market, including
smaller banks and alternative financial service providers, and are creating increased demand for risk and
compliance related solutions.
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An unpredictable threat landscape environment. The growing number of data breaches and cyber
security incidents put increasing amounts of personally identifiable information and sensitive data at risk of
exposure. This information can be used to open accounts that can be used for laundering money, terrorist
financing, account fraud, market manipulation, social engineering, and more. In addition, the surge in
consumer scams that lead to account takeover and authorized fraud threaten an organization’s reputation
and their customer satisfaction, as well as create large financial exposures due to both losses as well as
fines. In addition, the large volumes of data, related to both internal and external threats, place an enormous
operational burden on organizations. Financial institutions are seeking advanced AI solutions to help
address these threats, and ultimately protect their firm and their customers.
An increasing need to control cost of compliance. The regulatory pressures and increasing threat
landscape have driven an increase in the number of risk and compliance personnel, which in turn has
dramatically increased the cost of compliance. Organizations are turning to technology to allow them to
help control these costs without compromising their compliance adherence while continuing to lower their
exposure to financial crime.
Financial institutions seek a single AI platform that aggregates and analyzes financial crime-related
risk in one place. The ever-expanding risk landscape and sophistication of financial criminals, as well as
the need to keep costs in check, creates a growing need for a single view of different detection signals
throughout the financial services organization. A single platform allows financial services organizations to
analyze the data, act on it and present it in one dashboard to both operations and executives.
Financial institutions are adopting cloud platforms for financial crime and compliance solutions. Top
tier financial institutions have been slow to adopt cloud delivery driven by the sensitive nature of their data,
but are now realizing the value of the cloud, and are increasingly choosing to deploy solutions on their own
private cloud or on public cloud infrastructure.
AI and Machine learning is being adopted in the fight against financial crime. Traditional methods of
financial crime detection, such as rule-based systems, are limited in their ability to adapt and detect new
types of financial crime or changes in criminal behavior and patterns. AI and Machine learning algorithms
can be trained on historical data and continue to improve their performance as they encounter new
behaviors. This enables them to detect patterns and anomalies that may be indicative of financial crime.
Financial institutions are being disrupted by digital players providing improved experiences and
more personalized products and services. Banking services and many other financial service
organizations are being challenged by neo-banks, fintech companies and other digital players. To improve
customer experiences, and compete against these digital players, financial institutions continue to invest
heavily in digital capabilities. Consumers have increased expectations for faster and frictionless processes.
In terms of risk, digital banking moves the consumer away from the branch creating new risks around
identity verification, customer due diligence and general monitoring of consumer financial behavior. The
expectations for fast response times drive financial institutions to re-design their compliance processes to
be able to respond in minutes rather than days or weeks, which in turn requires broader adoption of AI
across the customer lifecycle.
Strategy
Our long-term strategy is to further broaden our industry leadership in both the Customer Engagement and Financial
Crime and Compliance market segments using NICE’s unique domain-specific AI capabilities and our foundational platform,
applications and data assets.
We continue to lead fast-growing vast markets that also manifest unique favorable attributes: they require constant
problem solving that typically transcends economic fluctuations; they present complex challenges that require feature-rich
solutions, preventing commoditization and giving rise to high barriers of entry that keep potential competitors at bay; they
provide an abundance of opportunities fueled by the distinctive lag of technology adoption; and they are burdened by soaring
labor-driven costs, often exceeding 90% of total expenditures, ripe for the massive shift of spend from labor to automation.
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NICE is well-positioned across all markets, given our unique set of assets: we are categorically recognized as one of
the top leaders in every market we operate in; we offer complete, robust and dominant platforms; we deliver a wide-ranging
portfolio; we own the most critical data elements that form the foundation for AI; and we established wide-reaching global
ecosystem. On top of it all, we are a highly profitable company, with strong balance sheet, acting as a springboard for our
organic and inorganic growth.
In the Customer Engagement business, we intend to continue to leverage CXone to further grow our leadership in
the CX market. We plan to achieve this through strategic AI-powered product launches fueled by organic developments and
acquisitions. Furthermore, we intend to continue to evolve as the global leader in all major markets and segments for
managing customer service interactions – hold the largest market share for CCaaS and WEM solutions; provide a significant
share of next gen digital engagements; be the most adopted self-service conversational AI provider in the CX market,
providing purpose-built AI for CX solutions; become the leading provider of AI copilot capabilities for augmenting CX
employees at all levels, offer the most extensive customer-experience marketplace platform and data; and continue to expand
into international markets in both the high-end and the mid to low end of the markets we serve. In Public Safety and Justice,
we intend to cement and increase our leadership in the digital transformation of the US Justice System, becoming the de facto
platform for workflow management across the Criminal Justice system. We will do so by leveraging our Evidencentral
platform for handling massive amount of digital evidence and cases with streamlined workflows; using AI to further uncover
insights and automate Justice processes; and delivering effective justice from the overwhelming amounts of evidence for
every stakeholder in the Criminal Justice eco-system.
In our Financial Crime and Compliance business, we intend to expand to be the largest and leading cloud provider of
financial crime and compliance solutions in all segments and across all major markets – further embedding AI across our
portfolio while leveraging the X-Sight platform to cloudify the high end of the market; enhancing Xceed to be the cloud
platform of choice in the mid-market; leveraging our unparalleled collective intelligence to provide a more holistic view of
digital identity risk; and better monetizing data, based on advanced AI capabilities.
Leading our markets with domain-specific AI solutions
We intend to continue augmenting our AI leadership across all our markets, as AI establishes itself an overarching
catalyst, propelling NICE’s four vectors of AI growth strategy:
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AI fuels our cloud win rate - We are witnessing an enterprise cloud inflection point, where the lion’s
share of large-scale cloud transitions is about to take place. AI is enhancing our differentiation,
substantially expanding our cloud win rates and displacements.
AI as the bedrock of rapid expansion into digital - NICE's digital solutions encompass the range of
digital channels. AI is a strong contributing factor for migration from legacy digital vendors to NICE,
contributing to the growth in volume of digital engagements managed by our platforms.
AI fusion powers our platform adoption – Enterprises are pivoting from multiple point solutions to
building and simplifying their tech stack by standardizing on a single platform. This trend is now gaining a
significant boost because it is the only viable way to implement AI that works and requires well designed
AI-embedded platforms that were built with specific domains and use-cases in mind.
AI as endless source for lucrative new use-cases – Organizations are coming to a clear realization that
generic Generative AI and LLM solutions are not providing the expected results. NICE’s specialized AI,
with its thousands of constantly evolving and expanding models, based on billions of interactions, is fast
becoming a true viable option for addressing the complex use-cases of our markets.
Empowering organizations to lead by adapting to change
We intend to continue leading the market by leveraging several major industry trends and evolving our offering to
meet our customers’ current and future needs while focusing on key strategic pillars:
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Cloud Foundation – we provide cloud-native open platforms for our Customer Engagement and Financial
Crime and Compliance offerings. This allows our customers to facilitate adoption of cloud infrastructure to
accelerate innovation and reduce integration, implementation and operational efforts.
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Complete Platform Suite – across all markets, we provide one of the industry’s most comprehensive set of
integrated, scalable, world class applications. Our ability to provide our customers with a full range of
capabilities, for organizations of various sizes that can provide for their various needs using a single vendor
unified suite, gives us a strong market differentiation in today’s drive for simplicity, cost savings and
elimination of legacy silos.
Digital Engagement - we enable organizations to deliver experiences in every possible digital way across
the full customer journey, keeping them engaged and informed, leveraging smart self-service,
conversational AI and knowledge across multiple channels to solve for service needs, as well as providing
secure digital banking, and helping public safety organizations shift to digital interaction and digital
evidence environments.
AI – we accelerate business transformation with purpose-built AI-embedded natively across our platforms,
making our applications and business processes smarter. Our domain expertise, proprietary data, advanced
technology, and pre-built AI models create industry-leading solutions for all our market segments.
Large Language Models and Generative AI – we leverage LLMs and Generative AI to help consumers
and employees access knowledge and interact with each other effortlessly and safely, while improving
employee productivity and customer experience.
Data - recognizing the power of data, we consider data as a key component and a strategic asset across our
portfolio and leverage it as a basis for our purpose-built AI solutions. We manage our customer data with
security and compliance measures while leveraging it to equip our customers with a data-driven approach
to manage their business, reduce cost, improve performance and identify customer insights.
Strengthening our market leadership
Our brand, global reach, financial resources, extensive domain expertise and ability to deliver a wide array of
solutions for large, as well as small and mid-sized organizations, will further anchor our market-leading position.
We plan to continue to develop our open cloud platforms and advanced purpose-built AI capabilities for the
Customer Engagement and Financial Crime and Compliance markets to enable unified integrated solutions that offer fast
innovation and quick time to value. These platforms allow us to deepen our direct relationships with our customers, nurture
our partner ecosystem and create new growth opportunities. AI serves as a strong differentiator and catalyst for cloud
migration and our platform adoption.
In our Customer Engagement business, we intend to continue being a leader in the CCaaS market with CXone, one
of the industry's most comprehensive suite of integrated, scalable, world-class CX applications with embedded purpose-built
AI delivered on a single open cloud platform. CXone enables rapid innovation, agility and scalability, and continue to extend
our offering around the goal of providing high-quality, proactive, personalized experiences for consumers, organizations and
service agents based on our leading cloud native CX platform, CXone, digital capabilities and NICE Enlighten AI, our
purpose-built AI for the customer engagement market. With CXone, organizations can meet their customers wherever they
choose to begin their journeys, and provide the right attended or unattended service, based on their profile, preferences and
needs. This includes a broad suite of digital, analytics and purpose-built AI-powered integrated applications, used for
understanding consumers, employees and business needs and preferences, and leveraging that information to create
orchestrated journeys that cover every interaction. We intend to continue enhancing our NICE Enlighten AI solutions with
the latest advancements in LLM, incorporating Generative AI capabilities to deliver purpose-built copilot, self-service and
management capabilities. Alongside our existing offering, we plan to lead in new product categories, as we introduce novel
solutions and enter additional market segments.
We will continue to extend our leading market position for AI-powered cloud solutions, aimed for providing
frictionless experiences in and outside the contact center, catering to organizations of all sizes and replacing legacy on-
premises infrastructure players. We will also continue to enable our customers to extend our solutions through innovative
third-party applications via our DEVone dedicated partner ecosystem that our customers can self-select through our
platform’s CXexchange application marketplace.
Our Evidencentral cloud digital evidence management platform enables public safety, law enforcement and criminal
justice agencies to transform to unified digital evidence workflows by managing incident response, investigation and
prosecution digitally and embedding analytics and AI throughout the entire criminal justice process, enabling agencies to
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leverage data to the fullest and work together collaboratively to enhance public safety and deliver faster, fairer justice
processes.
In our Financial Crime and Compliance business, we will continue to expand our offerings across market segments
by providing new and enhanced solutions that protect financial services organizations and their customers earlier in the
customer lifecycle and by further embedding AI across our portfolio of solutions. With our X-Sight cloud platform, we
provide open, scalable and flexible solutions with broad financial crime and compliance coverage to the top tier of the
market. Continued innovations on X-Sight will further cement our leading market position. With our Xceed platform, we
provide packaged anti-money laundering (AML) and fraud coverage solutions to the mid-market, enabling smaller
organizations to realize greater protection with quick time to value. In the Financial Crime and Compliance business, our
solutions are infused with Always on AI, our multi-layered approach that injects AI, machine learning, automation, natural
language processing, LLMs, and other advanced technologies throughout the financial crime and compliance value chain.
This allows financial services organizations to merge innovative and patented technologies to effortlessly connect data and
apply AI to turn raw data into financial crime intelligence that fuels analytic precision to detect and prevent financial crimes.
These offerings enable us to add value to our existing customers, as well as expand our reach and open-up new opportunities,
considerably increasing our total addressable market.
Helping our on-premises customers and new customers migrate to the cloud
Our leading cloud platforms and domain expertise, along with our flexible migration models, enable our customers
to adopt cloud solutions and migrate to the cloud at the pace that matches their needs and preferences.
To support all of our customers and the different pace of their cloud migrations, we intend to continue offering our
solutions in a variety of delivery models, which enable us to be flexible in effectively addressing our customers’ needs.
We are the trusted advisor for our on-premises customers as we support their migration from legacy infrastructure to
the cloud. We provide deep cloud expertise and migration tools to simplify configuration, reporting and data collection from
legacy systems. Further, we offer holistic transformation consulting services, provided exclusively by our skilled employees,
delivering a smooth transition for our customers.
Continuing to cross-sell and upsell our full solutions portfolio to our existing customer base
One of our main assets is our growing customer base. We believe there are many opportunities to expand, up-sell
and cross-sell within our existing cloud customer base. This includes increasing our customers’ exposure to the full breadth
of our portfolio. We continue to provide our customers with new benefits by expanding the offering they already use, and
adding new products and solutions.
Continuing organic innovation and development, while also pursuing acquisitions
We intend to continue investing in innovation across our portfolio and platforms and augment our organic growth
with additional acquisitions that will broaden our product and technology portfolio, expand our presence in selected verticals,
adjacent markets and geographic areas, broaden our customer base, and increase our distribution channels.
Maximizing the synergies across our businesses
At NICE, we value and promote a synergetic approach to our platforms and solutions (e.g., sharing information,
knowhow, and design practices in transitioning to native cloud platforms across Customer Engagement and Financial Crime
and Compliance). We will continue leveraging our solutions' common cloud architectures as well as methodologies of
capturing and analyzing massive amounts of structured and unstructured data, providing real-time insight and driving process
automation. Maximizing these synergies and cooperation between our business areas is a key pillar of our corporate strategy.
We have several joint offerings across our business segments and combined go-to-market efforts. We will continue
leveraging our extensive complementary domain expertise, technological know-how, capabilities and development, in order
to grow our business through additional cross-sell and up-sell opportunities.
Increasing our footprint in select geographical regions
As part of our growth strategy, we are expanding our business in select regions globally, where we can further grow
and establish our presence in less penetrated, growing markets. We are doing this by leveraging our existing offering and
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growing partner ecosystem, in both the Customer Engagement business as well as the Financial Crime and Compliance
business. We continue to expand our international partner network.
Expanding our global partnerships
As part of our growth strategy, we are investing in expanding relationships with global go to market partners that we
believe can accelerate our growth while ensuring the success of our customers. In addition, as part of our open platforms, we
are enabling the success of our technology partners who complement our product offerings to bring unique value to our
customers.
Customer Engagement Business Strategy
Our strategy is to continue serving as a leader in the Customer Engagement market and expand our reach beyond the
boundaries of the contact center by fundamentally reinventing the way consumers interact with organizations in today's
digital era. We are driving a new customer experience standard by intelligently meeting customers wherever they choose to
begin their journey, enabling resolution through generative purpose-built AI and data-driven self-service and providing
agents with knowledge and tools to successfully resolve any need in real-time. We intend to achieve this by:
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Infusing AI, analytics and automation into every element of our Customer Engagement offerings to enable
predictive and proactive service, workforce augmentation and automation. We leverage insights from an
extensive number of interactions, with hundreds of purpose-built CX AI models to create frictionless
customer experiences that are smarter and faster.
Enabling our customers to deploy AI-driven intelligent conversational bots, to provide self-service and
assisted service capabilities, which improve customer experience as well as reduce the cost to service
consumers.
Providing agents with unique unified and native capabilities including digital collaboration, agent
assistants, AI-powered copiloting capabilities, real-time guidance, to assist agents, using conversational
context and knowledge-based information.
Empowering our customers to anticipate business demands with smarter, AI-based forecasting and
scheduling tools, and providing their workforce with AI- enhanced training and analytics tools to help them
gain the accountability, transparency and flexibility they need around their performance, as part of our
holistic WEM suite that enhances both agent engagement and customer experiences.
Offering CXone, the global leading unified cloud customer engagement platform that combines guided
journey orchestration for voice and digital channels, and comprises of tightly integrated IVR, advance
digital capabilities, self-service, bots, proactive conversational AI purpose-built for CX use-cases,
knowledge management, agent assist tools, customer journey analytics, leading Workforce Engagement
Management and automation solutions.
Expanding our capabilities to provide holistic digital and self-service experiences throughout the entire
customer journey, starting at the very beginning on search, apps and other digital doorsteps, and continuing
through self-service and engagement with the contact center through voice or digital enabling customer
service organizations to provide a true omnichannel service experience across all touchpoints.
Leading cloud transformation across the entire Customer Engagement portfolio for all market segments and
regions to enable rapid innovation, enhance flexibility and agility, and lower operational costs.
Offering our customers the ability to extend our solutions through innovative third-party applications
provided by our DEVone dedicated partner ecosystem. Our customers can self-select these third-party
applications from our platform’s CXexchange marketplace.
Increasing our presence across all verticals, regions and market segments with CXone, AI innovation and
enhanced data to help organizations adapt to today’s complex consumer expectations as well as ever
changing CX realities.
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Leveraging our large customer base in all verticals and regions to generate incremental revenue growth
through up-selling and cross-selling our Customer Engagement portfolio.
Extending our public safety offering to the Public Safety Answering Points (PSAP) to support next
generation digital emergency communication, ensuring compliance and enabling enhanced digital evidence
collection and investigation.
Offering one of the industry’s most leading unified cloud-based Digital Evidence Management and
Investigation platform, Evidencentral, that integrates and consolidates all forms of evidence information -
data and media from police records and dispatch management systems.
Financial Crime and Compliance Business Strategy
We plan to continue extending our market leading position and our addressable market, while further supporting the
move to the cloud by financial institutions. We also plan to leverage our capabilities to facilitate both better financial crime
protection and to help our customers realize cost reductions. We intend to achieve this by focusing on:
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Delivering integrated Financial Crime and Compliance solutions that help financial services organizations
identify risks faster and earlier throughout all phases of the customer lifecycle.
Expanding our market reach within the mid-tier banks and financial institutions with our Xceed native
cloud and AI platform, which provides AML and Fraud solutions in a packaged SaaS offering to smaller
organizations, enabling them to benefit from the capabilities previously only afforded to large
organizations.
Expanding X-Sight, our cloud-native AI platform and solutions for the top tiers of the market to further
strengthen and grow our market leadership position. X-Sight combines data and analytics agility and
provides us the ability to cross-sell solutions. Our cloud platform leverages data, AI, machine learning,
advanced automation, and other technologies to help customers reduce the cost of operations, while
increasing their adherence to compliance and preventing financial crime.
Expanding X-Sight AI, machine-learning data-driven, analytics-managed service or do-it-yourself
environment to help further optimize analytic models and develop new analytics by leveraging insights
across our broad customer base and our market-wide and domain expertise in fraud prevention and anti-
money laundering.
Empowering our customers to increase their operations teams’ productivity by providing more purpose-
built Generative AI offerings within X-Sight AI and Xceed to enable faster and more accurate
investigations.
Offering X-Sight DataIQ, our orchestration and aggregation engine that effortlessly connects to multiple
premium and public data sources, turning raw data into the data intelligence to fight financial crimes.
Expanding the X-Sight Marketplace, an ecosystem of innovative third-party partners where our customers
can select complementary offerings to extend our platforms and products.
Offering our solutions to verticals outside of the traditional financial services, such as technology, gaming,
energy, insurance, industry regulators, government agencies, as well as to fintech and alternative payments
providers.
Further expanding our footprint across international geographies and segments while continuing to cross-
sell and up-sell into our existing customer base around the world.
Expanding our sales channels with world-class systems integrators, consultancies, core banking providers,
and other regional reseller firms to identify additional significant opportunities.
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I. Offering Overview - Customer Engagement
With the growing complexity, demand and urgency of customer service needs, the exponential usage of digital and
the growing maturity of Generative AI capabilities, organizations are required to adapt new operating models to maintain a
holistic relationship with their customers. These dynamics are challenging organizations to differentiate themselves through
efficient, effective and high-quality customer experiences that are digital, including agent-assisted and self-help channels that
are smart, secure, consistent and personalized across all touch points. In addition, organizations must find ways to generate
business insights, better understand and predict customer intent and create smarter customer connections, as well as provide
their employees with the flexibility and balance they seek. Organizations need to accomplish these objectives while
containing operational costs and adhering to regulations.
To fully accomplish this new era of a holistic relationship between consumers and organizations, and to be able to
manage all interactions, channels, data and knowledge in one place, we have extended the reach of our offering with CXone
and our advanced data and AI platform, NICE Enlighten AI, to allow organizations understand, engage and interact with their
customers throughout their entire journey, creating smart, connected, self-service and human-assisted digital interactions,
leveraging the power of AI.
Our Platform and Solutions’ Core Capabilities:
Our Cloud Native Open Platform, NICE CXone, is one of the industry’s most comprehensive customer
engagement platforms, with best-in-class customer analytics, AI routing, digital engagement, journey orchestration,
knowledge management, voice of the customer, complete workforce engagement and automation, all on an open cloud
foundation. CXone consolidates all communication channels, applications, data and knowledge, bringing together both
platform and external data, to deliver a full view of the customer experience. CXone is designed to support any sized
organization, and encompasses our customer-centric expert services, unique domain expertise and extensive ecosystem of
partnerships, while meeting the strictest security and uptime standards. In today's reality, customer journeys extend well
beyond traditional contact center interactions, and CXone is our leading AI-powered CX platform that provides the benefits
of a modern native cloud architecture and delivers a complete suite of customer engagement applications. This multipath
approach enables organizations to leverage CXone in many ways, such as a complete open suite, an open suite integrated
with third-party Automatic Contact Distributor (ACD) or a hybrid approach that combines native applications with existing
premise recording and ACD systems.
Our CX purpose-built AI, NICE Enlighten, is embedded across our entire platform and suite of applications. It uses
our proprietary data to understand CX intents, behaviors and different types of characteristics, analyzes every interaction and
allows proactive identification of the needs of consumers, agents and CX leaders, as well as the ability to act on them in real
time. In addition, it incorporates LLMs as a conversational interface to humanize the experience.
On the consumer side, NICE Enlighten is trained on extensive conversational data to understand multi-level
consumer intents and learn from an organization’s top-performing employee-assisted interactions to discover and deliver on
automation opportunities for self-service and bots.
On the agent side, NICE Enlighten augments agents in real-time to reduce friction, keeping them informed and
prepared by surfacing knowledge at the right time and auto-composing responses, and connecting agents with consumers on a
personal level to optimize outcomes. It redefines the quality and coaching process to be based on agents’ soft skill behaviors
measured on all interactions.
On the Business side, NICE Enlighten identifies optimization opportunities across the platform, with access to all
native and connected CXone applications, enabling CX leaders to act on business insights with a click of a button.
Our Entry Points solutions enable organizations to build scalable and effective digital experience and empower
consumers with smart AI-based self-service that is purpose-built for CX, enabling them to address their needs in a human-
like conversational way. We allow organizations to meet their consumers wherever their journey start, provide the right
knowledge management tools to drive knowledge at any point of their journey, starting with search, and then proactively
reach-out to consumers and present the most relevant offers to them based on analyzing their needs, while guiding them in
real-time on their channel of choice through an interactive conversation.
Our Journey Orchestration and Proactive Engagement solutions empower organizations to connect and route
their customers across their entire journey over 30 supported channels, including voice and digital, in a joint, consistent, and
smart way by combining every touchpoint including online search, mobile apps and other digital doorsteps, continuing
through to self-service and interacting with the contact center. Our proactive engagement capabilities enhance the overall
experience by anticipating needs and initiating contact before issues arise, ensuring a seamless and preemptive service
approach. Consumers can easily and effortlessly move between channels, while maintaining the full context and a sense of a
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single consistent journey. We create highly personalized interaction experiences by matching the most appropriate agent or
bot to deal with the customer's request, connecting them using real time AI-based routing.
Our Digital and Smart Self-Service solutions empower organizations to build intelligent automated conversations
based on data that indicates what customers need and how they express these needs and deliver the right resolution. Our
smart self service allows organizations to design data-driven, personalized self-service interactions, using NICE’s purpose-
built NICE Enlighten AI experience optimization engine, to identify customer needs and automate the right conversations,
resulting in fast and satisfying resolutions and offers. This profound understanding of consumers' needs also enables
organizations to proactively engage with their consumers to resolve their issues before they occur. We provide intelligent bots
that are able to comprehend human conversations through a powerful conversational AI platform that learns and improves
over time, leveraging Generative AI and LLMs.
Our solutions and tools designed for Employee Augmentation and automation enable contact center agents and
supervisors to be engaged in real-time and to be knowledgeable and prepared so they can create the most hyper-personalized,
unique interactions that increase customer satisfaction and resolve issues quickly. We ensure employees have the right
content and context delivered to them through smart knowledge management that is available in real-time. We guide and alert
employees to specific behavioral insights so they can take immediate action to improve resolution, and increase employee
potential with a personalized virtual companion to guide them through any type of service request and a set of tools to
complete mundane and manual processes for them.
Our Workforce Engagement and Analytics solutions help capture, understand, analyze and continuously optimize
all elements that impact customer experiences. We enable organizations to record structured and unstructured customer
interaction and transaction data on any channel, in a secure and compliant way, forecast the complex staffing needs across all
channels including asynchronous digital touch points, and automate intraday schedules with an AI-based Workforce
Management suite, while empowering agents with mobility and notifications to engage and maintain their desired work-life
balance, taking into consideration their personal attributes and preferences. We drive better agent behaviors with a leading
AI-powered Quality Management solution, to consistently measure agent soft skills and customer satisfaction indicators in
real time. We analyze all interactions, across all channels, to identify areas for performance improvement, then turn the
insights into daily business processes. We provide employees with a comprehensive Performance Management solution,
creating a consolidated view for agent measurements, drive engagements with gamification capabilities and deliver persona-
based coaching for constant improvement.
NICE Evidencentral - Our Digital Evidence Management and Investigation Platform for public safety
emergency communications, law enforcement and criminal justice transforms how digital evidence and data are managed.
Public safety and justice agencies spend precious time managing digital evidence and data- collecting, storing, copying,
analyzing, sharing and even physically transporting it. Evidencentral helps overcome these obstacles by breaking down data
silos, applying analytics and workflow automation to processes, and by connecting public safety and criminal justice agencies
together, so justice can flow smoothly, from incident to court. Evidencentral help agencies get control of digital evidence and
data, so they can get emergency response right, be a greater force for good, ensure safer communities, and provide timelier
justice for victims.
II. Offering Overview - Financial Crime and Compliance
Enabling trusted financial transactions is critical in the digital banking era and is increasingly challenging for
financial services organizations. To stay competitive, organizations are providing more digital channels and more products
and services to acquire and retain customers, all of which need to be monitored for fraud and regulatory compliance. With
criminals, organized crime rings, and armies of cyber bots leveraging AI to attack digital payments and banking channels
while also scamming individuals and corporations, preventing fraud without customer friction and detecting and predicting
money laundering is more complex than ever. In addition, adhering to capital markets compliance regulations by surveilling
trades across all asset classes for market manipulation has also become more complex.
These demands, the evolving regulatory landscape and market dynamics coupled with consumers’ desire for
frictionless digital transactions require organizations to transform and modernize their financial crime programs.
NICE Actimize provides the market-leading purpose-built AI-based cloud platforms and solutions for detecting and
preventing financial crimes and ensuring compliance, with proven AI capabilities for real-time and cross-channel fraud
prevention, anti-money laundering and capital markets compliance. We enable financial institutions to effectively adapt to
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changing threats, provide excellent customer experiences and grow their business, all while protecting their organization,
safeguarding their customers, and ensuring the integrity of the financial services industry.
Our Platforms’ and Solutions’ Core Capabilities
• Our AI cloud platform for the high-end of the market, X-Sight, is an open and flexible AI-cloud platform for
Financial Crime and Compliance, enabling top-tier financial services organizations to leverage market-leading
solutions and services that meet their sophisticated and unique needs with security, scalability and speed. X-Sight
provides global customers with immediate access to new innovations, removing expensive and lengthy system
integrations and product lifecycles by leveraging the unified modern cloud architecture. We offer configuration and
customization through APIs and available services and leverage elastic cloud computing for massive scalability, so
the largest global financial institutions have the flexibility to configure their controls and financial crime programs to
meet their unique needs.
• Our AI cloud platform for the mid-market, Xceed, brings together powerful AI, data intelligence, machine
learning, and insights for comprehensive AML and fraud prevention for small and mid-sized organizations. The
solutions on Xceed provide the protection that larger organizations receive but are packaged and connect directly
with core banking providers for smaller organizations to realize immediate value.
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Our X-Sight and Xceed AI offerings apply advanced AI techniques fueled by insights we receive in working
collaboratively with our large world-class client base to provide rich intelligence to optimize machine learning
prevention and detection analytics in our portfolio of solutions as well use Generative AI and automation to cut
down analysts time when investigating financial crimes. This allows us to provide market-leading solutions to our
customers, addressing numerous business use cases across risk domains and coverage areas. All Financial Crime and
Compliance solutions are infused with Always on AI, our multi-layered approach that injects AI, machine learning,
automation, natural language processing, and other advanced technologies throughout the financial crime and
compliance value chain. This provides financial services organizations with innovative and patented technologies
which fuel automation and analytic precision to detect and prevent financial crimes in real-time and provides secure
and frictionless customer experiences.
• Our cloud platforms provide financial services organizations with the agility required to quickly adapt to changing
regulatory and threat landscapes. With machine learning, predictive analytics, and embedded AI, organizations are
able to proactively prevent crime faster, leading to higher customer satisfaction, lower losses, and reduced risk of
regulatory enforcement action or reputational damage. Our platforms and solutions enable organizations to have a
more comprehensive understanding of their customers’ activities and risk, as well as the organization’s risk
exposure.
• Our data intelligence solutions enable organizations to turn raw data into comprehensive actionable intelligence to
prevent and detect financial crimes and enable better and faster decisions. With effortless access to data and our X-
Sight Marketplace ecosystem of complementary partner offerings, our solutions deliver comprehensive real-time
intelligence to fuel analytics and enrich investigations.
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Our AI and Analytics innovative technologies, our deep domain expertise, and the insights we receive by working
collaboratively and collectively with our large world-class client base provide rich intelligence to our solutions. This
allows us to provide market leading solutions to our customers, addressing numerous business use-cases across risk
domains and coverage areas. All Financial Crime and Compliance solutions are infused with Always on AI, our
multi-layered approach that injects AI, machine learning, automation, natural language processing, and other
advanced technologies throughout the financial crime and compliance value chain. This provides financial services
organizations with innovative and patented technologies which fuel automation and analytic precision to detect and
prevent financial crimes in real-time and provides secure and frictionless customer experiences.
• Our vast coverage of solutions enable organizations to detect market manipulations and prevent money laundering
and fraud while helping them adhere to compliance regulations. With broad coverage for compliance around
regulations and financial crime risks including account takeover, social engineering scams and many other financial
crimes, the solutions include hundreds of out-of-the-box engineered models for current risk topologies across global
regulatory regimes as well as emerging risk types including cryptocurrencies and cannabis-related risks to name a
couple. Organizations gain holistic coverage to reduce risk, mitigate losses and protect their organizations and
customers.
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Our intelligent investigations solutions serve hundreds of thousands of analysts and investigators across the globe
enabling them to make better, faster decisions. The rich and robust, purpose-built solutions include out-of-the-box
workflows and audits for the regulated industry to intelligently route alerts and cases and track all activity for quick,
accurate and transparent investigations. With built-in automation and interactive visual displays, organizations can
empower their teams with comprehensive intelligence to optimize efficiency.
Our Self-Service solutions provide organizations with customization and self-development capabilities powered by
APIs and intuitive tools for 24/7 access to smart self-service.
Strategic Alliances
We sell our Customer Engagement and Financial Crime and Compliance platforms and solutions worldwide,
primarily directly to customers and indirectly through selected partners to better serve our global customers. We partner with
companies in a variety of sales channels, including service providers, system integrators, consulting firms, distributors, value-
added resellers and complimentary technology vendors. These partners form a vital network for selling and supporting our
solutions and platforms. We have established a cross-organization business partner program to support our ever-growing eco-
system, providing a full range of tools and benefits to help promote the NICE offerings and drive mutual revenue growth and
success.
Our strategic technology partnerships ensure full integration with the NICE offerings, delivering value added
capabilities that enable them to provide our customers with an improved set of solutions and services.
Our DEVone program, comprising more than 200 partners, allows third-party software providers that bring
complementary capabilities, to integrate with our CXone platform and extend its functionality. DEVone partner offerings are
listed in our CXexchange Marketplace. Our Actimize X-Sight Marketplace hosts market leading vendors in the AML and
Fraud domains that complement the Financial Crime and Compliance solution suite.
Our Evidencentral Marketplace hosts an expanding ecosystem of technology vendors that integrate with our
Evidencentral platform to extend its functionality and make it simpler and faster for Emergency Communications, Law
Enforcement and Criminal Justice agencies to bring a high volume of multimedia evidence together, accelerate case building,
unearth hidden evidence and address evidence disclosure challenges.
Professional Service and Support
The NICE Professional Services and Support organization enables our customers to derive sustainable business
value from our solutions.
The Professional Service and Support offerings include a variety of services - both standalone and bundled with our
products. We address all stages of the technology lifecycle, including defining requirements, planning, design,
implementation, customization, optimization, proactive maintenance and ongoing support.
Enabling Value
Solution Delivery optimizes solution delivery to our customers and enables them to achieve their specific business
and organizational goals, on time and on budget. NICE solutions are delivered by certified project managers, technical
experts, and application specialists. We follow a proven methodology that includes business discovery to map solutions to
business processes.
Value Realization Services (VRS) ensure quick, deep and sustained adoption of the NICE solutions. These services
enable our customers to leverage the features and functionalities of our solutions to drive immediate and long-term results,
aligned to their specific business case, accelerating their return on investment. The services are specifically designed to
address the top short and long-term business concerns we heard through working with hundreds of customers across the
globe. VRS teams work with customers during all phases of solution implementation – before, during and after go-live. We
begin working with customer teams as soon as the project is kicked off, when the solution goes live, and for months after the
solution is implemented. Our experience has shown that our customers benefit greatly from access to NICE VRS resources
once they begin using the solution. This post-implementation engagement allows us to build skill and ownership within
customer teams, embed changes within the customer organization and determine return on investment from the solution.
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Managed Services empowers organizations to meet short term objectives, such as reducing handle time or
improving sales rates, along with achieving long term goals such as customer retention. Our team of experienced practitioners
work with customers, guiding the process of collecting interactions, prioritizing subjects to study, conducting analysis and
most importantly, developing plans that put the results of the analysis into action.
Customer Education Services provide users with the necessary knowledge and skills to operate NICE solutions
and to leverage their capabilities to meet customer needs. These services are offered both before and after the deployment of
NICE solutions.
Sustaining Value
Customer Success means working hand-in-hand with our customers to identify areas where they can maximize
business value and minimize complications, ensuring continued delivery of business benefits.
Cloud Operations ensure that solutions deployed on the NICE cloud run optimally and allow more simplified
software upgrades, maximizing availability, performance and quality, while ensuring the security of customer information.
This is delivered by using sophisticated proprietary utilities and automations that operate in a proactive manner, providing the
means to avoid impacting customer and business operations. This includes: Cloud Architecture teams that design cloud
service delivery and operation architectures; Cloud Security teams that help ensure that we set and meet the required Security
certifications; Cloud Infrastructure teams that manage both virtual and physical infrastructure requirements; Cloud DevOps
teams that implement the utilities and automations while working with our product development teams to optimize our
solutions for the cloud environment; and the 7X24 Cloud Application Support teams that monitor and manage the solutions
for our customers, ensuring world class up-time, performance, scalability and security. The NICE Cloud utilizes multiple
underlying technologies to give our customers many paths to the cloud – these include Physical Data Centers and Public
Cloud providers such as AWS and Azure. NICE maintains multiple Cloud Certifications including SOC 2 Type II –
Applications; HITRUST; ISO:27001 and PCI.
Customer Support and Maintenance responds to customer requests for support on a 24/7 basis, using advanced
tools and methodologies. NICE offers flexible service level agreements to meet our customers’ needs. Our solutions are
generally sold with a warranty for repairs of software defects or malfunctions. Software maintenance includes an
enhancement program with (in the majority of cases) an ongoing delivery of “like-for-like” upgrade releases, service packs
and hot fixes. NICE also offers a Technical Account Management service or TAM. The TAM is a designated manager
responsible for escalation management and overall customer care services.
Proactive Maintenance addresses issues before they can significantly impact our customers’ businesses. These
offerings include:
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Advanced Services – Technical experts perform system-level audits to ensure ongoing compliance with
operational specifications as well as specific product customizations tailored to the requirements of the
customer.
Application Performance Services – A 24/7 function that proactively monitors NICE-hosted and
customer-premises environments with triage, resolution and escalation of system alarms.
Managed Technical Services (Technical and Operation) – NICE offers a suite of managed technical and
operation services that enable the customer to fully outsource all necessary responsibilities and functions required in order to
manage the NICE solutions. This service includes dedicated onsite and remote support engineers, system management,
system operation, updates and upgrades.
Information Security - we have established information security management policies and procedures to protect the
confidentiality, integrity, and availability of our data while providing value to the way we conduct our business. We have
security measures, internal policies, and procedures in place to protect our customers’ information and ensure that proper
measures are taken in connection with our customers’ and their end users’ information. Additionally, we ensure that
information security controls are designed and implemented throughout our products and services development lifecycle. Our
privacy information management policies and procedures comply with industry accepted standards, such as ISO 27001. For
additional information on information security, please see Item 16K, “Cybersecurity“ in this annual report.
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Manufacturing and Source of Supplies
Many of our solutions are software-based and are deployed by open cloud platform and standard commercial
servers.
There is a small portion of our products that have certain hardware elements that are based primarily on standard
commercial off-the-shelf components and utilize proprietary in-house developed circuit cards and algorithms, digital
processing techniques and software. These products are IT-grade compatible.
We manufacture those products that contain hardware elements through subcontractors. Our manufacturers provide
turnkey manufacturing solutions including order receipt, purchasing, manufacturing, testing, configuration, inventory
management and delivery to customers for all of our product lines. NICE exercises various control mechanisms and
supervision over the entire production process. In addition, the manufacturer of a significant portion of such products, is
obligated to ensure the readiness of a back-up site in the event that the main production site is unable to operate as required.
We believe these outsourcing agreements provide us with a number of cost advantages.
Some of the components we use have a single approved manufacturer while others have two or more alternatives for
supply. In addition, we maintain an inventory for some of the components and subassemblies in order to limit the potential
for interruption. We also maintain relationships directly with some of the more significant manufacturers of our components,
and we believe that we can obtain alternative sources of supply in the event that the suppliers are unable to meet our
requirements in a timely manner.
We have qualified for and received the ISO-9001:2015 quality management, as well as the ISO 27001:2013
information security management, ISO 27701:2019 privacy management and ISO 14001:2015 environmental management
certifications.
Research and Development
We believe that the development of new products and solutions and the enhancement of existing products and
solutions are essential to our future success. Therefore, we intend to continue to devote substantial resources to research and
new product and service development, and to continuously improve our systems and design processes in order to reduce the
cost of our products and services. We conduct our research and development activities primarily in Israel, India and the U.S.
Our research and development efforts have been financed through our internal funds and through some programs sponsored
through the government of Israel.
We participate in programs funded by the IIA to develop generic technology relevant to the development of our
products. Such programs are approved pursuant to the Law for the Encouragement of Research, Development and
Technological Innovation in Industry 5744-1984 (the “Research and Development Law”), and the regulations promulgated
thereunder. We were eligible to receive grants constituting between 30% and 55% of certain research and development
expenses relating to these programs. Some of these programs were approved as programs for companies with large research
and development activities and some of these programs are in the form of membership in certain Magnet consortiums.
Accordingly, the grants under these programs are not required to be repaid by way of royalties. However, the restrictions of
the Research and Development Law described below apply to these programs.
The Research and Development Law generally requires that the product incorporating know-how developed under
an IIA-funded program be manufactured in Israel. However, upon the approval of the IIA (or notification in the event set
forth below, as the case may be), some of the manufacturing volume may be performed outside of Israel, provided that the
grant recipient pays royalties at an increased rate, which may be substantial, and the aggregate repayment amount is
increased). Following notification to the IIA (and provided the IIA did not object), up to 10% of the grant recipient’s
approved Israeli manufacturing volume, measured on an aggregate basis, may be transferred out of Israel, subject to payment
of the increased royalties referenced above.
The Research and Development Law also provides that know-how (or rights thereto) developed under an approved
research and development program may not be transferred or pledged to third parties without the approval of the IIA. Such
approval is not required for the sale or export of any products resulting from such research or development. The IIA, under
special circumstances, may approve the transfer of IIA-funded know-how outside Israel, including, in the event of a sale of
the know-how, provided that the grant recipient pays to the IIA a portion of the sale price, which portion will not exceed six
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times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the
event that the recipient of the know-how has committed to retain the R&D activities of the grant recipient in Israel after the
transfer).
