NiCE NASDAQ: NICE reported second-quarter 2026 revenue and adjusted earnings per share at or above the upper end of its guidance, supported by cloud growth, rising artificial intelligence bookings and stronger-than-expected product revenue from its non-customer-engagement operations.
Total revenue rose 8% year over year to $782 million, while non-GAAP diluted earnings per share reached $2.70. Chief Financial Officer Beth Gaspich said the revenue outperformance primarily reflected stronger product revenue, while cloud revenue performed in line with the company’s expectations.
Cloud and AI bookings build
Cloud revenue increased 12.6% from a year earlier to $609 million, accounting for 78% of total revenue. Cognigy contributed about 250 basis points to cloud growth, Gaspich said. CXAI and self-service annual recurring revenue reached $362 million, up 52% year over year and representing 15% of cloud revenue.
Chief Executive Officer Scott Russell said the company recorded a quarterly record for new cloud annual contract value bookings and another record for AI bookings. Cloud backlog grew 19% year over year, while AI backlog increased 72%. Those metrics excluded a recently signed contract with HM Revenue & Customs, or HMRC, because of customary public-sector contractual requirements.
The HMRC agreement was a nine-digit total contract value deal and an eight-digit annual contract value win, according to management. Russell described it as the company’s largest CXone and Cognigy deal to date. NiCE is working with Capgemini on the deployment, which is intended to modernize citizen engagement.
NiCE also won an eight-digit ACV contract with a large U.S. healthcare organization, partnering with Accenture to deploy CXone and Cognigy. Russell said nearly every enterprise CXone deal during the quarter included AI.
Management said AI bookings have not immediately translated into revenue because customers often need time to prepare data, governance and operating models before expanding AI into mission-critical workflows. Gaspich told analysts that the difference between record bookings and quarterly ARR additions was “simply related to the conversion of timing.”
International growth and platform strategy
International revenue increased 22% year over year during the quarter, Russell said. In the geographic breakdown, EMEIA revenue rose 30%, or 28% on a constant-currency basis, while APAC revenue grew 8%, or 5% on a constant-currency basis. International cloud revenue rose 34% on a constant-currency basis.
Russell cited cloud migrations, demand for sovereign cloud deployments in Europe and an expanding partner ecosystem as drivers of international growth. He also said annual contract value booked through global systems integrator partners was multiples higher than the prior-year period.
The company said it has expanded relationships with AWS, RingCentral and Epic. NiCE will offer RingCentral’s UCaaS product, while RingCentral will continue to offer NiCE’s CXone platform. The company also highlighted an Epic integration designed to embed patient engagement into clinical workflows.
Russell said Cognigy is now fully native to CXone ahead of schedule. The integration is intended to allow customers to deploy conversational AI agents using CXone data without separate platform integration. The company also introduced Agentic Analytics, an Agentic Engagement Plane and NICE Labs, an AI-focused research and prototyping organization.
Segment performance and profitability
Customer Engagement revenue rose 8% to $645 million, representing 82% of total revenue. Financial Crime and Compliance revenue increased 6% to $137 million.
Services revenue declined 11% to $125 million as customers migrated from on-premise deployments to cloud, while product revenue rose 7% to $49 million. Gaspich attributed product growth to greater-than-expected term renewals in non-CX businesses, particularly from financial institutions.
Cloud net revenue retention was 106%, which management said reflected the expected impact of targeted strategic renewals. Russell said those renewals were designed to secure multiyear commitments and accelerate customer AI adoption, rather than representing a broad change in commercial policy.
Gross margin was 68.4%, while cloud gross margin improved 40 basis points year over year to 69%. Operating income was $198 million, producing a 25.3% operating margin. The company reported operating cash flow of $123 million and free cash flow of $93 million for the quarter, ending June with $355 million in cash and short-term investments.
NiCE repurchased $58 million of stock during the quarter and $311 million year to date. Shares outstanding declined 6% year over year to approximately 58.1 million.
Guidance reiterated, EPS outlook raised
For full-year 2026, NiCE reiterated its revenue outlook of $3.17 billion to $3.19 billion, representing 8% growth at the midpoint. The company continues to expect cloud revenue growth of 13% to 15% for the year, with third-quarter cloud growth expected to be similar to the second quarter.
The company raised its full-year non-GAAP diluted EPS forecast to $11.06 to $11.26, reflecting expectations for operating margin to reach the upper end of its previously discussed 25% to 26% range.
- Third-quarter revenue is projected at $780 million to $790 million.
- Third-quarter non-GAAP diluted EPS is projected at $2.73 to $2.83.
- Management expects full-year free-cash-flow margin at the higher end of its 18% to 19% target range.
Russell said the company remains confident in the medium-term targets presented in November, including its previously communicated $3.5 billion 2028 revenue expectation, citing bookings, backlog growth, international expansion and partner activity.
About NiCE (NASDAQ:NICE)
NiCE Ltd is a global software provider specializing in solutions for customer engagement, financial crime prevention, public safety, workforce optimization and border security. Its product offerings include cloud-native and on-premises platforms that leverage advanced analytics, artificial intelligence and automation to help organizations enhance customer experiences, streamline operations and ensure regulatory compliance. NiCE’s portfolio addresses the needs of contact centers, financial institutions, government agencies and enterprises across a broad range of industries.
In customer engagement, NiCE delivers tools for omnichannel interaction management, real-time and historical analytics, workforce management, and quality management.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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