Q4 2025 NiCE Ltd Earnings Call

February 19, 2026

Operator: Welcome to the NICE Conference Call.

Ryan Gilligan: Thank you.

Operator: -discussing Q4 2025 results, and thank you all for holding. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded 19 February 2026. I would now like to turn this call over to Mr. Ryan Gilligan, VP, Investor Relations at NICE. Please go ahead.

Speaker #1: Following management's formal presentation instructions will be given for the question and answer session. As a reminder, this conference is being recorded. February 19th, 2026.

Speaker #1: I would now like to turn this call over to Mr. Ryan Gilligan, VP Investor Relations at NICE. Please go ahead.

Speaker #2: Thank you, Operator. With me on today's call are Scott Russell, Chief Executive Officer and Beth Gaspich, Chief Financial Officer. Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements.

Ryan Gilligan: Thank you, operator. With me on today's call are Scott Russell, Chief Executive Officer, and Beth Gaspich, Chief Financial Officer. Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company's 2024 Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on March 19, 2025.

Speaker #2: In accordance with the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward-looking statements.

Speaker #2: Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company's 2024 Annual Report on Form 20F as filed with the Securities and Exchange Commission on March 19, 2025.

Speaker #2: During today's call, we will present a more detailed discussion of fourth quarter and full year 2025 results, and the company's guidance for first quarter and full year 2026.

Ryan Gilligan: During today's call, we will present a more detailed discussion of Q4 and full year 2025 results and the company's guidance for Q1 and full year 2026. You can find our press release as well as PDFs of our financial results on NICE's Investor Relations website. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations, which differ in certain respects from generally accepted accounting principles, as reflected mainly in accounting for share-based compensation, amortization of acquired intangible assets, acquisition-related expenses, amortization of discount on debt, and loss from extinguishment of debt, and the tax effect of the non-GAAP adjustments. The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release.

Speaker #2: You can find our press release, as well as PDFs of our financial results, on NICE's Investor Relations website. Following our comments, there will be an opportunity for questions.

Speaker #2: Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations which differ in certain respects from generally accepted accounting principles as reflected mainly in accounting for share-based compensation, amortization of acquired and tangible assets, acquisition-related expenses, amortization of discount on debt and loss from extinguishment of debt, and the tax effect of the non-GAAP adjustments.

Speaker #2: The differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release. The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks uncertainties and assumptions.

Ryan Gilligan: The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties, and assumptions. I will now turn the call over to Scott.

Speaker #2: I will now turn the call over to Scott.

Speaker #3: Thank you, Ryan. And good morning, everyone. I am incredibly proud of what our team accomplished in 2025. We achieved our financial guidance each quarter and for the full year delivered total revenue growth of 8%, cloud revenue growth of 13%, and non-GAAP EPS of $12.30, all at the high end of our guidance range.

Scott Russell: Thank you, Ryan, and good morning, everyone. I am incredibly proud of what our team accomplished in 2025. We achieved our financial guidance each quarter and for the full year delivered total revenue growth of 8%, cloud revenue growth of 13%, and non-GAAP EPS of $12.30, all at the high end of our guidance range. Since I joined, we sharpened our focus on execution and speed. We leaned in to the AI-first, platform-led strategy and doubled down on international expansion and strategic partnerships. Our 2025 results reflect strong execution against that strategy. In 2025, we extended our CX AI market leadership with AI ARR increasing 66% to $328 million, representing 13% of cloud revenue.

Speaker #3: Since I joined, we sharpened our focus on execution and speed. We leaned in to the AI-first platform-led strategy and doubled down on international expansion and strategic partnerships.

Speaker #3: Our 2025 results reflect strong execution against that strategy. In 2025, we extended our CX AI market leadership with AI, ARR increasing 66% to $328 million representing 13% of cloud revenue.

Speaker #3: We set records for acquiring new AI logos, growing 300% year over year, and closed a record number of seven-figure ACV deals for CX1 with 100% including AI.