Intellectual Property
We currently rely on a combination of trade secret, patent, copyright and trademark law, together with non-
disclosure and non-compete agreements, to establish and/or protect the technology used in our systems.
We currently hold 529 U.S. patents and 40 patents issued in additional countries covering substantially the same
technology as the U.S. patents. We have 206 patent applications pending in the United States and other countries. We believe
that the improvement of existing products and the development of new products are important in establishing and maintaining
a competitive advantage. We believe that the value of our products is dependent upon our proprietary software and hardware
continuing to be “trade secrets” or subject to copyright or patent protection. We generally enter into non-disclosure and non-
compete agreements with our employees and subcontractors. However, there can be no assurance that such measures will
protect our technology, or that others will not develop a similar technology or use technology in products competitive with
those offered by us. In most of the areas in which we operate, third parties also have patents which could be found applicable
to our technology and products. Such third parties may include competitors, as well as large companies, which invest millions
of dollars in their patent portfolios, regardless of their actual field of business. Although we believe that our products do not
infringe upon the proprietary rights of third parties, there can be no assurance that one or more third parties will not make a
claim or that we will be successful in defending such claim.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with
respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which
may not be available on reasonable terms.
We own the following trademarks and/or registered trademarks in different countries: Actimize, Actimize logo,
NICE Adaptive WFO, NICE WFM, NICE Voice of the Customer, NICE Work Force Management, NICE Incentive
Compensation, NICE Real Time Solutions, NICE Trading Recording, NICE Uptivity, NICE Air, NICE Communication
Surveillance, Customer Engagement Analytics, Decisive Moment, Fizzback, IEX, inContact, inContact Logo, NICE
inContact, Last Message Replay, NICE, NICE Analyzer, NICE Engage, NICE Engage Platform, NICE Interaction
Management, NICE Sentinel, NICE Inform, NICE Inform Lite, NICE Performance Compliance, NICE Inform Media Player,
NICE Inform Verify, NICE Logo, NICE Incentive Compensation Management, NICE Real Time Solutions, NICE Trading
Recording, NICE Proactive Compliance, NICE Security Recording, NICE SmartCenter, NICE, Nexidia, Nexidia ((!)) Logo,
Nexidia Interaction Analytics, Nexidia Advanced Interaction Analytics, Nexidia Search Grid, Neural Phonetic Speech
Analytics, Own the Decisive Moment, Scenario Replay, Syfact, Syfact Investigator, inContact Cloud Center Solutions,
Supervisor on-the-go, VAAS, Voice as a Service, Personal Connection, InTouch, Echo, inCloud, CXone, CXone Logo,
NICE inContact CXone, NICE Performance Management, inContact Automatic Contact Distributor, inContact Personal
Connection, inContact Interactive Voice Response, inContact Work Force Management, Mattersight, Mattersight Logo,
Mattersight See What Matters, Chemistry of Conversation, Net Promoter, Satmetrix, NPX, NPS, Fraudmap, Guardian
Analytics, Evidence Lake, Alacra, Free your business, Resolve, Brand Embassy and Hiperos, ContactEngine, ContactEngine
Logo, GoMoxie, FluenCX, TRUTH DEPENDS ON IT, MindTouch, NICE ElevateAI, ElevateAI and the NICE Smile design
logo, StatsViewer, ScheduleViewer, VoApps, Directdrop voicemail and Directdrop voicemail logo, LiveVox, LiveVox Logo,
Human Call Initiator, HCI and HTI.
Seasonality
In previous years the majority of our business operated under an on-premises enterprise software model, which was
characterized, in part, by uneven business cycles throughout the year, with a significant portion of customer orders received
in the fourth quarter of each calendar year. This was due primarily to year-end capital purchases by customers and holiday
season spending. In recent years, our business has been shifting more and more to the cloud, which is characterized by more
evenly distributed business, which balances the impact of being heavily weighted towards the fourth quarter. While the
seasonality associated with our cloud business is less impactful, we continue to have a second half fiscal year which typically
results in higher usage of our solutions stemming primarily from the retail and insurance verticals. While seasonal factors
such as these are common in the software and technology industry, this pattern should not be considered a reliable indicator
of our future revenue or financial performance. Many other factors, including general economic conditions, also have an
impact on our business and financial results. See “Risk Factors” under Item 3, “Key Information” of this annual report for a
more detailed discussion of factors which may affect our business and financial results.
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Regulation
Data Privacy, Cyber-Related Security and AI
We are subject to applicable data privacy and cyber-related security restrictions in countries in which our customers
and their end-users are located, including the United States, Israel and the E.U., mostly in relation to our SaaS, hosting and
cloud offering, as well as other outsourced services. With heightened privacy concerns and regulations, failure to comply
with the applicable legislation, procedures and security measures may result in significant financial penalties. In addition, as
the regulatory landscape continues to evolve, new laws, rules and regulations governing the use of AI technologies may also
apply. For more information on data privacy and cyber security related concerns and legislation, including the GDPR and
upcoming regulations governing AI, see also Item 3, "Key Information - Risk Factors" in this annual report.
We are also subject to domestic data privacy laws, such as the Israeli Privacy Law, the CCPA, CPRA and the United
Kingdom Data Protection Act 2018. We are evaluating the business impact of compliance with the constantly changing data
privacy laws and regulations, which may include domestic laws, regulations and guidelines that may come into effect in
additional regions as well, and apply to our products and services.
As part of our effort to comply with such regulations and mitigate any future risks related to data privacy and cyber-
security, we have adopted certain internal policies and procedures related to information security and incident response, as
well as Business Continuity Plans, Risk Assessment Procedures and Vendor Management Policies. These internal policies
and procedures are intended to address our business and operational practices as well as our customers' information security
concerns, and to avoid or mitigate the risks associated with our information assets and those of our customers. In addition, we
received the ISO 27001:2013 information security management certification, ISO 27701:2019 privacy management and
SOC2 Type II, PCI, Hitrust and FedRamp certifications were provided to the relevant business lines (as required).
Furthermore, we continually evaluate our policies and procedures in light of the regulations related to data privacy, cyber-
security and AI and to our customers' needs.
Trade Compliance
As a company with global operations, we may be subject to laws as well as international treaties and conventions
controlling imports, exports, re-export and transfer of goods, services and technology. These include import and customs
laws, export controls, trade embargoes and economic sanctions, restrictions on sales to parties that are listed on (or are owned
or controlled by one or more parties listed on) denied party watch lists and anti-boycott measures.
We are subject to applicable export control regulations in countries from which we export goods and services,
including the United States, Israel, European Union and the United Kingdom. Such regulations may apply with respect to
product components that are developed or manufactured in, or shipped from, the United States, Israel, European Union and
the United Kingdom, or with respect to certain content contained in our products. There are restrictions that apply to software
products that contain encryption functionality. In the event that our products and services are subject to such controls and
restrictions, we may be required to obtain an export license or authorization and comply with other applicable requirements
pursuant to such regulations or may be restricted from exporting certain products and services to certain countries or to
sanctioned parties.
European Environmental Regulations
Our European activities require us to comply with the Directive 2011/65/EU of the European Parliament and of the
Council on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment and the
Commission Delegated Directive (EU) 2015/863 (together “RoHS”). RoHS provides, among other things, that producers of
electrical and electronic equipment may not place new equipment containing certain materials, in amounts exceeding certain
maximum concentration values, on the market in the EU. We are also required to comply with Regulation (EC) 1907/2006 of
the European Parliament and of the Council Registration, Evaluation, Authorisation and Restriction of Chemicals
(“REACH”, SVHC-205), which requires producers to manage the risks from chemicals used in their products and to provide
safety information on the substances found in their products.
Our products meet the requirements of the RoHS and REACH directives, and we are making every effort in order to
maintain compliance, without adversely affecting the quality and functionalities of our products. If we fail to maintain
39
compliance, including by reason of failure of our suppliers to comply, we may be restricted from conducting certain business
in the EU, which could adversely affect our results of operations.
Our European activities also require us to comply with Directive 2012/19/EU of the European Parliament on Waste
Electrical and Electronic Equipment (“WEEE”). The WEEE directive covers the labeling, recovery and recycling of IT/
Telecommunications equipment, electrical and electronic tools, monitoring and control instruments and other types of
equipment, devices and items, and we have set up the operational and financial infrastructure required for collection and
recycling of WEEE, as stipulated in the WEEE directive, including product labeling, registration and the joining of
compliance schemes. We are taking and will continue to take all requisite steps to ensure compliance with this directive. If
we fail to maintain compliance, we may be restricted from conducting certain business in the EU, which could adversely
affect our results of operations.
Similar regulations have been, or are being, formulated in other parts of the world. We may be required to comply
with other similar programs that are enacted outside Europe in the future.
Environmental, Social and Governance (ESG) Report
NICE is guided by a deep commitment to social contribution, environmental sustainability and corporate citizenship
that is ingrained in our core values. For further information on our ESG strategy and performance, you may access our full
ESG Report, which is located on our Corporate Responsibility webpage at https://www.nice.com/company/corporate-
responsibility. The contents of our ESG Report and related supplemental information (including information on our website)
are not incorporated by reference into this annual report or in any other report or document we file with the SEC.
Competition
We believe that our solutions have several competitive advantages (as set forth above in “Our Solutions” section in
this Item 4, “Information on the Company – Business Overview”) in their scale, performance and accuracy,
comprehensiveness and broad functionality.
We are leaders in the Customer Engagement space. We compete against WFO players such as Alvaria, Calabrio,
Genesys and Verint. In the CCaaS market, which is a part of the Contact Center Infrastructure market that is still mainly held
by traditional on-premises players, we compete against Amazon-connect, Avaya, Cisco, Five9, Genesys and TalkDesk, as
well as other niche vendors. We also compete against certain UCaaS and Collaboration Software vendors, such as 8x8,
Vonage and Zoom, which offer basic CCaaS capabilities, and certain digital engagement vendors, such as LivePerson, which
offer digital engagement and self-service capabilities for contact centers. In addition, we are seeing some CRM companies,
such as Salesforce and Zendesk, that provide a subset functionality of our broader offerings. In the emergency
communications market, we compete against traditional recording vendors like Eventide, Equature and Exacom. In the Law
Enforcement and Justice space, we compete against evidence content generation providers like Axon and Genetec who are
looking to expand into broader digital evidence management.
We are leaders in the Financial Crime and Compliance space. We compete against niche vendors that provide one
subset of functionality to protect against a specific risk and against vendors that provide a more comprehensive offering. In
the Anti-Fraud market, we compete against vendors such as SAS, FICO, Featurespace and Feedzai. In the Anti-Money
Laundering market we compete against vendors such as SAS, Oracle and Quantexa. In the Financial Markets Compliance
market, we compete against vendors such as SMARTS, Oracle and SAS. In the Mid-market segment, we compete mainly
against Verafin.
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Item 4.C
Organizational Structure
The following is a list of our significant subsidiaries and other subsidiaries, including the country of incorporation or
residence. Each of our subsidiaries listed below is wholly owned by us.
Name of Subsidiary
NICE Systems Australia PTY Ltd.
NICE Systems Technologies Brasil LTDA
NICE Systems Canada Ltd.
NICE Interactive Solutions India Private Ltd.
Actimize Ltd.
NICE Japan Ltd.
NICE Technologies Mexico S.R.L.
NICE Netherlands B.V.
NICE Systems (Singapore) Pte. Ltd.
Country of Incorporation or Residence
Australia
Brazil
Canada
India
Israel
Japan
Mexico
Netherlands
Singapore
NICE Technologies Sole Proprietorship LLC
United Arab Emirates
Actimize UK Limited
NICE Systems Technologies UK Limited
NICE Systems UK Ltd.
Actimize Inc.
inContact Inc.
NICE Systems Inc.
NICE Systems Technologies Inc.
LiveVox Inc.
Item 4.D
Property, Plants and Equipment
United Kingdom
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
We have leased offices and facilities in several countries, which include the following headquarter offices:
•
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Our Israeli headquarters in Ra'anana occupies approximately 165,000 square feet.
Our North American headquarters in Hoboken, New Jersey, occupies approximately 60,000 square feet;
Our EMEA headquarters in London, occupies approximately 10,000 square feet; and
Our APAC headquarters in Singapore occupies approximately 5,600 square feet.
Additional material leased facilities consist of the following:
•
•
Americas facilities located in –
◦
◦
◦
Atlanta, Georgia - and office that occupies approximately 17,000 square feet;
Salt Lake City, Utah – an office that occupies approximately 128,000 square feet; and
Additional offices are located in Colorado, Texas, Ohio and California.
APAC facilities include an office space located in Pune, India, which occupies approximately 135,000
square feet . There are also additional APAC offices located in Bengaluru, Manila and Tokyo.
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We believe that our existing facilities are adequate to meet our current needs and substantially adequate to meet our
foreseeable future needs.
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Item 4A.
Unresolved Staff Comments.
None.
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Item 5.
Operating and Financial Review and Prospects.
The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and the related notes and other financial information included
elsewhere in this annual report. This discussion contains certain forward-looking statements that involve risks,
uncertainties and assumptions. As a result of many factors, including those set forth under Item 3, “Key Information -
Risk Factors” and elsewhere in this annual report, our actual results may differ materially from those anticipated in
these forward-looking statements. For more information about forward-looking statements, see the “Preliminary Note”
that immediately follows the Table of Contents of this annual report.
Overview
NICE is a global enterprise software leader, providing AI-powered cloud platforms that serve two main
markets: Customer Engagement and Financial Crime and Compliance. Our core mission is to transform experiences to
be extraordinary and trusted and create a frictionless and safe digital-first consumer reality where every interaction is
intelligent, meaningful and effortless. Our solutions are used by organizations of all sizes and are offered in multiple
delivery models, including cloud and on-premises.
Our strategy is based on serving rapidly expanding, specialized markets that require feature-rich solutions,
with robust, comprehensive cloud platforms that are spearheaded by AI as an overarching catalyst, propelling our
unique AI-driven vectors of growth: using AI differentiation to expand our cloud win rates, positioning AI as the
bedrock for driving rapid expansion into digital, utilizing AI to fuel massive platform-adoption and leveraging AI as a
lucrative source for new domain-specific use-cases.
In the Customer Engagement market, we enable organizations to transform experiences with specialized AI-
powered solutions aimed at augmenting employee activities with smart copiloting capabilities, delivering seamless
automated customer self-service using conversational AI, orchestrating journeys across multiple channels and intents,
meeting consumers wherever they choose to begin their journey, providing them with the knowledge element they
need, and creating smarter personalized customer interactions. We help organizations transform their workforce
experience with AI-powered solutions aimed at guiding and engaging employees, optimizing operations and
automating processes to deliver seamless transition between automated service and human-assisted interactions. We
are also digitally transforming the evidence process from police investigators and district attorneys to court and
correction facilities, providing a single, streamlined view of the truth as the core of our Public Safety and Justice
business, which is part of our Customer Engagement segment.
In the Financial Crime and Compliance market, we protect financial services organizations, with solutions
that identify risks and help prevent money laundering and fraud, as well as help ensure financial markets compliance in
real-time. With our holistic, data and entity-centric approach, we help financial services organizations address the new
dynamic of financial crime threats, which are significantly growing in the digital era.
NICE is at the forefront of several industry technological disruptions that have greatly accelerated in the last
several years: the growing acceptance and adoption of specialized AI-powered solutions combining domain-specific
use-cases, Generative AI and LLMs, the adoption of cloud platforms by organizations of all sizes and verticals, the
shift of consumer and organizational preferences towards digital-centric services and experiences, an increase in
consumer cross channel, self-service usage and the need to manage, optimize and engage a diverse workforce while
retaining and attracting top talent. Our suite of integrated solutions, based on our unique domain expertise, enables
customer service, financial crime prevention and criminal justice organizations to innovate and thrive with industry-
leading cloud platforms that use domain-specific data and AI powered solutions.
We rely on multiple key assets to drive our growth:
•
Our market-leading open cloud platforms which natively embed AI, analytics and automation, and
are purpose-built for our specific domains, scale up to any sized organization, offer a comprehensive
application suite for complete functionality, and are protected by a broad array of patents.
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•
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•
•
•
•
•
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•
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•
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•
•
Our extensive portfolio of applications that address organizational needs across all our areas of
domain expertise.
Our broad array of proprietary technologies and algorithms in the domains of Generative AI, LLMs,
automation, analytics, machine learning, speech-to-text, natural language processing, personality-
based routing and others. Our native AI models are based on years of industry-specific data and
domain expertise, consistently using machine learning for generating actionable insights.
Our access to vast amount of CX data, derived from billions of domain-specific interactions of all
types, enriching our applications and enabling us to build hundreds of CX purpose-built AI models.
Our unique digital capabilities that are critical for organizations of all sizes and across all industries
in dealing with the exponential adoption of digital in consumer preferences, banking transactions and
justice agencies operations.
Our advanced data security and compliance capabilities that deliver trusted enterprise software
across all our markets, including FedRAMP authorization to the relevant business lines, with 30
authorized applications, native PCI, supported by the most advanced SOC in the industry.
Our flexible delivery model that allows our customers to benefit from a wide range of both cloud and
on-premises solutions.
Our solutions' market coverage of all segments, from small and mid-sized businesses to large scale
Fortune 100 enterprises.
The mission critical nature of our solutions to the operations of our customers and our cloud
platforms that are essential for enabling a scalable and sustainable work-from-anywhere
environment.
Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness
for our solutions in our areas of operation.
Our broad partner ecosystem that enables us to reach and serve a large number of customers across
many countries.
Our loyal customer base of more than 25,000 organizations in over 150 countries, across many
industries, including 85 of the Fortune 100 companies.
Our strong profitability and free cash flow that allows us to invest in innovative solutions and
product development and fuels strategic acquisitions.
Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and
trends, which we introduce to the market through our direct sales force and distribution network.
Our skilled employees and domain expertise in our core markets allow us to bring our customers the
right solutions to address key business challenges and build strong customer partnerships.
Our customer support and operations, which enable our customers to quickly enjoy the benefits of
our solutions, with multiple deployment models in the cloud or on-premises throughout the world
and support for full value realization and customer success.
Our outcome-oriented white-glove services that enable our customers achieve greater efficiency,
higher revenue, and lower operating costs with our solutions.
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Recent Acquisitions
From time to time we complete acquisitions and investments. Some of them are not considered material to
our business and operations. During 2023, we completed several acquisitions for total consideration of approximately
$446.9 million. During 2022, we completed an acquisition for total cash consideration of approximately $30 million
and contingent consideration with a fair value of approximately $20.4 million. For additional information see Note 1b
to our Consolidated Financial Statements included elsewhere in this annual report.
The acquisitions were accounted for by the acquisition method of accounting, and, accordingly, the purchase
price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The results of
operations related to each acquisition are included in our consolidated statements of income from the date of
acquisition.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP.
Certain accounting policies require that we apply significant judgment in determining the appropriate
assumptions for calculating financial estimates. By their nature, these judgments will be subject to an inherent degree
of uncertainty. Our judgments are based upon our management’s historical experience, terms of existing contracts,
observance of trends in the industry, information provided by our customers and information available from other
outside sources, as appropriate.
We believe that the accounting policies and estimates discussed below are critical to our financial results and
to the understanding of our past and future performance, as these policies relate to the more significant areas involving
management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to
make assumptions because information was not available at the time or it included matters that were highly uncertain
at the time we were making our estimate and (2) changes in the estimate could have a material impact on our financial
condition or results of operations.
Revenue Recognition. We generate revenues from sales of cloud, service and software products, which
include software
implementation,
license, SaaS, network connectivity, hosting, support and maintenance,
configuration, project management, consulting and training, and software licenses. We sell our cloud, products and
services directly through our sales force and indirectly through a global network of distributors, system integrators and
strategic partners, all of whom are considered end-users.
We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers” (“ASC
606”). Under this standard, we recognize revenues when a customer obtains control of promised goods or services in
an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To
determine revenue recognition for contracts that are within the scope of this standard, we perform the following five
steps:
1) Identify the contract(s) with a customer
A contract with a customer exists when (i) there is an enforceable contract with the customer that defines each
party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods
or services; (ii) the contract has commercial substance; and (iii) we determine that collection of substantially all
consideration for goods or services that are transferred is likely based on the customer’s intent and ability to pay the
promised consideration. We apply judgment in determining the customer’s ability and intent to pay, which is based on
a variety of factors, including the customer's historical payment experience.
2) Identify the performance obligations of the contract
We enter into contracts that may include multiple performance obligations. We account for individual
products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other
items in the contract and if a customer can benefit from it on its own or with other resources that are readily available
to the customer.
3) Determine the transaction price
46
The transaction price is determined based on the consideration to which we will be entitled in exchange for
transferring goods or services to the customer.
Payment terms and conditions vary by contract type. In instances where the timing of revenue recognition
differs from the timing of invoicing, we generally do not include a significant financing component in our contracts
since our sale prices are not subject to billing terms and the purpose of our contracts is not to receive financing from,
or provide financing to, customers. In addition, we elected to apply the practical expedient to not adjust the promised
amount of consideration for the effects of a significant financing component if we expect, at contract inception, that
the period between when we transfer a promised good or service to a customer and when the customer pays for that
good or service will be one year or less.
Revenue is measured based on the consideration specified in a contract with a customer, excluding taxes
assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing
transaction, that we collect from a customer. We enter into contracts that can include various combinations of products
and services, which are generally capable of being distinct and accounted for as separate performance obligations.
4) Allocate the transaction price to the performance obligations of the contract
We allocate the transaction price to each performance obligation identified based on its relative standalone
selling price (“SSP”) out of the total consideration of the contract.
We use judgment in determining the SSP. If the SSP is not observable through standalone transactions, we
estimate the SSP by taking into account available information such as geographic or regional specific factors, internal
costs, profit objectives, and internally approved pricing guidelines related to the performance obligations.
We typically establish SSP range for our products and services, which is reassessed on a periodic basis or
when facts and circumstances change. SSP for products and services can evolve over time due to changes in NICE
pricing practices that are influenced by intense competition, changes in demand for products and services, and
economic factors, among others.
For products for which the SSP cannot be determined based on observable prices given that the same products
are sold for a broad range of amounts (i.e., the selling price is highly variable), the SSP included in a contract with
multiple performance obligations is determined by applying a residual approach whereby all other performance
obligations within a contract are first allocated a portion of the transaction price based upon their respective SSPs, with
any residual amount of transaction price allocated to these product revenues.
5) Recognize revenue when (or as) the entity satisfies a performance obligation
We derive our cloud revenues from subscription services, which are comprised of subscription fees from
granting customers access to our cloud platforms, network connectivity and/or services fees for deployment of certain
cloud platforms.
Revenue from subscription services is recognized either ratably over the contract period or based on usage,
and revenue from network connectivity is based on customer call usage and is recognized in the period the call is
initiated and services fees for deployment are amortized over average customer life.
Revenue from software license, support and maintenance services are recognized at the time the related
performance obligation is satisfied by transferring the promised product or service to the customer. Software license
revenues are recognized at the point in time when the software license is delivered, and the customer obtains control of
the asset. Support and maintenance service revenues are recognized ratably over the term of the underlying
maintenance contract term. Renewals of maintenance contracts create new performance obligations that are satisfied
over the term with the revenues recognized ratably over the period of the renewal.
Professional services revenues, except fees for deployment of certain cloud platforms, are recognized as
services are performed.
Impairment of Long-Lived Assets. Our long-lived assets include goodwill, property and equipment and
identifiable other intangible assets that are subject to amortization.
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Goodwill represents the excess of the purchase price in a business combination over the fair value of the net
tangible and intangible assets acquired. Under ASC 350, "Intangible - Goodwill and Other" ("ASC 350"), goodwill is
not amortized, but rather is subject to an annual impairment test. If we determine that it is more likely than not that the
fair value of a reporting unit is less than its carrying value, then we prepare a quantitative analysis to determine
whether the carrying value of reporting unit exceeds its estimated fair value. If the carrying value of a reporting unit
exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance
with the guidance in FASB Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other
(Topic 350).
During the fourth quarter of each of the fiscal years ended December 31, 2023, 2022 and 2021, we performed
a qualitative assessment for our reporting units and concluded that the qualitative assessment did not result in a more
likely than not indication of impairment, and therefore no further impairment testing was required. Accordingly, no
impairment charge was recognized during any of such fiscal years.
Income Taxes. To prepare our consolidated financial statements, we estimate our income taxes in each of the
jurisdictions in which we operate, and in certain of these jurisdictions, our income taxes are calculated based on our
assumptions as to our entitlement to various benefits under the applicable tax laws in the jurisdiction. The entitlement
to such benefits depends upon our compliance with the terms and conditions set out in these laws.
We account for income taxes in accordance with ASC 740, “Income Taxes.” This topic prescribes the use of
the liability method whereby deferred tax asset and liability account balances are determined based on differences
between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, if
necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred tax assets
and deferred tax liabilities are presented under long-term assets and long-term liabilities, respectively.
We implement a two-step approach to recognize and measure uncertain tax positions. The first step is to
evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available
evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be
sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the
tax benefit as the largest amount that is more than 50% (cumulative basis) likely to be realized upon ultimate
settlement.
We classify interest and penalties on income taxes (which includes uncertain tax positions) as taxes on
income.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting
for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the
guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income
taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance
also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the
accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income
taxes to separate financial statements of entities not subject to income tax. The adoption of ASU 2019-12 did not have
a significant impact on our consolidated financial statements.
Business Combination. We apply the provisions of ASC 805, “Business Combination,” and we allocate the
fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired
based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these
identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and
liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible
assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash
flows from customer relationships, acquired technology and acquired trademarks from a market participant
perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed
to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from
estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as
incurred.
Contingent consideration incurred in a business combination is included as part of the acquisition price and
recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the
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contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in
earnings under general and administrative expenses.
In October 2021, the FASB issued ASU No. 2021-08, Business Combination (Topic 805): Accounting for
Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure
contract assets and liabilities acquired in a business combination in accordance with Revenue from ASC 606 rather
than adjust them to fair value at the acquisition date. We early adopted ASU 2021-08 in the fourth quarter of 2021,
retroactively applying it to all business combinations since January 1, 2021. The adoption did not have a material
effect on our consolidated financial statements.
Stock-based Compensation. We account for stock-based compensation in accordance with ASC 718,
“Compensation - Stock Compensation” (“ASC 718”), which requires the measurement and recognition of stock base
compensation expense based on estimated fair values for all share-based payment awards made to employees and
directors. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant
using an option-pricing model and account for forfeitures as they occur.
We recognize compensation expenses for the value of our awards, which have graded vesting, based on the
accelerated attribution method over the requisite service period of each of the awards. We account for forfeitures as
they occur.
We estimate the fair value of stock options granted using the Black-Scholes-Merton option-pricing model,
which requires a number of assumptions: the expected volatility is based upon actual historical stock price movements;
the expected term of options granted is based upon historical experience and represents the period of time that options
granted are expected to be outstanding; the risk-free interest rate is based on the yield from U.S. Federal Reserve zero-
coupon bonds with an equivalent term; and the expected dividend rate (an annualized dividend yield) is based on the
per share dividend declared by our Board of Directors.
We measure the fair value of restricted stock based on the market value of the underlying shares at the date of
grant.
Marketable Securities. We account for investments in debt securities in accordance with ASC 320,
“Investments - Debt Securities” and ASC No. 326, “Financial Instruments - Credit Losses”. Management determines
the appropriate classification of our investments in debt securities at the time of purchase and re-evaluates such
determinations at each balance sheet date.
Marketable securities classified as “available-for-sale” (“AFS”) are carried at fair value. Unrealized gains and
losses are reported in a separate component of shareholders’ equity in accumulated other comprehensive income, net
of taxes. Gains and losses are recognized when realized, on a specific identification basis, in our consolidated
statements of income.
For each reporting period, we evaluate whether declines in fair value below the amortized cost are due to
expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs, in
accordance with ASC 326. Allowance for credit losses on AFS debt securities are recognized as a charge in financial
expenses (income) and other, net, on the consolidated statements of income, and any remaining unrealized losses, net
of taxes, are included in accumulated other comprehensive income (loss). As of December 31, 2023, no credit losses
have been recorded.
We classified all our securities with maturities beyond 12 months as current assets under the caption short
term investments on the consolidated balance sheet. These securities are available to support current operations and we
may sell these debt securities prior to their stated maturities.
49
Exchangeable Senior Notes. Through December 31, 2021, prior to the adoption of ASU 2020-06, we
separately accounted for the liability and equity components of convertible debt instruments that may be settled in
combination of cash and shares. The liability component at issuance was recognized at fair value, based on the fair
value of a similar instrument that did not have a conversion feature. The equity component was based on the excess of
the proceeds over the fair value of the liability component, after adjusting for an allocation of debt issuance costs, and
was recorded as additional paid in capital.
Debt discounts were amortized as additional non-cash interest expense over the expected life of the debt. We
allocated the total issuance costs incurred to the liability and equity components of the exchangeable senior notes
based on the same proportions as the proceeds from the notes.
On December 31, 2021, we entered into the First Supplemental Indenture to the 2017 Indenture (as defined in
Item 10, "Additional Information - Material Contracts - Notes and Indenture") (the “First Supplemental Indenture”). In
accordance with the First Supplemental Indenture, we irrevocably elected Cash Settlement for the principal and any
premium due upon conversion to apply to all conversions of the 2017 Notes (as defined in Item 10, "Additional
Information - Material Contracts - Notes and Indenture") with an Exchange Date (as defined in the 2017 Indenture)
that occurs on or after December 31, 2021. As a result, the conversion feature of the 2017 Notes was required to be
bifurcated from the debt host and accounted for separately as a derivative liability. As such, we recognized a derivative
liability at an amount equal to the fair value of the conversion feature at that date. Subsequent changes in fair value of
the bifurcated conversion derivative are reflected in financial income (expenses) on a net basis.
Additionally, in December 2021, we made an irrevocable election to settle the principal amount of the 2020
Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture") in cash.
Accordingly, upon conversion, the principal amount shall be paid in cash. Any amount in excess of the principal
amount may be paid, or delivered, as the case may be, in cash, shares of common stock or a combination of cash and
shares of the Company stock, at the Company's discretion. Prior to this irrevocable election, upon conversion, we,
could have elected to deliver to holders cash, shares of the Company's common stock or a combination of cash and
shares of the Company's common stock to settle the principal amount.
Starting January 1, 2022, we adopted ASU 2020-06, which simplifies the guidance on the issuer’s accounting
for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion
feature and (2) convertible instruments with a beneficial conversion feature. As a result, we do not separately present
in equity an embedded conversion feature in such debt. Instead, we account for a convertible debt instrument wholly as
debt, unless the debt contains embedded derivatives required to be bifurcated or the debt is issued at a substantial
premium. We recognized a cumulative effect of initially applying ASU 2020-06 as an adjustment to the January 1,
2022 opening balance of accumulated deficit. We combined the previously separated equity component with the
liability component, which together is classified as debt, thereby eliminating the subsequent amortization of the debt
discount as interest expense. Similarly, the portion of issuance costs previously allocated to equity was reclassified to
debt and amortized as interest expense. Accordingly, we recorded as of January 1, 2022 an increase to retained
earnings of approximately $7,331, a decrease to additional paid-in capital of $28,816, an increase to long-term debt of
$24,758, a decrease to deferred tax liabilities of $2,937, and an increase in debt issuance costs of $336. There will be
an impact to earnings per share as a result of the adoption based on the if-converted method if the we average share
price will exceed the conversion price of $299.19 of the 2020 Notes, then there will be an impact to earnings per share
for the dilution impact above the conversion price as a result of the adoption based on the if-converted method. The
prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under
the accounting standards in effect for those periods (see Note 15 to our Consolidated Financial Statements included
elsewhere in this annual report).
Recently Issued Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures. This standard updates reportable segment disclosure requirements, primarily through
enhanced disclosures about significant segment expenses and information used to assess segment performance on an
interim and annual basis. This update is effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU
2023-07 is not expected to have a significant impact on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income
Tax Disclosures", which expands the disclosure requirements for income taxes, primarily related to the rate
50
reconciliation and income taxes paid. This guidance is effective for the fiscal years beginning after December 15,
2024. Early adoption is permitted. The adoption of ASU 2023-09 is not expected to have a significant impact our
consolidated financial statements.
Results of Operations
The following table sets forth our selected consolidated statements of income for the years ended December
31, 2022 and 2023, expressed as a percentage of total revenues (totals may not add up due to rounding).
Revenue:
Cloud
Services
Product
Cost of revenue:
Cloud
Services
Product
Gross profit
Operating expenses:
Research and development, net
Selling and marketing
General and administrative
Total operating expenses
Operating income
Financial income and other, net
Income before taxes
Taxes on income
Net income
2023
2022
66.5 %
59.4 %
27.0
6.5
100.0
23.3
7.9
1.1
32.3
67.7
13.6
25.2
10.6
49.4
18.3
(0.9)
19.2
5.0
14.2
29.8
10.8
100.0
21.7
8.4
1.2
31.3
68.7
14.0
28.0
11.3
53.2
15.5
(0.5)
15.8
3.6
12.2
Comparison of Years Ended December 31, 2023 and 2022
For a comparison of our results for the years ended 2022 and 2021, please refer to Item 5 in our annual
report on Form 20-F for the year ended 2022, filed with the SEC on March 30, 2023.
Our revenues increased by approximately $196.2 million, or 9%, from $2,181.3 million in the year
ended December 31, 2022 to $2,377.5 million in the year ended December 31, 2023. The increase consisted of
a $205.3 million increase in Customer Engagement revenue, which was partially offset by a $9.1 million decrease in
Financial Crime and Compliance revenue.
The revenue growth of our Customer Engagement business segment in 2023 is attributed to the increased
demand for our cloud platform CXone from new customers and ongoing expansion within our installed customer base,
driven by further penetration into both large enterprises and the mid-market.
51
The revenue decrease in our Financial Crime and Compliance business segment in 2023 is primarily
attributed to a decrease in product revenue, which was partially offset by an increase in cloud revenue due to increased
adoption of our cloud platforms X-Sight and Xceed.
Cloud revenue
Service revenue
Product revenue
Total revenue
Years Ended December 31, Percentage
(In millions)
2023
2022
Change
2022-2023
$
1,581.8 $
1,295.3
22.1 %
641.4
154.3
650.1
235.9
(1.3)
(34.6)
$
2,377.5 $
2,181.3
9.0 %
Our cloud revenue in 2023 increased by 22.1%, or $286.5 million, to $1,581.8 million compared to $1,295.3
million in 2022, mainly due to an increase in the Customer Engagement segment from growing demand for our CXone
cloud platform, including ongoing penetration in the mid-market with further adoption at the high end of the market
and increasing international cloud adoption, resulting from both new customers and expansion from existing
customers. In addition, the increase in overall cloud revenue is partially attributed to the growing adoption of our cloud
solutions in the Financial Crime and Compliance segment. Revenue derived from our cloud platforms accounted for
66.5% of our total revenue in 2023, as part of our cloud-first strategy of increasing cloud revenue as a percentage of
our total revenue.
Our service revenue in 2023 decreased by 1.3%, or $8.7 million, to $641.4 million compared to $650.1
million in 2022, mainly due to a decrease in maintenance revenue as a growing number of our existing on-premises
customers transitioned to our cloud-based solutions.
Our product revenue in 2023 decreased by 34.6%, or $81.6 million, to $154.3 million compared to $235.9
million in 2022, as demand decreased for on-premises products in 2023 compared to 2022, primarily in the Financial
Crime and Compliance business segment, as a growing number of our existing on-premises customers transitioned to
our cloud-based solutions.
Revenue by Region
Years Ended December 31, Percentage
(In millions)
2023
2022
Change
2022-2023
United States, Canada and Central and South America (“Americas”)
$
1,986.6 $
1,802.2
Europe, the Middle East and Africa (“EMEA”)
Asia-Pacific (“APAC”)
Total revenues
248.0
142.9
249.7
129.4
$
2,377.5 $
2,181.3
10.2 %
(0.7)
10.5
9.0 %
Revenue in Americas increased in 2023 by 10.2%, or $184.4 million, to $1,986.6 million compared to
$1,802.2 million in 2022, mainly due to an increase in cloud revenue for our cloud platforms, primarily from CXone.
Revenue in EMEA decreased in 2023 by 0.7%, or $1.7 million, to $248.0 million compared to $249.7 million
in 2022, primarily attributed to the decrease in product revenue from the Financial Crime and Compliance segment,
largely offset by an increase in cloud revenue in both business segments.
Revenue in APAC increased in 2023 by 10.5%, or $13.5 million, to $142.9 million compared to $129.4
million in 2022. The increase in revenue in 2023 is primarily attributed to the increase in cloud revenue in the
Customer Engagement segment and an increase in service revenue in the Financial Crime and Compliance segment.
52
Cost of Revenue
Cost of cloud revenue
Cost of service revenue
Cost of product revenue
Total cost of revenue
Years Ended December 31, Percentage
(In millions)
2023
2022
Change
2022-2023
$
553.7 $
188.9
25.6
$
768.2 $
472.8
183.9
26.9
683.7
17.1 %
2.7
(4.8)
12.4 %
Our cost of cloud revenue in 2023 increased by $80.9 million, or 17.1% compared to 2022, and decreased as
a percentage of cloud revenue. The increase in the cost of cloud revenue is primarily due to an increase in our cloud
sales. The decrease as percentage of cloud revenue is primarily due to increased scale in our cloud business in 2023.
Our cost of service revenue in 2023 increased by $5.0 million, or 2.7%, compared to 2022 and slightly
increased as a percentage of service revenue compared to 2022.
Our cost of product revenue in 2023 decreased by $1.3 million, or 4.8%, compared to 2022 and increased as a
percentage of product revenue compared to 2022, mainly due to decreased scale in our product business in 2023.
Gross Profit
Gross profit on cloud revenue
as a percentage of cloud revenue
Gross profit on service revenue
as a percentage of service revenue
Gross profit on product revenue
as a percentage of product revenue
Total gross profit
as a percentage of total revenue
Years Ended December 31, Percentage
(In millions)
2023
2022
Change
2022-2023
$ 1,028.2
$
822.5
25.0 %
65.0 %
452.5
70.5 %
128.6
83.3 %
63.5 %
466.2
71.7 %
208.9
88.6 %
(2.9)
(38.5)
$ 1,609.3
$ 1,497.6
7.5 %
67.7 %
68.7 %
Our cloud gross profit was $1,028.2 in 2023 compared to $822.5 in 2022, representing an increase of $205.7
million, or 25.0%. Our cloud gross profit as percentage of cloud revenue increased to 65.0% in 2023 compared to
63.5% in 2022. The increase in cloud gross profit and margin is mainly attributed to scaling in our cloud business,
further adoption of higher margin software offerings within our cloud platforms and efficiencies in our internal
operations.
Our services gross profit was $452.5 in 2023 compared to $466.2 in 2022, representing a decrease of $13.7
million, or 2.9%, which is mainly attributed to a decrease in maintenance revenue as a growing number of our existing
on-premises customers transition to our cloud-based solutions. As a percentage of service revenue, our services gross
profit was 70.5% in 2023 compared to 71.7% in 2022.
Our product gross profit was $128.6 in 2023 compared to $208.9 in 2022, representing a decrease of
$80.3 million, or 38.5%, which is mainly attributed to the execution of our strategy as a cloud first company. Our
product gross margin decreased to 83.3% in 2023 compared to 88.6% in 2022, mainly due to the change in product
revenue mix sold as compared to the prior year.
53
Operating Expenses
Research and development, net
Selling and marketing
General and administrative
Total operating expenses
Years Ended December 31,
Percentage
(In millions)
2023
2022
Change
2022-2023
$
322.7 $
599.1
252.3
306.1
609.8
246.5
$
1,174.1 $
1,162.4
5.4 %
(1.8) %
2.4 %
1.0 %
Research and Development, Net. Net research and development expenses increased by $16.6 million to
$322.7 million in 2023 compared to $306.1 million in 2022, and represented 13.6% and 14.0% of revenues in 2023
and 2022, respectively. The increase in research and development expenses is attributed mainly to an increase in
headcount to further drive innovation in our AI based solutions and expand our cloud platforms and capabilities.
Selling and Marketing Expenses. Selling and marketing expenses decreased by $10.7 million to $599.1
million in 2023 compared to $609.8 million in 2022, which represented 25.2% and 28.0% of total revenues in 2023
and 2022, respectively. The decrease in selling and marketing expenses is attributed primarily to a decrease in
marketing costs, stock-based compensation costs and fully amortized intangible assets. The decrease was partially
offset by an increase in selling costs to obtain contracts and an increase in our go-to-market headcount.
General and Administrative Expenses. General and administrative expenses in 2023 were $252.3 million
compared to $246.5 million in 2022, which represented 10.6% of total revenues in 2023, as compared to 11.3% of total
revenues in 2022. The increase in general and administrative expenses is attributed primarily to an increase in
headcount and an increase in stock-based compensation costs.
Financial Expenses and Other, net
Financial income and other, net
Years Ended December 31,
(In millions)
2023
2022
Percentage
Change
2022-2023
(22.5)
(10.2)
120.6 %
Financial Expense income and Other, net. Financial income and other, net, increased by $12.3 million to
income of $22.5 million in 2023 compared to $10.2 million in 2022. The increase in financial income and other, net is
attributable primarily to an increase in interest income earned from our cash and investment portfolio.
Taxes on Income. Total tax expenses were $119.4 million in 2023 and $79.4 million in 2022. Our effective
tax rate was 26.1% in 2023 and 23.0% in 2022.
The increase in 2023 of $40.0 million in tax expenses is mainly due to our increased profitability. The
increase in our effective tax rate is mainly attributed to an increase in our U.S. market-based income with a higher
income tax rate and to a change in certain tax positions.
The majority of our income in Israel continues to benefit from reduced tax rates, which was 12% in 2023 and
2022, pursuant to our Preferred Technology Enterprise programs, as discussed in Note 13 of our Consolidated
Financial Statements included elsewhere in this annual report under the caption “Taxes on Income”.
Net Income. Net income increased by $72.4 million to $338.3 million in 2023 compared to $265.9 million in
2022. The increase in 2023 resulted primarily from an increase in our revenue, gross profit, operating income and
financial income, partially offset by higher operating expenses.
54
Liquidity and Capital Resources
To date, we have financed our operations, acquisitions and the repurchase of our equity, primarily through
cash generated from our operating activities as well as through debt financing in the form of Exchangeable Notes.
As of December 31, 2023, we had $1,407.8 million of cash equivalents and in short-term investments, which
included $511.8 million in cash and cash equivalents, and $896.0 million in short-term investments. We believe our
existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at
least the next 12 months.
We plan to continue to finance our operations in the future primarily through sales of our solutions, most
notably our cloud platforms. Our future capital requirements will depend on many factors, including our growth rate,
continuing market acceptance of our solutions, client retention, our ability to gain new clients, the timing and extent of
spending to support research and development efforts, the expansion of sales and marketing activities and personnel,
the introduction of new and enhanced offerings, and the impact of changes to the global economy, among other
factors. We may also acquire or invest in complementary businesses, technologies and intellectual property rights,
which may increase our use of cash and future capital requirements, both to pay acquisition costs and to support our
combined operations.
We continually evaluate our capital needs and may decide to raise additional capital to fund the growth of our
business and future acquisitions and investments, through public or private equity offerings or through additional debt
financing. Access to additional capital may not be available or on favorable terms.
Cash Flows
Generally, we invest our excess cash in highly liquid investment grade securities. As of December 31, 2023,
we had $1,407.8 million of cash and cash equivalents and short-term investments, as compared to $1,571.5 million at
December 31, 2022.
Cash provided by operating activities was $561.4 million and $479.7 million in 2023 and 2022,
respectively. Net cash from operations in 2023 consisted primarily of net income of $338.3 million, adjusted for non-
cash activities such as depreciation and amortization of $167.4 million, stock-based compensation of $176.7 million,
an increase in deferred taxes of $66.6 million as well as working capital changes derived from a decrease in deferred
revenues of $45.9 million and a decrease in accrued expenses and other liabilities of $55.7 million, partially offset by
an increase in trade receivables of $34.3 million . Net cash from operations in 2022 consisted primarily of net income
of $265.9 million, adjusted for non-cash activities such as depreciation and amortization of $176.5 million, stock-based
compensation of $182.7 million, an increase in deferred taxes of $52.6 million as well as working capital changes
derived from an increase in deferred revenues of $6.4 million, an increase in accrued expenses and other liabilities of
$33.7 million and an increase in trade receivables of $129.7 million.
Net cash used in investing activities was $293.6 million and $152.4 million in 2023 and 2022, respectively. In
2023, net cash used in investing activities consisted primarily of payment for acquisitions in the aggregate amount of
$415.2 million, purchase of property and equipment of $29.2 million and capitalization of internal use software costs
of $55.0 million, partially offset by net proceeds from investment in marketable securities and short-term bank
deposits of $205.8 million. In 2022, net cash used in investing activities consisted primarily of payment for an
acquisition in the amount of $29.7 million, net investment in marketable securities and short-term bank deposits of
$40.7 million and purchase of property and equipment of $31.9 million and capitalization of internal use software costs
of $50.0 million.
Net cash used in financing activities was $290.3 million and $164.5 million in 2023 and 2022, respectively.
In 2023, net cash used in financing activities was attributed primarily to repurchase of our ordinary shares of
$288.4 million and repayment of long-term debt in the amount of $2.6 million, which were partially offset by proceeds
from the issuance of shares upon the exercise of options of $2.6 million. In 2022, net cash used in financing activities
was attributed primarily to repayment of long-term debt in the amount of $20.1 million and repurchase of our ordinary
shares of $144.9 million, which were partially offset by proceeds from the issuance of shares upon the exercise of
options of $1.0 million.
55
Contractual and Other Obligations
Set forth below are our material contractual obligations and other commercial commitments as of
December 31, 2023 (in thousands).
Contractual Obligations
Total
Payments Due by Period
Less than 1
year
1- 3 years
3-5 years
More than 5
years
Debt Obligations, including estimated
interest *
Operating Leases
Unconditional Purchase Obligations
Severance Pay**
Total Contractual Cash Obligations
Uncertain Income Tax Positions ***
$
$
$
$
$
669,900 $
209,900 $
460,000 $
— $
146,782
17,962
32,907
29,155
425,702 $
105,843 $
170,181 $
149,678 $
—
66,758
—
17,078
1,259,462 $
333,705 $
663,088 $
178,833 $
66,758
90,124
*
**
***
Debt obligations includes senior exchangeable notes. The principal balances of the exchangeable senior notes
are reflected in the payment periods in the table above based on their respective contractual maturities
assuming no conversion. See Note 15 to our consolidated financial statements included elsewhere in this
annual report for further details. In January 2024, the 2017 Notes fully matured, and the entire aggregate
principal amount of $87,432 was settled in cash (see Note 19 to our consolidated financial statements).
Severance pay relates to accrued obligations to employees as required under applicable labor laws. These
obligations are payable only upon termination, retirement or death of the respective employees.
Uncertain income tax positions under ASC 740 are due upon settlement and we are unable to reasonably
estimate the ultimate amount or timing of settlement. See Note 13(i) of our consolidated financial statements
included elsewhere in this annual report for further information regarding our liability under ASC 740.
Other Commercial Commitments
Amount of Commitment Expiration Per Period
Total
Amounts
Committed
Less than 1
year
1- 3 years
3- 5 years
More than 5
years
Guarantees*
$
2,986 $
794 $
2,192 $
— $
—
* Primarily in connection with office lease agreements.
Research and Development and Intellectual Property
For information on our research and development policies and intellectual property, please see “Research and
Development” and “Intellectual Property” under Item 4, “Information on the Company” in this annual report.
Trend Information
For additional information on trends in our industry, please see Item 4, “Information on the Company—
Business Overview—Industry and Technology Trends” in this annual report.
For additional information on trends, uncertainties, demands, commitments or events that may have a material
effect on revenue, please see Item 3, “Key Information—Risk Factors” in this annual report.
56
Item 6.
Directors, Senior Management and Employees.
Item 6A.
Directors and Senior Management.
The following tables set forth, as of March 19, 2024, the name, age and position of each of our directors and
executive officers and, in regard to our directors, any of the committees of our board of directors on which they serve and
whether any such director is an outside director:
Members of the Board of Directors
Name
Age
Position
David Kostman
59
Chairman of
the Board of
Directors
Rimon Ben-
Shaoul
79
Director
Dan Falk
79
Director
Yocheved Dvir
71
Director
Yehoshua
Ehrlich
74
Director
Leo Apotheker
70
Director
Joe Cowan
75
Director
Zehava Simon
65
Director
Audit
Committee
Member
Compensation
Committee
Member
Internal
Audit
Committee
Member
Mergers and
Acquisitions
Committee
Member
Nominations
Committee
Member
Outside
Director*
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
*
See Item 6C., “Directors, Senior Management and Employees—Board Practices— Outside Directors.”
57
Members of Management
Name
Barak Eilam
Beth Gaspich
Barry Cooper
Craig Costigan
Yaron Hertz
Darren Rushworth
Awan Roy
Shiri Neder
Tali Mirsky
Gil Vassoly
Age
48
58
53
63
53
56
53
48
51
50
Position
Chief Executive Officer
Chief Financial Officer
President, CX
Chief Executive Officer, NICE Actimize
President, NICE Americas
President, CE International
Vice President, Head of NICE India
Executive Vice President, Human Resources
Corporate Vice President, General Counsel and Corporate
Secretary
Vice President, Corporate Finance
David Kostman has served as one of our directors since 2001 (with the exception of the period between June 2007
and July 2008), and as our Chairman of the Board since February 2013. Mr. Kostman is currently co-CEO and board member
of publicly traded Outbrain, Inc. and serves on the board of directors of publicly traded Unity Inc. and privately held Tivit
S.A. Mr. Kostman is also a former board member of publicly traded Retalix Ltd. (acquired by NCR). From 2006 until 2008,
Mr. Kostman was a Managing Director in the investment banking division of Lehman Brothers, heading the Global Internet
Group. From April 2003 until July 2006, Mr. Kostman was Chief Operating Officer and then Chief Executive Officer of
Delta Galil USA, a subsidiary of publicly traded Delta Galil Industries Ltd. From 2000 until 2002, Mr. Kostman was
President of the International Division and Chief Operating Officer of publicly traded VerticalNet Inc. Prior to that Mr.
Kostman worked in the investment banking divisions of Lehman Brothers from 1994 to 2000, focusing on the technology and
Internet sectors, and NM Rothschild & Sons from 1992 to 1993, focusing on mergers and acquisitions and privatizations. Mr.
Kostman holds a Bachelor’s degree in Law from Tel Aviv University and a Master’s degree in Business Administration from
INSEAD.
58
Rimon Ben-Shaoul has served as one of our directors since September 2001. Between 2001 and 2005, Mr. Ben-
Shaoul has served as Co-Chairman, President, and Chief Executive Officer of Koonras Technologies Ltd., a technology
investment company controlled by LEADER Ltd., an Israeli holding company. Since 2002 Mr. Ben-Shaoul serves as
Chairman of Grand AutoMotive LLP, a private company. Mr. Ben-Shaoul also served as a director of MIND C.T.I. Ltd.,
BVR Systems Ltd. and several private companies. In addition, he served as the President and Chief Executive Officer of
Polar Communications Ltd., which manages media and communications investments. Mr. Ben-Shaoul also served as the
Chairman of T.A.T Technologies Ltd., a public company listed on NASDAQ and TASE. Between 1997 and 2001, Mr. Ben-
Shaoul was the President and Chief Executive Officer of Clal Industries and Investments Ltd., one of the largest holding
companies in Israel with substantial holdings in the high-tech industry. During that time, Mr. Ben-Shaoul also served as
Chairman of the Board of Directors of Clal Electronics Industries Ltd., Scitex Corporation Ltd., and various other companies
within the Clal Group. Mr. Ben-Shaoul also served as a director of ECI Telecom Ltd., Fundtech Ltd., Creo Products, Inc. and
Nova Measuring Instruments Ltd. From 1985 to 1997, Mr. Ben-Shaoul was President and Chief Executive Officer of Clal
Insurance Company Ltd. and a director of the company and its various subsidiaries. Mr. Ben-Shaoul holds a Bachelor’s
degree in Economics and Statistics and a Master’s degree in Business Administration, both from Tel-Aviv University.
Dan Falk has served as one of our outside directors since 2001. Mr. Falk is currently a board member and the Chair
of the audit committee of each of Innoviz Technologies Ltd. and Evogene Ltd. Mr. Falk also served on the board of directors
of each of Attunity Ltd. and Orbotech Ltd. and until recently also served on the board of directors of Ormat Technologies Inc.
From 1999 to 2000, Mr. Falk was President and Chief Operating Officer of Sapiens International Corporation N.V. From
1985 to 1999, Mr. Falk served in various positions in Orbotech Ltd., the last of which was Chief Financial Officer and
Executive Vice President. From 1973 to 1985, he served in several executive positions in the Israel Discount Bank. Mr. Falk
holds a Bachelor’s degree in Economics and Political Science and a Master’s degree in Business Administration, both from
the Hebrew University of Jerusalem.
Yocheved Dvir has served as one of our outside directors since January 2008. Since 2000, Ms. Dvir has served as a
strategic advisor in business development affairs to multiple companies and initiatives. Ms. Dvir also serves on the board of
directors of Menorah Insurance Company. She previously served on the board of directors of Xenia Venture Capital, Endey
Med, Alrov Real Estate, Visa Cal, Trendline Business Information & Communications Ltd., Israel Corporation Ltd., ECI
Telecom Ltd., Strauss Industries Ltd., Phoenix Holding and Phoenix Insurance Co. Between 1990 and 2000, Ms. Dvir served
as a Senior Vice President of the Migdal Group. Ms. Dvir joined the Migdal Group in 1981 and, until late 2000, held a
number of senior financial and managerial positions, including Head of the Group’s Economics Department (1986-1988),
Head of the Group’s Corporate Office from 1989 to 1992, Head of the Group’s General Insurance Division and Corporate
Office from 1993 to 1997, Group CFO from 1997 to 1999, and Head of the Group’s Strategic Development Division and
Marketing Array and Risk Manager in 2000. Ms. Dvir holds a Bachelor’s degree in Economics and Statistics from the
University of Haifa and completed studies towards a second degree in Statistics from the Hebrew University of Jerusalem.
Yehoshua (Shuki) Ehrlich has served as one of our directors since September 2012. Mr. Ehrlich is an active social
investor, serving as Chairman of “Committed to Give”, a group formed by Israeli social investors for promoting philanthropy
in Israel and several other social organizations. Mr. Ehrlich also serves as a board member of the American Joint Distribution
Committee and a board member of AfterDox, an angels’ investment group. Between the years 2000 and 2010, Mr. Ehrlich
served as Managing Director at Giza Venture Capital, where he focused on the communications, enterprise software and
information technology sectors. Additionally, Mr. Ehrlich had a fifteen-year career with Amdocs, a public software company
specializing in billing, CRM, order management systems for telecommunications and Internet service providers. In his last
role at Amdocs, Mr. Ehrlich served as Senior Vice President of Business Development. Mr. Ehrlich holds a Bachelor of
Science in Mathematics and Computer Science from Tel Aviv University.
Leo Apotheker has served as one of our directors since August 2013. Mr. Apotheker is currently chairman of the
board of Syncron AB, Harvest and Eudonet, and a member of the board of Schneider SE and MercuryGate. Mr. Apotheker
was the Co-Chief Executive Officer of Burgundy Technology Acquisition Corp until recently and from 2012 to 2014, he was
the Managing Partner and co-founder of Efficiency Capital SAS, a growth capital advisory firm. From 2010 to 2011, Mr.
Apotheker served as Chief Executive Officer of Hewlett Packard. From 2008 to 2010, he served as Chief Executive Officer
of SAP AG. Mr. Apotheker also previously served as the chairman of the board of Unit4, a leading Dutch software company
and a member of the board of Taulia Inc. Mr. Apotheker holds a Bachelor’s degree in Economics and International Relations
from the Hebrew University of Jerusalem.
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Joe Cowan has served as one of our directors since August 2013. Mr. Cowan is currently a director of Auburn
University Foundation, StartProto and MachineMetrics, private entities. Until recently, Mr. Cowan served as a director of
Drishti Technologies Inc, ChannelAdvisor Inc and SAI Global. From 2013 until 2017, Mr. Cowan was the CEO and director
of Epicor. During 2013, Mr. Cowan also served as President of DataDirect Networks, Inc. He also served as a director of
DataDirect Networks, Inc. between 2011 and 2013. From 2010 until 2013, Mr. Cowan served as the Chief Executive Officer
and President of Online Resources Corp. During 2009, he served as an Operating Executive and Consultant at Vector Capital.
From 2007 to 2009, Mr. Cowan served as the Chief Executive Officer of Interwoven Inc. From 2004 to 2006, Mr. Cowan
served as the President and Chief Executive Officer of Manugistics Inc. and Manugistics Group Inc. Prior to that, Mr. Cowan
served in various senior executive positions, including as the Chief Operating Officer of Baan Co. NV and Avantis GOB NV.
Mr. Cowan has also served on the board of directors of Blackboard Inc., as well as several private companies. Mr. Cowan
holds an M.S. degree in Electrical Engineering from Arizona State University and holds a B.S. degree in Electrical
Engineering from Auburn University.
Zehava Simon has served as one of our outside directors since July 2015. Ms. Simon served as a Vice President of
BMC Software Inc. from 2000 until 2013, most recently as Vice President of Corporate Development. From 2002 to 2011,
Ms. Simon also served as Vice President and General Manager of BMC Software in Israel. Prior to that, Ms. Simon held
various positions at Intel Israel, which she joined in 1982, including acting as leader of Finance and Operations and Business
Development for Intel in Israel. Ms. Simon is currently a board member of Audiocodes Ltd. and Nova Measurements, both
public companies traded on NASDAQ and TASE. Ms. Simon is a former member of the board of directors of Insightec Ltd.,
M-Systems Ltd. (acquired by SanDisk Corp.), Tower Semiconductor Ltd. and Amiad Water Systems, a public company
traded on the London Stock Exchange. Ms. Simon holds a B.A. in Social Sciences from the Hebrew University, Jerusalem, a
law degree (LL.B.) from the Interdisciplinary Center in Herzliya and an M.A. in Business and Management from Boston
University.
Barak Eilam has served as Chief Executive Officer since April 2014. In his previous position with NICE, Mr.
Eilam was President of our American division from July 2012 to March 2014. Prior to that, Mr. Eilam was the head of sales
and the general manager of the Enterprise Group in the Americas. From 2007 to 2009, Mr. Eilam founded and served as the
general manager of the NICE Interaction Analytics Global Business Unit. Mr. Eilam has also served in a variety of executive
positions within NICE, managing different aspects of the business in product development, sales and product
management. Before joining NICE in 1999, Mr. Eilam was an officer for an elite intelligence unit in the Israeli defense
forces. Mr. Eilam holds a Bachelor’s degree in Electrical and Electronics Engineering from Tel Aviv University.
Beth Gaspich has served as our Chief Financial Officer since October 2016. Ms. Gaspich joined NICE as CFO of
the Financial Crime and Compliance division NICE Actimize in September 2011, where she was responsible for finance,
legal and business operations. Prior to joining NICE, she was Chief Financial Officer for Archive Systems, Inc., a privately
held document management software provider. She also served as Vice President of Finance at RiskMetrics Group, Inc., a
cloud-based risk management software company. Ms. Gaspich was one of the founding members of RiskMetrics Group and
assisted in taking the company through a successful public offering on the NYSE in January 2008. Prior to that, Ms. Gaspich
held several other senior positions throughout her career at large global financial institutions, including JP Morgan and Price
Waterhouse. Ms. Gaspich holds a B.A. in Accounting from the University of Missouri.
Barry Cooper has been with NICE since March 2011 and serves as our President, CX since October 2022.
Previously he served as our President, WCX - Workforce Engagement & Customer Experience from January 2019, and from
May 2016 until December 2018, he served as Chief Operating Officer (COO). Prior to serving as COO, Mr. Cooper served as
Vice President, Business Operations for NICE APAC from March 2011 until June 2013, and as of July 2013 and until
assuming the role of COO, he served as Executive Vice President, Professional Services and Cloud. Prior to joining NICE,
Mr. Cooper was a Management Consultant at Accenture; the Head of Customer Service, IT and Billing at Time Telekom,
Malaysia; and Vice President of Professional Services, APAC for CSG Systems, later Comverse. Mr. Cooper holds a First
Class Bachelor of Computer Science and Mathematics with Honors from Salford University in the United Kingdom.
Craig Costigan has served as NICE Actimize CEO since November 2018. From 2016 to 2018, he served as
President of Capital Markets & Credit at Fidelity National Information Services Inc. (FIS), where he managed a team of
approximately 4,000 staff worldwide, overseeing risk, compliance, credit, security finance, securities processing and market
data solutions and services for over 2,000 banks, broker dealers, investment firms, hedge funds, insurance companies and
clients in the financial market. Prior to that, Mr. Costigan served as President of the Risk, Compliance and Global Securities
Business at SunGard. Mr. Costigan holds a BS in Economics from Northeastern University.
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Yaron Hertz has served as our President, NICE Americas since 2017. Mr. Hertz joined NICE in 2007 as part of the
Actimize acquisition by NICE. Prior to his current position, Mr. Hertz served as the head of sales for NICE Actimize in the
Americas. Prior to joining Actimize, Mr Hertz severed as Head of Partner and Channel development for RSA Security. In
addition, Mr. Hertz has extensive experience in senior leadership position, and he served as VP of Business Development in
Cyota. Mr. Hertz is a former attorney and holds an LLB from the University of Northumbria in Newcastle, England.
Darren Rushworth has been with NICE since 2017 and serves as our President, CE International since April 2022.
Previously he served as President of NICE APAC. Mr. Rushworth’s career spans over 30 years in the IT industry of which
the past 21 years have been in the Asia Pacific Region. Prior to joining NICE, Mr. Rushworth held the role of Managing
Director of Singapore for SAP Asia Pacific and he also led SAP’s Philippine and Emerging Market operations. Prior to that,
Mr. Rushworth held multiple leadership roles at Oracle including VP Applications Sales APAC, VP Channels and VP Oracle
Direct APAC.
Awan Roy has served as our Vice President, Head of NICE India GTC since March 2021. From 2007 to 2020 Mr.
Roy served as Sr Director, R&D and India Site Head at Varian Medical Systems where he established the India center,
growing it into a global Center of Excellence for Infrastructure and Informatics software. Prior to that, Mr. Roy served as Sr
Manager at Siemens Healthineers where he led the development of several medical software products and platforms. Mr. Roy
holds a Bachelor's degree in Computer Science from the University of Delhi and a Masters' degree in Computer Science from
Devi Ahilya Vishwavidyalaya.
Shiri Neder has served as our Executive Vice President, Human Resource since February 2018. Prior to joining
NICE, Ms. Neder was the Corporate Vice President, Head of Human Resources at Nova Measuring Instruments. Prior to that,
Ms. Neder worked at Amdocs as Vice President, Human Resources for the Product and Delivery organizations and served as
head of Amdocs’ Talent Development organization. In addition, Ms. Neder has held positions at Microsoft where she
established the Human Resources function for the Telecom division as well as served as Regional Senior Human Resources
Manager for the EMEA region. Ms. Neder holds a B.A. in Social Science and an M.A. in Law from Bar Ilan University.
Tali Mirsky has served as our Corporate Vice President, General Counsel and Corporate Secretary since March
2018. From 2010 to early 2018, she served as Global Vice President of Legal Affairs and Corporate Secretary at Frutarom
Industries Ltd., where she led the company’s M&A transactions in addition to managing the company’s legal department and
handling all legal matters and corporate and securities related items. Prior to that, Ms. Mirsky served as Vice President,
General Counsel and Corporate Secretary of Alvarion, led Business and Legal Affairs at Nicast and Midbar Tech and was an
associate with Naschitz Brandes & Co law office. She holds an LL.B. in Law and Business Administration from IDC,
Herzliya and is admitted to practice law in Israel.
Gil Vassoly has served as our Vice President, Corporate Finance since August 2022. Between 2019 and August
2022, Mr. Vassoly served as Vice President Finance and Operations for KLA Ltd., where he led the Electronics, Packaging
and Components Finance Organization and the Orbotech integration, and in early 2019 he served as Chief Financial Officer
for StoreONE. Prior to that, between 2015 and 2019, Mr. Vassoly served as Executive Vice President, Chief Operating
Officer and Chief Financial Officer for Gibbs International Inc., where he led the finance and operations activity. In addition,
Mr. Vassoly held positions at The Gores Group and PwC in Israel, as an Audit Manager. Mr. Vassoly is a Certified Public
Accountant (CPA) and holds a BA in Accounting from the College of Management.
There are no family relationships between any of the directors or executive officers named above.
Item 6B.
Compensation.
(a) Aggregate Executive Compensation
The aggregate compensation paid to our directors and executive officers as a group of 19 persons for 2023
(including compensation accrued for such year) consisted of approximately $8.7 million in salary, fees, bonus, commissions
and directors’ fees and approximately $1 million in amounts set aside or accrued to provide pension, severance, retirement or
similar benefits or expenses, but excluding amounts expended for business travel, relocation, professional and business
association dues and expenses reimbursed to our directors and executive officers.
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Our compensation policy for our executive management team, as approved by our shareholders, following the
recommendation of our compensation committee and approval by our Board of Directors (as amended, the “Compensation
Policy”), is annually reviewed and approved by our Board of Directors, as is any bonus payment made under the policy.
We have a performance-based bonus plan for our executive management team. The plan is based on our overall
performance, the particular unit performance and individual performance. The measurements can change from year to year,
based on a combination of financial parameters, including revenues, booking and operating income as well as other non-
financial parameters, such as customer satisfaction and others. The plan is reviewed and approved by our compensation
committee and Board of Directors annually, as is any bonus payment under the plan.
During 2023, our officers and directors received, in the aggregate, (i) options to purchase 72,615 ordinary shares,
which include 50,676 options with an exercise price equal to the par value of the ordinary shares (the “par value options”),
and (ii) 185,343 restricted share units, under our equity-based compensation plans. The options (other than the par value
options) have a weighted average price of $206.5 and all options will expire six years after the date of grant. The restricted
shares units are granted at par value of the ordinary shares.
Pursuant to the requirements of the Israeli Companies Law, 5759–1999 (the “Israeli Companies Law”),
remuneration of our directors requires shareholder approval. Compensation and reimbursement for outside directors (as
described below) is statutorily determined pursuant to the Israeli Companies Law. Effective as of July 1, 2015, our
shareholders approved the payment to each of our non-executive directors, including outside directors, of an annual fee of
$40,000 and a meeting attendance fee of $1,500 for each Board meeting attended (whether in person or through media), and
$1,000 for each Board committee meeting attended (whether in person or through media) (in each case paid in U.S. dollars or
in NIS based on the exchange rate on July 1, 2015), subject to additional value added tax, as applicable.
In addition, our shareholders approved a special annual cash fee for the Chairman of the Board in the amount of NIS
450,000 (equivalent to approximately $124,000). The special annual fee is subject to adjustment for changes in the Israeli
consumer price index after September 2012. At the Company’s 2023 annual general meeting, following the recommendation
of our compensation committee and approval by our Board of Directors, our shareholders reapproved our Compensation
Policy, as further discussed below in Item 10, “Additional Information. – Approval of Office Holder Compensation” in this
annual report.
(b) Individual Compensation of Covered Executives
The following describes the compensation of our five most highly compensated executive officers in 2023, based on
the total of salary costs, bonus cost and equity costs for equity granted and expensed by the Company in 2023 (“Covered
Executives”).
The compensation specified below is broken down into the following components (all amounts specified below are
in terms of cost to the Company, as recorded in our financial statements, and U.S. dollar amounts indicated for Salary, Bonus
Costs and Equity Costs are in thousands of dollars):
(1)
(2)
(3)
Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by
applicable law which may include, to the extent applicable to each Covered Executive, payments,
contributions and/or allocations for pension, severance, vacation, travel and accommodation, car or car
allowance, medical insurances and risk insurances (e.g., life, disability, accidents), phone, convalescence
pay, relocation, payments for social security, and other benefits consistent with the Company’s guidelines.
Bonus Costs. Bonus Costs represent bonuses granted to the Covered Executive with respect to the year
ended December 31, 2023, paid in accordance with the Company’s performance-based bonus plan or as
detailed below.
Equity Costs. Represents the expense recorded in our financial statements for the year ended December 31,
2023, with respect to equity granted in 2023 and in previous years (if applicable). For assumptions and key
variables used in the calculation of such amounts, see Note 14b of our audited consolidated financial
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statements.
i.
ii.
iii.
iv.
v.
Barak Eilam – CEO. Salary Costs - $1,042; Bonus Costs - $1,125; Equity Costs - $6,697 expense
recorded in 2023 for equity granted in 2023; and $15,627 expense recorded in 2023 for equity
granted in previous years.
Barry Cooper – President, CX. Salary Costs - $532; Bonus Costs - $533; Equity Costs - $3,729
expense recorded in 2023 for equity granted in 2023 and $4,194 expense recorded in 2023 for
equity granted in previous years.
Yaron Hertz – President, NICE Americas. Salary Costs - $510; Bonus Costs - $401; Equity Costs -
$3,263 expense recorded in 2023 for equity granted in 2023 and $3,595 expense recorded in 2023
for equity granted in previous years.
Darren Rushworth– President, CE International. Salary Costs - $801; Bonus Costs $418; Equity
Costs - $1,808 expense recorded in 2023 for equity granted in 2023 and $2,272 expense recorded
in 2023 for equity granted in previous years.
Craig Costigan – CEO, NICE Actimize. Salary Costs - $495; Bonus Costs - $526; Equity Costs -
$1,866 expense recorded in 2023 for equity granted in 2023 and $2,273 expense recorded in 2023
for equity granted in previous years.
Item 6C.
Board Practices
Corporate Governance Practices
We are incorporated in Israel and therefore are subject to various corporate governance practices under the Israeli
Companies Law, relating to such matters as outside directors, the internal audit committee, the internal auditor and approvals
of interested party transactions. These matters are in addition to the ongoing listing conditions of the NASDAQ and other
relevant provisions of U.S. securities laws. Under applicable NASDAQ rules, a foreign private issuer may generally follow
its home country rules of corporate governance in lieu of comparable NASDAQ requirements, except for certain matters such
as composition and responsibilities of the audit committee and the independence of its members. For further information, see
Item 16G, “Corporate Governance” of this annual report.
General Board Practices
Our articles of association provide that the number of directors serving on the Board shall be not less than three but
shall not exceed thirteen. Our directors, other than outside directors, are elected at the annual shareholders meeting to serve
until the next annual meeting or until their earlier resignation, death, bankruptcy, incapacity or removal by an extraordinary
resolution of the general shareholders meeting. Directors may be re-elected at each annual shareholders’ meeting. The Board
may appoint additional directors (whether to fill a vacancy or create new directorships) to serve until the next annual
shareholders meeting, provided, however, that the Board shall have no obligation to fill any vacancy unless the number of
directors is less than three.
The Board may, subject to the provisions of the Israeli Companies Law, appoint a committee of the Board and
delegate to such committee all or any of the powers of the Board, as it deems appropriate. Notwithstanding the foregoing and
subject to the provisions of the Israeli Companies law, the Board may, at any time, amend, restate or cancel the delegation of
any of its powers to any of its committees. The Board has appointed an internal audit committee under the Israeli Companies
Law that has three members, an audit committee that has five members, a compensation committee that has five members, a
nominations committee that has two members and a mergers and acquisitions committee that has six members. In addition,
from time to time the Board may appoint an ad hoc committee for certain purposes, such as the review, negotiation and
recommendation of approval of M&A transactions. We do not have, nor do our subsidiaries have, any service contracts
granting to the directors any benefits upon termination of their service as Board members.
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Outside Directors
Except as discussed below, under the Israeli Companies Law companies incorporated under the laws of Israel whose
shares have been offered to the public in or outside of Israel are required to appoint at least two “outside” directors. Pursuant
to regulations under the Israeli Companies Law that took effect in April 2016, a NASDAQ-listed company that does not have
a controlling shareholder is entitled to opt out of the provisions of the Israeli Companies Law requiring at least two outside
directors and certain related requirements, so long as the company complies with the SEC regulations and NASDAQ listing
rules regarding independent directors and the composition of the audit and compensation committees. In December 2016, our
shareholders approved amendments to our articles of association, pursuant to which our Board of Directors may elect to opt
out of such requirements for appointment of outside directors (together the “2016 Relief Amendments”). At this time, our
Board of Directors has not made an election to opt out of such requirements.
Outside directors are required to possess professional qualifications as set out in regulations promulgated under the
Israeli Companies Law. The Israeli Companies Law provides that a person may not be appointed as an outside director if (i)
such person or person’s relative or affiliate has, at the date of appointment, or had at any time during the two years preceding
such date, any affiliation with the company, a controlling shareholder thereof or their respective affiliates; or (ii) in a
company that does not have a 25% shareholder, such person has an affiliation with any person who, at the time of
appointment, is the chairman, the chief executive officer, the chief financial officer or a 5% shareholder of the company. In
general, the term “affiliation” includes: an employment relationship; a business or professional relationship maintained on a
regular basis; control; and service as an office holder.
No person may serve as an outside director if the person’s position or other activities create or may create a conflict
of interest with the person’s responsibilities as an outside director or may otherwise interfere with the person’s ability to serve
as an outside director. Until the lapse of two years from termination of office, a company or its controlling shareholder may
not give any direct or indirect benefit to the former outside director.
Outside directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:
•
•
the majority of shares voted at the meeting shall include at least a majority of the shares of non-controlling
shareholders present at the meeting and voting on the matter (without taking into account the votes of the
abstaining shareholders); or
the total number of shares of non-controlling shareholders voted against the election of the outside directors
does not exceed two percent of the aggregate voting rights in the company.
The initial term of an outside director is three years and may be extended for up to two additional three-year terms.
Thereafter, he or she may be reelected by our shareholders for additional periods of up to three years each only if the internal
audit committee and the Board of Directors confirm that, in light of the outside director’s expertise and special contribution to
the work of the Board of Directors and its committees, the reelection for such additional period is beneficial to the company.
Reelection of an outside director may be effected through one of the following mechanisms: (1) the Board of Directors
proposed the reelection of the nominee and the election was approved by the shareholders in the same manner required to
appoint outside directors for their initial term; or (2) one or more shareholders holding one percent or more of a company’s
voting rights or the outside director proposed the reelection of the nominee, and the reelection is approved by a majority of
the votes cast by the shareholders of the company, excluding the votes of controlling shareholders and those who have a
personal interest in the matter as a result of their relations with the controlling shareholders, provided that the aggregate votes
cast in favor of the reelection by such non-excluded shareholders constitute more than two percent of the voting rights in the
company. An outside director may be removed only in a general meeting, by the same percentage of shareholders as is
required for electing an outside director, or by a court, and in both cases only if the outside director ceases to meet the
statutory qualifications for appointment or if he or she has violated the duty of loyalty to us. Unless we actually adopt the
applicable relief provided under the 2016 Relief Amendments, each committee of the Company’s Board of Directors which is
empowered to exercise any of the Board’s powers is required to include at least one outside director, provided that each of the
internal audit committee and compensation committee must include all of the outside directors. At this time, our Board of
Directors has not made an election to opt out of such requirements.
An outside director is entitled to compensation as provided in regulations adopted under the Israeli Companies Law
and is otherwise prohibited from receiving any other compensation, directly or indirectly, from the company. In accordance
with such regulations, our shareholders approved that our outside directors are to receive compensation equal to that paid to
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the other members of the Board of Directors. For further information, please see Item 6, “Directors, Senior Management and
Employees—Compensation” in this annual report.
Financial and Accounting Expertise
Pursuant to the Israeli Companies Law, our Board of Directors has determined that at least one member of our Board
of Directors must be an “accounting and financial expert.” The Israeli Companies Law requires that all outside directors must
be “professionally qualified.” Under applicable NASDAQ rules, each member of our audit committee must be financially
literate and at least one of the members must have experience or background that results in such member’s financial
sophistication. Our Board of Directors has determined that each of Dan Falk and Yocheved Dvir is an “accounting and
financial expert” for purposes of the Israeli Companies Law and is financially sophisticated for purposes of applicable
NASDAQ rules. See also Item 16A, “Audit Committee Financial Expert” in this annual report.
Independent Directors
Under the rules of the NASDAQ, a majority of our directors are required to be “independent” as defined in
applicable NASDAQ rules. All of our directors satisfy the respective independence requirements of NASDAQ.
In addition, our Articles of Association provide that, if we do not have a shareholder that holds 25% or more of our
issued and outstanding share capital, a majority of the directors must be “independent” as defined in the Israeli Companies
Law and the regulations promulgated thereunder. If we have a shareholder that holds 25% or more of our issued and
outstanding share capital, then at least one third of the directors must be “independent.” All of our directors satisfy the
respective independence requirements of the Israeli Companies Law. The qualifications for independent directors under the
Israeli Companies Law are similar to those for outside directors, as described above under “Outside Directors”, including the
nine-year term limit and the ability to extend such term beyond nine years upon the approval of our internal audit committee
and Board of Directors.
Internal Audit Committee
The Israeli Companies Law requires public companies to appoint an internal audit committee. The role of the
internal audit committee under the Israeli Companies Law is to examine flaws in the management of the company’s business
in consultation with the internal auditors and the independent accountants, and to propose remedial measures to the Board.
The internal audit committee also reviews interested party transactions for approval as required by law, including approval of
the remuneration of a director in any capacity, which also requires Board, compensation committee and shareholder approval.
The internal audit committee also assesses our internal audit system and the performance of our internal auditor and oversees
the implementation and enforcement of our compliance program. Under the Israeli Companies Law, an internal audit
committee must consist of at least three directors, including all of the outside directors. The members of the internal audit
committee must satisfy certain independence standards under the Israeli Companies Law, and the chairman of the internal
audit committee must be an outside director. The following may not serve as members of the internal audit committee: the
chairman of the Board of Directors, any director employed by the company or by its controlling shareholder or by an entity
controlled by the controlling shareholder, a director who regularly provides services to the company or to its controlling
shareholder, any director who derives most of its income from the controlling shareholder and a controlling shareholder or
any relative of a controlling shareholder. Pursuant to the 2016 Relief Amendments, the Company may elect to opt out of the
composition and attendance rules set with respect to the internal audit committee under the Israeli Companies Law, so long as
the Company complies with the SEC regulations and NASDAQ listing rules regarding the composition and attendance rules
in that respect. At this time, our Board of Directors has not made an election to opt out of such requirements.
All of the current members of our internal audit committee (presently comprised of Yocheved Dvir (Chair), Dan
Falk and Zehava Simon) meet these qualifications.
Internal Auditor
Under the Israeli Companies Law, the Board of Directors must appoint an internal auditor, proposed by the internal
audit committee. The role of the internal auditor is to examine, among other matters, whether the company’s activities
comply with the law and orderly business procedures. Under the Israeli Companies Law, the internal auditor may be an
employee of the company but may not be an interested party or office holder, or a relative of any interested party or office
65
holder and may not be a member of the company’s independent accounting firm or its representative. We have appointed an
internal auditor in accordance with the requirements of the Israeli Companies Law.
Audit Committee
The NASDAQ rules require that the audit committee of a listed company be composed of at least three directors,
each of whom is (i) independent; (ii) does not receive any compensation (except for board fees) from the company; (iii) is not
an affiliated person of the company or any subsidiary; and (iv) has not participated in the preparation of the company’s (or a
current subsidiary’s) financial statements during the past three years. All of the current members of our audit committee
(presently comprised of Zehava Simon (Chair), Rimon Ben-Shaoul, Dan Falk, Yocheved Dvir and Joe Cowan) meet the
NASDAQ standards described above.
Our audit committee has adopted a charter specifying the committee’s purpose and outlining its duties and
responsibilities which include, among other things, (i) appointing, retaining and compensating the company’s independent
auditor, subject to Board of Directors and shareholder approval, (ii) pre-approving all services of the independent auditor, (iii)
reviewing the annual audited financial statements and quarterly financial statements and the content of our earnings press
releases, and (iv) overseeing our accounting and financial reporting processes and the audits of our financial statements. Our
audit committee is also authorized to act as our “qualified legal compliance committee.” As such, our audit committee will be
responsible for investigating reports made by attorneys appearing and practicing before the SEC in representing us, of
perceived material violations of U.S. federal or state securities laws, breaches of fiduciary duty or similar material violations
of U.S. law by us or any of our agents.
We believe we currently meet the applicable NASDAQ requirements with respect to our Audit Committee and we
intend to continue to take all actions as may be necessary for us to maintain our compliance with applicable NASDAQ
requirements with respect to our Audit Committee.
Compensation Committee
As required by NASDAQ rules, our compensation committee approves the compensation of our executive officers.
The compensation committee is also authorized to approve the grant of stock options and other securities to eligible grantees
under our benefit plans pursuant to guidelines adopted by our Board of Directors. However, grants of stock options and other
securities to our executive officers also require approval of our Board of Directors. Under the Israeli Companies Law, the
Board of Directors of a public company must establish a compensation committee. Pursuant to the 2016 Relief Amendments,
the Company may elect to opt out of the relevant composition and attendance rules set under the Israeli Companies Law, and
to comply with the SEC regulations and NASDAQ listing rules that apply to the composition and attendance rules of a
compensation committee. At this time, our Board of Directors has not made an election to opt out of such requirements and
we have continued to comply with the Israeli Companies Law with respect to the composition and attendance rules of a
compensation committee, as our compensation committee consists of at least three directors who satisfy the independence
qualifications detailed above in “Internal Audit Committee”, and the chairman of the compensation committee is an outside
director.