Scott Russell: We set records for acquiring new AI logos, growing 300% year-over-year, and closed a record number of seven-figure ACV deals for CXone, with 100% including AI. We further strengthened our competitive position with the acquisition of Cognigy, the enterprise leader in agentic AI, making NICE the only player in the CX market with a fully AI-native CX platform. In our international markets, 2025 was a breakthrough year. We landed our largest international deal ever and ultimately grew international revenue by 16%, with growth accelerating to 29% in Q4. We also expanded our strategic partner ecosystem through deals with ServiceNow, AWS, Snowflake, Salesforce, Deloitte Digital, PwC, and RingCentral, as well as several other international SI partners.

Speaker #3: We further strengthened our competitive position with the acquisition of Cognigy, the enterprise leader in agentic AI, making NICE the only player in the CX market with a fully AI-native CX platform.

Speaker #3: In our international markets, 2025 was a breakthrough year. We landed our largest international deal ever and ultimately grew international revenue by 16% with growth accelerating to 29% in the fourth quarter.

Speaker #3: We also expanded our strategic partner ecosystem. Through deals with ServiceNow, AWS, Snowflake, Salesforce, Deloitte Digital, PwC, and RingCentral, as well as several other international SI partners.

Speaker #3: Our partners continue to be an incredibly valuable and exciting part of our growing contribution, and we expect these partnerships to bring even more in the coming years.

Scott Russell: Our partners continue to be an incredibly valuable, and exciting part of our growing contribution, and we expect these partnerships to bring even more in the coming years. Coming out of Q4 with a strong booking momentum and retention, we are entering 2026 on track to re-accelerate cloud revenue growth, which Beth will, of course, cover in more detail shortly. None of this would be possible without a healthy core CCaaS business. We have the leading platform in a growing and healthy market. Seats and interactions on CXone continue to grow in 2025, and importantly, only about 40% of contact centers have migrated to CCaaS today, leaving a large and durable on-premise to cloud migration opportunity ahead. We are delivering real transformative value to our customers, and this is translating into strong performance in our core CCaaS business.

Speaker #3: Coming out of Q4 with a strong booking momentum and retention, we are entering 2026 on track to re-accelerate cloud revenue growth, which Beth will, of course, cover in more detail shortly.

Speaker #3: None of this would be possible without a healthy core CCAS business. We have the leading platform in a growing and healthy market. Seats and interactions on CX1 continue to grow in 2025, and importantly, only about 40% of contacts centers have migrated to CCAS today, leaving a large and durable on-premise to cloud migration opportunity ahead.

Speaker #3: We are delivering real transformative value to our customers, and this is translating into strong performance in our core CCAS business. In Q4, cloud revenue grew 14% year over year and excluding NICE Cognigy grew 12%.

Scott Russell: In Q4, cloud revenue grew 14% year-over-year, and excluding NICE Cognigy, grew 12%. Q4 was a record quarter for new ACV cloud ACV bookings, including and excluding Cognigy, driving cloud backlog growth to 25%, including Cognigy, and 22% excluding it. Our win rates continue to improve against key CX competitors as customers increasingly favor holistic end-to-end CX platforms over fragmented point solutions. This is reflected in several key deals during the quarter, including a large enterprise win with a leading North American financial services firm. They selected NICE in a competitive displacement of a legacy on-prem environment and will adopt NICE's AI-powered CXone platform, including NICE Cognigy, to increase service automation, reduce low-value interactions, and deliver more personalized client experiences.

Speaker #3: Q4 was a record quarter for new ASIC cloud ACV bookings, including and excluding Cognigy, driving cloud backlog growth to 25% including Cognigy and 22% excluding it.

Speaker #3: Our win rates continued to improve against key CX competitors as customers increasingly favor holistic end-to-end CX platforms over fragmented point solutions. This is reflected in several key deals during the quarter, including a large enterprise win with a leading North American financial services firm.

Speaker #3: They selected NICE in a competitive displacement of a legacy on-prem environment and will adopt NICE's AI-powered CX1 platform, including NICE Cognigy, to increase service automation, reduce low-value interactions, and deliver more personalized client experiences.

Speaker #3: Additionally, we won a seven-figure ACV deal with a leading financial services group in EMEA. Which selected NICE CX1 to replace a legacy on-premise ACD and consolidate multiple platforms into a unified AI-ready CX foundation.