Under the Israeli Companies Law, the role of the compensation committee is to recommend to the Board of
Directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of office holders
based on specified criteria, to review modifications to the Compensation Policy from time to time, to review its
implementation and to approve the actual compensation terms of office holders prior to the approval thereof by the Board of
Directors.
Pursuant to the NASDAQ rules, our compensation committee is required to consist of at least two members, with all
members of the compensation committee required to be independent, unless we elect to take advantage of the exemption
provided to foreign private issuers to comply with home country practice instead of the listing rules of exchanges such as
NASDAQ. At this time, our Board of Directors has not made an election to opt out of such requirements. The determination
of whether a director is independent takes into account all factors relevant to whether a director has a relationship with the
Company which would be material to such director’s ability to be independent from management in connection with carrying
out the duties of a compensation committee member. Factors required for consideration in making this determination
specifically include (i) the source of compensation of such director (including any consulting, advisory or other compensatory
fee paid to such director) and (ii) whether such director is affiliated with the Company or one of its affiliates or subsidiaries.
Pursuant to the NASDAQ rules, we are also required to have a compensation committee charter, which, among other things,
66
must set forth the scope of the compensation committee’s responsibilities and how they will be carried out, as well as grant
the compensation committee the power to retain compensation advisers following consideration of certain factors that may be
indicative of a conflict of interest by the compensation adviser in rendering compensation advice.
Our Board of Directors adopted a compensation committee charter that includes the requirements of the NASDAQ
rules. However, the charter provides that if there is any conflict between the responsibilities and requirements set forth therein
and either the Israeli Companies Law or the Compensation Policy, the latter will govern. For information regarding the
Compensation Policy, see Item 10, “Additional Information – Memorandum and Articles of Association – Approval of Office
Holder Compensation” in this annual report.
We do not believe that there are any existing conflicts between the compensation committee charter and either of the
Israeli Companies Law or the Compensation Policy. However, if any such conflict should develop such that we are no longer
in compliance with the requirements of the NASDAQ rules, we intend to utilize the foreign private issuer exemption
described above with respect to such requirement, and in accordance with the NASDAQ rules we will disclose the practice
that we follow in lieu of the applicable NASDAQ requirement in our future annual reports.
All of the current members of the compensation committee (presently comprised of Dan Falk (Chairman), Yocheved
Dvir, Leo Apotheker, Zehava Simon and Yehoshua Ehrlich) satisfy the respective independence requirements of both the
NASDAQ rules and the Israeli Companies Law.
Nominations Committee
As required by NASDAQ rules, our nominations committee recommends candidates for election to our Board of
Directors pursuant to a written charter. Both of the current members of this committee (David Kostman and Dan Falk) are
independent directors.
Mergers and Acquisitions Committee
Our Board of Directors has delegated powers with respect to the review and recommendation of mergers and
acquisitions and related investments and transactions, which are then subject to approval by the Board of Directors. The
committee also has limited authority to approve mergers and acquisitions for consideration up to a certain amount. All of the
current members of this committee (presently comprised of David Kostman (Chairman), Dan Falk, Rimon Ben Shaoul,
Yehoshua Ehrlich, Leo Apotheker and Joe Cowan) are independent directors.
Item 6D.
Employees.
As of December 31, 2023, we had 8,384 employees worldwide, which represented an increase of approximately
5.8% from December 31, 2022, resulting from both organic and non-organic growth.
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The following table sets forth the number of our full-time employees at the end of each of the last three fiscal years
as well as the main category of activity and geographic location of such employees:
Category of Activity
Customer Support*
Sales and Marketing
Research and Development
General and Administrative
Total
Geographic Location
Americas
EMEA
APAC
Total
2023
3,012
1,746
2,780
846
8,384
3,674
1,526
3,184
8,384
At December 31,
2022
2,794
1,678
2,643
811
7,926
3,439
1,509
2,978
7,926
2021
2,603
1,471
2,303
725
7,102
3,112
1,480
2,510
7,102
*
Including the number of employees designated under “Operations” in our previous annual reports.
We also utilize temporary employees in various activities. On average, we employed 35 temporary employees and
obtained services from 1,501 consultants (not included in the numbers set forth above) during 2023.
Our future success will depend in part upon our ability to attract and retain highly skilled and qualified personnel.
Although competition for such personnel is generally intense, we believe that adequate personnel resources are currently
available to meet our requirements.
We are not a party to any collective bargaining agreement with our employees or with any labor organization in
substantially all jurisdictions where we operate. However, we are subject to certain labor related statutes and certain
provisions of collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the
Coordinating Bureau of Economic Organizations (including the Industrialists’ Association of Israel) that apply to our Israeli
employees by order of the Israeli Ministry of Labor and Welfare. These statutes and provisions principally deal with the
length of the work day and the work week, minimum wages, insurance coverage of work-related accidents, determination of
severance pay and the provisions of other employment matters. Israeli law generally requires the payment of severance pay
by employers upon an employee’s death, retirement or termination of employment by the employer without due cause. We
currently fund our ongoing severance payment obligations in Israel by making monthly payments to approved severance
funds or insurance policies. For more information please see Note 2p of our consolidated financial statements. In addition,
according to the National Insurance Law, Israeli employers and employees are required to pay predetermined sums to the
National Insurance Institute, an organization similar to the U.S. Social Security Administration. These contributions entitle
the employees to benefits in periods of unemployment, work injury, maternity leave, disability, reserve military service and
bankruptcy or winding-up of the employer and also include payments for national health insurance. The payments to the
National Insurance Institute varies between 7.05%-19.6% of an employee’s salary (up to a certain cap as determined from
time to time by the law), of which the employee contributes approximately 3.5%-12.0% and the employer contributes
approximately 3.55%-7.6%.
In addition, we pay severance benefits to our employees located elsewhere in accordance with local laws and
practices of the countries in which they are employed, including our U.S. based employees pursuant to the U.S. Federal
Department labor legislation and requirements and local state regulations.
Employment Agreements
We have employment agreements with our officers. Pursuant to these employment agreements, each party may
terminate the employment without cause by giving a 30, 60 or 90 day prior written notice (six to twelve months in case of
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certain senior officers). In addition, we may terminate such agreement for cause with no prior notice. The agreements
generally include non-competition and non-disclosure provisions, although the enforceability of non-competition provisions
in employment agreements may be limited under applicable law.
Item 6E.
Share Ownership.
As of March 19, 2024, our directors and executive officers then-serving beneficially owned an aggregate of 340,737
ordinary shares, including options and restricted share units to purchase ordinary shares that were vested on such date or that
are scheduled to vest within 60 days thereafter, or approximately 0.5% of our outstanding ordinary shares. The options and
restricted share units have an average exercise price of $82.09 per share and the options will expire between 2024 and 2030.
No individual director or executive officer beneficially owns 1% or more of our outstanding ordinary shares.
The following is a description of each of our equity plans under which awards were outstanding as of March 19,
2024.
2016 Share Incentive Plan
In February 2016 the Company adopted the 2016 Share Incentive Plan (the “2016 Plan”). The Company adopted the
2016 Plan to provide incentives to employees, directors, consultants and/or contractors by rewarding performance and
encouraging behavior that will improve the Company’s profitability.
Under the 2016 Plan, the Company’s employees, directors, consultants and/or contractors may be granted any
equity-related award, including: any type of an option to acquire the Company ordinary shares; share appreciation right; share
and/or restricted share award (“RSA”); restricted stock unit (“RSU”) and/or other share unit; and/or other share-based award
and/or other right or benefit under the 2016 Plan, including any such equity-related award that is a performance-based award
(each an “Award”).
Generally, under the terms of the 2016 Plan, unless determined otherwise by the administrator of the 2016 Plan,
25% of an Award granted becomes exercisable on the first anniversary of the date of grant and 6.25% becomes exercisable
once every quarter during the subsequent three years. Specifically with respect to RSUs and options granted with an exercise
price equal to the nominal value of an ordinary share (“par value options”), unless determined otherwise by the Board of
Directors, 25% of the RSUs and the par value options granted become vested on each of the four consecutive annual
anniversaries following the date of grant. Certain executive officers are entitled to acceleration of vesting of Awards in the
event of a change of control, subject to certain conditions. Different terms related to vesting of Awards may apply with
respect to Awards granted in relation to equity grants assumed pursuant to acquisition transactions. Awards with a vesting
period expire six years after the date of grant. The maximum number of shares that may be subject to Awards granted under
the 2016 Plan is calculated each calendar year as 3% of the Company’s issued and outstanding share capital as of December
31 of the preceding calendar year. Such amount is reset for each calendar year. Awards are non-transferable except by will or
the laws of descent and distribution.
Options granted under the 2016 Plan are granted at an exercise price equal to the average of the closing prices of one
ADR as quoted on the NASDAQ market during the 30 consecutive calendar days preceding the date of grant, unless
determined otherwise by the administrator of the 2016 Plan (including par value options in some cases).
The Company’s Board of Directors also adopted an addendum to the 2016 Plan for Awards granted to residents of
Israel (the “Addendum”) and resolved to elect the “Capital Gains Route” (as defined in Section 102(b)(2)) of the Israeli
Income Tax Ordinance-5721-1961 (“Tax Ordinance”) for the grant of Awards to Israeli grantees. There is also a U.S.
addendum under the 2016 Plan that applies to non-qualified stock options for purposes of U.S. tax laws.
The 2016 Plan is generally administered by our Board of Directors and compensation committee, which determine
the grantees under the 2016 Plan and the number of Awards to be granted. As of March 19, 2024, options and restricted share
units to purchase 2,876,265 ordinary shares were outstanding under the 2016 Plan at a weighted average exercise price of
$9.84.
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Guardian Analytics, Inc. 2006 Stock Plan
In 2006, Guardian Analytics, Inc. (“Guardian Analytics”) adopted the Guardian Analytics, Inc. 2006 Stock Plan (the
“Guardian Plan”), to attract and retain Guardian Analytics' employees and consultants (which includes its directors and
advisors), and to align the interests of such recipients with the interests of Guardian Analytics’ shareholders.
Pursuant to the terms of the Guardian Analytics' acquisition agreement, we assumed and converted Guardian
Analytics' stock options originally granted under the Guardian Plan into stock options of NICE.
As of March 19, 2024, assumed Guardian Analytics' stock options to purchase 2,888 shares of NICE were
outstanding under the Guardian Plan, at a weighted average exercise price of $32.26. We have registered, through the filing
of a registration statement on Form S-8 with the SEC under the Securities Act, 5,823 ordinary shares for issuance under the
Guardian Plan.
Nexidia Inc. 2005 Stock Incentive Plan
In 2005, Nexidia adopted the Nexidia Inc. 2005 Stock Incentive Plan (the “Nexidia Plan”), to attract and retain
Nexidia’s employees, directors, consultants and advisors and to align the interests of such recipients with the interests of
Nexidia’s shareholders.
Pursuant to the terms of the Nexidia acquisition agreement, we assumed and converted Nexidia’s stock options and
restricted stock units originally granted under the Nexidia Plan into stock options and restricted stock units of NICE,
respectively.
As of March 19, 2024, assumed Nexidia options to purchase 381 shares of NICE were outstanding under the
Nexidia Plan, at a weighted average exercise price of $6.84. We have registered, through the filing of a registration statement
on Form S-8 with the SEC under the Securities Act, 173,860 ordinary shares for issuance under the Nexidia Plan.
inContact, Inc. 2008 Equity Incentive Plan
In 2008, inContact adopted the inContact, Inc. 2008 Equity Incentive Plan, as subsequently amended in June 14,
2012 (as amended, the “inContact Plan”) to enhance inContact’s ability to attract and retain those employees, officers,
directors and consultants who are expected to make important contributions to inContact and any of its subsidiaries and to
align the interests of such recipients with the interests of inContact’s shareholders.
Pursuant to the terms of the inContact acquisition agreement, we assumed and converted inContact’s stock options,
restricted stock awards and restricted stock units originally granted under the inContact Plan into stock options, restricted
stock awards and restricted stock units of NICE, respectively.
As of March 19, 2024, assumed inContact options and restricted share units to purchase 1,037 shares of NICE were
outstanding under the inContact Plan, at a weighted average exercise price of $42.04. We have registered, through the filing
of a registration statement on Form S-8 with the SEC under the Securities Act, 476,114 ordinary shares for issuance under the
inContact Plan.
Item 6F.
Disclosure of a registrant’s action to recover erroneously awarded compensation.
Not applicable.
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Item 7.
Major Shareholders and Related Party Transactions
Major Shareholders
The following table sets forth certain information with respect to the beneficial ownership of our ordinary shares,
with respect to each person known to us to be the beneficial owner of 5% or more of our outstanding ordinary shares,
reported as of March 19, 2024. None of our shareholders has any different voting rights than any other shareholder.
Name and Address
Capital Research Global Investors
BlackRock, Inc.
Number of
Shares
4,980,331 (2)
3,226,820 (3)
Percent of
Shares
Beneficially
Owned (1)
7.9 %
5.1 %
(1)
(2)
(3)
Based upon 63,058,665 ordinary shares issued and outstanding as of March 19, 2024.
The information is based upon Amendment No. 4 to Schedule 13G filed with the SEC by Capital Research Global
Investors (“CRGI”) on February 9, 2024.
The information is based upon Amendment No. 2 to Schedule 13G filed with the SEC by BlackRock, Inc. on
February 1, 2023.
On February 9, 2024, FMR LLC filed Amendment No. 1 to Schedule 13G with the SEC reporting that they are no
longer a beneficial owner of 5% or more of our outstanding ordinary shares.
As of March 19, 2024, we had 42 registered ADS holders of record in the United States, with our ADS holders
holding in total approximately 61% of our outstanding ordinary shares, as reported by JPMorgan Chase Bank, N.A., the
depositary for our ADSs.
To our knowledge, we are not directly or indirectly owned or controlled by another corporation or by any foreign
government and there are no arrangements that might result in a change in control of our company.
Related Party Transactions
None.
Item 8.
Financial Information.
A. Consolidated Statements and Other Financial Information
See Item 18, “Financial Statements” in this annual report.
Legal Proceedings
From time to time, we or our subsidiaries may be involved in legal proceedings and/or litigation arising in the
ordinary course of our business. While the outcome of these matters cannot be predicted with certainty, we do not believe
they, individually or in the aggregate, will have a material effect on our business, consolidated financial position, results of
operations, or cash flows.
Dividends
We do not have any plans at this time to make any future dividend payments. Payment of future dividends, if any,
will be at the discretion of our Board of Directors and will depend on various factors, such as our statutory profits, financial
condition, operating results and current and anticipated cash needs. In the event cash dividends are declared by us, we may
71
decide to pay such dividends in Israeli currency. Under current Israeli regulations, any cash dividend in Israeli currency paid
in respect of ordinary shares purchased by non-residents of Israel with non-Israeli currency may be freely repatriated in such
non-Israeli currency, at the rate of exchange prevailing at the time of conversion. For more information regarding the taxation
implications of the dividend plan, see Item 10, "Additional Information - Taxation” of this annual report.
B. Significant Changes
There are no significant changes that occurred since December 31, 2023, except as otherwise disclosed in this
annual report and in the annual consolidated financial statements included in this annual report. In January 2024, the 2017
Notes matured and were settled in the amount of $87.4 million.
Item 9.
The Offer and Listing.
Trading in the ADSs
Our ADSs have been quoted on the NASDAQ Stock Market under the symbol “NICEV” from our initial public
offering in January 1996 until April 7, 1999, and thereafter under the symbol “NICE.” Prior to that time, there was no public
market for our ordinary shares in the United States. Each ADS represents one ordinary share.
JPMorgan Chase Bank, N.A. is the depositary for our ADSs. Its address is 4 New York Plaza, Floor 12, New York,
New York 10004.
Trading in the Ordinary Shares
Our ordinary shares have been listed on the Tel-Aviv Stock Exchange, or TASE, since 1991 under the symbol
“NICE.TA.” Our ordinary shares are not listed on any other stock exchange and have not been publicly traded outside Israel
(other than through ADSs, as noted above).
Item 10.
Additional Information.
Memorandum and Articles of Association
Organization and Register
We are a company limited by shares organized in the State of Israel under the Israeli Companies Law. We are
registered with the Registrar of Companies of the State of Israel and have the company number 52-0036872.
Objectives and Purposes
Our objectives and purposes include a wide variety of business purposes, including all kinds of research,
development, distribution, service and maintenance of products in all fields of technology and engineering and to engage in
any other kind of business or commercial activity. Our objectives and purposes are set forth in detail in Section 2 of our
memorandum of association.
Directors
Our articles of association provide that the number of directors serving on the Board shall be not less than three but
shall not exceed thirteen. As discussed above in Item 6, “Directors, Senior Management and Employees – Board Practices –
Outside Directors,” in December 2016, our shareholders approved amendments to our articles of association, pursuant to
which our Board of Directors may elect to opt out of such requirements and we would not be required to have outside
directors serve on our Board of Directors. At this time, our Board of Directors has not made an election to opt out of such
requirements. Our directors, other than outside directors, are elected at the annual shareholders meeting to serve until the next
annual meeting or until their earlier death, resignation, bankruptcy, incapacity or removal by resolution of the general
shareholders meeting. Directors may be re-elected at each annual shareholders’ meeting. The Board may appoint additional
directors (whether to fill a vacancy or create new directorship) to serve until the next annual shareholders meeting, provided,
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however, that the Board shall have no obligation to fill any vacancy unless the number of directors is less than three. Our
officers serve at the discretion of the Board.
The Board of Directors may meet and adjourn its meetings according to the Company’s needs but must meet at least
once every three months. A meeting of the Board may be called at the request of any two directors. The quorum required for
a meeting of the Board consists of a majority of directors who are lawfully entitled to participate in the meeting and vote
thereon. The adoption of a resolution by the Board requires approval by a simple majority of the directors present at a
meeting in which such resolution is proposed. In lieu of a Board meeting, a resolution may be adopted if all of the directors
lawfully entitled to vote thereon consent not to convene a meeting.
Subject to the Israeli Companies law, the Board may appoint a committee of the Board and delegate to such
committee all or any of the powers of the Board, as it deems appropriate. Under the Israeli Companies Law, the Board of
Directors must appoint an internal audit committee comprised of at least three directors. The function of the internal audit
committee is to review irregularities in the management of the Company’s business and recommend remedial measures. The
committee is also required, under the Israeli Companies Law, to approve certain related party transactions and to assess our
internal audit system and the performance of our internal auditor. Notwithstanding the foregoing, the Board may, at any time,
amend, restate or cancel the delegation of any of its powers to any of its committees. The Board has appointed an internal
audit committee which has three members, an audit committee which has five members, a compensation committee which
has five members, a nominations committee which has two members and a mergers and acquisitions committee which has six
members. For more information on the Company’s committees, please see Item 6C., “Directors, Senior Management and
Employees—Board Practices” in this annual report.
Fiduciary Duties of Officers
The Israeli Companies Law codifies the fiduciary duties that “office holders,” including directors and executive
officers, owe to a company. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of
loyalty includes avoiding any conflict of interest between the office holder’s position in the company and his personal affairs,
avoiding any competition with the company, avoiding exploiting any business opportunity of the company in order to receive
personal advantage for himself or others, and revealing to the company any information or documents relating to the
company’s affairs which the office holder has received due to his position as an office holder.
Approval of Certain Transactions
The Israeli Companies Law requires that an office holder of a company promptly disclose any personal interest that
he or she may have and all related material information known to him or her, in connection with any existing or proposed
transaction by the company. In addition, if the transaction is an extraordinary transaction as defined under Israeli law, the
office holder must also disclose any personal interest held by the office holder’s spouse, siblings, parents, grandparents,
descendants, spouse’s descendants and the spouses of any of the foregoing. In addition, the office holder must also disclose
any interest held by any corporation in which the office holder is a 5% or greater shareholder, director or general manager or
in which he or she has the right to appoint at least one director or the general manager. An extraordinary transaction is
defined as a transaction not in the ordinary course of business, not on market terms, or that is likely to have a material impact
on the company’s profitability, assets or liabilities.
In the case of a transaction which is not an extraordinary transaction, after the office holder complies with the above
disclosure requirement, only Board approval is required unless the articles of association of the company provide otherwise.
The transaction must not be adverse to the company’s interest. Furthermore, if the transaction is an extraordinary transaction,
then, in addition to any approval stipulated by the articles of association, it also must be approved by the company’s internal
audit committee and then by the Board of Directors, and, under certain circumstances, by a meeting of the shareholders of the
company. An office holder who has a personal interest in a transaction that is considered at a meeting of the Board of
Directors or the internal audit committee generally may not be present at the deliberations or vote on this matter, unless the
chairman of the Board or chairman of the internal audit committee, as the case may be, determined that the presence of such
person is necessary to present the transaction to the meeting. If a majority of the directors have a personal interest in an
extraordinary transaction with the company, shareholder approval of the transaction is required.
It is the responsibility of the audit committee to determine whether or not a transaction should be deemed an
extraordinary transaction. In addition, the audit committee must also establish (i) procedures for the consideration of any
transaction with a controlling shareholder, even if it is not extraordinary, such as a competitive process with third parties or
73
negotiation by independent directors, and (ii) approval requirements for controlling shareholder transactions that are not
negligible.
The Israeli Companies Law applies the same disclosure requirements to a controlling shareholder of a public
company, which includes a shareholder that holds 25% or more of the voting rights if no other shareholder owns more than
50% of the voting rights in the company. Extraordinary transactions with a controlling shareholder or in which a controlling
shareholder has a personal interest, and the terms of management fees of a controlling shareholder or compensation of a
controlling shareholder who is an office holder, require the approval of the audit committee, the Board of Directors and the
shareholders of the company by simple majority; provided that either such majority vote must include at least a simple
majority of the shareholders who have no personal interest in the transaction and are present at the meeting (without taking
into account the votes of the abstaining shareholders), or that the total shareholdings of those who have no personal interest in
the transaction who vote against the transaction represent no more than two percent of the voting rights in the company. Any
such extraordinary transaction whose term is longer than three years requires further shareholder approval every three years,
unless (with respect to transactions not involving management fees or employment terms) the internal audit committee
approves that a longer term is reasonable under the circumstances.
In addition, under the Israeli Companies Law, a private placement of securities requires approval by the Board of
Directors and the shareholders of the company if it will cause a person to become a controlling shareholder or if:
•
•
•
the securities issued amount to 20% or more of the company’s outstanding voting rights before the
issuance;
some or all of the consideration is other than cash or listed securities or the transaction is not on market
terms; and
the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s
outstanding share capital or voting rights or that will cause any person to become, as a result of the
issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.
According to the Company’s articles of association, certain resolutions, such as resolutions regarding mergers and
windings up, require approval of the holders of 75% of the shares represented at the meeting and voting thereon.
Approval of Office Holder Compensation
Under the Israeli Companies Law, we are required to adopt a compensation policy, recommended by the
compensation committee, and approved by the Board of Directors and the shareholders, in that order, at least once every three
years. The shareholder approval requires a majority of the votes cast by shareholders, excluding any controlling shareholder
and those who have a personal interest in the matter (similar to the threshold described above). Our current Compensation
Policy was approved by our shareholders at our 2023 annual general meeting. In general, all office holders’ terms of
compensation – including fixed remuneration, bonuses, equity compensation, retirement or termination payments,
indemnification, liability insurance and the grant of an exemption from liability - must comply with the Company’s
Compensation Policy. Although NASDAQ rules generally require shareholder approval when an equity-based compensation
plan is established or materially amended, as a foreign company we follow the aforementioned requirements of the Israeli
Companies Law.
In addition, the compensation terms of directors, the chief executive officer, and any employee or service provider
who is considered a controlling shareholder generally must be approved separately by the compensation committee, the
Board of Directors and the shareholders of the company, in that order. Notwithstanding, a company’s compensation
committee and board of directors are permitted to approve the compensation terms of a chief executive officer or of a
director, without convening a general meeting of shareholders, provided however, that such terms: (1) are not more beneficial
than such officer’s former terms or than the terms of his predecessor, or are essentially the same in their effect; (2) are in line
with the Compensation Policy; and (3) are brought for shareholder approval at the next general meeting of shareholders.
The compensation terms of other officers require the approval of the compensation committee and the Board of
Directors. An amendment of existing compensation terms of an office holder who is not a director, if the compensation
committee determines that the amendment is not material, requires the approval of the compensation committee only.
Pursuant to regulations promulgated under the Israeli Companies Law, an amendment of the existing compensation terms of
74
office holders who are subordinate to the chief executive officer, if the amendment is not material and the changes are in line
with the existing Compensation Policy, requires only the chief executive officer’s approval. Under our Compensation Policy,
our Chief Executive Officer is authorized to approve non-material changes to the compensation terms of office holders
subordinated to him, without seeking the approval of the compensation committee.
The Compensation Policy sets forth the guidelines for the compensation of our office holders. It is tailored to ensure
a compensation which balances performance targets and time horizons through rewarding business results and long-term
performance. The Compensation Policy requires that compensation of our office holders include a mix of fixed amounts
(such as annual based salaries), variable performance-based components (such as performance-based cash incentive
compensation), and long term incentive components (such as long-term equity-based compensation, including performance-
based equity). Pursuant to the Compensation Policy, performance-based compensation granted may be based on our overall
performance, the particular unit performance, individual performance and the results of the customer satisfaction survey
conducted annually. Our Compensation Policy includes applicable clawback provisions and references the Company's
compensation recovery policy adopted pursuant to the recent NASDAQ listing rules in response to Exchange Act Rule
10D-1.
Duties of Shareholders
Under the Israeli Companies Law, a shareholder has a duty to act in good faith towards the company and other
shareholders and to refrain from abusing his or her power in the company including, among other things, voting in a general
meeting of shareholders on the following matters:
•
•
•
•
any amendment to the articles of association;
an increase of the company’s authorized share capital;
a merger; or
approval of interested party transactions which require shareholder approval.
In addition, any controlling shareholder, any shareholder who knows that it possesses power to determine the
outcome of a shareholder vote and any shareholder who, pursuant to the provisions of a company’s articles of association, has
the power to appoint or prevent the appointment of an office holder in the company, is under a duty to act with fairness
towards the company. The Israeli Companies Law does not describe the substance of this duty but provides that a breach of
his duty is tantamount to a breach of fiduciary duty of an officer of the company.
Exemption, Insurance and Indemnification of Directors and Officers
Exemption of Office Holders
Under the Israeli Companies Law, an Israeli company may not exempt an office holder from liability for breach of
his duty of loyalty but may exempt in advance an office holder from liability to the company, in whole or in part, for a breach
of his duty of care (except in connection with distributions), provided the articles of association of the company allow it to do
so. Our articles of association do not allow us to do so.
Office Holder Insurance
Our articles of association provide that, subject to the provisions of the Israeli Companies Law, including the receipt
of all approvals as required therein or under any applicable law, we may enter into an agreement to insure an office holder for
any responsibility or liability that may be imposed on such office holder in connection with an act performed by such office
holder in such office holder’s capacity as an office holder of us with respect to each of the following:
•
•
a violation of his duty of care to us or to another person;
a breach of his duty of loyalty to us, provided that the office holder acted in good faith and had reasonable
grounds to assume that his act would not prejudice our interests;
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•
•
•
a financial obligation imposed upon him for the benefit of another person;
a payment which the office holder is obligated to make to an injured party as set forth in Section
52(54)(a)(1)(a) of the Israeli Securities Law, 5728-1968, as amended (the “Securities Law”) and Litigation
Expenses (as defined below) that the office holder incurred in connection with a proceeding under Chapters
H’3, H’4 or I’1 of the Securities Law; and
any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder.
Indemnification of Office Holders
Our articles of association provide that, subject to the provisions of the Israeli Companies Law, including the receipt
of all approvals as required therein or under any applicable law we may indemnify an office holder with respect to any
liability or expense for which indemnification may be provided under the Israeli Companies Law, including the following
liabilities and expenses, provided that such liabilities or expenses were imposed upon or incurred by such office holder in
such office holder’s capacity as an office holder of us:
•
•
•
•
•
•
a monetary liability imposed on or incurred by an office holder pursuant to a judgment in favor of another
person, including a judgment imposed on such office holder in a settlement or in an arbitration decision that
was approved by a court of law;
reasonable Litigation Expenses, expended by the office holder as a result of an investigation or proceeding
instituted against him by a competent authority, provided that such investigation or proceeding concluded
without the filing of an indictment against him and either (A) concluded without the imposition of any
financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial
liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of
criminal intent (mens rea) or in connection with a financial sanction;
“conclusion of a proceeding without filing an indictment” in a matter in which a criminal investigation has
been instigated and “financial liability in lieu of a criminal proceeding,” have the meaning ascribed to them
under the Israeli Companies Law. The term “Litigation Expenses” shall include, without limitation,
attorneys’ fees and all other costs, expenses and obligations paid or incurred by an office holder in
connection with investigating, defending, being a witness or participating in (including on appeal), or
preparing to defend, be a witness or participate in any claim or proceeding relating to any matter for which
indemnification may be provided;
reasonable Litigation Expenses, which the office holder incurred or with which the office holder was
charged by a court of law, in a proceeding brought against the office holder, by the Company, on its behalf
or by another person, or in a criminal prosecution in which the office holder was acquitted, or in a criminal
prosecution in which the office holder was convicted of an offense that does not require proof of criminal
intent (mens rea);
a payment which the office holder is obligated to make to an injured party as set forth in Section
52(54)(a)(1)(a) of the Securities Law, and Litigation Expenses that the office holder incurred in connection
with a proceeding under Chapters H’3, H’4 or I’1 of the Securities Law; and
any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office
holder.
The foregoing indemnification may be procured by us (a) retroactively and (b) as a commitment in advance to
indemnify an office holder, provided that, in respect of the first bullet above, such commitment shall be limited to (A) such
events that in the opinion of the Board of Directors are foreseeable in light of our actual operations at the time the
undertaking to indemnify is provided, and (B) to the amounts or criterion that the Board of Directors deems reasonable under
the circumstances; and further provided that such events and amounts or criterion are set forth in the undertaking to
indemnify, and which shall in no event exceed, in the aggregate, the greater of: (i) 25% of our shareholder’s equity at the time
of the indemnification or (ii) 25% of our shareholder’s equity at the end of fiscal year of 2010.
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We have undertaken to indemnify our directors and officers pursuant to applicable law and we have obtained
directors' and officers' liability insurance for the benefit of our directors and officers.
Limitations on Exemption, Insurance and Indemnification
The Israeli Companies Law provides that a company may not exempt or indemnify an office holder, or enter into an
insurance contract, which would provide coverage for any monetary liability incurred as a result of any of the following:
•
•
•
•
a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or
indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act
would not prejudice the company;
a breach by the office holder of his duty of care if the breach was done intentionally or recklessly (other
than if solely done in negligence);
any act or omission done with the intent to derive an illegal personal benefit; or
a fine, civil fine or ransom levied on an office holder, or a financial sanction imposed upon an office holder
under Israeli Law.
Required Approvals
In addition, under the Israeli Companies Law, any exemption of, indemnification of, or procurement of insurance
coverage for, our office holders must be approved by our Audit Committee and our Board of Directors and, if the beneficiary
is the chief executive officer or a director, by our shareholders. We have obtained such approvals for the procurement of
liability insurance covering our officers and directors and for the grant of indemnification letters to our officers and directors.
Rights of Ordinary Shares
Our ordinary shares confer upon our shareholders the right to receive notices of, and to attend, shareholder meetings,
the right to one vote per ordinary share at all shareholders’ meetings for all purposes, and to share equally, on a per share
basis, in such dividends as may be declared by our Board of Directors; and upon liquidation or dissolution, the right to
participate in the distribution of any surplus assets of the Company legally available for distribution to shareholders after
payment of all debts and other liabilities of the Company. All ordinary shares rank pari passu in all respects with each other.
Our Board of Directors may, from time to time, make such calls as it may think fit upon a shareholder in respect of any sum
unpaid in respect of shares held by such shareholder which is not payable at a fixed time, and each shareholder shall pay the
amount of every call so made upon him (and of each installment thereof if the same is payable in installments).
Meetings of Shareholders
An annual general meeting of our shareholders shall be held once in every calendar year at such time and at such
place either within or without the State of Israel as may be determined by our Board of Directors.
Our Board of Directors may, whenever it thinks fit, convene a special general meeting at such time and place, within
or without the State of Israel, as may be determined by the Board of Directors. Special general meetings may also be
convened upon shareholder request in accordance with the Israeli Companies Law and our articles of association.
The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by
proxy who hold or represent between them at least 25% of the outstanding voting shares, unless otherwise required by
applicable rules. Although NASDAQ generally requires a quorum of 33-1/3%, subject to an exemption under the NASDAQ
rules we follow the generally accepted business practice for companies in Israel, which have a quorum requirement of 25%.
A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and
place or any time and place as the chairman may designate with the consent of a majority of the voting power represented at
the meeting and voting on the matter adjourned. At such reconvened meeting, the required quorum consists of any two
members present in person or by proxy.
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Mergers and Acquisitions
A merger of the Company shall require the approval of the holders of 75% of the voting power represented at the
annual or special general meeting in person or by proxy or by written ballot, as shall be permitted, and voting thereon in
accordance with the provisions of the Israeli Companies Law. Upon the request of a creditor of either party of the proposed
merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the
merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger. In addition, a
merger may not be completed unless at least (i) 50 days have passed from the time that the requisite proposal for the merger
has been filed by each party with the Israeli Registrar of Companies and (ii) 30 days have passed since the merger was
approved by the shareholders of each party.
The Israeli Companies Law also provides that an acquisition of shares of a public company must be made by means
of a tender offer if, as a result of the acquisition, the purchaser would become a 25% or greater shareholder of the company
and there is no existing 25% or greater shareholder in the company. An acquisition of shares of a public company must be
made by means of a tender offer if, as a result of the acquisition, the purchaser would hold more than 45% of the company
and there is no existing shareholder of more than 45% in the company. These requirements do not apply if the acquisition (i)
occurs in the context of a private placement by the company that received shareholder approval for the purpose of reaching
such threshold, (ii) was from a 25% shareholder of the company and resulted in the acquirer becoming a 25% shareholder of
the company or (iii) was from a greater than 45% shareholder of the company and resulted in the acquirer becoming a greater
than 45% shareholder of the company. The tender offer must be extended to all shareholders, but the offeror is not required to
purchase more than 5% of the company’s outstanding shares, regardless of how many shares are tendered by shareholders.
The tender offer may be consummated only if (i) at least 5% of the company’s outstanding shares will be acquired by the
offeror and (ii) the number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer.
If as a result of an acquisition of shares the acquirer will hold more than 90% of a company’s outstanding shares, the
acquisition must be made by means of a tender offer for all of the outstanding shares. If as a result of a full tender offer the
acquirer would own more than 95% of the outstanding shares, then all the shares that the acquirer offered to purchase will be
transferred to it. The law provides for appraisal rights if any shareholder files a request in court within six months following
the consummation of a full tender offer, but the acquirer is entitled to stipulate that tendering shareholders forfeit their
appraisal rights. If as a result of a full tender offer the acquirer would own 95% or less of the outstanding shares, then the
acquirer may not acquire shares that will cause his shareholding to exceed 90% of the outstanding shares.
Material Contracts
Notes and Indenture
2017 Notes and Indenture
On January 18, 2017, NICE Systems Inc., a wholly owned subsidiary of the Company ("NICE Systems"), issued
$287.5 million aggregate principal amount of the 1.25% exchangeable senior notes due 2024 (the "2017 Notes"). The 2017
Notes were the general unsecured obligations of NICE Systems, guaranteed by us. The sale of the Notes generated net
proceeds of approximately $260.1 million. The 2017 Notes were issued pursuant to an indenture (the “2017 Indenture”)
among us, NICE Systems and the Trustee.
On December 31, 2021, the Company entered into the First Supplemental Indenture. In accordance with the First
Supplemental Indenture, the Company settled certain exchangeable notes by way of a Cash Settlement (as defined in the
2017 Indenture).
The 2017 Notes fully matured on January 15, 2024 and were settled in cash in the amount of $87.4 million.
2020 Notes and Indenture
On August 27, 2020, we issued $400 million aggregate principal amount of 0% exchangeable senior notes due 2025
(the “2020 Notes” and together with the 2017 Notes, the “Notes”) and on September 4, 2020, we issued an additional $60
million of the 2020 Notes pursuant to the exercise of the initial purchasers’ option. The 2020 Notes are general unsecured
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obligations of the Company. The sale of the 2020 Notes generated net proceeds of approximately $451 million. The 2020
Notes were issued pursuant to an indenture (the “2020 Indenture” and collectively with the 2017 Indenture, the "Indentures")
between us and U. S. Bank National Association, as trustee (the “Trustee”).
The 2020 Notes do not bear regular interest, and the principal amount of the 2020 Notes does not accrete. The 2020
Notes will mature on September 15, 2025, unless earlier prepaid, redeemed or converted, and are not redeemable at our
option prior to September 21, 2023, except in the event of certain tax law changes. We may redeem for cash all or any portion
of the 2020 Notes, at our option, on or after September 21, 2023 if the last reported sale price of the ADSs has been at least
130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day
immediately preceding the date on which we provide notice of redemption. In the case of any redemption, the redemption
price will be equal to 100% of the principal amount of the 2020 Notes to be redeemed, plus accrued and unpaid special
interest, if any, to, but excluding, the redemption date. A holder may convert its 2020 Notes at its option at any time prior to
the close of business on the business day immediately preceding June 15, 2025 in the event certain conditions are met during
set periods. On or after June 15, 2025, until the close of business on the second scheduled trading day immediately preceding
the maturity date, a holder may convert its 2020 Notes at any time.
Upon conversion, we, at our election, can pay or deliver (i) cash, (ii) ADSs or (iii) a combination thereof. The
conversion rate will initially be 3.3424 ADSs per $1,000 principal amount of 2020 Notes (equivalent to an initial conversion
price of approximately $299.19 per ADS). The conversion rate will be subject to adjustment in some events. In addition,
following certain corporate events that occur prior to the maturity date or our delivery of a notice of redemption, the
Company will under certain circumstances, increase the conversion rate for a holder who elects to convert its 2020 Notes in
connection with such a corporate event or to convert its 2020 Notes called for redemption in connection with such notice of
redemption, as the case may be.
If we undergo a fundamental change, holders of the 2020 Notes will have the right to require us to repurchase all or
a portion of their 2020 Notes upon the occurrence of a fundamental change (as defined in the 2020 Indenture) at a cash
repurchase price equal to 100% of the principal amount of the 2020 Notes to be repurchased, plus any accrued and unpaid
interest, if any, to, but excluding the fundamental change repurchase date.
The Indentures contain customary events of default, including a default in the payment of principal or interest when
due, default in compliance with the covenants set forth therein, and certain events of bankruptcy, insolvency or
reorganization.
On December 31, 2021, the Company irrevocably elected that all conversions occurring on or after December 31,
2021 will be settled pursuant to Combination Settlement (as defined in the 2020 Indenture) with a Specified Dollar Amount
(as defined in the 2020 Indenture) no less than $1,000 per $1,000 principal amount of 2020 Notes. Generally, under this
settlement method, the conversion value corresponding to the principal amount will be converted in cash, and the conversion
value over the principal amount will be settled, at the Company’s election, in cash or shares or a combination thereof.
Exchange Controls
Holders of ADSs are able to convert dividends and liquidation distributions into freely repatriable non-Israeli
currencies at the rate of exchange prevailing at the time of repatriation, pursuant to regulations issued under the Currency
Control Law, 5738–1978, provided that Israeli income tax has been withheld by us with respect to amounts that are being
repatriated to the extent applicable or an exemption has been obtained.
Our ADSs may be freely held and traded pursuant to the General Permit and the Currency Control Law. The
ownership or voting of ADSs by non-residents of Israel are not restricted in any way by our memorandum of association or
articles of association or by the laws of the State of Israel, except subjects of a country deemed an “enemy country” under
Israeli legislation or persons or individuals on weapon of mass destruction or terror sanctions lists.
Taxation
The following is a discussion of Israeli and United States tax consequences material to our shareholders. The
discussion is not intended, and should not be construed, as legal or professional tax advice and does not exhaust all possible
tax considerations.
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Holders of our ADSs should consult their own tax advisors as to the United States, Israeli or other tax consequences
of the purchase, ownership and disposition of our ADSs, including, in particular, the effect of any foreign, state or local taxes.