Scott Russell: Additionally, we won a seven-figure ACV deal with a leading financial services group in EMEA, which selected NICE CXone to replace a legacy on-premise ACD and consolidate multiple platforms into a unified AI-ready CX foundation. With a strong core, we are positioned to capitalize on the significant CX AI opportunity in front of us. AI is expanding NICE's CX market opportunity beyond the contact center, creating new use cases that are still early in adoption and driving faster expansion as customers scale AI across their organizations. NICE Cognigy strengthens that position. NICE Cognigy is ranked number one by industry analysts and was recently recognized as the only conversational AI platform to receive the Customer Choice distinction in the latest Gartner Peer Insights Voice of the Customer report.

Speaker #3: With a strong core, we are positioned to capitalize on the significant CX AI opportunity in front of us. AI is expanding NICE's CX market opportunity beyond the contacts center.

Speaker #3: Creating new use cases that are still early in adoption and driving faster expansion as customers scale AI across their organizations. NICE Cognigy strengthens that position.

Speaker #3: NICE Cognigy is ranked number one by industry analysts and was recently recognized as the only conversational AI platform to receive the customer choice distinction in the latest Gartner Peer Insights Voice of the Customer report.

Speaker #3: That customer validation extends across our core platform as well, with CXone also now recognized as the only CCaaS platform to receive the Customer Choice distinction.

Scott Russell: That customer validation extends across our core platform as well, with CXone also now recognized as the only CCaaS platform to receive the Customer Choice distinction. Combining the market leaders in CCaaS and agentic AI for CX into the only AI-native CX platform that can operate seamlessly across voice, digital, and AI at enterprise scale, allows NICE to be uniquely positioned to seize the significant CX AI opportunity ahead. Our platform owns the point of engagement and is built on the industry's largest CX data foundation. With decades of CX experience and a platform that supports 20 billion interactions annually, NICE understands customer experience better than anyone, and this leadership is showing in the results. 2026 is the year that NICE Cognigy begins to act as a force multiplier.

Speaker #3: Combining the market leaders in CCAS and agentic AI for CX into the only AI-native CX platform that can operate seamlessly across voice, digital, and AI at enterprise scale, allows NICE to be uniquely positioned to seize the significant CX AI opportunity ahead.

Speaker #3: Our platform owns the point of engagement and is built on the industry's largest CX data foundation. With decades of CX experience and a platform that supports 20 billion interactions annually, NICE understands customer experience better than anyone, and this leadership is showing in the results.

Speaker #3: 2026 is the year that NICE Cognigy begins to act as a force multiplier. We recently launched Cognigy Simulator, an AI performance lab that allows for faster, scalable, and more reliable testing of AI agents, and soon we will expand NICE Copilot capabilities with task assist for agents powered by NICE Cognigy.

Scott Russell: We recently launched Cognigy Simulator, an AI performance lab that allows for faster, scalable, and more reliable testing of AI agents, and soon we will expand NICE Copilot capabilities with task assist for agents powered by NICE Cognigy. Later this year, we will complete the integration of NICE Cognigy into a single, fully native CXone platform, delivering a seamless AI-native experience at enterprise scale. As we enter 2026, I am very excited about the significant pipeline growth from our NICE install base that we... We expect that pipeline to grow as we further integrate NICE, integrate NICE Cognigy into CXone. While we're incredibly excited about what the future holds for our seamlessly integrated capabilities, NICE Cognigy is seeing strong momentum today. More broadly, we continue to see strong AI-driven enterprise software demand, with customers prioritizing investments that deliver clear ROI and measurable outcomes.

Speaker #3: Later this year, we will complete the integration of NICE Cognigy into a single fully native CX1 platform, delivering a seamless AI-native experience at enterprise scale.

Speaker #3: As we enter 2026, I am very excited about the significant pipeline growth from our NICE in-store base, that we expect that pipeline to grow as we further integrate NICE Cognigy into CX1.

Speaker #3: While we're incredibly excited about what the future holds for our seamlessly integrated capabilities, NICE Cognigy is seeing strong momentum today. More broadly, we continue to see strong AI-driven enterprise software demand, with customers prioritizing investments that deliver clear ROI and measurable outcomes.

Speaker #3: In Q4, seven-digit ACV wins included a leading North American consumer services company that expanded its relationship with NICE by adding Cognigy for self-service to its existing CX1 platform.