Israeli Tax Considerations
The following is a summary of both the general corporate tax laws applicable to companies in Israel, with special
reference to their effect on us, and a discussion of the material tax consequences to holders of our ordinary shares or ADSs
related to our domicile in Israel. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a
particular holder in light of his or her personal circumstances or to some types of holders subject to special treatment under
Israeli law. To the extent that the discussion is based on new tax legislation which has not been subject to judicial or
administrative interpretation, we cannot assure that the views expressed in the discussion will be accepted by the appropriate
tax authorities or the courts. The discussion is not intended, and should not be construed, as a legal or professional tax advice
and is not exhaustive of all possible tax considerations.
General Corporate Taxation in Israel
Generally, Israeli companies are subject to corporate tax on taxable income, including capital gains, at the rate of
23% for 2023 and 2024. However, the effective tax rate payable by a company that is eligible for tax benefits under the
Israeli Law for the Encouragement of Capital Investments-1959 (the "Investments Law"), and in particular the 12% rate
under the Preferred Technology Enterprise regime (as discussed below), may be considerably less.
We are permitted to measure our Israeli taxable income in U.S. dollars pursuant to regulations published by the
Israeli Minister of Finance, which provide the conditions for doing so. We believe that we meet, and will continue to meet,
the necessary conditions and as such, we measure our results for tax purposes based on the U.S. dollar/NIS exchange rate on
December 31 of the relevant tax year.
Tax Benefits under the Israeli Law for the Encouragement of Capital Investments, 1959, as amended.
Pursuant to Investments Law and its various amendments, under which both the Company and its Israeli subsidiary
have been granted “Approved Enterprise” status, we have derived and expect to continue to derive significant tax benefits
relating to our “Approved, Privileged, and Preferred Enterprise” programs for which we were eligible up to and including the
2016 tax year, and relating to Preferred Technological Enterprise program for the 2017 and subsequent tax years. To be
eligible for these tax benefits, a beneficiary must continue to meet certain conditions. In the event we are considered to have
failed to comply with these conditions, in whole or in part, the eligibility for the benefits may be canceled and we may be
required to refund the relevant amount, including interest and inflation adjustments. As of December 31, 2023, we believe
that we are in compliance with all the conditions required by the Investments Law.
In December 2016, the Israeli Knesset passed a number of changes to the Investments Law. These changes became
effective beginning January 1, 2017, following promulgation of Regulations by the Finance Ministry in May 2017 to
implement the “Nexus Principles” based on OECD guidelines published as part of the Base Erosion and Profit Shifting
(BEPS) project. The Regulations provide rules for implementation of the tax regime, which applies to both the Company and
its Israeli subsidiary, effective from the 2017 tax year and onwards.
Benefits under the “Preferred Technology Enterprise” regime include:
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A reduced 12% corporate tax rate (or 7.5% for entities located in Development Area A) on qualifying
income deriving from eligible intellectual property (“Preferred Technology Income”), subject to a number
of base conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditures and
R&D employees, as well as having at least 25% of annual income derived from export;
A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise,
provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or
more; and
A withholding tax rate of 20% for dividends paid from Preferred Technology Income (with an exemption
from such withholding tax applying to dividends paid to an Israeli company). Such rate may be reduced to
4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of
foreign ownership of the distributing entity.
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The above rates may be reduced by an applicable double tax treaty, subject to the receipt in advance of a valid certificate
from the Israel Tax Authority allowing for a reduced tax rate.
The effective tax rate applying to our Preferred Technology Enterprise is calculated based on the Nexus Principles,
taking into account eligible and ineligible R&D expenses incurred by us, as prescribed in the Regulations.
Income from sources other than the Preferred Technology Income are taxable at regular corporate tax rates of 23%
for 2023 and 2024.
Full details regarding our Preferred and Preferred Technology Enterprises may be found in Note 13(a)(1) of our
consolidated financial statements.
Tax Benefits and Grants for Research and Development
Israeli tax law allows, under specified conditions, a tax deduction for expenditures, including capital expenditures,
for the year in which they are incurred. These expenses must relate to scientific research and development projects and must
be approved by the relevant Israeli government ministry, determined by the field of research, and the research and
development must be conducted for the promotion of the company and carried out by or on behalf of the company seeking
such deduction. However, the amount of such deductible expenses is reduced by the sum of any funds received through
government grants for the financing of such scientific research and development projects. No deduction is allowed if it is
related to an expense invested in an asset depreciable under the general depreciation rules of the Tax Ordinance. Expenditures
not so approved, but otherwise qualifying for deduction, are deductible over a three-year period.
Tax Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Law for the Encouragement of Industry (Taxes), 1969 (the “Industry Encouragement Law”), Industrial
Companies (as defined below) are entitled to the following tax benefits, among others:
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•
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deductions over an eight-year period for purchases of know-how and patents;
deductions over a three-year period of expenses involved with the issuance and listing of shares on a stock
market; and
the right to elect, under specified conditions, to file a consolidated tax return with other related Israeli
Industrial Companies.
Eligibility for benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any
governmental authority. Under the Industry Encouragement Law, an “Industrial Company” is defined as a company that is an
Israeli resident for tax purposes and at least 90% of the income of which (other than income from certain government loans),
in any tax year, is derived from an “Industrial Enterprise” that is located in Israel and owned by such company.
An “Industrial Enterprise” is defined as an enterprise whose major activity in a given tax year is industrial
production activity. Eligibility for benefits under the Industry Encouragement Law is not contingent upon the approval of any
governmental authority. We believe that we currently qualify as an Industrial Company within the definition of the Industry
Encouragement Law. No assurance can be given that we will continue to qualify as an Industrial Company or that the
benefits described above will be available in the future.
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Taxation of Holders of Ordinary Shares
The following discussion refers to the tax consequences to holders of our ordinary shares. However, the same tax
treatment would apply to holders of our ADSs.
Capital Gains Tax on Sales of Our Ordinary Shares
Israeli law generally imposes a capital gains tax on the sale of any capital assets by residents of Israel, as defined for
Israeli tax purposes, and on the sale of assets located in Israel, including shares in Israeli companies, by both residents and
non-residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s
country of residence provides otherwise. The Tax Ordinance distinguishes between real gain and inflationary surplus. The
inflationary surplus is a portion of the total capital gain equivalent to the increase of the relevant asset’s purchase price
attributable to an increase in the Israeli consumer price index, or, under certain circumstances, a foreign currency exchange
rate, between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the
inflationary surplus.
Taxation of Israeli Residents
Israeli individuals are generally subject to a tax rate of 25% on capital gains derived from the sale of shares, whether
listed on a stock market or not unless such shareholder claims a deduction for financing expenses in connection with such
shares, in which case the gain is generally taxed at a rate of 30%. In addition, if such shareholder is considered a “significant
shareholder” at any time during the 12-month period preceding such sale (i.e., such shareholder holds directly or indirectly,
including jointly with others, at least 10% of any means of control in the company), in the tax rate will be 30%. Individuals
who are subject to tax in Israel are also subject to an additional income surtax at a rate of 3% (as described below). For this
purpose, taxable income will include taxable capital gains from the sale of our shares and taxable income from dividend
distributions. Certain Israeli institutions that are exempt from tax under Section 9(2) or Section 129C(a)(1) of the Tax
Ordinance (such as exempt trust funds and pension funds) may be exempt from capital gains tax on the sale of the shares.
Israeli companies are subject to the corporate tax rate on capital gains derived from the sale of listed shares.
Different tax rates may apply to dealers in securities and shareholders who acquired their shares prior to an initial
public offering.
Taxation of Non-Israeli Residents
Both individual and corporate non-Israeli residents are generally exempt from Israeli capital gains tax on any gains
derived from the sale of shares publicly traded on the TASE provided that (among other things) such gains did not derive
from a permanent establishment of such shareholders in Israel. Non-Israeli residents are also exempt from Israeli capital gains
tax on any gains derived from the sale of shares of Israeli companies publicly traded on a recognized stock market outside of
Israel, provided that (among other things) such shareholders did not acquire their shares prior to the issuer’s initial public
offering and that the gains did not derive from a permanent establishment of such shareholders in Israel. However, non-Israeli
corporations will not be entitled to such exemption if Israeli residents (i) have a controlling interest of more than 25% in such
non-Israeli corporation; or (ii) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-
Israeli corporation, whether directly or indirectly.
In addition, the sale, exchange or disposition of our ordinary shares by a U.S. resident individual or corporate
shareholder (for purposes of the U.S.-Israel Tax Treaty), and who holds ordinary shares as a capital asset, is also exempt from
Israeli capital gains tax under the U.S.-Israel Tax Treaty unless either (i) the U.S. resident shareholder holds, directly or
indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding such sale;
(ii) the capital gains arising from such sale, exchange or disposition are attributable to either real estate located in Israel, a
permanent establishment of the shareholder located in Israel, or royalties; or (iii) such U.S. resident shareholder is an
individual and was present in Israel for 183 days or more during the relevant taxable year. If the above conditions are not met,
the U.S. resident would be subject to Israeli tax, to the extent applicable. However, under the U.S.-Israel Tax Treaty, the gain
would be treated as foreign source income for United States foreign tax credit purposes and such U.S. resident would be
permitted to claim a credit for such taxes against the United States federal income tax imposed on such sale, exchange or
disposition, subject to the limitations under the United States federal income tax laws applicable to foreign tax credits.
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Taxation of Dividends Paid on our Ordinary Shares
Taxation of Israeli Residents
Israeli resident individuals are generally subject to Israeli income tax on the receipt of dividends paid on our
ordinary shares, other than bonus shares (share dividends) or stock dividends. The tax rate applicable to such dividends is
25% or 30% for a shareholder that is considered a significant shareholder at any time during the 12-month period preceding
such distribution. Individuals may also be required to pay surtax with respect to dividends received, as further explained
below. Dividends paid out of profits sourced from ordinary income are subject to withholding tax at the rate of 25% if the
shares are registered with a nominee company (whether the recipient is a significant shareholder or not). Dividends paid from
income derived from our Approved and Privileged Enterprises are subject to withholding tax at the rate of 15%, and
dividends paid from income derived from our Preferred Enterprise and Preferred Technology Enterprise are subject to
withholding tax at the rate of 20%. We cannot assure that we will designate the profits that are being distributed in a way that
will reduce shareholders’ tax liability.
Dividend distributions to Israeli resident corporations are generally not subject to a withholding tax.
Taxation of Non-Israeli Residents
Non-residents of Israel, both companies and individuals, are generally subject to Israeli income tax on the receipt of
dividends paid on our ordinary shares, at the aforementioned rates applicable to Israeli residents, which tax will be withheld
at source, unless a different rate is provided in a treaty between Israel and the shareholder’s country of residence.
Under the U.S.-Israel Treaty, the maximum Israeli withholding tax on dividends paid by us is 25%. The U.S.-Israel
Tax Treaty further provides for a 12.5% Israeli dividend withholding tax rate on dividends paid by an Israeli company to a
U.S. corporation owning at least 10% or more of such Israeli company’s issued voting power for, in general, the part of the
tax year which precedes the date of payment of the dividend and the entire preceding tax year. The 12.5% rate applies only to
dividends paid from regular income (and not derived from an Approved, Privileged Preferred Enterprise or Preferred
Technological Enterprise) in the applicable period and does not apply if the company has more than 25% of its gross income
derived from certain types of passive income. If the conditions mentioned above are met, dividends from income of an
Approved, Privileged Preferred Enterprise or Preferred Technological Enterprise are subject to a 15% withholding tax rate
under the U.S.-Israel Tax Treaty. Residents of the United States generally will have withholding tax in Israel deducted at
source. They may be entitled to a credit or deduction for United States federal income tax purposes in the amount of the taxes
withheld, subject to detailed rules contained in United States tax statutes, rules and regulations.
An individual or corporate non-resident of Israel who has dividend income derived from or accrued in Israel, from
which tax was withheld at source, is generally exempt from the duty to file tax returns in Israel with respect to such income,
provided that (i) such income was not derived from a business conducted in Israel by the taxpayer, (ii) the taxpayer has no
other taxable sources of income in Israel with respect to which a tax return is required to be filed in Israel; and (iii) the
taxpayer is not obligated to pay income surtax in Israel (as discussed below).
Surtax
Subject to the provisions of any applicable tax treaty, individuals who are subject to tax in Israel (whether or not any such
individual is an Israeli resident) are also subject to a surtax at the rate of 3% on annual income (including, but not limited to,
dividends, interest and capital gains) exceeding NIS 721,560 for 2024, which amount is linked to the annual change in the
Israeli consumer price index.
U.S. Federal Income Tax Considerations
The following is a summary of the material U.S. federal income tax consequences that apply to U.S. holders
(defined below) who hold ADSs as capital assets for tax purposes. This summary is based on the U.S. Internal Revenue Code
of 1986, as amended (the “Code”), existing final, temporary and proposed regulations thereunder, judicial decisions and
published positions of the Internal Revenue Service (the "IRS") and the U.S.-Israel income tax treaty in effect as of the date
of this annual report, all of which are subject to change at any time (including changes in interpretation), possibly with
retroactive effect, in a manner that could adversely affect a U.S. holder.
This summary does not address all U.S. federal income tax matters that may be relevant to a particular prospective
holder or all tax considerations that may be relevant with respect to an investment in ADSs, including the U.S. federal estate,
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gift, or alternative minimum tax consequences, or any state, local or non-U.S. tax consequences, of the acquisition, ownership
and disposition of ADSs.
This summary does not address tax considerations applicable to a holder of an ADS that may be subject to special
tax rules including, without limitation, the following:
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dealers or traders in securities, currencies or notional principal contracts;
financial institutions, banks and financial services entities;;
insurance companies;
real estate investment trusts;
persons subject to special tax accounting rules under Section 451(b) of the Code;
investors subject to the alternative minimum tax;
tax-exempt organizations;
regulated investment companies;
investors that actually or constructively own 10 percent or more of our shares and/or other equity by vote
or value;
investors that will hold the ADSs as part of a hedging or conversion transaction or as a position in a
straddle or a part of a synthetic security or other integrated transaction for U.S. federal income tax
purposes;
investors that are treated as partnerships or other pass-through entities for U.S. federal income tax purposes
and persons who hold the ADSs through partnerships or other pass-through entities;
investors whose functional currency is not the U.S. dollar; and
expatriates or former long-term residents of the United States.
You are urged to consult your own tax advisor regarding the foreign and U.S. federal, state and local and
other tax consequences of an investment in ADSs.
For purposes of this summary, a “U.S. holder” is a beneficial owner of ADSs that is, for U.S. federal income tax
purposes:
•
•
•
•
an individual who is a citizen or a resident of the United States;
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or
organized in or under the laws of the United States or any political subdivision thereof;
an estate whose income is subject to U.S. federal income tax regardless of its source; or
a trust if:
(a)
(b)
the trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes; or
(i) a court within the United States is able to exercise primary supervision over the administration
of the trust; and (ii)one or more United States persons have the authority to control all substantial
decisions of the trust
84
If an entity that is classified as a partnership for U.S. federal tax purposes holds ADSs, the U.S. federal income tax
treatment of its partners will generally depend upon the status of the partners and the activities of the partnership. Entities that
are classified as partnerships for U.S. federal tax purposes and persons holding ADSs through such entities should consult
their own tax advisors.
In general, if you hold ADSs, you will be treated as the holder of the underlying shares represented by those ADSs
for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if you exchange ADSs for the
underlying shares represented by those ADSs.
U.S. holders should consult their own tax advisors regarding the U.S. federal income tax consequences to
them with respect to the acquisition, ownership and disposition of ADSs in light of their particular circumstances.
U.S. Taxation of ADSs
Distributions
Subject to the discussion under “Passive Foreign Investment Companies” below, the gross amount of any
distribution, including the amount of any Israeli taxes withheld from these distributions (see “Israeli Tax Considerations”),
actually or constructively received by a U.S. holder with respect to ADSs will be taxable to the U.S. holder as a dividend to
the extent of our current and accumulated earnings and profits as determined under U.S. federal income tax principles.
Distributions in excess of earnings and profits will be non-taxable to the U.S. holder to the extent of, and will be applied
against and reduce, the U.S. holder’s adjusted tax basis in the ADSs. Distributions in excess of earnings and profits and such
adjusted tax basis will generally be taxable to the U.S. holder as a capital gain from the sale or exchange of property. We do
not maintain calculations of our earnings and profits under U.S. federal income tax principles. If we do not report to a U.S.
holder the portion of a distribution that exceeds earnings and profits, the distribution will generally be taxable as a dividend
even if that distribution would otherwise be treated as a non-taxable return of capital or as a capital gain under the rules
described above. A U.S. holder that is a corporation will not be eligible for any dividends received deduction, except as
provided by Sections 245 and 245A of the Code.
Under the Code, certain dividends received by non-corporate U.S. holders may be “qualified dividend income,”
which is taxed at the lower capital gains rate, currently 20%. This reduced income tax rate is only applicable to dividends
paid by a “qualified foreign corporation” that is not a “passive foreign investment company” and only with respect to shares
held by a qualified U.S. holder (i.e., a non-corporate holder) for a minimum holding period (generally 61 days during the
121-day period beginning 60 days before the ex-dividend date). We should be considered a qualified foreign corporation
because (i) we are eligible for the benefits of a comprehensive tax treaty between Israel and the U.S., which includes an
exchange of information program; and (ii) the ADSs are readily tradable on an established securities market in the U.S. In
addition, based on our current business plans, we do not expect to be classified as a “passive foreign investment
company” (see “Passive Foreign Investment Companies” below). Accordingly, dividends paid by us to individual U.S.
holders on shares held for the minimum holding period should be eligible for the reduced income tax rate. In addition to the
income tax on dividends discussed above, certain non-corporate U.S. holders will also be subject to the 3.8% Medicare tax on
dividends as discussed below under “Medicare Tax on Unearned Income”.
The amount of any distribution paid in a currency other than U.S. dollars (a “foreign currency”) including the
amount of any withholding tax thereon, will be included in the gross income of a U.S. holder in an amount equal to the U.S.
dollar value of the foreign currencies calculated by reference to the exchange rate in effect on the date of receipt, regardless
of whether the foreign currencies are converted into U.S. dollars. If the foreign currencies are converted into U.S. dollars on
the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the
dividend. If the foreign currencies received in the distribution are not converted into U.S. dollars on the date of receipt, a U.S.
holder will have a basis in the foreign currencies equal to its U.S. dollar value on the date of receipt. Any gain or loss on a
subsequent conversion or other disposition of the foreign currencies will be treated as ordinary income or loss.
Generally, dividends received by a U.S. holder with respect to ADSs will be treated as foreign source income for the
purposes of calculating that holder’s foreign tax credit limitation. Subject to certain conditions and limitations, any Israeli
taxes withheld on dividends at the rate provided by the U.S.-Israel tax treaty may be deducted from taxable income or
credited against a U.S. holder’s U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign
tax credit is calculated separately with respect to various categories of income, including “passive” income and “general”
85
income. The rules relating to foreign tax credits and the timing thereof are complex. U.S. holders should consult their own tax
advisors regarding the availability of a foreign tax credit under their particular situation.
Sale or Other Disposition of ADSs
If a U.S. holder sells or otherwise disposes of its ADSs, gain or loss will be recognized for U.S. federal income tax
purposes in an amount equal to the difference between the amount realized on the sale or other disposition and such holder’s
adjusted tax basis in the ADSs. Subject to the discussion below under the heading “Passive Foreign Investment Companies,”
such gain or loss generally will be a capital gain or loss and will be a long-term capital gain or loss if the holder had held the
ADSs for more than one year at the time of the sale or other disposition. Long-term capital gains realized by individual U.S.
holders generally are subject to a lower marginal U.S. federal income tax rate (currently up to 20%) than the marginal tax rate
on ordinary income. In addition to the income tax on gains discussed above, certain non-corporate U.S. holders will also be
subject to the 3.8% Medicare tax on net gains as discussed below under “Medicare Tax on Unearned Income”. Under most
circumstances, any gain that a holder recognizes on the sale or other disposition of ADSs will be U.S. sourced for purposes of
the foreign tax credit limitation and any recognized losses will be allocated against U.S. source income.
If a U.S. holder receives foreign currency upon a sale or exchange of ADSs, gain or loss, if any, recognized on the
subsequent sale, conversion or disposition of such foreign currency will be ordinary income or loss, and will generally be
income or loss from sources within the United States for foreign tax credit limitation purposes. However, if such foreign
currency is converted into U.S. dollars on the date received by the U.S. holder, the U.S. holder generally should not be
required to recognize any gain or loss on such conversion.
A U.S. holder who holds shares through an Israeli stockbroker or other Israeli intermediary may be subject to Israeli
withholding tax on any capital gain recognized if the U.S. holder does not obtain approval of an exemption from the Israeli
Tax Authorities or claim any allowable refunds or reductions. U.S. holders are advised that any Israeli tax paid under
circumstances in which an exemption from (or a refund of or a reduction in) such tax was available will not give rise to a
deduction or credit for foreign taxes paid for U.S. federal income tax purposes. If applicable, U.S. holders are advised to
consult their Israeli stockbroker or intermediary regarding the procedures for obtaining an exemption or reduction.
Medicare Tax on Unearned Income
Certain U.S. holders that are individuals, estates or trusts are required to pay an additional 3.8% tax on all or a
portion of their “net investment income,” which includes dividends and net gains from the sale or other dispositions of ADSs
(other than ADSs held in a trade or business).
Passive Foreign Investment Companies
For U.S. federal income tax purposes, we will be considered a passive foreign investment company (“PFIC”) for any
taxable year in which either (i) 75% or more of our gross income is "passive income", as defined in the relevant provisions of
the Code; or (ii) on average, at least 50% of our assets (generally determined on a quarterly basis) produce or are held for
the production of passive income. For this purpose, passive income includes dividend, interest, royalty, rent, and annuity
income and the excess of gains over losses from the disposition of assets which produce passive income. If we were
determined to be a PFIC for U.S. federal income tax purposes, highly complex rules would apply to U.S. holders owning
ADSs.
Based on our estimated gross income, the average value of our gross assets and the nature of our business, we do not
believe that we will be classified as a PFIC in the current taxable year. Our status in any taxable year will depend on our
assets and activities in each year and because this is a factual determination made annually at the end of each taxable year,
there can be no assurance that we will not be considered a PFIC for any future taxable year. If we were treated as a PFIC in
any year during which a U.S. holder owns ADSs, such U.S. holder may be subject to materially adverse tax consequences,
including additional U.S. federal income tax liability and tax filing obligations. Given our current business plans, however,
we do not expect that we will be classified as a PFIC in future years.
You are urged to consult your own tax advisor regarding the possibility of us being classified as a PFIC and
the potential tax consequences arising from the ownership and disposition (directly or indirectly) of an interest in a
PFIC.
86
Tax Cuts and Jobs Act (the "U.S. Tax Reform" or "TCJA")
As a global corporation, we are subject to income, non-income and transactional tax regimes in the United States
and various other jurisdictions, which are unsettled and may be subject to significant change. On December 22, 2017, the
United States enacted the Tax Cuts and Jobs Act (the "TCJA"), a comprehensive tax law that included several key tax
changes to the taxation of business entities, among which is the change to Section 174 of the Code, that went into effect for
taxable years beginning after December 31, 2021, requiring research and development expenses to be capitalized and
amortized over a period of either five or fifteen years. Prior to this change, the research and development expenses could be
fully expensed, as incurred, for U.S. federal income tax purposes.
The final impact of the TCJA may differ due to, among other things, possible changes in the interpretations and
assumptions made by us as a result of additional information, additional guidance or finalization of law and regulations that
will be issued by the U.S. Department of Treasury, the IRS or other standard-setting bodies, and which may impact our future
financial statements, and will be accounted for when such guidance is issued.
Backup Withholding and Information Reporting
Payments of dividends with respect to ADSs and the proceeds from the sale, retirement, or other disposition of
ADSs made by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. holder as may be
required under applicable U.S. Treasury regulations. We, or an agent, a broker, or any paying agent, as the case may be, may
be required to withhold tax (backup withholding), currently at the rate of 24%, if a non-corporate U.S. holder that is not
otherwise exempt fails to provide an accurate taxpayer identification number and comply with other IRS requirements
concerning information reporting. Certain U.S. holders (including, among others, corporations and tax-exempt organizations)
are not subject to backup withholding. Any amount of backup withholding withheld may be used as a credit against your U.S.
federal income tax liability provided that the required information is timely furnished to the IRS. U.S. holders should consult
their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining an
exemption.
Foreign Asset Reporting
Certain U.S. holders who are specified individuals or specified domestic entities are required to report information
relating to an interest in our ADSs on IRS Form 8938 (Statement of Specified Foreign Financial Assets), subject to certain
exceptions (including an exception for shares held in accounts maintained by financial institutions). U.S. holders are
encouraged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their
ownership and disposition of our ADSs.
Documents on Display
We are subject to certain of the information reporting requirements of the Securities and Exchange Act of 1934, as
amended. As a foreign private issuer, we are exempt from the rules and regulations under the Securities Exchange Act
prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt
from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Securities Exchange Act, with
respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with
the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Securities Exchange Act.
NASDAQ rules generally require that companies send an annual report to shareholders prior to the annual general meeting,
however we rely upon an exception under the NASDAQ rules and follow the generally accepted business practice for
companies in Israel. Specifically, we file annual reports on Form 20-F, which contain financial statements audited by an
independent accounting firm, electronically with the SEC and post a copy on our website. We also furnish to the SEC
quarterly reports on Form 6-K containing unaudited financial information after the end of each of the first three quarters.
The SEC maintains a website that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC, and our SEC reports can be viewed or downloaded there. The
address of this web site is http://www.sec.gov. In addition, information that we furnish or file with the SEC, including annual
reports on Form 20-F, reports on Form 6-K, proxy and information statements and any amendments to, or exhibits included
in, those reports are available to be viewed or download, free of charge, on our website at http://www.nice.com/company/
investors as soon as reasonably practicable after such materials are filed or furnished with the SEC. Information contained, or
87
that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference
herein, and we have included our website address in this annual report solely for informational purposes.
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
General
Market risks relating to our operations result primarily from weak economic conditions in the markets in which we
sell our products and changes in interest and exchange rates. To manage the volatility related to the latter exposure, we may
enter into various derivative transactions. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in
earnings and cash flows associated with changes in currency exchange rates. It is our policy and practice to use derivative
financial instruments only to manage such exposures. We do not use financial instruments for trading purposes and we are
not a party to any leveraged derivative.
Foreign Currency Exchange Risk
We conduct our business primarily in U.S. dollars but also in the currencies of Israel, the U.K., the E.U., India and
Philippines, as well as other currencies. Thus, we are exposed to foreign exchange fluctuations, primarily in NIS, GBP, EUR,
INR and PHP. We monitor foreign currency exposure and from time to time we may use various instruments to preserve the
value of sale transactions and commitments, however, this cannot assure us protection against risks of currency fluctuations.
For more information regarding foreign currency related risks, please refer to Item 3, “Key Information—General Risks
Relating to Our Business” of this annual report. We use currency forward contracts and option contracts in order to protect
against the increase in value of forecasted non-dollar currency cash flows and to hedge future anticipated payments.
As of December 31, 2023, we had outstanding currency forward contracts to hedge payroll, facilities expenses and
lease obligations, denominated in NIS, INR and PHP, in the total amount of approximately $209.21 million. The fair value
adjustment of those contracts was approximately $719 thousand. These transactions were for a period of up to one year.
The following table details the balance sheet exposure (i.e., the difference between assets and liabilities) in our main
foreign currencies, as of December 31, 2023, against the relevant functional currency.
Foreign currencies
USD
GBP
EUR
CAD
AUD
MXN
CHF
JPY
INR
SGD
HKD
NIS
PHP
BRL
Other currencies
Functional currencies
(In U.S. dollars in millions)
USD
GBP
CAD
MXN
AUD
SGD
1 $
— $
20 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
19 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
(2) $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
1 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
— $
3 $
21 $
20 $
2 $
5 $
— $
(6) $
(7) $
(15) $
(6) $
(16) $
(3) $
6 $
2 $
88
The table below presents the fair value of firmly committed transactions for lease obligations denominated in
currencies other than the U.S. dollar, which is our reporting currency:
Less than 1 year
1-3 years
3-5 years
Over 5 years
Total
(In U.S. dollars in millions)
New Israeli Shekel
Other currencies *
Total
$
$
$
$
$
(5) $
(8) $
(7) $
(13) $
(33) $
(2) $
(4) $
(4) $
(4) $
(14) $
(7)
(12)
(11)
(17)
(47)
*
Other currencies include the following currencies: AUD, EUR, GBP, INR, JPY, PHP, COP and SGD.
Interest Rate Risk
We are subject to interest rate risk on our investments and on our borrowings.
On August 24, 2020, we issued $460.0 million aggregate principal amount of 0% exchangeable senior notes due
2025.
On January 18, 2017, we issued $287.5 million aggregate principal amount of 1.25% exchangeable senior notes due
2024. The principal amount as of December 31, 2023, is $87.4 million.
Our outstanding debt obligations, the corresponding interest rates, currency and repayment schedules as of
December 31, 2023, are set forth in the table below in U.S. dollar equivalent terms (in millions).
Currency
Amount
Interest
rate
2024
2025
(In millions)
Fixed Rate:
USD
Total:
Debt issuance costs, net
of amortization
Unamortized discount
$ 669.9
0%-1.25% $ 209.9 $ 460.0
$ 669.9
$ 209.9 $ 460.0
(2.9)
(0.1)
Total:
$ 666.9
Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest
income and the fair market value of our marketable securities portfolio.
Our short term investment portfolio consists of investment-grade corporate debentures, U.S. Government agencies
and U.S. treasuries. As of December 31, 2023, 82.6% of our portfolio was in such securities and the remainder was in dollar
deposits.
We invest in dollar deposits with U.S. banks, European banks, Israeli banks and money market funds. As of
December 31, 2023, 17.4% of our portfolio was in such deposits. Since these investments are for short periods, interest
income is sensitive to changes in interest rates.
89
The weighted average duration of the securities portfolio, as of December 31, 2023, is 1.68 years. The securities in
our marketable securities portfolio are rated generally as A+ according to Standard and Poor’s rating or A1, according to
Moody’s rating. Securities representing 9.1% of the marketable securities portfolio are rated as AAA; securities representing
18.7% of the marketable securities portfolio are rated as AA; securities representing 67.4% of the marketable securities
portfolio are rated as A; securities representing 3.7% of the marketable securities portfolio are rated as BBB+ securities
representing 0.5% of the marketable securities portfolio are rated as BBB and securities representing 0.5 % of the marketable
securities portfolio are rated as BBB- after being downgraded during 2022.
The table below presents the fair value of marketable securities which are subject to risk of changes in interest rate,
segregated by maturity dates (in U.S. dollars, in millions):
Amortized Cost
Up to 1
year
1-3 years 4-7 years
Corporate debentures
236.8
422.9
176.0
U.S. treasuries
U.S. government agencies
10.4
—
31.9
2.8
8.8
—
Estimated fair value
Up to 1
year
1-3 years 4-7 years
233.8
413.6
173.1
10.3
—
31.4
2.8
8.9
—
Total
820.5
50.6
2.8
Total
835.8
51.2
2.8
Total
247.2
457.6
184.8
889.8
244.1
447.8
182.0
873.9
Other risks and uncertainties that could affect actual results and outcomes are described in Item 3, “Key Information
– Risk Factors” in this annual report.
Item 12.
Description of Securities Other than Equity Securities.
American Depositary Shares and Receipts
Set forth below is a summary of certain provisions in relation to charges and other payments under the Deposit
Agreement, as amended, among NICE, JPMorgan Chase Bank, N.A. as depositary (the “Depositary”), and the owners and
holders from time to time of ADRs issued thereunder (the “Deposit Agreement”). A summary of rights of holders and
additional terms contained in the Deposit Agreement has been filed as Exhibit 2.4 to this Annual Report. These summaries
are not complete and are qualified in their entirety by the Deposit Agreement, a form of which has been filed as Exhibit 99(a)
to the Registration Statement on Form F-6 (Registration No. 333-203623) filed with the SEC on April 24, 2015, as amended
by that certain Amendment No. 1 to the Deposit Agreement, a form of which has been filed as Exhibit 99(a)(2) to the Post-
Effective Amendment No. 1 to the Form F-6 (Registration No. 333-303623) filed with the SEC on April 29, 2020.
Charges of the Depositary
The Depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against
deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock
dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or
event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities
or whose ADSs are cancelled or reduced for any other reason, $0.05 for each ADS issued, delivered, reduced, cancelled or
surrendered, as the case may be. The Depositary may sell (by public or private sale) sufficient securities and property
received in respect of a share distribution, rights or other distribution prior to such deposit to pay such charge.
The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing
shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a
stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a
distribution of ADSs), whichever is applicable:
•
•
a fee of $1.50 per ADR for transfers of certificated or direct registration ADRs;
a fee of up to $0.05 per ADS for any cash distribution made pursuant to the Deposit Agreement;
90
•
•
•
•
•
•
•
a fee of up to $0.05 per ADS per calendar year (or portion thereof) for services performed by the
Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar
year and shall be assessed against holders of ADRs as of the record date or record dates set by the
Depositary during each calendar year and shall be payable in the manner described in the next succeeding
provision);
a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary or any of
its agents (including, without limitation, the custodian and expenses incurred on behalf of holders in
connection with compliance with foreign exchange control regulations or any law or regulation relating to
foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of
securities (including, without limitation, deposited securities), the delivery of deposited securities or
otherwise in connection with the Depositary’s or its custodian’s compliance with applicable law, rule or
regulation (which fees and charges shall be assessed on a proportionate basis against holders as of the
record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by
billing such holders or by deducting such charge from one or more cash dividends or other cash
distributions);
stock transfer or other taxes and other governmental charges;
cable, telex and facsimile transmission and delivery charges incurred at the request of an ADR holder in
connection with the deposit or delivery of shares;
transfer or registration fees for the registration of transfer of deposited securities on any applicable register
in connection with the deposit or withdrawal of deposited securities;
in connection with the conversion of foreign currency into U.S. dollars, the fees, charges and expenses of
the Depositary (which are paid out of such foreign currency); and
fees of any division, branch or affiliate of the Depositary utilized by the Depositary to direct, manage or
execute any public or private sale of securities under the deposit agreement.
The Depositary may generally refuse to provide services until it is reimbursed applicable amounts, including stock
transfer or other taxes and other governmental charges, and is paid its fees for applicable services.
The fees and charges an ADR holder may be required to pay may vary over time and may be changed by us and by
the Depositary. Our ADR holders will receive prior notice of the increase in any such fees and charges.
We will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the custodian)
pursuant to agreements from time to time between us and the Depositary. The charges described above may be amended from
time to time by agreement between us and the Depositary.
Fees paid by the Depositary
Our Depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and
maintenance of the ADR program upon such terms and conditions as we and the Depositary may agree from time to time.
The Depositary may make available to us a set amount or a portion of the Depositary fees charged in respect of the ADR
program or otherwise upon such terms and conditions as we and the Depositary may agree from time to time.
In respect of 2023, we received a payment in the amount of approximately $1 million from the Depositary as
reimbursement for expenses we incurred in 2023 in relation to the maintenance and administration of the ADR program.
91
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
PART II
None.
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds.
None.
Item 15.
Controls and Procedures.
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of NICE’s disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this
report. Based on that evaluation, our Chief Executive Officer (principal executive officer) and Chief Financial Officer
(principal financial officer) concluded that NICE’s disclosure controls and procedures were effective as of such date.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial
reporting, as such term is defined in Rule 15d-15(f) under the Securities Exchange Act. Our internal control over our
financial reporting system was designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements
and even when determined to be effective can only provide reasonable assurance with respect to financial statements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.
Our management based its assessment on criteria established in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management
has concluded that, as of December 31, 2023, our internal control over financial reporting is effective.
Attestation Report of the Independent Registered Public Accounting Firm
Our independent registered public accounting firm, Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young
Global independently assessed the effectiveness of our internal control over financial reporting and has issued an attestation
report, which is included under Item 18 on page F-4 of this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by
this annual report that have materially affected, or that are reasonably likely to materially affect, our internal control over
financial reporting.
Item 16A.
Audit Committee Financial Expert.
Our Board of Directors has determined that each of Dan Falk and Yocheved Dvir meets the definition of an audit
committee financial expert, as defined in Item 407 of Regulation S-K and is independent under the applicable regulations.
92
Item 16B.
Code of Ethics.
We have adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) that applies to our principal
executive and financial officers, and that also applies to all of our employees. If we make any substantive amendments to the
Code of Ethics or grant any waiver from a provision of this code to our chief executive officer, principal financial officer or
corporate controller, we will either disclose the nature of such amendment or waiver on our website or in our annual report on
Form 20-F.
The Code of Ethics, among other things, summarizes the principles of our Anti-Bribery and Corruption Policy. We
have zero tolerance for bribery and corruption and are committed to complying with applicable laws and regulations relating
to the fight against bribery and corruption.
The Code of Ethics and our separate Anti-Bribery and Corruption Policy are each available on our website:
www.nice.com. Written copies are available upon request without charge.
Item 16C.
Principal Accountant Fees and Services.
Fees Paid to Independent Auditors
Fees billed or expected to be billed by Kost, Forer, Gabbay & Kasierer, a member of EY Global, and other members
of EY Global for professional services for each of the last two fiscal years were as follows:
2023 Fees
2022 Fees
$
$
$
$
$
1,150 $
95 $
438 $
— $
1,683 $
1,012
73
484
—
1,569
Services Rendered
Audit (1)
Audit-related (2)
Tax (3)
All Other Fees
Total
(1)
(2)
(3)
Audit fees refer to audit services for each of the years shown in this table which include fees associated with the
annual audit for each of 2022 and 2023 (including an audit in each such year in accordance with section 404 of the
Sarbanes-Oxley Act), certain procedures regarding our quarterly financial results submitted on Form 6-K,
consultations concerning financial accounting and various accounting issues and performance of local statutory
audits.
Audit-related fees relate to assurance and associated services that traditionally are performed by the independent
auditor, which include due diligence investigations and audit services related to other statutory or regulatory filings,
mainly those related to mergers and acquisitions.
Tax fees refer to professional services rendered by our auditors, which include tax compliance, tax advice on actual
or contemplated transactions, tax consulting associated with transfer pricing.
Policies and Procedures
Our audit committee has adopted a policy and procedures for the pre-approval of audit and non-audit services
rendered by our external auditors, Kost, Forer, Gabbay & Kasierer, a member of EY Global. The policy, which is designed to
ensure that such services do not impair the independence of our auditors, requires pre-approval from the audit committee on
an annual basis for the various audit and non-audit services that may be performed by our auditors. If a type of service, that is
to be provided by our auditors, has not received such general pre-approval, it will require specific pre-approval by our audit
committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-
approval by our audit committee. The policy prohibits retention of the independent auditors to perform the prohibited non-
audit functions defined in Section 201 of the Sarbanes-Oxley Act of 2002 or the rules of the SEC, and also considers whether
proposed services are compatible with the independence of the public auditors.
93
Item 16D.
Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
During 2023, we repurchased our ordinary shares as described in the table below.
Period
(a) Total
number of
shares
purchased
(b) Average
price paid per
share
(c) Total
number of
shares
purchased as
part of publicly
announced
plans or
programs
(d) Maximum
number (or
approximate
dollar value) of
shares that may
yet be
purchased
under the plans
or programs
January 1 - January 31
February 1 - February 28
March 1 - March 31
April 1 - April 30
May 1 - May 31
June 1 - June 30
July 1 - July 31
August 1 - August 31
September 1 - September 30
October 1 - October 31
November 1 - November 30
December 1 - December 31
Total
(In dollars, except share amounts)
67,876
241,416
335,732
14,324
3,500
333,251
132,613
42,307
128,632
197,628
1,497,279
220.25
206.12
183.47
200.79
204.71
198.26
176.65
169.63
177.66
197.30
192.63
67,876
241,416
—
335,732
14,324
3,500
333,251
132,613
42,307
128,632
197,628
246,682,595
231,732,928
181,971,396
120,374,875
117,498,774
116,782,272
50,710,707
27,285,198
20,108,461
297,255,790
258,264,136
1,497,279
1,668,667,132
On November 9, 2022, our Board of Directors authorized a program to repurchase up to $250 million of our issued
and outstanding ordinary shares and ADRs. The Company fully executed the $250 million share repurchase program before
the end of 2023. On November 15, 2023, our Board of Directors authorized an additional program to repurchase up to $300
million of our issued and outstanding ordinary shares and ADRs which commenced following completion of the repurchase
program that was authorized by our Board of Directors in 2022. Repurchases may be made from time to time in the open
market or in privately negotiated transactions in accordance with applicable securities laws and regulations. The timing and
amount of the repurchase transactions will be determined by management and may depend on a variety of factors including
market conditions, alternative investment opportunities and other considerations.
These programs do not obligate us to acquire any particular amount of ordinary shares and ADRs and each program
may be modified or discontinued at any time without prior notice.
Item 16F.
Change in Registrant’s Certifying Accountant.
None.
94
Item 16G.
Corporate Governance.
We follow the Israeli Companies Law, the relevant provisions of which are summarized in this annual report, rather
than comply with the NASDAQ requirements relating to: (i) the quorum for shareholder meetings (see Item 10, “Additional
Information – Memorandum and Articles of Association – Meetings of Shareholders” in this annual report); (ii) shareholder
approval with respect to issuance of securities under equity-based compensation plans (see Item 10, “Additional Information
– Memorandum and Articles of Association – Approval of Certain Transactions” and “Approval of Office Holder
Compensation” in this annual report); and (iii) sending annual reports to shareholders (see Item 10, “Additional Information –
Documents on Display” in this annual report).
Item 16H.
Mine Safety Disclosure.
Not Applicable.
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not Applicable.
Item. 16K. Cybersecurity
Cybersecurity forms an integral part of our risk management practices. We have established and maintain a
Cybersecurity Risk Program which has been developed to assess, identify and manage material risks from cybersecurity
threats. Our program is inclusive of related information security policies and procedures to protect the confidentiality,
integrity, and availability of the information contained within our systems, products, and services, and to assess, identify,
manage, and address cybersecurity risks. Our internal cybersecurity policies and procedures incorporate industry best
practices and are assessed annually as part of our Cybersecurity Risk Program review. These policies and procedures include
information security policies, incident response procedure, risk assessment procedures and a vendor management policy.
We have verified our information security management policies and procedures and received certifications in
accordance with the ISO 27001:2013 information security management standard and ISO 27701:2019 privacy management
standard as well as other certifications such as FedRAMP, SOC 2 Type II Applications, PCI DSS, and HITRUST for specific
business lines.
We utilize multiple third-party experts to support our program, to advise us on best practices and assist us in
evaluating and enhancing our cybersecurity practices. These experts include threat monitoring service providers, cyber
software and managed service providers, penetration testing firms, forensic investigators, cybersecurity consultants, and legal
counsel specializing in the cyber domain.
We regularly conduct cybersecurity risk assessments and audits, both internally and through the engagement of third
parties. These processes include regular scanning of our information systems for vulnerabilities, including by conducting
penetration testing, and we maintain tools to detect unusual or unauthorized activities that may affect our systems, products,
and services. We also retain the services of a reputable third-party firm for threat monitoring and detection.
We require that employees, contractors, partners, and vendors understand their cybersecurity responsibilities. All of
our employees conduct an annual cybersecurity training and other on-going cybersecurity awareness exercises.
We maintain third party risk management process in order to identify, assess and mitigate the risks associated with
our third-party service providers. As part of this process, we impose contractual obligations related to information security
and require that our third-party partners maintain adequate security measures and controls to ensure the security of our data.
Our incident response policy provides guidelines for the handling and reporting of cybersecurity incidents. In the
event of a potential cybersecurity incident, our Security Operations Center (SOC) conducts an initial assessment and,
depending on the severity of the incident, provides a report regarding the incident to our Corporate VP Information Security.
The Corporate VP Information Security then consults with other internal and external parties, depending upon the nature and/
or severity of the incident, including members of our Cyber Incident Response Team (CIRT) and our General Counsel.
Depending on the assessed potential materiality of an incident, notification may be given to our Chief Financial Officer,
Chief Executive Officer, the Chair of the Board’s Internal Audit Committee, and the Chairman of our Board of Directors.
95
Additional guidelines covered under our incident response policy include steps for incident identification, containment,
eradication, recovery, and lessons learned activities.
Our Cybersecurity Risk Program is run by our Corporate VP Information Security who reports to our Chief
Financial Officer. Our Corporate VP Information Security has significant experience assessing and managing cybersecurity
programs and risks and has extensive cybersecurity knowledge. Members of the corporate cybersecurity team are responsible
for implementing and maintaining the cybersecurity program and practices for the Company. Other cybersecurity teams and
professionals within our Company have the responsibility to implement and maintain cybersecurity processes within their
business lines. Such teams and individuals work in coordination with our corporate cybersecurity team and under the
guidance of our Corporate VP Information Security. The corporate cybersecurity team works closely with the SOC team,
which serves as the central hub for monitoring and responding to security incidents and is trained to support our management
in incident related matters.
Our management is committed to maintaining a robust cybersecurity program, which includes supplying the
necessary resources to sustain the program, including people, tools, processes, procedures, and education. Cybersecurity risks
and controls are evaluated and reviewed regularly by our senior management, including as part of our internal audits that are
presented to the Internal Audit Committee of the Board of Directors. Our Board of Directors has ultimate oversight of
cybersecurity risk management as part of its general oversight function. Our Board of Directors receives and reviews updates,
reports and presentations related to cybersecurity threats and trends as well as to our cybersecurity program.
Through the date of filing this annual report, cybersecurity threats, including as a result of any previous
cybersecurity incidents, have not materially affected our business strategy, results of operations, or financial condition. If a
material cybersecurity incident will occur in the future, it may have an adverse effect on our business or financial condition.
For information on the market risks relating to cybersecurity, please see Item 3 “Risks Relating to Information and Product
Security and Intellectual Property” in this annual report.
96
PART III
Item 17.
Financial Statements.
Not Applicable.
Item 18.
Financial Statements.
See pages F-1 through F-55 of this annual report attached hereto.
Item 19.
Exhibits.
Exhibit No.
Description
1.1
1.2
2.1
2.2
2.3
2.4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
8.1
12.1
12.2
Amended and Restated Memorandum of Association, as approved on December 21, 2006 (English
translation) (filed as Exhibit 1.1 to NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on June 13,
2007, and incorporated herein by reference).
Amended and Restated Articles of Association, as amended on December 21, 2016 (filed as Exhibit 1.2 to
NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on April 21, 2017, and incorporated herein by
reference).
Form of Share Certificate (filed as Exhibit 4.1 to Amendment No. 1 to NICE Ltd.’s Registration Statement
on Form F-1 (Registration No. 333-99640) filed with the SEC on December 29, 1995, and incorporated
herein by reference).
Form of Deposit Agreement including Form of ADR Certificate (filed as Exhibit 1 to NICE Ltd.’s
Registration Statement on Form F-6 (Registration No. 333-203623) filed with the SEC on April 24, 2015,
and incorporated herein by reference).
Form of Amendment No. 1 to the Deposit Agreement, including Form ADR Certificate (filed as Exhibit
99(a)(2) to the Post-Effective Amendment No. 1 to the Form F-6 (Registration No. 333-303623) filed with
the SEC on April 29, 2020 and incorporated herein by reference.
Description of Securities (filed as Exhibit 2.4 to NICE Ltd.'s Annual Report on Form 20-F filed with the SEC
on March 30, 2023, and incorporated herein by reference).
NICE Ltd.'s Executives & Directors Compensation Policy (filed as Exhibit A in Exhibit 99.1 of NICE's
Report on Form 6-K filed with the SEC on June 8, 2023, and incorporated herein by reference).
inContact, Inc. 2008 Equity Incentive Plan (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on
Form S-8 (Registration No. 333-191176) filed with the SEC on November 15, 2016, and incorporated herein
by reference).
Nexidia Inc. 2005 Stock Incentive Plan (filed as Exhibit 4.4 to NICE-Systems Ltd.’s Registration Statement
on Form S-8 (Registration No. 333-191176) filed with the SEC on March 23, 2016, and incorporated herein
by reference).
Guardian Analytics, Inc. 2006 Stock Plan (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on
Form S-8 (Registration No. 333-249186), filed with the SEC on October 1, 2020, and incorporated herein by
reference).
2017 Indenture, dated January 18, 2017 (filed as Exhibit 4.16 to NICE Ltd.’s Annual Report on Form 20-F
filed with the SEC on April 21, 2017, and incorporated herein by reference).
2020 Indenture, dated August 27, 2020 (filed as Exhibit 4.14 to NICE Ltd.'s Annual Report on Form 20-F
filed with the SEC on March 23, 2021, and incorporated herein by reference).
NICE Ltd. 2016 Share Incentive Plan (filed as Exhibit 4.7 to NICE Ltd's Annual Report on Form 20-F filed
with the SEC on March 30, 2023, and incorporated herein by reference).
List of significant subsidiaries.
Certification by the Chief Executive Officer of NICE Ltd., pursuant to Section 302 of the Sarbanes-Oxley
Act 2002.
Certification by the Chief Financial Officer of NICE Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
97
13.1
13.2
15.1
97.1
101
Certification by the Chief Executive Officer of NICE Ltd., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification by the Chief Financial Officer of NICE Ltd., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Consent of Kost, Forer, Gabbay & Kasierer, a member of EY Global.
NICE Ltd. Policy for Recovery of Erroneously Awarded Compensation.
The following financial information from NICE Ltd.’s Annual Report on Form 20-F for the year ended
December 31, 2023, formatted in Inline XBRL ("iXBRL"): (i) Consolidated Balance Sheets at December 31,
2023 and 2022; (ii) Consolidated Statements of Income for the years ended December 31, 2023, 2022 and
2021; (iii) Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended
December 31, 2023, 2022 and 2021; (iv) Consolidated Statements of Cash Flows for the years ended
December 31, 2023, 2022 and 2021; and (v) Notes to Consolidated Financial Statements.
98
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2023
IN U.S. DOLLARS
INDEX
Reports of Independent Registered Public Accounting Firm (PCAOB ID 1281)
F - 2
Page
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F - 7
F - 9
F - 10
F - 11
F - 14
F - 16
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
NICE Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of NICE Ltd. and its subsidiaries (the "Company")
as of December 31, 2023, and 2022, the related consolidated statements of income, comprehensive income, changes
in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the
related notes (collectively referred to as the "Consolidated Financial Statements"). In our opinion, the Consolidated
Financial Statements present fairly, in all material respects, the financial position of the Company at December 31,
2023, and 2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated March 27, 2024, expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matters does not alter in any way our
opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
F-2
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
Description
of the
Matter
Revenue Recognition
As described in Note 2 to the Consolidated Financial Statements, the Company generates
revenues mainly from licensing its software products and services, including cloud-based
services. The Company enters into contracts with customers that often include promises to
transfer multiple products and services, which are accounted for separately if they are distinct
performance obligations. In such contracts, the transaction price is then allocated to the distinct
performance obligations on a relative standalone selling price basis and revenue is recognized
when control of the distinct performance obligation is transferred. Revenues from cloud-based
services are recognized either ratably over the contract period or based on usage, as applicable.
The accounting for contracts with multiple elements which include a software license requires
the company to exercise significant judgment in determining revenue recognition for these
contracts and includes: (a)1identification and determination of whether products and services
are considered distinct performance obligations that should be accounted for separately based
on the terms and conditions of the relevant agreements, (b) determination of stand-alone
selling prices for each distinct performance obligation that is not sold separately. For products
that are not sold separately, directly observable data is generally not available, which requires
the Company to make significant assumptions regarding the stand-alone selling prices of the
related performance obligations based on, among others, geographic or regional-specific
factors and internally approved pricing guidelines, and (c) the pattern of transferring control
(i.e., timing of when revenue is recognized) for each distinct performance obligation. For
cloud-based revenues recognized based on usage, the processing and recognition of revenue
are highly automated and involve capturing and pricing significant volumes of data.
Given these factors, the related audit effort in evaluating management’s judgments in
determining revenue recognition for these customer contracts was extensive and required a
high degree of auditor judgment.
How We
Addressed
the Matter
in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
the Company's process and controls to identify and determine the distinct performance
obligations, the relative standalone selling price for each performance obligation, and the
determination of the timing of revenue recognition.
Our audit procedures included, among others, evaluating the methodology and reasonableness
of management’s assumptions used for the estimate of stand-alone selling prices on a sample
basis for products and services that are not sold separately.
For a sample of customers, we: (1) obtained and read contract source documents, including
master agreements, and other documents that were part of the agreement, (2) tested
management’s identification of significant terms for completeness, including the identification
and determination of distinct performance obligations, (3) tested management’s calculations of
revenue and the associated timing of revenue recognition, and (4) we involved IT professionals
with specialized skill and knowledge to assist in testing certain internal controls over the
Company’s revenue process, including controls over the capture related usage transactional
information through the Company’s IT systems. On a sample basis, we tested usage and
accordingly observed that usage attributes such as duration and type of service were captured
in the relevant IT systems.
F-3
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
Description
of the
Matter
Business Combination
As described in Note 1 to the consolidated financial statements, during 2023, the Company
completed its acquisition of LiveVox Holding Inc. for total consideration of $424.1 million.
The transaction was accounted for as a business combination.
Auditing the Company's accounting for its acquisition of LiveVox Holding Inc. was complex
due to the significant estimation required by management in determining the fair value of the
identified intangible assets, which principally consisted of technology intangible asset in the
amount of $137.5 million (hereinafter, “the Intangible Asset”). The significant estimation was
primarily due to the judgmental nature of the inputs to the valuation models used to measure
the fair value of this Intangible Asset, as well as the sensitivity of the respective fair value to
the underlying significant assumptions. The Company used the discounted cash flow method
of the income approach to measure the fair value of this Intangible Asset. The significant
assumptions used to estimate the fair value of the Intangible Asset included, among others,
discount rate, projected revenue growth rates and royalty rate. These significant assumptions
are forward-looking and could be affected by future economic and market conditions.
How We
Addressed
the Matter
in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls over the Company's process for accounting of acquisition of intangible assets. For
example, we tested controls over management’s review of the valuation of intangible assets,
including the review of the valuation model and significant assumptions used in the valuation.
To test the fair value of this acquired intangible asset, our audit procedures included, among
others, evaluating the Company's use of valuation methodologies, evaluating the prospective
financial information, and testing the completeness and accuracy of underlying data supporting
the significant assumptions and estimates. For example, we compared the significant
assumptions to current industry, market and economic trends, historical results of the acquired
business and to other relevant factors.
We involved our valuation professionals to assist in evaluation of the methodology used by the
Company and certain assumptions included in the fair value estimates. For example, our
valuation professionals performed independent comparative calculations to estimate the
acquired entity discount rate.
/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company's auditor since 1995.
Tel-Aviv, Israel
March 27, 2024
F-4
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of NICE Ltd.
Opinion on Internal Control over Financial Reporting
We have audited NICE Ltd. and its subsidiaries' internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, NICE Ltd. and
its subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related
consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each
of the three years in the period ended December 31, 2023, and the related notes and our report dated March 27, 2024,
expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company's internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
F-5
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst& Young Global
Tel-Aviv, Israel
March 27, 2024
F-6
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term investments
Trade receivables (net of allowance for credit losses of $16,712 and $9,253 at
December 31, 2023 and 2022, respectively)
Debt hedge option
Prepaid expenses and other current assets
Total current assets
LONG-TERM ASSETS:
Prepaid expenses and other long-term assets
Property and equipment, net
Deferred tax assets
Operating lease right-of-use assets
Other intangible assets, net
Goodwill
Total long-term assets
Total assets
NICE LTD. AND ITS SUBSIDIARIES
December 31,
2023
2022
$
511,795 $
529,596
896,044
1,041,943
585,154
121,922
197,967
518,517
122,323
204,754
2,312,882
2,417,133
219,332
174,414
178,971
104,565
305,501
231,496
159,285
116,889
102,893
209,605
1,821,969
1,617,118
2,804,752
2,437,286
$
5,117,634 $
4,854,419
The accompanying notes are an integral part of the consolidated financial statements.
F-7
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables
Deferred revenues and advances from customers
Current maturities of operating leases liabilities
Debt
Accrued expenses and other liabilities
Total current liabilities
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers
Accrued severance pay
Deferred tax liabilities
Debt
Operating leases
Other long-term liabilities
Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital-
Ordinary shares of NIS 1 par value:
Authorized: 125,000,000 shares at December 31, 2023 and 2022; Issued: 74,774,827
and 74,774,827 shares at December 31, 2023 and 2022, respectively; Outstanding:
62,870,669 and 63,634,991 shares at December 31, 2023 and 2022, respectively
Additional paid-in capital
Treasury shares at cost – 11,904,158 and 11,139,836 Ordinary shares at December 31,
2023 and 2022, respectively
Accumulated other comprehensive loss
Retained earnings
Total attributable to NICE Ltd.'s shareholders
Non-controlling interests
Total shareholders' equity
December 31,
2023
2022
$
66,036 $
302,649
13,747
209,229
528,660
56,019
338,930
13,525
209,292
523,451
1,120,321
1,141,217
52,458
17,078
8,596
457,081
102,909
4,691
57,211
16,446
7,336
455,382
99,262
22,142
642,813
657,779
18,961
18,961
2,123,487
1,951,035
(1,005,104)
(743,054)
(59,110)
(111,255)
2,262,898
3,341,132
1,926,398
3,042,085
13,368
13,338
3,354,500
3,055,423
Total liabilities and shareholders' equity
$
5,117,634 $
4,854,419
The accompanying notes are an integral part of the consolidated financial statements.
F-8
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except share and per share data)
Revenue:
Cloud
Services
Product
Total revenue
Cost of revenue:
Cloud
Services
Product
Total cost of revenue
Gross profit
Operating expenses:
Research and development, net
Selling and marketing
General and administrative
NICE LTD. AND ITS SUBSIDIARIES
Year ended December 31,
2022
2023
2021
$
1,581,825 $
641,387
154,296
1,295,323 $
650,116
235,855
1,018,624
660,083
242,443
2,377,508
2,181,294
1,921,150
553,654
188,890
25,629
472,805
183,938
26,945
410,671
191,137
22,648
768,173
683,688
624,456
1,609,335
1,497,606
1,296,694
322,708
599,114
252,286
306,073
609,833
246,527
271,187
536,192
225,406
Total operating expenses
1,174,108
1,162,433
1,032,785
Operating income
Financial expenses (income) and other, net
Income before taxes on income
Taxes on income
Net income
Basic earnings per share
Diluted earnings per share
435,227
335,173
(22,473)
(10,159)
457,700
119,399
345,332
79,387
263,909
23,290
240,619
41,396
338,301
265,945
199,223
$
$
5.32 $
4.17 $
5.11 $
4.00 $
3.15
2.98
Weighted average number of shares (in thousands) used in computing:
Basic earnings per share
63,590
63,790
63,189
Diluted earnings per share
66,265
66,465
66,896
The accompanying notes are an integral part of the consolidated financial statements.
F-9
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands
NICE LTD. AND ITS SUBSIDIARIES
Net income
Year ended
December 31,
2022
2023
2021
$
338,301 $
265,945 $
199,223
Change in foreign currency translation adjustment
13,810
(27,582)
(7,402)
Available-for-sale investments:
Change in net unrealized gains (losses)
Less - reclassification adjustment for net losses (gains) realized and
included in net income
18,029
(33,319)
(13,368)
12,271
419
(1,403)
Net change (net of tax effect of ($4,130), $4,483 and $2,012)
30,300
(32,900)
(14,771)
Cash flow hedges:
Change in unrealized gains (losses)
Less - reclassification adjustment for net gains (losses) realized and
included in net income
(5,300)
(18,223)
5,024
13,335
7,189
(5,928)
Net change (net of tax effect of ($1,096), $1,505 and $123)
8,035
(11,034)
(904)
Total other comprehensive income (loss)
52,145
(71,516)
(23,077)
Comprehensive income
$
390,446 $
194,429 $
176,146
The accompanying notes are an integral part of the consolidated financial statements.
F-10
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
NICE LTD. AND ITS SUBSIDIARIES
Balance as of January 1, 2023
Stock-based compensation
Issuance of treasury shares under share-based
compensation plan (733,472 ordinary shares)
Treasury shares purchase
Other comprehensive income
Equity awards assumed for acquisitions
Dividends Paid to non-controlling interest
Net income attributable to Nice Shareholders
Net loss attributable to non-controlling interests
Share
capital
Additional
paid-in
capital
Treasury
shares
Accumulated
other
comprehensive
loss
Retained
earnings
Non-
controlling
Interest
Total
shareholders'
equity
$
18,961 $
1,951,035 $ (743,054) $
(111,255) $
1,926,398 $
13,338 $
3,055,423
—
—
—
—
—
—
—
—
183,302
—
(23,923)
26,496
—
—
13,073
—
—
—
(288,546)
—
—
—
—
—
—
—
—
52,145
—
—
—
—
—
—
—
—
—
—
336,500
—
—
—
—
—
—
(1,771)
—
1,801
183,302
2,573
(288,546)
52,145
13,073
(1,771)
336,500
1,801
Balance as of December 31, 2023
$
18,961 $
2,123,487 $ (1,005,104) $
(59,110) $
2,262,898 $
13,368 $
3,354,500
The accompanying notes are an integral part of the consolidated financial statements.
F-11
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
NICE LTD. AND ITS SUBSIDIARIES
Share
capital
Additional
paid-in
capital
Treasury
shares
Accumulated
other
comprehensive
loss
Retained
earnings
Non-
controlling
Interest
Total
shareholders'
equity
Balance as of January 1, 2022
$
18,961 $
1,817,710 $
(625,810) $
(39,739) $
1,653,963 $
12,874 $
2,837,959
Adoption of ASU 2020-06 (Note 2k)
Stock-based compensation
Issuance of treasury shares under share-based
compensation plan (840,766 ordinary shares)
Treasury shares purchase
Other comprehensive income
Dividends Paid to non-controlling interest
Net income attributable to NICE Shareholders
Net loss attributable to non-controlling
interests
Balance as of December 31, 2022
$
—
—
—
—
—
—
—
—
(28,816)
188,888
—
—
(26,747)
27,700
—
—
—
—
—
(144,944)
—
—
—
—
—
—
—
—
(71,516)
—
—
—
7,331
—
—
—
—
—
265,104
—
—
—
—
—
—
(21,485)
188,888
953
(144,944)
(71,516)
(376)
(376)
—
840
265,104
840
18,961 $
1,951,035 $
(743,054) $
(111,255) $
1,926,398 $
13,338 $
3,055,423
The accompanying notes are an integral part of the consolidated financial statements.
F-12
NICE LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Share
capital
Additional
paid-in
capital
Treasury
shares
Accumulated
other
comprehensive
loss
Retained
earnings
Non-
controlling
Interest
Total
shareholders'
equity
Balance as of January 1, 2021
$
18,961 $
1,681,587 $
(574,364) $
(16,662) $
1,454,388 $
24,574 $
2,588,484
Stock-based compensation
Issuance of treasury shares under
share-based compensation plan
(717,500 ordinary shares)
Treasury shares purchase
Other comprehensive income
Equity component of
exchangeable notes, net of
issuance costs and deferred tax
Equity awards assumed for
acquisitions
Purchase of subsidiaries' shares
from non-controlling, net
Dividends Paid to non-
controlling interest
Net income attributable to NICE
Shareholders
Net loss attributable to non-
controlling interests
—
—
—
—
—
—
—
—
—
—
156,373
—
(17,194)
21,618
—
—
75
183
(3,314)
—
—
—
(73,064)
—
—
—
—
—
—
—
—
—
—
(23,077)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
156,373
4,424
(73,064)
(23,077)
75
183
(9,594)
(12,908)
(1,754)
(1,754)
199,575
—
199,575
—
(352)
(352)
Balance as of December 31, 2021 $
18,961 $
1,817,710 $
(625,810) $
(39,739) $
1,653,963 $
12,874 $
2,837,959
The accompanying notes are an integral part of the consolidated financial statements
F-13
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
NICE LTD. AND ITS SUBSIDIARIES
Year ended
December 31,
2022
2023
2021
Cash flows from operating activities:
Net income
$
338,301 $
265,945 $
199,223
Adjustments required to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Share-based compensation
Accrued severance pay, net
Amortization of premium, discount and accrued interest on marketable
securities
Deferred taxes, net
Changes in operating assets and liabilities:
Trade receivables, net
Prepaid expenses and other current assets
Trade payables
Accrued expenses and other current liabilities
Operating lease right-of-use assets
Deferred revenue
Realized loss on marketable securities, net
Operating lease liabilities
Amortization of discount on long-term debt
Loss from extinguishment of debt
Change in fair value of contingent consideration
Other
167,360
176,658
789
176,546
182,704
1,171
2,480
8,322
(66,620)
(52,618)
(34,292)
(129,712)
73,052
3,426
(55,703)
12,518
(45,947)
12,271
(31,673)
19,923
33,684
20,393
6,417
—
184,092
153,030
597
11,867
(39,316)
(85,778)
(79,624)
(389)
64,179
15,075
30,770
—
(11,100)
(26,191)
(18,011)
4,615
53
(18,258)
1,827
4,582
1,206
—
14,469
13,969
—
(984)
(2,337)
Net cash provided by operating activities
561,430
479,715
461,816
Cash flows from investing activities:
Purchase of property and equipment
Purchase of investments
Proceeds from sales of marketable investments
Payments for business acquisitions, net of cash acquired
Capitalization of internal use software costs
(29,205)
(31,893)
(24,771)
(230,263)
(396,297)
(322,129)
436,044
355,560
270,645
(415,185)
(29,724)
(142,804)
(54,974)
(49,997)
(42,440)
Net cash used in investing activities
(293,583)
(152,351)
(261,499)
The accompanying notes are an integral part of the consolidated financial statements.
F-14
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
NICE LTD. AND ITS SUBSIDIARIES
Year ended
December 31,
2023
2022
2021
Cash flows from financing activities:
Proceeds from issuance of shares upon exercise of options
Purchase of treasury shares
Dividends paid to non-controlling interest
Purchase of subsidiaries shares from non-controlling interest
Repayment of debt
2,570
953
(288,443)
(144,944)
(1,771)
—
(376)
—
4,426
(73,180)
(1,754)
(14,000)
(2,628)
(20,132)
(177,308)
Net cash used in financing activities
(290,272)
(164,499)
(261,816)
Effect of exchange rate changes on cash
2,643
(8,425)
(2,112)
Net change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of the year
(19,782)
533,096
154,440
378,656
Cash, cash equivalents and restricted cash at the end of the year
$
513,314 $
533,096 $
(63,611)
442,267
378,656
Reconciliation of cash, cash equivalents and restricted cash reported in
the consolidated balance sheet:
Cash and cash equivalents
Restricted cash included in other current assets
$
511,795 $
529,596 $
378,656
1,519
3,500
—
Total cash, cash equivalents and restricted cash shown in the statement of
cash flows
$
513,314 $
533,096 $
378,656
Supplemental disclosure of cash flows activities:
Cash paid during the year for:
Income taxes
Interest
Non-cash activities:
Change in fair value of contingent consideration
Increase in accrued expenses and other liabilities with respect to purchase
of treasury shares
$
210,445 $
123,586 $
97,258
1,221
2,974
688
(18,258)
103
—
—
—
4
The accompanying notes are an integral part of the consolidated financial statements.
F-15
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL
a. General:
NICE Ltd. (together with its subsidiaries, “NICE”, or the “Company”) is a global enterprise software
leader, providing AI-powered cloud platforms that serve two main markets: Customer Engagement and
Financial Crime and Compliance. The Company's core mission is to transform experiences to be
extraordinary and trusted and create a frictionless and safe digital-first consumer reality where every
interaction is intelligent, meaningful and effortless. The Company's solutions are used by organizations of
all sizes and are offered in multiple delivery models, including cloud and on-premises.
The Company's strategy is based on serving rapidly expanding, specialized markets that require feature-rich
solutions, with robust, comprehensive cloud platforms that are spearheaded by AI as an overarching
catalyst, propelling our unique AI-driven vectors of growth: using AI differentiation to expand the
Company cloud win rates, positioning AI as the bedrock for driving rapid expansion into digital, utilizing
AI to fuel massive platform-adoption and leveraging AI as a lucrative source for new domain-specific use-
cases.
In the Customer Engagement market, The Company enables organizations to transform experiences with
specialized AI-powered solutions aimed at augmenting employee activities with smart copiloting
capabilities, delivering seamless automated customer self-service using conversational AI, orchestrating
journeys across multiple channels and intents, meeting consumers wherever they choose to begin their
journey, providing them with the knowledge element they need, and creating smarter personalized customer
interactions. The Company helps organizations transform their workforce experience with AI-powered
solutions aimed at guiding and engaging employees, optimizing operations and automating processes to
deliver seamless transition between automated service and human-assisted interactions. The Company is
also digitally transforming the evidence process from police investigators and district attorneys to court and
correction facilities, providing a single, streamlined view of the truth as the core of our Public Safety and
Justice business, which is part of the Company Customer Engagement segment.
In the Financial Crime and Compliance market, the Company protects financial services organizations, with
solutions that identify risks and help prevent money laundering and fraud, as well as help ensure financial
markets compliance in real-time. With the Company's holistic, data and entity-centric approach, the
Company helps financial services organizations address the new dynamic of financial crime threats, which
are significantly growing in the digital era.
The Company is at the forefront of several industry technological disruptions that have greatly accelerated
in the last several years: the growing acceptance and adoption of specialized AI-powered solutions
combining domain-specific use-cases, Generative AI and large language models (LLMs), the adoption of
cloud platforms by organizations of all sizes and verticals, the shift of consumer and organizational
preferences towards digital-centric services and experiences, an increase in consumer cross channel, self-
service usage and the need to manage, optimize and engage a diverse workforce while retaining and
attracting top talent. The Company's suite of integrated solutions, based on The Company's unique domain
expertise, enables customer service, financial crime prevention and criminal justice organizations to
F-16
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL (Cont.)
innovate and thrive with industry-leading cloud platforms that use domain-specific data and AI powered
solutions.
b. Acquisitions:
1. Acquisitions in 2023:
a. On December 2023, the Company completed an acquisition of LiveVox Inc. (“LiveVox”), a leading
AI-driven proactive outreach provider. The Company acquired LiveVox for a total consideration of
$424,117.
Upon consummation of the acquisition, LiveVox became a wholly-owned subsidiary of the Company.
The acquisition was accounted for as a business combination. This method requires, among other
things, that assets acquired, and liabilities assumed in the business combination be recognized at their
fair values as of the acquisition date.
The following table presents details of the identified intangible assets acquired as of the date of the
acquisition:
Net tangible assets and liabilities assumed
Trademarks
Technology
Customer relationships
Goodwill
Total
Estimated
useful life (in
years)
5
5
5
Fair Value
$
63,575
4,930
137,462
31,957
186,193
424,117
$
Goodwill generated from this business combination is primarily attributable to synergies between the
Company's and LiveVox's respective products and services. The goodwill is not deductible for
income tax purposes.
Pro forma results of operations related to this acquisition have not been prepared because they are not
material to the Company's consolidated financial statements.
The preliminary fair value of assets acquired, and liabilities assumed from the acquisition, completed
during 2023, were based upon preliminary calculations and valuations, and the estimates and
assumptions for this acquisition are subject to change as the Company obtains additional information
during the respective measurement periods (up to one year from the respective acquisition dates).
During 2023, the Company acquired certain additional companies, which were accounted for as
business combinations for a total consideration of $22,815. The financial results of those acquired
companies are included in the Company’s consolidated financial statements from their respective
acquisition dates. The results from these acquisitions individually and in aggregate, were not material
to the Company’s consolidated financial statements. The Company preliminary recorded $13,247 of
identifiable intangible assets based on their estimated fair values, and $10,682 of residual goodwill,
from these acquisitions.
F-17
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL (Cont.)
2. Acquisitions in 2022:
a. On November 14, 2022, the Company completed an acquisition for a total consideration of $50,381
as follow: $30,000 cash consideration; Milestone-based contingent payment in a total sum of up to
$24,000 payable in March 2026. The contingent consideration was measured at fair value at the
closing date and recorded as a liability on the balance sheet in the amount of $20,381.
Upon consummation of the acquisition, the acquired company became a wholly-owned subsidiary of
the Company. The acquisition was accounted for as a business combination. As of the acquisition date
the Company preliminarily recorded core technology, customer relationships, trademark and goodwill
in amounts of $12,470; $9,058; $459 and $28,039, respectively. The estimated useful life of the core
technology, customer relationships, and trademark is four years, four years and three years,
respectively.
Goodwill generated from this business combination is attributed to synergies between the Company's
and acquired company respective products and services. The goodwill is not deductible for income
tax purposes.
The results of the acquired company's operations have been included in the consolidated financial
statements since November 14, 2022. Pro forma results of operations related to this acquisition have
not been prepared because they are not material to the Company's consolidated financial statements.
The estimated fair value of assets acquired and liabilities assumed from the acquisition completed
during 2022 was based upon preliminary calculations and valuations. These estimates were finalized
during 2023 as part of the measurement period and the resulting change in fair value for the twelve
months ended December 31, 2023 was non-cash income of $18,258 included as a change in the fair
value of contingent consideration under general and administrative operating expenses in the
consolidated statements of income. This was primarily driven by lower expected performance
measurements of the acquired entity as determined in the purchase agreement.
The fair value of the contingent consideration arrangement was classified within Level 3 and was
determined using a probability-based scenario analysis approach. The resulting probability-weighted
contingent consideration amounts were discounted based on the Company's estimated cost of debt.
3. Acquisitions in 2021:
a. On June 17, 2021,
the acquisition of ContactEngine Limited
("ContactEngine"), a leading AI automation provider for customer self-service. The Company
acquired ContactEngine for a total consideration of $94,897.
the Company completed
Upon consummation of the acquisition, ContactEngine became a wholly-owned subsidiary of the
Company. The acquisition was accounted for as a business combination. As of the acquisition date the
Company preliminarily recorded core technology, customer relationships, customer backlog and
goodwill in amounts of $20,558; $3,279; $5,493 and $69,593, respectively. The estimated useful life
of the core technology, customer relationships, and customer backlog is five years, six years and two
years, respectively.
Goodwill generated from this business combination is attributed to synergies between the Company's
and ContactEngine's respective products and services. The goodwill is not deductible for income tax
purposes.
F-18
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL (Cont.)
The results of ContactEngine's operations have been included in the consolidated financial statements
since June 17, 2021. Pro forma results of operations related to this acquisition have not been prepared
because they are not material to the Company's consolidated financial statements.
b. During 2021, the Company acquired certain additional companies, which were accounted for as
business combinations for a total consideration of $59,317. The financial results of those acquired
companies are included in the Company’s consolidated financial statements from their respective
acquisition dates. The results from these acquisitions individually and in aggregate, were not material
to the Company’s consolidated financial statements. The Company preliminary recorded $20,036 of
identifiable intangible assets based on their estimated fair values, and $38,590 of residual goodwill,
from these acquisitions.
The estimated fair value of assets acquired and liabilities assumed from acquisitions completed during
2021 were based upon preliminary calculations and valuations. These estimates were finalized during
2022 as part of the measurement period. See Note 8 regarding changes made during 2022.
4. Acquisitions related costs:
During 2023, 2022 and 2021, acquisition related costs amounted to $13,987, $48 and $1,761,
respectively, and were included in general and administrative expenses.
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements were prepared in accordance with United States Generally Accepted
Accounting Principles ("U.S. GAAP").
a. Use of estimates:
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates, judgments and assumptions. The Company's management believes that the
estimates, judgments and assumptions used are reasonable based upon information available at the time they
are made. These estimates, judgments and assumptions can affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
b. Financial statements in United States dollars:
The currency of the primary economic environment in which the operations of NICE Ltd. and certain
subsidiaries are conducted is the U.S. dollar ("dollar"); thus, the dollar is the functional currency of NICE
Ltd. and certain subsidiaries.
NICE Ltd. and certain subsidiaries' transactions and balances denominated in dollars are presented at their
original amounts. Non-dollar transactions and balances have been remeasured to dollars in accordance with
ASC 830, “Foreign Currency Matters”. All transaction gains and losses from remeasurement of monetary
balance sheet items denominated in non-dollar currencies are reflected in the statements of income as
financial income or expenses, as appropriate.
For those subsidiaries whose functional currency has been determined to be a non-dollar currency, assets and
liabilities are translated at year-end exchange rates and statement of income items are translated at average
F-19
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
exchange rates prevailing during the year. Such translation adjustments are recorded as a separate
component of accumulated other comprehensive income (loss) in shareholders' equity.
c. Principles of consolidation:
The consolidated financial statements incorporate the financial statements of the Company and all of its
subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.
d. Cash equivalents:
Cash equivalents are short-term unrestricted highly liquid investments that are readily convertible into cash,
with original maturities of three months or less at acquisition.
e. Marketable securities:
The Company accounts for investments in debt securities in accordance with ASC 320, "Investments - Debt
Securities" and ASC No. 326, "Financial Instruments - Credit Losses". Management determines the
appropriate classification of its investments in debt securities at the time of purchase and re-evaluates such
determinations at each balance sheet date.
Marketable securities classified as "available-for-sale" ("AFS") are carried at fair value. Unrealized gains
and losses are reported in a separate component of shareholders' equity in accumulated other comprehensive
income, net of taxes. Gains and losses are recognized when realized, on a specific identification basis, in the
Company's consolidated statements of income.
For each reporting period, the Company evaluates whether declines in fair value below the amortized cost
are due to expected credit losses, as well as the Company's ability and intention to hold the investment until
a forecasted recovery occurs, in accordance with ASC 326. Allowance for credit losses on AFS debt
securities are recognized as a charge in financial expenses (income) and other, net, on the consolidated
statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other
comprehensive income (loss). As of December 31, 2023 and 2022, no credit losses have been recorded.
The Company classifies all securities with maturities beyond 12 months as current assets under the caption
short term investments on the consolidated balance sheet. These securities are available to support current
operations and the company may sell these debt securities prior to their stated maturities.
f. Property and equipment, net:
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets, at the following annual periods ranges:
Computers and peripheral equipment
Internal use software
Office furniture and equipment
Leasehold improvements
g. Internal use software costs:
Years
3 - 5
3
4 - 14
Over the lease term or the estimated useful life
of the improvements, whichever is shorter
The Company capitalizes development costs incurred during the application development stage that are
related to internal use technology that supports its cloud services. Under ASC 350-40, internal-use software
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NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
is included in property and equipment, net in the consolidated balance sheets. Capitalization of such costs
begins when the preliminary project stage is complete and ceases at the point in which the project is
substantially complete and is ready for its intended purpose. Costs incurred in the process of software
production are charged to expenses as incurred.
h. Other intangible assets, net:
Other intangible assets are amortized over their estimated useful lives using the straight-line method, at the
following annual periods ranges:
Core technology
Customer relationships
Trademarks
Customer backlog
i.
Impairment of long-lived assets:
Years
4 – 8
3 – 9
3 – 12
3
The Company's long-lived assets and identifiable intangibles that are subject to amortization are reviewed
for impairment in accordance with ASC 360, "Property, Plant, and Equipment" whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators
include any significant changes in the manner of the Company's use of the assets and significant negative
industry or economic trends.
Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a
comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an
impairment charge is recorded for the excess of the carrying amount over fair value. In 2023, 2022 and
2021, no impairment charges were recognized.
j. Goodwill:
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net
tangible and intangible assets acquired. Under ASC 350, "Intangible - Goodwill and Other" ("ASC 350"),
goodwill is not amortized, but rather is subject to an annual impairment test. If the Company determines that
it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the
Company prepares a quantitative analysis to determine whether the carrying value of reporting unit exceeds
its estimated fair value. If the carrying value of a reporting unit exceeds its estimated fair value, the
Company recognizes an impairment of goodwill for the amount of this excess, in accordance with the
guidance in FASB Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other
(Topic 350).
For each of the three years in the period ended December 31, 2023, 2022 and 2021, no impairment was
identified.
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NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
k. Exchangeable senior notes:
Through December 31, 2021, prior to the adoption of ASU 2020-06, the Company separately accounted for
the liability and equity components of convertible debt instruments that may be settled in a combination of
cash and shares. The liability component at issuance is recognized at fair value, based on the fair value of a
similar instrument that did not have a conversion feature. The equity component was based on the excess of
the proceeds over the fair value of the liability component, after adjusting for an allocation of debt issuance
costs, and was recorded as paid-in capital.
Debt discounts were amortized as additional non-cash interest expense over the expected life of the debt.
The Company allocated the total issuance costs incurred to the liability and equity components of the
exchangeable senior notes based on the same proportions as the proceeds from the notes.
On December 31, 2021, the Company entered into the First Supplemental Indenture to the 2017 Indenture
(the "First Supplemental Indenture"). In accordance with the First Supplemental Indenture, the Company
irrevocably elected cash settlement for the principal and any premium due upon conversion to apply to all
conversions of notes issued under the 2017 Indenture (the "2017 Notes") with an Exchange date (as defined
in the 2017 Indenture) that occurs on or after December 31, 2021. As a result, the conversion feature of the
2017 Notes was required to be bifurcated from the debt host and accounted for separately as a derivative
liability. As such the Company recognized a derivative liability at an amount equal to the fair value of the
conversion feature at that date. Subsequent changes in fair value of the bifurcated conversion derivative are
reflected in financial income (expenses) on a net basis.
Additionally, on December 2021, the Company made an irrevocable election to settle the principal amount
of the 2020 Notes only in cash. Accordingly, upon conversion, the Company will pay the principal amount
in cash and will pay, or deliver, as the case may be, any amount in excess of the principal amount in cash,
shares of common stock or a combination of cash and shares of the Company stock, at the Company's
election. Prior to this election, upon conversion, the Company, could have elected to deliver to holders cash,
shares of the Company's common stock or a combination of cash and shares of the Company's common
stock for the principal amount.
Starting January 1, 2022, the Company adopted ASU 2020-06, which simplifies the guidance on the issuer’s
accounting for convertible debt instruments by removing the separation models for (1) convertible debt with
a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result,
the Company does not separately present in equity an embedded conversion feature in such debt. Instead, the
Company accounts for a convertible debt instrument wholly as debt, unless the debt contains embedded
derivatives required to be bifurcated or the debt is issued at a substantial premium.
The Company recognized a cumulative effect of initially applying ASU 2020-06 as an adjustment to the
January 1, 2022 opening balance of accumulated deficit. The Company combined the previously separated
equity component with the liability component, which together is classified as debt, thereby eliminating the
subsequent amortization of the debt discount as interest expense. Similarly, the portion of issuance costs
previously allocated to equity was reclassified to debt and amortized as interest expense. Accordingly, the
Company recorded as of January 1, 2022 an increase to retained earnings of approximately $7,331, a
decrease to additional paid-in capital of $28,816, an increase to long-term debt of $24,758, a decrease to
deferred tax liabilities of $2,937, and an increase in debt issuance costs of $336. There will be an impact to
earnings per share as a result of the adoption based on the if-converted method if the Company average share
price will exceed the conversion price of $299.19 of the 2020 Notes, then there will be an impact to earnings
per share for the dilution impact above the conversion price as a result of the adoption based on the if-
converted method. The prior period consolidated financial statements have not been retrospectively adjusted
and continue to be reported under the accounting standards in effect for those periods (See Note 15 "Debt"
for further details).
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NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
l. Revenue recognition:
The Company generates revenues from sales of cloud, services, and software products, which include
software license, SaaS, network connectivity, hosting, support and maintenance, implementation,
configuration, project management, consulting and training. The Company sells its cloud, products and
services directly through its sales force and indirectly through a global network of distributors, system
integrators and strategic partners.
The Company recognizes revenues in accordance with ASC No. 606, "Revenue from Contracts with
Customers" ("ASC 606"). Under the standard, the Company recognizes revenue when its customer obtains
control of promised goods or services in an amount that reflects the consideration that the Company expects
to receive in exchange for those goods or services. To determine revenue recognition for contracts that are
within the scope of the standard, the Company performs the following five steps:
1) Identify the contract(s) with a customer
A contract with a customer exists when (i) there is an enforceable contract with the customer that defines
each party’s rights regarding the goods or services to be transferred and identifies the payment terms
related to these goods or services; (ii) the contract has commercial substance; and (iii) the Company
determines that collection of substantially all consideration for goods or services that are transferred is
probable based on the customer’s intent and ability to pay the promised consideration. The Company
applies judgment in determining the customer's ability and intent to pay, which is based on a variety of
factors, including the customer's historical payment experience.
2) Identify the performance obligations of the contract
The Company enters into contracts that can include multiple performance obligations. The Company
accounts for individual products and services separately if they are distinct – i.e., if a product or service is
separately identifiable from other promises in the contract and if a customer can benefit from it on its
own or with other resources that are readily available to the customer.
3) Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in
exchange for transferring goods or services to the customer.
Payment terms and conditions vary by contract type. In instances where the timing of revenue
recognition differs from the timing of invoicing, the Company determines its contracts generally to not
include a significant financing component since the Company's selling prices are not subjected to billing
terms nor is its purpose to receive financing from its customers or to provide customers with financing. In
addition, the Company elected to apply the practical expedient to not adjust the promised amount of
consideration for the effects of a significant financing component if the Company expects, at contract
inception, that the period between when the Company will transfer a promised good or service to a
customer and when the customer will pay for that good or service will be one year or less.
Revenue is measured based on the consideration specified in a contract with a customer, excluding taxes
assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-
producing transaction, that are collected by the Company from a customer.
4) Allocate the transaction price to the performance obligations in the contract
The Company allocates the transaction price to each performance obligation identified based on its
relative standalone selling price ("SSP") out of the total consideration of the contract.
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NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company uses judgment in determining the SSP. If the SSP is not observable through standalone
transactions, the Company estimates the SSP taking into account available information such as
geographic or regional specific factors, internal costs, profit objectives, and internally approved pricing
guidelines related to the performance obligations.
The Company typically establishes a SSP range for its products and services, which is reassessed on a
periodic basis or when facts and circumstances change. SSP for products and services can evolve over
time due to changes in the Company's pricing practices that are influenced by intense competition,
changes in demand for products and services, and economic factors, among others.
For a product where the SSP cannot be determined based on observable prices, given the same products
are sold for a broad range of amounts (that is, the selling price is highly variable), the SSP included in a
contract with multiple performance obligations is determined by applying a residual approach whereby
all other performance obligations within a contract are first allocated a portion of the transaction price
based upon their respective SSPs, with any residual amount of transaction price allocated to these product
revenues.
5) Recognize revenue when (or as) the entity satisfies a performance obligation
The Company derives its cloud revenues from subscription services, which are comprised of subscription
fees from granting customers access to the Company’s cloud platforms, network connectivity and
services fees for deployment of certain cloud platforms.
Revenue from subscription services is recognized either ratably over the contract period or based on
usage, revenue from network connectivity is based on customer call usage and is recognized in the period
the call is initiated, and services fees for deployment are amortized over average customer life.
Revenue from software licenses, support and maintenance services are recognized at the time the related
performance obligation is satisfied by transferring the promised product or service to the customer.
Software license revenues are recognized at the point in time when the software license is delivered and
the customer obtains control of the asset. Support and maintenance service revenues are recognized
ratably over the term of the underlying maintenance contract term. Renewals of maintenance contracts
create new performance obligations that are satisfied over the term with the revenues recognized ratably
over the period of the renewal.
Professional services revenues, except fees for deployment of certain cloud platforms, are recognized as
services are performed.
Deferred revenues, which represent a contract liability, represent unrecognized fees collected mostly for
maintenance, cloud and professional services. Deferred revenues are recognized as (or when) the
Company performs under the contract. The amount of revenues recognized in the period that was
included in the opening deferred revenues balance was approximately $299,598 for the year ended
December 31, 2023.
As of December 31, 2023, the aggregate amount of the total transaction price allocated in contracts with
original duration greater than one year of the remaining performance obligations was approximately
$2,544,325. For performance obligations which are recognized over time, based on usage, the Company
elected to disclose only the contractual minimum attributed to these performance obligations, as part of
the remaining performance obligation disclosure.
As of December 31, 2023, the Company expects to recognize the majority of the revenue of remaining
performance obligations over the next 24 months. Such remaining performance obligations represent
unsatisfied or partially unsatisfied performance obligations pursuant to ASC 606. The Company has
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NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
elected the optional exemption, which allows for the exclusion of the amounts for remaining performance
obligations that are part of contracts with an original expected duration of one year or less.
m. Costs to Obtain Contracts:
The Company capitalizes certain sales commission as costs of obtaining a contract when they are
incremental and if they are expected to be recovered. The Company applies judgment in estimating the
amortization period by taking into consideration customer contract terms, history of renewals, expected
length of customer relationship, as well as the useful life of the underlying technology and products.
Amortization of sales commission expenses are included in Selling and Marketing expenses in the
accompanying consolidated statements of income. For costs that the Company would have capitalized and
amortized over one year or less, the Company has elected to apply the practical expedient and expense these
contract costs as incurred. Costs to obtain contracts amortization expense for the years 2023, 2022 and 2021
were $142,699, $135,437 and $130,466, respectively.
n. Research and development costs:
Research and development costs (net of grants and capitalized expenses) incurred in the process of software
production are charged to expenses as incurred.
o. Income taxes:
To prepare the consolidated financial statements, the Company estimates its income taxes in each of the
jurisdictions in which it operates, and in certain of these jurisdictions, it is calculated based on the
Company's assumptions as to its entitlement to various benefits under the applicable tax laws in the
jurisdiction. The entitlement to such benefits depends upon the Company's compliance with the terms and
conditions set out in these laws.
The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". ASC 740 prescribes
the use of the liability method whereby deferred tax asset and liability account balances are determined
based on differences between financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is
more likely than not to be realized. Deferred tax assets and deferred tax liabilities are presented under long-
term assets and long-term liabilities, respectively.
The Company implements a two-step approach to recognize and measure uncertain tax positions. The first
step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight
of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits,
the tax position will be sustained on audit, including resolution of any related appeals or litigation processes.
The second step is to measure the tax benefit as the largest amount that is more than 50% (on a cumulative
basis) likely to be realized upon ultimate settlement.
The Company classifies interest and penalties on income taxes (which includes uncertain tax positions) as
taxes on income. The Company applies ASU 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating
certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the
methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities
for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and
enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the
tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not
subject to income tax.
F-25
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
p. Non-royalty grants:
Non-royalty bearing grants from the Government of Israel for funding research and development projects are
recognized at the time the Company is entitled to such grants on the basis of the related costs incurred and
recorded as a deduction from research and development expenses.
q. Concentrations of credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally
of cash and cash equivalents, trade receivables, marketable securities and foreign currency derivative
contracts.
The Company's cash and cash equivalents are invested in deposits and money market funds, mainly in
dollars with major international banks. Deposits in the U.S. may be in excess of insured limits and are not
insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and therefore bear
minimal risk.
The Company's trade receivables are derived from sales to customers generated from a multitude of markets
in countries around the world with the largest proportion denominated in the US dollar. The Company
performs ongoing credit evaluations of its customers and insures some of its receivables with a credit
insurance company. The Company performs ongoing credit evaluations of its customers for the purpose of
determining the appropriate allowance for credit losses.
The Company's marketable securities include investment in corporate debentures, U.S. Treasuries and U.S.
government agencies. The Company's investment policy limits the amount that the Company may invest in
any one type of investment per minimum credit rating or specific issuer, thereby reducing credit risk
concentrations.
The Company enter into foreign currency forward and option contracts intended to protect cash flows
resulting from payroll and facilities related expenses against the volatility in value of forecasted non-dollar
currency. The derivative instruments hedge a portion of the Company's non-dollar currency exposure. See
Note 10 for additional information.
r. Severance pay:
The Israeli Severance Pay Law-1963 (the "Severance Pay Law") generally requires payment of severance
pay upon dismissal of an employee or upon termination of employment in certain circumstances. The
Company makes ongoing deposits into Israeli employees' pension plans to fund their severance liabilities.
According to Section 14 of the Severance Pay Law, the Company deposits for employees employed by the
Company since May 1, 2009 are made in lieu of the Company's severance liability, therefore no obligation is
provided for in the financial statements. Severance Pay liabilities for employees employed by the Company
prior to May 1, 2009, as well as employees with special contractual arrangements, are provided for in the
financial statements based upon the latest monthly salary multiplied by the number of years of employment.
Severance pay expenses for 2023, 2022 and 2021 amounted to $10,917, $8,328 and $8,810, respectively.
The Company also has other liabilities for severance pay in other jurisdictions.
The Company has multiple 401(k) defined contribution plans covering certain employees in the U.S. All
eligible employees may elect to contribute a portion of their eligible compensation, generally not greater
than an annual contribution of $22.5 in 2023 and $19.5 in both 2022 and 2021 (for certain employees over
50 years of age the maximum annual contribution was $30 per year in 2023 and $26 in 2021 and in 2020) of
their total annual compensation to the plan through salary deferrals, subject to IRS limits. The Company, at
its discretion, matches 50% of employee contributions to the plan up to a limit of 6-8% of their eligible
F-26
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
compensation. In the years 2023, 2022 and 2021, the Company recorded an expense for all matching
contributions in the amount of $11,599; $9,887 and $9,366, respectively.
s. Leases
Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease
liabilities are recognized at commencement date based on the present value of remaining lease payments
over the lease term. For this purpose, the Company considers only payments that are fixed and determinable
at the time of commencement. As most of the Company leases do not provide an implicit rate, the Company
uses its incremental borrowing rate based on the information available at commencement date in
determining the present value of lease payments. The incremental borrowing rate is estimated to
approximate the interest rate on a collateralized basis with similar terms and payments. The ROU asset is
recorded net of any lease incentives received. The lease terms may include options to extend or terminate the
lease when it is reasonably certain that the Company will exercise such options. The Company's lease
agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or
other costs. Variable lease costs are expensed as incurred on the consolidated statements of income.
The Company elected to combine its lease and non-lease components for car leases and to not recognize a
lease liability and a right-of-use ("ROU") asset on the balance sheet for leases with a term of twelve months
or less. The Company recognizes the associated lease payments in the consolidated statements of income on
a straight-line basis over the lease term.
t. Basic and diluted net earnings per share:
Basic net earnings per share are computed based on the weighted average number of ordinary shares
outstanding during each year. Diluted net earnings per share are computed based on the weighted average
number of ordinary shares outstanding during each year plus dilutive potential equivalent ordinary shares
considered outstanding during the year, in accordance with ASC 260, "Earnings per Share".
As further described in Note 15, the Company entered into an exchangeable note hedge transaction and
warrants transaction in 2017. While the exchangeable note hedge transaction is anti-dilutive and as such is
not included in the computation of diluted earnings per share, the warrants transaction had a dilutive effect,
and as such, was included in the computation of the diluted earnings per share. The number of shares related
to the outstanding exchangeable note hedge transaction is 3,457,475.
On December 31, 2021, the Company entered into the First Supplemental Indenture according to which the
Company irrevocably elected cash settlement for the principal and any premium due upon conversion to
apply to all conversions of the 2017 Notes issued under the 2017 Notes with an Exchange Date (as defined
in the 2017 Indenture) that occurs on or after December 31, 2021. As a result, the 2017 Notes do not have a
dilutive effect for the year ended December 31, 2023 and 2022 . Prior to December 31, 2021, the Company
had the intention and ability to settle the exchangeable senior notes issued in 2017 in cash, therefore the
2017 Notes did not have a dilutive effect for the years ended December 31, 2021.
On December 31, 2021, the Company irrevocably elected to settle the principal of the exchangeable senior
notes issued in 2020 in cash. As a result, the Company will use the if converted method for calculating any
potential dilutive effect on diluted net income per share, if applicable. The conversion premium will have a
dilutive impact on diluted net income per share only when the average market price of an ordinary share for
a given period exceeds the conversion price of $299.19 per share. As a result, 1,537,504 shares underlying
the conversion option of the exchangeable senior notes issued in 2020 are not considered in the calculation
of diluted net income per share in either 2021, 2022 or 2023, as the effect would be anti-dilutive.
The weighted average number of shares related to outstanding anti-dilutive options excluded from the
calculations of diluted net earnings per share was 4,096, 18,161 and 4,754 for the years 2023, 2022 and
2021, respectively.
F-27
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
u. Accounting for stock-based compensation:
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock
Compensation" ("ASC 718"), which requires the measurement and recognition of stock base compensation
expenses based on estimated fair values for all share-based payment awards made to employees and
directors. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date
of grant using an option-pricing model and account for forfeitures as they occur.
The Company recognizes compensation expenses for the value of its awards, which have graded vesting,
based on the accelerated attribution method over the requisite service period of each of the awards. The
Company accounts for forfeitures as they occur.
The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-
pricing model, which requires a number of assumptions: the expected volatility is based upon actual
historical stock price movements; the expected term of options granted is based upon historical experience
and represents the period of time that options granted are expected to be outstanding; the risk-free interest
rate is based on the yield from U.S. Federal Reserve zero-coupon bonds with an equivalent term; and the
expected dividend rate (an annualized dividend yield) is based on the per share dividend declared by the
Company's Board of Directors.
The Company measures the fair value of restricted stock based on the market value of the underlying shares
at the date of grant.
v. Fair value of financial instruments:
The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820") for valuing
financial instruments. Under this standard, fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants
at the measurement date. The Company measures its investments in money market funds classified as cash
equivalents, marketable securities, foreign currency derivative contracts, exchangeable notes hedge and its
contingent consideration arrangement at fair value.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy
for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs
are inputs that market participants would use in pricing the asset or liability developed based on market data
obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the
Company's assumptions about the assumptions market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
• Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the
ability to access. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these products does not entail a significant degree of judgment.
• Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all
significant inputs are observable, either directly or indirectly.
• Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value
measurement.
The availability of observable inputs can vary from investment to investment and is affected by a wide
variety of factors, including, for example, the type of investment, the liquidity of markets and other
F-28
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value requires more judgment and
the investments are categorized as Level 3.
The Company's marketable securities, exchangeable senior notes and foreign currency derivative contracts
are classified within Level 2 (see Notes 3, 10 and 15).
The fair value of the contingent consideration arrangement was classified within Level 3 and was determined
using a probability-based scenario analysis approach. The resulting probability-weighted contingent
consideration amounts were discounted based on the Company's estimated cost of debt.
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables and trade
payables approximate their fair value due to the immediate or short-term maturities of these financial
instruments.
w. Legal contingencies:
The Company is currently involved in various claims and legal proceedings arising in the ordinary course of
business. The Company reviews the status of each matter and assesses its potential financial exposure. If the
potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably
estimated, the Company accrues a liability for the estimated loss.
x. Advertising expenses:
Advertising expenses are charged to expense as incurred. Advertising expenses for the years 2023, 2022 and
2021 were $50,740; $43,981 and $31,575, respectively.
y. Treasury shares:
The Company repurchases its ordinary shares from time to time on the open market or in other transactions
and holds such shares as treasury shares. The Company accounts for the cost to repurchase treasury shares as
a reduction of shareholders' equity. The Company reissues treasury shares under the stock purchase plan,
upon exercise of options and upon vesting of restricted stock units ("RSU"). Re-issuance of treasury shares
is accounted for in accordance with ASC 505-30 in which gains are credited to additional paid-in capital and
losses are charged to additional paid-in capital to the extent that previous net gains are included therein and
otherwise to retained earnings.
z. Business combination:
The Company applies the provisions of ASC 805, "Business Combination", and allocates the fair value of
purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired
based on their estimated fair values. The excess of the fair value of purchase consideration over the fair
values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of
assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially
with respect to intangible assets.
Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash
flows from customer relationships, acquired technology and acquired trademarks from a market participant
perspective, useful lives and discount rates. Management's estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result,
actual results may differ from estimates. Acquisition-related expenses are recognized separately from the
business combination and are expensed as incurred.
F-29
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Contingent consideration incurred in a business combination is included as part of the acquisition price and
recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of
the contingent consideration is re-measured at each reporting period, with any adjustments in fair value
recognized in earnings under general and administrative expenses.
The Company applies ASU No. 2021-08, Business Combination (Topic 805): Accounting for Contract
Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure
contract assets and liabilities acquired in a business combination in accordance with revenue from ASC 606
rather than adjust them to fair value at the acquisition date.
aa. Non-controlling interests:
The consolidated financial statements include the Company's accounts and the accounts of the Company's
wholly- and majority-owned subsidiaries. Non-controlling interest positions of the Company's consolidated
entities are reported as a separate component of consolidated equity from the equity attributable to the
Company’s shareholders.
In case of an increase in ownership of a subsidiary, the carrying amount of the non-controlling interest is
adjusted to reflect the controlling interest’s increased ownership interest in the subsidiary’s net assets. Any
difference between the consideration paid by the Company to a non-controlling interest holder (or
contributed by the Company to the net assets of the subsidiary) and the adjustment to the carrying amount of
the non-controlling interest in the subsidiary is recognized directly in equity and attributable to the
controlling interest. In 2021, the Company acquired an additional 20% in the 2020 Subsidiary (the "2020
Subsidiary") for a total consideration of approximately $14,000.
ab. Comprehensive income:
The Company accounts for comprehensive income in accordance with ASC 220, "Comprehensive Income".
Comprehensive income generally represents all changes in shareholders' equity during the period except
those resulting from investments by, or distributions to, shareholders. Other comprehensive income for the
Company relates to gains and losses on hedging derivative instruments, unrealized gains and losses on
available for sale marketable securities and changes in foreign currency translation adjustments.
The following tables show the components of accumulated other comprehensive income, net of taxes, as of
December 31, 2023, 2022 and 2021:
Year ended December 31, 2023
Unrealized
gains (losses)
on
marketable
securities
Unrealized
gains (losses)
on cash flow
hedges
Foreign
currency
translation
adjustment
Total
Beginning balance
$
(34,386) $
(7,102) $
(69,767) $
(111,255)
Other comprehensive loss before reclassifications
18,029
(5,300)
13,810
26,539
Amounts reclassified from accumulated other
comprehensive loss
Net current-period other comprehensive loss
12,271
30,300
13,335
8,035
—
13,810
25,606
52,145
Ending balance
$
(4,086) $
933 $
(55,957) $
(59,110)
F-30
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Beginning balance
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Year ended December 31, 2022
Unrealized
gains (losses)
on
marketable
securities
Unrealized
gains (losses)
on cash flow
hedges
Foreign
currency
translation
adjustment
Total
$
(1,486) $
(33,319)
3,932 $
(18,223)
(42,185) $
(27,582)
(39,739)
(79,124)
419
7,189
—
7,608
Net current-period other comprehensive income
(32,900)
(11,034)
(27,582)
(71,516)
Ending balance
$
(34,386) $
(7,102) $
(69,767) $
(111,255)
Beginning balance
Other comprehensive (income) loss before
reclassifications
Amounts reclassified from accumulated other
comprehensive income
Net current-period other comprehensive income
Year ended December 31, 2021
Unrealized
gains (losses)
on
marketable
securities
Unrealized
gains (losses)
on cash flow
hedges
Foreign
currency
translation
adjustment
Total
$
13,285 $
4,836 $
(34,783) $
(16,662)
(13,368)
5,024
(7,402)
(15,746)
(1,403)
(14,771)
(5,928)
(904)
—
(7,331)
(7,402)
(23,077)
Ending balance
$
(1,486) $
3,932 $
(42,185) $
(39,739)
ac. Recently issued accounting standards, not yet adopted:
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures. This standard updates reportable segment disclosure requirements,
primarily through enhanced disclosures about significant segment expenses and information used to assess
segment performance on an interim and annual basis. This update is effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early
adoption is permitted. The adoption of ASU 2023-07 is not expected to have a significant impact on the
Company's consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income
Tax Disclosures", which expands the disclosure requirements for income taxes, primarily related to the rate
reconciliation and income taxes paid. This guidance is effective for the fiscal years beginning after
December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-09 is not expected to have a
significant impact on the Company’s consolidated financial statements.
NOTE 3:-
SHORT-TERM INVESTMENTS
Short-term investments include marketable securities in the amount of $873,976 and $1,012,286 as of
December 31, 2023 and 2022, respectively and short-term bank deposits in the amounts of $22,068 and $29,657
as of December 31, 2023 and 2022, respectively.
F-31
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:- SHORT-TERM INVESTMENTS (Cont.)
The following table summarizes amortized costs, gross unrealized gains and losses and estimated fair values of
available-for-sale marketable securities as of December 31, 2023 and 2022:
Amortized cost
Gross unrealized gains
Gross unrealized
losses
Estimated fair value
(Level 2 within the
fair value hierarchy)
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
2023
2022
2023
2022
Corporate
debentures
U.S. Treasuries
U.S. Government
Agencies
$ 835,856 $ 986,803 $
1,299 $
180 $ (16,582) $ (37,408) $ 820,573 $ 949,574
51,207
42,317
2,841
22,238
93
3
96
12
(741)
(984)
50,559
41,428
—
(968)
2,844
21,284
$ 889,904 $ 1,051,358 $
1,395 $
288 $ (17,323) $ (39,360) $ 873,976 $ 1,012,286
The scheduled maturities of available-for-sale marketable securities as of December 31, 2023 are as follows:
Due within one year
Due after one year through five years
Amortized
cost
Estimated
fair value
$
$
531,021 $
358,883
889,904 $
518,153
355,823
873,976
Investments with continuous unrealized losses for less than 12 months and 12 months or greater and their
related fair values as of December 31, 2023 and 2022 are as indicated in the following tables:
Investments with
continuous unrealized
losses for less than 12
months
December 31, 2023
Investments with
continuous unrealized
losses for 12 months or
greater
Total Investments with
continuous unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
$ 103,904 $
(993) $ 541,497 $
(15,589) $ 645,401 $
(16,582)
12,369
(127)
29,249
(614)
41,618
(741)
$ 116,273 $
(1,120) $ 570,746 $
(16,203) $ 687,019 $
(17,323)
Corporate debentures
U.S. Treasuries
F-32
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:- SHORT-TERM INVESTMENTS (Cont.)
Investments with
continuous unrealized
losses for less than 12
months
December 31, 2022
Investments with
continuous unrealized
losses for 12 months or
greater
Total Investments with
continuous unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
$ 404,393 $
(14,198) $ 508,180 $
(23,210) $ 912,573 $
(37,408)
32,501
3,344
(984)
(157)
—
15,195
—
(811)
32,501
18,539
(984)
(968)
$ 440,238 $
(15,339) $ 523,375 $
(24,021) $ 963,613 $
(39,360)
Corporate debentures
U.S. Treasuries
U.S. Government Agencies
NOTE 4:- PREPAID EXPENSES AND OTHER CURRENT ASSETS
Government authorities
Interest receivable
Prepaid expenses
Other
NOTE 5:- PREPAID EXPENSES AND OTHER LONG-TERM ASSETS
Deferred commission costs
Severance pay fund
Prepaid expenses
Other
December 31,
2023
2022
$
90,455 $
88,790
1,124
90,017
16,371
869
95,088
20,007
$
197,967 $
204,754
December 31,
2023
2022
$
129,687 $
138,861
11,808
74,421
3,416
11,967
74,819
5,849
$
219,332 $
231,496
F-33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 6:- PROPERTY AND EQUIPMENT, NET
NICE LTD. AND ITS SUBSIDIARIES
December 31,
2023
2022
Cost:
Computers and peripheral equipment
$
249,677 $
Internal use software
Office furniture and equipment
Leasehold improvements
Accumulated depreciation:
Computers and peripheral equipment
Internal use software
Office furniture and equipment
Leasehold improvements
309,383
3,148
41,897
604,105
204,631
194,262
78
30,720
429,691
Depreciated cost
$
174,414 $
231,714
247,763
6,460
59,796
545,733
186,146
147,657
5,103
47,542
386,448
159,285
Depreciation expense totaled $74,907; $71,460 and $65,411 for the years ended December 31, 2023, 2022 and
2021, respectively.
The Company recorded a reduction of $34,692 and $8,279 to the cost and accumulated depreciation of fully
depreciated equipment and leasehold improvements no longer in use for the years ended December 31, 2023
and 2022, respectively.
NOTE 7:- OTHER INTANGIBLE ASSETS, NET
a. Finite-lived other intangible assets:
Original amounts:
Core technology
Customer relationships and backlog
Trademarks
Accumulated amortization:
Core technology
Customer relationships and backlog
Trademarks
Other intangible assets, net
$
305,501 $
F-34
December 31,
2023
2022
$
821,835 $
334,881
50,072
674,729
296,712
44,899
1,206,788
1,016,340
581,930
281,032
38,325
901,287
503,421
270,280
33,034
806,735
209,605
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 7:- OTHER INTANGIBLE ASSETS, NET (Cont.)
b. Amortization expense amounted to $92,445; $105,086 and $118,681 for the years ended December 31,
2023, 2022 and 2021, respectively.
c. Estimated intangible asset amortization expense:
For the year ended December 31,
2024
2025
2026
2027
2028
Thereafter
NOTE 8:- GOODWILL
$
110,478
63,243
57,831
38,658
34,829
462
$
305,501
Following the Company's acquisitions in 2023 and 2022, as described in Note 1b, the changes in the carrying
amount of goodwill allocated to reportable segments for the years ended December 31, 2023 and 2022 are as
follows:
As of January 1, 2023
Acquisitions
Functional currency translation adjustments
As of December 31, 2023
As of January 1, 2022
Acquisitions (*)
Year ended December 31, 2023
Customer
Engagement
Financial
Crime and
Compliance
Total
$
1,269,610 $
347,508 $
1,617,118
194,990
7,006
1,885
970
196,875
7,976
$
1,471,606 $
350,363 $
1,821,969
Year ended December 31, 2022
Customer
Engagement
Financial
Crime and
Compliance
Total
$
1,257,149 $
349,607 $
1,606,756
27,763
27,763
(17,401)
Functional currency translation adjustments
(15,302)
(2,099)
As of December 31, 2022
$
1,269,610 $
347,508 $
1,617,118
(*) Including adjustment of ($276) resulting from finalization of purchase price allocations with respect to
2021.
F-35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9:- ACCRUED EXPENSES AND OTHER LIABILITIES
Payroll and related expenses
Accrued expenses
Government authorities
Other
NOTE 10:- DERIVATIVE INSTRUMENTS
NICE LTD. AND ITS SUBSIDIARIES
December 31,
2023
2022
$
200,820 $
162,953
162,306
2,581
197,480
141,144
171,217
13,610
$
528,660 $
523,451
The Company's risk management strategy includes the use of derivative financial instruments to reduce the
volatility of earnings and cash flows associated with changes in foreign currency exchange rates.
ASC 815, "Derivatives and Hedging" ("ASC 815"), requires the Company to recognize all of its derivative
instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair
value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments
that are designated and qualify as hedging instruments, an entity must designate the hedging instrument, based
upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a
foreign operation.
Gains and losses on derivatives instruments that are designated and qualify as a cash flow hedge (i.e., hedging
the exposure to variability in expected future cash flows that are attributable to a particular risk), are recorded in
accumulated other comprehensive income (loss) and reclassified into the statement of income in the same
accounting period in which the designated forecasted transaction or hedged item affects earnings.
The Company entered into option and forward contracts to hedge a portion of anticipated New Israeli Shekel
("NIS"), Indian Rupee ("INR") and Philippine peso ("PHP") payroll and benefit payments. These derivative
instruments are designated as cash flow hedges, as defined by ASC 815 and accordingly are measured at fair
value. These transactions are effective and, as a result, gain or loss on the derivative instruments are reported as
a component of accumulated other comprehensive income (loss) and reclassified as payroll expenses, facility
expenses or finance expenses, respectively, at the time that the hedged income/expense is recorded.
Forward contracts
expenses NIS
expenses INR
expenses PHP
Notional amount
December 31,
Fair value
(Level 2 within the fair value
hierarchy)
December 31,
2023
2022
2023
2022
107,940
62,023
11,577
111,253
46,406
11,235
253
147
302
(7,862)
(1,379)
651
$
181,540 $
168,894 $
702 $
(8,590)
F-36
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10:- DERIVATIVE INSTRUMENTS (Cont.)
The Company currently hedges its exposure to the variability in future cash flows, generally for a maximum
period of one year. As of December 31, 2023, the Company expects to reclassify all of its unrealized gains and
losses from accumulated other comprehensive income to earnings during the next fifteen months.
The fair value of the Company's outstanding derivative instruments at December 31, 2023 and 2022 is
summarized below:
Derivative assets:
Balance sheet line item
Fair value of derivative
instruments
December 31,
2023
2022
Foreign exchange forward contracts Prepaid expenses and other current assets
$
702 $
651
Derivative liabilities:
Foreign exchange forward contracts Accrued expenses and other liabilities
$
— $
(9,241)
The effect of derivative instruments in cash flow hedging relationship on income and other comprehensive
income for the years ended December 31, 2023, 2022 and 2021 is summarized below:
Amount of gain (loss) recognized in
other comprehensive income
on derivative, net of tax (effective portion)
Year Ended December 31,
2022
2023
2021
Derivatives in foreign exchange cash flow hedging relationships:
Forward contracts
Option contracts
$
$
(5,300) $
(18,223) $
—
—
(5,300) $
(18,223) $
4,993
31
5,024
Derivatives in foreign exchange cash flow hedging relationships for the years ended December 31, 2023, 2022
and 2021 is summarized below:
Option contracts
payroll and facility expenses
to hedge
Forward contracts to hedge
payroll and facility expenses
Statements of income line
item
Cost of revenues and operating
expenses
Cost of revenues, operating
expenses and financial
expenses
Amount of gain (loss) reclassified from other
comprehensive income
into income (expenses),
net of tax (effective portion)
Year Ended December 31,
2023
2022
2021
$
— $
— $
(771)
13,335
7,189
$
13,335 $
7,189 $
(5,157)
(5,928)
F-37
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 11:- LEASES
The Company has entered into various non-cancelable operating lease agreements for certain office spaces and
motor vehicles. The leases have original lease periods expiring between 2024 and 2037. The Company does not
assume renewals in its determination of the lease term unless the renewals are considered as reasonably assured.
The operating lease cost for the year ended December 31, 2023 was $23,053.
Supplemental cash flow information related to leases was as follows:
Cash payments related to operating lease
New right-of-use assets obtained in exchange for operating lease obligations
Maturities of lease liabilities were as follows:
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less imputed interest
Total
Supplemental balance sheet information related to leases was as follows:
Current maturities of operating leases
Long-term operating leases
Total operating lease liabilities
Weighted-average remaining operating lease term
Weighted-average discount rate of operating leases
F-38
Year ended
December 31,
2023
$
$
18,469
11,257
Operating
Leases
17,962
16,430
16,477
15,521
13,634
66,758
146,782
(30,126)
$
116,656
Year ended
December 31,
2023
13,747
102,909
$
116,656
9.80
5.2 %
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12:- COMMITMENTS AND CONTINGENT LIABILITIES
a. Commitments:
The Company is also obligated under certain agreements with its suppliers to purchase licenses and hosting
services. These non-cancelable obligations as of December 31, 2023 are $425,702.
b. Legal proceedings:
From time to time the Company or its subsidiaries may be involved in legal proceedings and/or litigation
arising in the ordinary course of business. While the outcome of these matters cannot be predicted with
certainty, the Company does not believe it will have a material effect on its consolidated financial position,
results of operations, or cash flows.
c. Bank Guarantees:
The Company obtained bank guarantees as of December 31, 2023 of $2,986, primarily in connection with
office lease agreements.
NOTE 13:- TAXES ON INCOME
a. Israeli taxation:
1. Corporate tax:
Commencing 2012, NICE Ltd. and its Israeli subsidiary elected the Preferred Enterprise regime to apply
under the Law for the Encouragement of Capital Investments (the "Investment Law"). The election is
irrevocable.
In December 2016, the Israeli Knesset passed a number of changes to the Investments Law regimes.
These changes came into law in May 2017, effective beginning January 1, 2017, upon the passing into
law of Regulations promulgated by the Finance Ministry to implement the "Nexus Principles" based on
OECD guidelines published as part of the Base Erosion and Profit Shifting (BEPS) project. Such
Regulations provide rules for implementation of the Preferred Technology Enterprise tax regime.
The Company believes it qualifies as a Preferred Technology Enterprise and accordingly is eligible for a
tax rate of 12% on its qualifying preferred technology income, as defined in such regulations, beginning
from tax year 2017 and onwards. The Company expects that it will continue to qualify as a Preferred
Technology Enterprise in subsequent tax years.
Income not eligible for Preferred Enterprise or Preferred Technology Enterprise benefits is taxed at the
regular corporate tax rate, which remains 23% in 2023 (23% in 2022 and 2021).
2. Foreign Exchange Regulations:
Under the Foreign Exchange Regulations, NICE Ltd. and its Israeli subsidiary calculate their tax liability
in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars, is translated
into NIS according to the exchange rate as of December 31st of each year.
F-39
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)
3. Tax benefits under the Israeli Law for the Encouragement of Industry (Taxation), 1969:
NICE Ltd. and its Israeli subsidiary believe they each currently qualify as an "Industrial Company" as
defined by the Investment Law and, as such, are entitled to certain tax benefits including deduction of
public offering expenses in three equal annual installments and amortization of cost of purchased know-
how and patents for tax purposes over 8 years.
b. Income taxes on non-Israeli subsidiaries:
Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of residence. The
Company's consolidated tax rate depends on the geographical mix of where its profits are earned. In 2023,
the Company's U.S. subsidiaries are subject to combined federal and state income taxes of approximately
25.1% and its subsidiaries in the U.K. and India are subject to corporation tax at a rate of approximately
23.5% and 34.9%, respectively. Neither Israeli income taxes, foreign withholding taxes nor deferred income
taxes were provided in relation to undistributed earnings of the Company's foreign subsidiaries. This is
because the Company has the intent and ability to reinvest these earnings indefinitely in the foreign
subsidiaries and therefore those earnings are continually redeployed in those jurisdictions. As of
December 31, 2023, the amount of undistributed earnings of non-Israeli subsidiaries, which is considered
indefinitely reinvested, was $1,767,539 with a corresponding unrecognized deferred tax liability of
$227,648. If these earnings were distributed to Israel in the form of dividends or otherwise, the Company
would be subject to additional Israeli income taxes, subject to an adjustment for foreign tax credits, and
foreign withholding taxes.
c. U.S. Tax:
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "U.S. Tax Reform" or
"TCJA"), a comprehensive tax legislation that includes several key tax changes to the taxation of business
entities, among which is the change to IRS Section 174, that went into effect for taxable years beginning
after December 31, 2021, requiring research and development expenses to be capitalized and amortized
over a period of either five or fifteen years. Prior to this change, the research and development expenses
could be fully expensed, as incurred, for tax purposes.
The final impact of the TCJA may differ due to, among other things, possible changes in the interpretations
and assumptions made by the Company as a result of additional information, additional guidance or
finalization of law and regulations that will be issued by the U.S. Department of Treasury, the IRS or other
standard-setting bodies, and which may impact the Company's future financial statements, and will be
accounted for when such guidance is issued.
d. Net operating loss carryforward:
As of December 31, 2023, the Company and certain of its subsidiaries had tax loss carry-forwards totaling in
aggregate approximately $316,962, which can be carried forward and offset against taxable income.
Approximately $238,065 of these carry-forward tax losses have no expiration date, with the balance expiring
between the years 2023 and 2041.
Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the "change in
ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses before utilization.
F-40
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)
e. Deferred tax assets and liabilities:
Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts recorded for tax purposes. Significant
components of the Company's deferred tax assets and liabilities are as follows :
December 31,
2023
2022
Deferred tax assets:
Net operating losses carryforward and tax credits
$
96,079 $
Intra-entity transfer of certain intangible assets (*)
Operating leases liabilities
Share based payments
Research and development costs
Reserves, allowances and other
Deferred tax assets before valuation allowance
Valuation allowance
Deferred tax assets
Deferred tax liabilities:
Acquired intangibles
Operating lease right-of-use assets
Acquired deferred revenue
Internal use software and other fixed assets
Prepaid compensation expenses
Other
Deferred tax liabilities
Deferred tax assets, net
14,563
18,820
37,110
112,311
55,124
334,007
(19,818)
314,189
(75,396)
(15,813)
—
(18,650)
(33,936)
(19)
51,924
17,252
22,878
38,206
62,695
54,774
247,729
(12,569)
235,160
(43,385)
(20,160)
(565)
(24,766)
(36,724)
(7)
(143,814)
(125,607)
$
170,375 $
109,553
(*) During the years ended December 31, 2023 and 2022, the Company completed intra-entity transfers of
certain intangible assets to a different tax jurisdiction. As a result of the transfers, the Company utilized net
operating losses carried forward, incurred a tax expense on capital gain, released valuation allowances and
recorded a deferred tax asset.
Deferred tax assets
Deferred tax liabilities
Deferred tax assets, net
December 31,
2023
2022
$
$
178,971 $
116,889
(8,596)
(7,336)
170,375 $
109,553
The Company has provided valuation allowances in respect of certain deferred tax assets resulting from tax
loss carry forwards and other reserves and allowances due to uncertainty concerning their realization.
F-41
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)
f.
A reconciliation of the Company's effective tax rate to the statutory tax rate in Israel is as follows:
Income before taxes on income, as reported in the
consolidated statements of income
Statutory tax rate in Israel
Preferred Enterprise / Preferred Technology Enterprise
benefits (*)
Changes in valuation allowance
Earnings taxed under foreign law
Tax settlements and prior years adjustments
Intangible assets transfer
Other
Effective tax rate
Year Ended December 31,
2022
2021
2023
$
457,700 $
345,332 $
240,619
23.0 %
23.0 %
23.0 %
(6.8) %
1.6 %
(0.9) %
4.4 %
— %
4.7 %
26.1 %
(3.3) %
0.5 %
0.7 %
0.4 %
— %
1.7 %
23.0 %
(2.2) %
1.0 %
0.2 %
(1.8) %
(1.7) %
(1.3) %
17.2 %
(*) The effect of the benefit resulting from the "Preferred Enterprise/Preferred Technology Enterprise
benefits" status on net earnings per ordinary share is as follows
Basic
Diluted
g. Income before taxes on income is comprised as follows:
Domestic
Foreign
Year Ended December 31,
2022
2021
2023
0.49 $
0.47 $
0.18 $
0.19 $
0.08
0.08
Year Ended December 31,
2022
2021
2023
195,203 $
102,500 $
262,497
457,700 $
242,832
345,332 $
53,703
186,916
240,619
$
$
$
$
F-42
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)
h. Taxes on income (tax benefit) are comprised as follows:
Current
Deferred
Domestic
Foreign
Of which:
Domestic taxes:
Current
Deferred
Foreign taxes:
Current
Deferred
Year Ended December 31,
2023
2022
2021
$
182,789 $
132,129 $
80,903
(63,390)
(52,742)
(39,507)
119,399
79,387
41,396
51,334
68,065
28,853
50,534
16,171
25,225
$
119,399 $
79,387 $
41,396
Year Ended December 31,
2022
2021
2023
$
50,414 $
29,576 $
27,400
920
(723)
(11,229)
51,334
28,853
16,171
132,375
102,553
53,503
(64,310)
(52,019)
(28,278)
68,065
50,534
25,225
Taxes on income
$
119,399 $
79,387 $
41,396
F-43
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)
i. Uncertain tax positions:
A reconciliation of the beginning and ending balances of the total amounts of uncertain tax position is as
follows:
Uncertain tax positions, beginning of year
Increases in tax positions for prior years
Increases in tax positions for current year
Expiry of the statute of limitations
December 31,
2023
2022
$
80,005 $
77,047
1,262
11,712
2,729
6,031
(2,855)
(5,802)
Uncertain tax positions, end of year
$
90,124 $
80,005
The Company accrued $38,347 and $22,285 due to interest and penalties related to uncertain tax positions as
of December 31, 2023 and 2022, respectively.
During the course of 2019, upon receipt of an information letter, the Company's United Kingdom Subsidiary
Group elected to register for the United Kingdom Profits Diversion Compliance Facility, covering the years
2015-2018. During December 2021 and 2022, this was extended to include the years 2019 and 2020
respectively.
NICE Ltd. and its foreign affiliates in Hungary and in the United Kingdom (“Foreign Affiliates”) are
undergoing routine Israeli income tax audits for the tax years 2011 through 2021. On December 30, 2020,
February 28, 2022 and on February 20, 2023 NICE Ltd. received a final assessments by way of Tax Decrees
(“Tax Decrees”) from the Israel Tax Authority (“ITA”) with respect to its fiscal years 2014 through 2016 for
an aggregate amount of tax of approximately NIS 154,869 (equivalent to approximately $43,127). On March
22, 2023, August 20, 2023, and on December 7, 2023 NICE Ltd.’s Foreign Affiliates received Tax Decrees
from the ITA with respect to its fiscal years 2011 through 2015, for an aggregate amount of tax of
approximately NIS 399,891 (equivalent to approximately $111,360). On December 28, 2022, NICE Ltd.
received an assessment from the ITA with respect to its fiscal years 2017 (“Assessment”), for an aggregate
amount of tax of approximately NIS 53,033 (equivalent to approximately $14,769) On December 6, 2023,
NICE Ltd. received an assessment from the ITA with respect to its fiscal years 2018 through 2021, for an
aggregate amount of tax of approximately NIS 47,320 (equivalent to approximately $13,177). Nice Ltd. and
its affiliates had filed number of appeals and objections in relation to the different assessments and decrees
mentioned above with the district court of Tel Aviv. In addition, the ITA, NICE Ltd and NICE Ltd.’s
Foreign Affiliates are in discussions in an effort to resolve these matters in a mutually agreeable manner. We
believe our recorded unrecognized tax benefits are sufficient to cover the resolution of the ITA’s Tax
Decreases and the Assessments.
As of December 31, 2023, U.S. federal income tax returns filed by the Company's U.S. subsidiaries for the
tax years prior to 2020 are no longer subject to general audit. To the extent the Company or its subsidiaries
generated net operating losses or tax credits in closed tax years, future use of the net operating loss or tax
credit carry forward balance would be subject to examination within the relevant statute of limitations for the
year in which it was utilized. The Company and its subsidiaries are still subject to other income tax audits
for the tax years of 2011 through 2022.
F-44
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:- SHAREHOLDERS' EQUITY
a. The ordinary shares, par value NIS 1.0 per share, of the Company are traded on the Tel-Aviv Stock
Exchange and its American Depositary Shares ("ADSs"), each representing one fully paid ordinary share,
are traded on The NASDAQ Stock Market.
b. Share option plan:
2016 Share Incentive Plan
In February 2016 the Company adopted the 2016 Share Incentive Plan (the "2016 Plan" ). The Company
adopted the 2016 Plan to provide incentives to employees, directors, consultants and/or contractors by
rewarding performance and encouraging behavior that will improve the Company’s profitability.
Under the 2016 Plan, the Company's employees, directors, consultants and/or contractors may be granted
any equity-related award, including: any type of an option to acquire the Company's ordinary shares; share
appreciation right; share and/or restricted share award ("RSA"); restricted stock unit ("RSU") and/or other
share unit; and/or other share-based award and/or other right or benefit under the 2016 Plan, including any
such equity-related award that is a performance-based award (each an "Award").
Generally, under the terms of the 2016 Plan, unless determined otherwise by the administrator of the 2016
Plan, 25% of an Award granted becomes exercisable on the first anniversary of the date of grant and 6.25%
becomes exercisable once every quarter during the subsequent three years. Specifically with respect to RSUs
and options granted with an exercise price equal to the nominal value of an ordinary share ("par value
options"), unless determined otherwise by the Board of Directors, 25% of the RSUs and the par value
options granted become vested on each of the four consecutive annual anniversaries following the date of
grant. Certain executive officers are entitled to acceleration of vesting of Awards in the event of a change of
control, subject to certain conditions.
Awards with a vesting period expire six years after the date of grant. Pursuant to a resolution of the
Company's Board of Directors dated February 4, 2014, options that are performance-based and that were
granted during calendar year 2014 and thereafter shall expire seven years following the date of grant. The
maximum number of shares that may be subject to Awards granted under each of the Plans is calculated
each calendar year as 3% of the Company’s issued and outstanding share capital as of December 31 of the
preceding calendar year (pursuant to an amendment of the 2016 Plan approved by the Board of Directors on
October 2, 2019). Such amount is reset for each calendar year. Awards are non-transferable except by will or
the laws of descent and distribution.
Options granted under the 2016 Plan are granted at an exercise price equal to the average of the closing
prices of one ADR as quoted on the NASDAQ market during the 30 consecutive calendar days preceding
the date of grant, unless determined otherwise by the administrator of the 2016 Plan (including par value
options).
The Company’s Board of Directors also adopted an addendum to the 2016 Plan for Awards granted to
residents of Israel (the "Addendum") and resolved to elect the "Capital Gains Route" (as defined in Section
102(b)(2)) of the Israeli Income Tax Ordinance-5721-1961 ("Tax Ordinance") for the grant of Awards to
Israeli grantees. There is also a U.S. addendum under the 2016 Plan that applies to non-qualified stock
options for purposes of U.S. tax laws.
During 2023, the Company granted 1,171,880 options and restricted share units under the 2016 Plan (which
constituted 1.86% of the Company issued and outstanding share capital as of December 31, 2023).
F-45
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:- SHAREHOLDERS' EQUITY (Cont.)
Pursuant to the terms of certain acquisitions, the Company assumed or replaced unvested options, RSAs and
RSUs and converted them or replaced them with the Company's options, RSAs and RSUs, as applicable,
based on an agreed exchange ratio. Each assumed or replaced option, RSA and RSU is subject to the same
terms and conditions, including vesting, exercisability and expiration, as originally applied to any such
option, RSA and RSU immediately prior to the acquisition.
The fair value of the Company's stock options granted to employees and directors for the years ended
December 31, 2023, 2022 and 2021 was estimated using the following assumptions:
Expected volatility
Risk free interest rate
Expected dividend
Expected term (in years)
2023
2022
2021
33.35%-35.67% 29.45%-34.11% 26.21%-27.87%
3.6%-4.68%
1.78%-4.15%
0.3%-0.93%
—
3.5
—
3.5
—
3.5
A summary of the Company's stock options activity and related information for the year ended
December 31, 2023, is as follows:
Outstanding at January 1, 2023
Granted
Exercised
Cancelled
Forfeited
Number of
options
1,179,972
344,450
(217,760)
(761)
(52,107)
Weighted-
average
exercise price
23.76
13.40
11.18
2.80
0.30
Weighted-
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
4.31
200,905
Outstanding at December 31, 2023
1,253,794
24.08
4.25
221,610
Exercisable at December 31, 2023
461,353
57.61
2.96
67,013
The weighted-average grant-date fair value of options granted during the years 2023, 2022 and 2021 was
$171.43; $198.41 and $243.34, respectively.
The total intrinsic value of options exercised, and restricted shares vested during the years 2023, 2022 and
2021 was $138,202; $178,693 and $189,408, respectively.
F-46
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:- SHAREHOLDERS' EQUITY (Cont.)
The options outstanding under the Company's stock option plans as of December 31, 2023, have been
separated into ranges of exercise price as follows:
Options
outstanding as of
December 31,
2023
Weighted
average
remaining
contractual
term
(Years)
Weighted
Average
Exercise
Price
$
Options
Exercisable as of
December 31,
2023
1,088,701
381
2,117
2,470
58,032
102,093
4.45
1.07
3.98
3.02
1.27
3.92
0.29
6.84
21.69
47.70
133.44
215.25
312,719
381
2,117
2,469
58,032
85,635
Ranges of
exercise price
$ 0.25 - 0.32
$ 6.72 -6.95
$ 20.44 - 24.99
$ 38.06 - 54.51
$ 96.74 - 151.63
$ 197.42 - 232.2
Weighted
average
exercise
price of
options
exercisable
$
0.29
6.84
21.69
47.70
133.44
216.93
1,253,794
4.25
24.08
461,353
57.61
A summary of the Company's RSU and the Company's RSA activities and related information for the year
ended December 31, 2023, is as follows:
Outstanding at January 1, 2023
Granted
Vested
Forfeited
Outstanding at December 31, 2023
Number of
RSU and
RSA (*)
1,524,223
827,430
(515,712)
(132,792)
1,703,149
(*) NIS 1.0 par value, which represents approximately $0.27.
The weighted-average grant-date fair value of restricted shares granted during the year 2023 was $187.73.
As of December 31, 2023, the total compensation cost related to non-vested awards not yet recognized was
approximately $254,834, which is expected to be recognized over a period of up to four years.
F-47
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:- SHAREHOLDERS' EQUITY (Cont.)
The total equity-based compensation expense related to all of the Company's equity-based awards
recognized for the years ended December 31, 2023, 2022 and 2021 was comprised as follows:
Cost of revenues
Research and development, net
Selling and marketing
General and administrative
Year ended
December 31,
2022
2023
$
18,904 $
18,535 $
38,047
48,022
78,329
39,747
57,114
73,492
2021
17,879
28,558
42,021
67,914
Total stock-based compensation expenses
$
183,302 $
188,888 $
156,372
c. Treasury shares:
On February 12, 2020, our Board of Directors authorized a program to repurchase up to $200,000 of the
Company issued and outstanding ordinary shares and ADRs, which commenced following completion of the
repurchase program that was authorized by the Company Board of Directors in 2017. On November 9, 2022,
the Company Board of Directors authorized an additional program to repurchase up to $250,000 of the
Company issued and outstanding ordinary shares and ADRs, which commenced following completion of the
program that was authorized in 2020. On November 15, 2023, the Company Board of Directors authorized
an additional program to repurchase up to $300,000 of the Company issued and outstanding ordinary shares
and ADRs, which commenced following completion of the repurchase program that was authorized by the
Company Board of Directors in 2022.
Repurchases may be made from time to time in the open market or in privately negotiated transactions in
accordance with applicable securities laws and regulations. The timing and amount of the repurchase
transactions will be determined by management and may depend on a variety of factors including market
conditions, alternative investment opportunities and other considerations.
These programs do not obligate us to acquire any particular amount of ordinary shares and ADRs and each
program may be modified or discontinued at any time without prior notice.
NOTE 15:- DEBT
Exchangeable Senior Notes and Hedging Transactions
2017 Notes
In January 2017, the Company issued $287,500 aggregate principal amount of 2017 Notes due 2024.
In the event that the last reported sale price of the company’s ADS for at least 20 trading days (whether
consecutive or not) during the period of 30 consecutive trading days ending on the last trading day of the
immediately preceding calendar quarter is greater than or equal to 130% of the exchange price ("Share Price
Condition") or in the event of the satisfaction of certain other conditions, during set periods, as defined in the
F-48
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
indenture governing the Notes, the holders of the exchangeable senior notes will have the option to exchange
the Notes for (at the Company's election) (i) cash, (ii) ADSs or (iii) a combination thereof.
As of December 31, 2022, the Share Price Condition for the 2017 Notes was triggered and, accordingly, the net
carrying amount of these 2017 Notes was presented in current liabilities.
The Company may provide additional ADSs upon conversion if there is a "Make-Whole Fundamental Change"
in the Company as defined in the indenture governing the 2017 Notes. The 2017 Notes are not redeemable by
the Company prior to the maturity date apart from certain cases as set forth in the indenture governing the notes.
On December 31, 2021, the Company entered into the First Supplemental Indenture. In accordance with the
First Supplemental Indenture, the Company irrevocably elected cash settlement for the principal and any
premium due upon conversion (as defined in the 2017 Indenture) to apply to all conversions of 2017 Notes with
an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021.
As a result of the requirement to deliver cash to settle the principal and any premium due upon conversion, on
December 31, 2021, the Company reclassified from equity to liability the conversion option (a derivative) fair
value of $292,940. The conversion option will be no longer eligible for ASC 815 scope exception. Therefore, a
derivative accounting for the conversion option was required.
Debt issuance costs of $5,791 attributable to the 2017 Notes are amortized as interest expense over the
contractual term of the notes using the effective interest rate.
Interest is payable on the debentures semi-annually at the cash coupon rate, however, the remaining debt
discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal
to the Company's estimated nonconvertible debt borrowing rate at the time of issuance.
The Company received notices for conversion of $2,039 and $2,626 of principal amount of the 2017 Notes in
2022 and 2023, respectively, for which $20,132 and $2,623 were settled in 2022 and 2023, respectively. The
Company paid the note holders the conversion value of the notes in cash. The cash conversion premium
payment upon conversion of the 2017 Notes was offset by cash under the convertible bond hedge transaction (a
derivative) entered into in connection with the offering of the 2017 Notes. As a result of the conversions, the
Company recorded in 2022 and 2023, respectively a $1,206 and $53 loss on extinguishment of debt.
The 2017 Notes fully matured on January 15, 2024 and were settled in cash (see Note 19 "Subsequent Events").
2020 Notes
On August 2020, the Company issued $460,000 aggregate principal amount of exchangeable senior notes (the
"2020 Notes" and together with the 2017 Notes, the "Notes") due 2025.
In the event that the Share Price Condition is satisfied or in the event of the satisfaction of certain other
conditions, during set periods, set forth in the indenture governing the 2020 Notes, the holders of the
exchangeable senior notes will have the option to exchange the Notes for (at the Company's election) (i) cash,
(ii) ADSs or (iii) a combination thereof.
On December 31, 2021, the Company irrevocably elected that all conversions occurring on or after December
31, 2021, will be settled pursuant to a Combination Settlement (as defined in the 2020 Indenture) with a
Specified Dollar Amount (as defined in the 2020 Indenture) no less than $1,000 per $1,000 principal amount of
2020 Notes. Generally, under this settlement method, the conversion value corresponding to the principal
amount will be converted in cash, and the conversion value over the principal amount will be settled, at the
Company’s election, in cash or shares or a combination thereof.
F-49
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
The 2020 Notes are redeemable by the Company on or after September 21, 2023 upon the fulfillment of the
Share Price Condition for cash in relation to the principal amount, and the conversion value over the principal
amount will be settled, at the Company's election, in (i) cash, (ii) ADSs or (iii) a combination thereof, apart
from certain cases as set forth in the indenture governing the Notes.
The 2020 Notes do not bear interest, however, the remaining debt discount is being amortized as additional non-
cash interest expense using an effective annual interest rate.
Debt issuance costs of $8,574 attributable to the 2020 Notes are amortized as interest expense over the
contractual term of the 2020 Notes using the effective interest rate.
The Company may provide additional ADSs upon conversion if there is a "Make-Whole Fundamental Change"
in the Company as defined in the indenture governing the 2020 Notes.
The following table summarizes some key facts and terms regarding the outstanding Notes as of December 31,
2023:
Issuance date
Maturity date
Effective conversion date
Principal amount
Cash coupon rate (per annum)
Conversion rate effective (per $1000 principal amount)
Effective conversion price (per ADS)
Due 2025
August 27, 2020
Due 2024
January 18, 2017
September 15, 2025
January 15, 2024
June 15, 2025
$460,000
September 15, 2023
$87,432
—%
3.34
$299.19
1.25%
12.05
$82.96
The carrying values of the liability of the Notes are reflected in the Company's accompanying consolidated
balance sheets as follows:
2020 Notes
December 31,
2017 Notes
December 31,
2023
2022
2023
2022
Principal
$
460,000 $
460,000
$
87,432 $
90,055
Conversion option (Level 2)
—
121,922 $
122,323
Less:
Debt issuance costs, net of amortization
(2,919)
(4,618)
Unamortized discount
—
(14)
(111)
(335)
(2,751)
Net liability carrying amount
$
457,081 $
455,382
$
209,229 $
209,292
As of December 31, 2023, the estimated fair value of the 2017 Notes and the 2020 Notes which the Company
has classified as Level 2 financial instruments are $208,833 ($207,169 as of December 31, 2022) and $437,368
($433,113 as of December 31, 2022), respectively.
F-50
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
The estimated fair value was determined based on the quoted bid price of the exchangeable senior notes in an
over-the-counter market on the last trading day of the reporting period. As of December 31, 2023, the difference
between the net carrying amount of the 2020 Notes and estimated fair value is mainly due to the interest
increase in global markets.
Interest expense related to the Notes is reflected on the accompanying consolidated statements of income as
follows:
2020 Notes
Year Ended December 31,
2017 Notes
Year Ended December 31,
2023
2022
2021
2023
2022
2021
$
1,699
$
1,693
$
1,485
$
316
$
303
$
608
—
—
—
—
—
—
6,471
—
—
2,600
1,101
2,587
1,127
5,986
1,891
53
1,206
13,969
Amortization of
debt issuance costs
Non-cash
amortization of
debt discount
Interest expense
Loss in respect of
convertible loan
extinguishment
Total interest
expense recognized
$
Effective interest
rate
1,699
$
1,693
$
7,956
$
4,070
$
5,223
$
22,454
0.37 %
0.37 %
1.87 %
4.65 %
4.65 %
4.68 %
Exchangeable notes hedge transactions
In connection with the pricing of the 2017 Notes, the Company has entered into privately negotiated
exchangeable note hedge transactions with some of the initial purchasers and/or their respective affiliates (the
"Option Counterparties").
Subject to customary anti-dilution adjustments substantially similar to those applicable to the 2017 Notes, the
exchangeable note hedge transactions cover the number of ADSs will initially underline the 2017 Notes.
The note hedge transactions are expected generally to reduce cash payments the Company is required to make
in excess of the principal amount, in each case, upon any exchange of the 2017 Notes.
A portion of the call-options can be settled upon a surrender of the same amounts of Notes by a holder. As
stated above, the Company irrevocably elected cash settlement to apply to all conversions of 2017 Notes with
an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021.
Conversion notices received on and after December 31, 2021 relating to the 2017 Notes will be fully settled in
cash, and amounts paid in excess of the principal amount will be offset by an equal receipt of cash under the
convertible bond hedge.
Concurrently with the Company's entry into the exchangeable note hedge transactions, the Company has entered
into warrant transactions with the Option Counterparties relating to the same number of ADSs (3,457,475), with
a strike price of $101.82 per ADS, subject to customary anti-dilution adjustments.
The warrants are exercisable for a period of three months as of the 2017 Notes' maturity date.
F-51
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
The warrants are classified to equity in accordance with U.S. GAAP. The warrants have a dilutive effect as the
market price per ordinary share exceeds the applicable exercise price of the warrants, as measured under the
terms of the warrant transactions.
As a result of the irrevocable cash election, on December 31, 2021, the Company reclassified from equity to
derivative asset the remaining bond hedge fair value of $292,940 (Level 2).
NOTE 16:- REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION
a. Reportable segments:
ASC 280, "Segment Reporting"' establishes standards for reporting information about operating segments.
Operating segments are defined as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. The Company's chief operating decision maker is its Chief Executive
Officer. Selected reportable segment data includes the results of companies which were acquired in the years
2023, 2022 and 2021 respectively in the applicable segment.
Year ended December 31, 2023
Customer
Engagement
Financial
Crime and
Compliance
Not
allocated
Total
Revenues
$
1,974,090 $
403,418 $
—
2,377,508
Operating income
$
456,793 $
129,023 $
(150,589)
435,227
Year ended December 31, 2022
Customer
Engagement
Financial
Crime and
Compliance
Not
allocated
Total
Revenues
$
1,768,804 $
412,490 $
— $
2,181,294
Operating income
$
343,892 $
159,298 $
(168,017) $
335,173
Year ended December 31, 2021
Customer
Engagement
Financial
Crime and
Compliance
Not
allocated
Total
Revenues
$
1,572,176 $
348,974 $
— $
1,921,150
Operating income
$
316,760 $
104,080 $
(156,931) $
263,909
F-52
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 16:- REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.)
The following table presents property and equipment as of December 31, 2023 and 2022, based on
operational segments:
Customer Engagement
Financial Crime and Compliance
Non-allocated
b. Geographical information:
December 31,
2023
2022
$
132,824 $
125,781
39,943
1,647
32,070
1,434
174,414 $
159,285
Total revenues from external customers on the basis of the Company's geographical areas are as follows:
Americas, principally the US
$
1,986,634 $
1,802,192 $
1,566,807
Year Ended December 31,
2022
2021
2023
EMEA (*)
Israel
Asia Pacific
244,523
3,508
142,843
245,198
4,484
129,420
236,122
3,839
114,382
$
2,377,508 $
2,181,294 $
1,921,150
The following presents property and equipment and operating lease right-of-use assets as of December 31,
2023 and 2022, based on geographical areas:
Americas, principally the US
EMEA (*)
Israel
Asia Pacific
(*) Includes Europe, the Middle East (excluding Israel) and Africa.
December 31,
2023
2022
$
128,065 $
10,145
122,940
17,829
127,289
4,669
112,702
17,518
$
278,979 $
262,178
F-53
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 17:- SELECTED STATEMENTS OF INCOME DATA
a. Research and development, net:
Total costs
Less - grants and participations
Less - capitalization of software development costs
b. Financial expenses and other, net:
Year Ended December 31,
2022
2021
2023
$
386,745 $
364,654 $
319,083
(2,441)
(2,414)
(61,596)
(56,167)
(2,118)
(45,778)
$
322,708 $
306,073 $
271,187
Financial income:
Interest and amortization/accretion of premium/discount
on marketable securities, net
$
Interest income
Financial expenses:
Interest expense
Loss in respect of debt extinguishment
Debt issuance costs amortization
Exchangeable senior notes amortization of discount
Exchange rates differences
Other
Year Ended December 31,
2022
2021
2023
13,813 $
13,659 $
13,751
20,260
4,720
200
34,073
18,379
13,951
(1,101)
(53)
(2,015)
(2,600)
(3,297)
(2,412)
(1,127)
(1,206)
(1,996)
(2,587)
(301)
(2,774)
(10,061)
(13,969)
(610)
(5,708)
(4,131)
(2,958)
(11,478)
(9,991)
(37,437)
Other (expenses) Income, net
(122)
1,771
196
$
22,473 $
10,159 $
(23,290)
c. Net earnings per share:
The following table sets forth the computation of basic and diluted net earnings per share:
F-54
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 17:-
SELECTED STATEMENTS OF INCOME DATA (Cont.)
1. Numerator:
Net income to ordinary shareholders
$
338,301 $
265,945 $
199,223
Year Ended December 31,
2022
2021
2023
2. Denominator (in thousands):
Year Ended December 31,
2023
2022
2021
Denominator for basic net earnings per share:
Weighted average number of shares (thousand)
63,590
63,790
63,189
Effect of dilutive securities:
Add - employee stock options and RSU
Warrants issued in the exchangeable notes
transaction
995
894
1,680
1,781
1,605
2,102
Denominator for diluted net earnings per share - adjusted
weighted average shares (thousand)
$
66,265
66,465
66,896
NOTE 18:- RELATED PARTY BALANCES AND TRANSACTIONS
In 2021, the Company acquired an additional 20% in the 2020 Subsidiary for a total consideration of
approximately $14,000. The amount paid to the 2020 Subsidiary's CEO in connection with this purchase was
$4,850. As of December 31, 2023 and 2022, the 2020 Subsidiary's CEO holds 12.04% of the 2020 Subsidiary,
which reflects $5,385 and $5,373 of the non-controlling amount on the balance sheet as of December 31, 2023
and 2022, respectively.
NOTE 19:- SUBSEQUENT EVENTS
On January 2024, the Company settled in cash the entire 2017 Notes in an aggregate principal amount of
$87,432 (See Note 15 "Debt" for further information regarding the 2017 Notes).
F-55
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
NICE LTD.
By:
/s/ Barak Eilam
Barak Eilam
Chief Executive Officer
Date: March 27, 2024
109
Significant Subsidiaries
Exhibit 8.1
The following is a list of our significant subsidiaries and other subsidiaries, including the country of incorporation or residence.
Each of our subsidiaries listed below is wholly-owned.
Name of Subsidiary
NICE Systems Australia PTY Ltd.
NICE Systems Technologies Brasil LTDA
NICE Systems Canada Ltd.
NICE Interactive Solutions India Private Ltd.
Actimize Ltd.
NICE Japan Ltd.
NICE Technologies Mexico S.R.L.
NICE Netherlands B.V.
NICE Systems (Singapore) Pte. Ltd.
Country of Incorporation or Residence
Australia
Brazil
Canada
India
Israel
Japan
Mexico
Netherlands
Singapore
NICE Technologies Sole Proprietorship LLC
United Arab Emirates
Actimize UK Limited
NICE Systems Technologies UK Limited
NICE Systems UK Ltd.
Actimize Inc.
inContact Inc.
NICE Systems Inc.
NICE Systems Technologies Inc.
LiveVox Inc.
United Kingdom
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a),
as adopted pursuant to §302 of the Sarbanes-Oxley Act
I, Barak Eilam, certify that:
1.
I have reviewed this annual report on Form 20-F of NICE Ltd.;
Exhibit 12.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the
periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred
during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or
persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company's ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the company's internal control over financial reporting.
By:
/s/ Barak Eilam
Barak Eilam
Chief Executive Officer
Date: March 27, 2024
Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a),
as adopted pursuant to §302 of the Sarbanes-Oxley Act
I, Beth Gaspich, certify that:
1.
I have reviewed this annual report on Form 20-F of NICE Ltd.;
Exhibit 12.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the
periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred
during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or
persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company's ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the company's internal control over financial reporting.
By:
/s/ Beth Gaspich
Beth Gaspich
Chief Financial Officer
Date: March 27, 2024
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 13.1
In connection with the Annual Report on Form 20-F of NICE Ltd. (the "Company") for the year ended December 31,
2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Barak Eilam,
Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. sec. 1350, as adopted pursuant to sec. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
By:
/s/ Barak Eilam
Barak Eilam
Chief Executive Officer
March 27, 2024
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 13.2
In connection with the Annual Report on Form 20-F of NICE Ltd. (the "Company") for the year ended December 31,
2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Beth Gaspich,
Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. sec. 1350, as adopted pursuant to sec. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
By:
/s/ Beth Gaspich
Beth Gaspich
Chief Financial Officer
March 27, 2024
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos.
333-166364, 333-168100, 333-171165, 333-162795, 333-162110, 333-06784, 333-08146, 333-11842, 333-09350,
333-11154, 333-111112, 333-111113, 333-134355, 333-144589, 333-145981, 333-153230, 333-177510,
333-179408, 333-181375, 333-191176, 333-199904, 333-210341, 333-210343, 333-210344, 333-214584,
333-210341, 333-210343, 333-210344, 333-214584, 333-226930, 333-228911, 333-249186 and 333-270969) of our
reports dated March 27, 2024, with respect to the consolidated financial statements of NICE Ltd. and its
subsidiaries and the effectiveness of internal control over financial reporting of NICE Ltd. included in this
Annual Report on Form 20-F for the year ended December 31, 2023.
Tel Aviv, Israel
March 27, 2024
/s/ KOST, FORER, GABBAY & KASIERER
KOST, FORER, GABBAY & KASIERER
A Member of EY Global
Exhibit 97.1
NICE LTD.
POLICY FOR RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
NICE Ltd. (the “Company”) has adopted this Policy for Recovery of Erroneously
Awarded Compensation (the “Clawback Policy”), effective as of October 2, 2023 (the “Effective
Date”). Capitalized terms used in this Clawback Policy but not otherwise defined herein are
defined in Section 11.
1.
Persons Subject to Clawback Policy
This Clawback Policy shall apply to and be binding and enforceable on current and
former Officers. In addition, the Committee and the Board may apply this Clawback Policy to
persons who are not Officers, that are designated in writing by the Committee and the Board in
advance of any Restatement that may require recovery of Erroneously Awarded Compensation
from such person, and such application shall apply in the manner determined by the Committee
and the Board in their sole discretion.
2.
Compensation Subject to Clawback Policy
This Clawback Policy shall apply to Incentive-Based Compensation received on or after
the Effective Date. For purposes of this Clawback Policy, the date on which Incentive-Based
Compensation is deemed “received” shall be determined under the Applicable Rules, which
generally provide that Incentive-Based Compensation is “received” in the Company’s fiscal
period during which the relevant Financial Reporting Measure is attained or satisfied, without
regard to whether the grant, vesting or payment of the Incentive-Based Compensation occurs
after the end of that period.
3.
Recovery of Compensation
In the event that the Company is required to prepare a Restatement, the Company shall
recover, reasonably promptly and in accordance with Section 4 below, the portion of any
Incentive-Based Compensation that is Erroneously Awarded Compensation, unless the
Committee and the Board have reasonably determined that recovery from the relevant current or
former Officer would be Impracticable. Recovery shall be required in accordance with the
preceding sentence regardless of whether the applicable Officer engaged in misconduct or
otherwise caused or contributed to the requirement for the Restatement and regardless of whether
or when restated financial statements are filed by the Company. For clarity, the recovery of
Erroneously Awarded Compensation under this Clawback Policy will not give rise to any
Officer’s right to voluntarily terminate employment for “good reason” or due to a “constructive
termination” (or any similar term of like effect) under any plan, program or policy of or
agreement with the Company or any of its affiliates.
4.
Manner of Recovery; Limitation on Duplicative Recovery
The Committee and the Board shall, in its sole discretion, determine the manner of
recovery of any Erroneously Awarded Compensation, which may include, without limitation,
reduction or cancellation by the Company or an affiliate of the Company of [vested?] Incentive-
Based Compensation or Erroneously Awarded Compensation, reimbursement or repayment by
any person subject to this Clawback Policy, and, to the extent permitted by law, an offset of the
Erroneously Awarded Compensation against other compensation payable by the Company or an
affiliate of the Company to such person. Notwithstanding the foregoing, unless otherwise
prohibited by the Applicable Rules, to the extent this Clawback Policy provides for recovery of
Erroneously Awarded Compensation already recovered by the Company pursuant to Section 304
of the Sarbanes-Oxley Act of 2002 or Other Recovery Arrangements, the amount of Erroneously
Awarded Compensation already recovered by the Company from the recipient of such
Erroneously Awarded Compensation may be credited to the amount of Erroneously Awarded
Compensation required to be recovered pursuant to this Clawback Policy from such person.
5.
Administration
This Clawback Policy shall be administered, interpreted and construed by the Committee,
which is authorized to make all determinations necessary, appropriate or advisable for such
purpose. The Board may re-vest in itself the authority to administer, interpret and construe this
Clawback Policy in accordance with applicable law and the Applicable Rules, and in such event
references herein to the “Committee” shall be deemed to be references to the Board. Subject to
any permitted review by the applicable national securities exchange or association pursuant to
the Applicable Rules, all determinations and decisions made by the Committee pursuant to the
provisions of this Clawback Policy shall be final, conclusive and binding on all persons,
including the Company and its affiliates and employees. The Committee may delegate
administrative duties with respect to this Clawback Policy to one or more directors or employees
of the Company, as permitted under applicable law, including any Applicable Rules.
6.
Interpretation
This Clawback Policy shall be interpreted and applied in a manner that is consistent with
the requirements of the Applicable Rules, and to the extent this Clawback Policy is inconsistent
with such Applicable Rules, it shall be deemed amended to the minimum extent necessary to
ensure compliance therewith.
7.
No Indemnification; No Liability
Notwithstanding the terms of any of the Company’s organizational documents, any
corporate policy or any contract, the Company shall not indemnify or insure any person against
the loss of any Erroneously Awarded Compensation pursuant to this Clawback Policy, nor shall
the Company directly or indirectly pay or reimburse any person for any premiums for third-party
insurance policies that such person may elect to purchase to fund such person’s potential
obligations under this Clawback Policy. None of the Company, an affiliate of the Company
(excluding any person subject to the recovery of Erroneously Awarded Compensation hereunder)
or any member of the Committee or the Board shall have any liability to any person as a result of
actions taken under this Clawback Policy.
8.
Application; Enforceability
Except as otherwise determined by the Committee or the Board, the adoption of this
Clawback Policy does not limit, and is intended to apply in addition to, any Other Recovery
Arrangements. Without limiting the foregoing, in the event of a conflict between this Clawback
Policy and Other Recovery Arrangements (including the Compensation Policy), the latter shall
prevail, except with respect to the recovery of any portion of Incentive-Based Compensation that
is Erroneously Awarded Compensation that would not be recoverable under such Other
Recovery Arrangements, in which case this Clawback Policy shall prevail. Subject to Section 4,
the remedy specified in this Clawback Policy shall not be exclusive and shall be in addition to
every other right or remedy at law or in equity that may be available to the Company or an
affiliate of the Company or is otherwise required by applicable law and regulations.
9.
Severability
The provisions in this Clawback Policy are intended to be applied to the fullest extent of
the law; provided, however, to the extent that any provision of this Clawback Policy is found to
be unenforceable or invalid under any applicable law, such provision will be applied to the
maximum extent permitted, and shall automatically be deemed amended in a manner consistent
with its objectives to the extent necessary to conform to any limitations required under applicable
law or the Applicable Rules.
10.
Amendment and Termination
The Board or the Committee may amend, modify or terminate this Clawback Policy in
whole or in part at any time and from time to time in its sole discretion. This Clawback Policy
will terminate automatically when the Company does not have a class of securities listed on a
national securities exchange or association in the U.S.
11.
Definitions
“Applicable Rules” means Section 10D of the Exchange Act, Rule 10D-1 promulgated
thereunder, the listing rules of the national securities exchange or association on which the
Company’s securities are listed, and any applicable rules, standards or other guidance adopted by
the Securities and Exchange Commission or any national securities exchange or association on
which the Company’s securities are listed.
“Board” means the Board of Directors of the Company.
“Compensation Policy” means the Company’s compensation policy for officers and
directors, as adopted in accordance with the Israeli Companies Law 5759-1999 and as in effect
from time to time.
“Committee” means the Compensation Committee of the Board or, in the absence of such
a committee, a majority of the independent directors serving on the Board.
“Erroneously Awarded Compensation” means
the amount of Incentive-Based
Compensation received by a current or former Officer that exceeds the amount of Incentive-
Based Compensation that would have been received by such current or former Officer based on a
restated Financial Reporting Measure, as determined on a pre-tax basis in accordance with the
Applicable Rules. For Incentive-based Compensation based on (or derived from) stock price or
total shareholder return where the amount of Erroneously Awarded Compensation is not subject
to mathematical recalculation directly from the information in the applicable Restatement, the
amount shall be determined by the Committee based on a reasonable estimate of the effect of the
Restatement on the stock price or total shareholder return upon which the Incentive-based
Compensation was determined (in which case the Company shall maintain documentation of
such determination of that reasonable estimate and provide such documentation to the
NASDAQ).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Financial Reporting Measure” means any measure determined and presented in
accordance with the accounting principles used in preparing the Company’s financial statements,
and any measures that are derived wholly or in part from such measures, including GAAP and
non-GAAP financial measures. Stock price and total shareholder return (and any measures that
are derived wholly or in part from stock price or total shareholder return) shall for purposes of
this Clawback Policy be considered Financial Reporting Measures. A financial reporting
measure need not be presented within the financial statements or included in a filing with the
Securities and Exchange Commission.
“GAAP” means United States generally accepted accounting principles.
“Impracticable” means (a) the direct expense paid to third parties to assist in enforcing
recovery would exceed the Erroneously Awarded Compensation; provided that the Company has
(i) made reasonable attempt(s) to recover the Erroneously Awarded Compensation, (ii)
documented such reasonable attempt(s) and (iii) provided such documentation to the relevant
listing exchange or association, (b) the recovery would violate the Company’s home country
laws adopted prior to November 28, 2022; provided that the Company has (i) obtained an
opinion of home country counsel, acceptable to the relevant listing exchange or association, that
recovery would result in such a violation and (ii) provided such opinion to the relevant listing
exchange or association, or (c) recovery would likely cause an otherwise tax-qualified retirement
plan, under which benefits are broadly available to employees of the Company, to fail to meet
the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the regulations thereunder.
“Incentive-Based Compensation” means, with respect
to a Restatement, any
compensation that is granted, earned, or vested based wholly or in part upon the attainment of
one or more Financial Reporting Measures and received by a person: (a) after such person began
service as an Officer; (b) who served as an Officer at any time during the performance period for
that incentive-based compensation; (c) while the Company has a class of securities listed on a
national securities exchange or association; and (d) during the applicable Three-Year Period.
“Officer” means the Company’s president, principal financial officer, principal
accounting officer (or if there is no such accounting officer, the controller), any vice-president of
the Company in charge of a principal business unit, division, or function (such as sales,
administration, or finance), any other officer who performs a policy-making function, or any
other person (including any executive officer of the Company’s affiliates) who performs similar
policy-making functions for the Company. The term “Officer” includes, without limitation,
those officers identified by the Company in any disclosure made pursuant to the requirements of
Regulation S-K Item 401(b) or Form 20-F, as applicable.
“Other Recovery Arrangements” means any clawback, recoupment, forfeiture or similar
policies or provisions of the Company or its affiliates, including any such policies or provisions
of such effect contained in any employment agreement, bonus plan, incentive plan, equity-based
plan or award agreement thereunder or similar plan, program or agreement of the Company or an
affiliate or required under applicable law (including, without limitation, the Compensation
Policy).
“Restatement” means an accounting restatement to correct the Company’s material
noncompliance with any financial reporting requirement under securities laws, including
restatements that correct an error in previously issued financial statements (a) that is material to
the previously issued financial statements or (b) that would result in a material misstatement if
the error were corrected in the current period or left uncorrected in the current period.
“Three-Year Period” means, with respect to a Restatement, the three completed fiscal
years immediately preceding the date that the Board, a committee of the Board, or the officer or
officers of the Company authorized to take such action if Board action is not required, concludes,
or reasonably should have concluded, that the Company is required to prepare such Restatement,
or, if earlier, the date on which a court, regulator or other legally authorized body directs the
Company to prepare such Restatement. The “Three-Year Period” also includes any transition
period (that results from a change in the Company’s fiscal year) within or immediately following
the three completed fiscal years identified in the preceding sentence. However, a transition
period between the last day of the Company’s previous fiscal year end and the first day of its
new fiscal year that comprises a period of nine to 12 months shall be deemed a completed fiscal
year.
ACKNOWLEDGMENT AND CONSENT TO
POLICY FOR RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
The undersigned has received a copy of the Policy for Recovery of Erroneously Awarded
Compensation (the “Clawback Policy”) adopted by NICE Ltd. (the “Company”) and has read
and understands the Clawback Policy. Capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Clawback Policy.
As a condition of receiving Incentive-Based Compensation from the Company, the undersigned
agrees that any Incentive-Based Compensation received on or after the Effective Date is subject
to recovery pursuant to the terms of the Clawback Policy, as may be amended, restated,
supplemented or otherwise modified from time to time. To the extent the Company’s recovery
right conflicts with any other contractual rights the undersigned may have with the Company, the
undersigned understands that the terms of the Clawback Policy shall supersede any such
contractual rights. The terms of the Clawback Policy shall apply in addition to any right of
recoupment against the undersigned under the Compensation Policy or applicable law and
regulations. The undersigned also acknowledges that it would not be entitled to indemnification
or advancement of expenses, in connection with any enforcement of the Clawback Policy by the
Company.
_______________________
__________________________________________
Date
Signature
__________________________________________
Name
__________________________________________
Title