Scott Russell: In Q4, seven-digit ACV wins included a leading North American consumer services company that expanded its relationship with NICE by adding Cognigy for self-service to its existing CXone platform. This expansion will replace an AI solution from a CRM provider, providing, delivering compounding benefits of a unified platform with improved orchestration, deeper insights, and more seamless experiences across channels. In another large enterprise win, a leading North American energy company, an existing CXone customer, expanded its relationship with NICE to accelerate AI-driven customer engagement. By adopting Cognigy for self-service and Copilot to support agents on more complex interactions, the customer aims to improve containment and call handle times while scaling efficiently during periods of elevated demand. The market is still in the early stages of AI adoption, yet it's already driving our growth.

Speaker #3: This expansion will replace an AI solution from a CRM provider providing delivering a compounding benefits of a unified platform with improved orchestration, deeper insights, and more seamless experiences across channels.

Speaker #3: In another large enterprise win, a leading North American energy company and an existing CXone customer expanded its relationship with NICE to accelerate AI-driven customer engagement.

Speaker #3: By adopting Cognigy for self-service and Copilot to support agents on more complex interactions, the customer aims to improve containment and call handle times while scaling efficiently during periods of elevated demand.

Speaker #3: The market is still in the early stages of AI adoption, yet it's already driving our growth. But as you heard me say in the capital markets day, we need to make strategic, targeted, and time-bound investments in 2026 to seize this opportunity.

Scott Russell: But as you heard me say in the Capital Markets Day, we need to make strategic, targeted, and time-bound investments in 2026 to seize this opportunity. These investments will focus on innovation, including integrating NICE Cognigy and advancing our agentic AI capabilities, while also expanding our go-to-market and delivery capabilities, so we're able to execute on the significant growth catalysts we see in 2026 and beyond. These catalysts, including driving AI-first growth across every customer touch point, automating end-to-end customer journeys with AI, agentic AI on our platform, capitalizing on the CCaaS cloud migration, accelerating our international expansion and partner ecosystem, and expanding beyond the contact center. Before handing it over to Beth, I want to emphasize two points. First, 2026 is all about speed, and we're moving quickly to seize the opportunity in front of us.

Speaker #3: These investments will focus on innovation, including integrating NICE Cognigy and advancing our agentic AI capabilities, while also expanding our go-to-market and delivery capabilities so we're able to execute on the significant growth catalysts we see in 2026 and beyond.

Speaker #3: These catalysts include driving AI-first growth across every customer touchpoint. Automating end-to-end customer journeys with AI agentic AI on our platform, capitalizing on the CCAS cloud migration, accelerating our international expansion and partner ecosystem, and expanding beyond the contacts center.

Speaker #3: Before handing it over to Beth, I want to emphasize two points. First, 2026 is all about speed, and we're moving quickly to seize the opportunity in front of us.

Speaker #3: And secondly, my conviction today is stronger than when I joined, that AI is a clear, tailwind for NICE. Let me be really clear here.

Scott Russell: Secondly, my conviction today is stronger than when I joined, that AI is a clear tailwind for NICE. Let me be really clear here. NICE is an AI company. Enterprise CXAI requires deep domain expertise, unified data, orchestration and governance at scale, and that is what we do. We have the technology, the data, the domain expertise, and the customer base to win, and we will seize this opportunity. With that, I'll now hand the call over to Beth.

Speaker #3: NICE is an AI company. Enterprise CX AI requires deep domain expertise, unified data, orchestration, and governance at scale, and that is what we do.

Speaker #3: We have the technology, the data, the domain expertise, and the customer base to win. And we will seize this opportunity. With that, I'll now

Speaker #2: Thank you, Scott. I'm pleased to close out 2025 by sharing our strong fourth-quarter and full-year results, which reflect continued discipline execution across our business.

Beth Gaspich: Thank you, Scott. I'm pleased to close out 2025 by sharing our strong Q4 and full year results, which reflect continued disciplined execution across our business. Our Q4 performance has further strengthened our confidence in the recent financial targets we shared at our Capital Markets Day in November 2025. Later in my remarks, I will share our Q1 and full year guidance for 2026, which reflects the healthy momentum we experienced exiting 2025. 2025 was a transformative year for NiCE, with Scott and our NiCEers across the globe laying the groundwork for accelerating top-line growth in the years ahead. Before I dive further into the Q4 2025 results, there are several financial accomplishments from last year that I would like to highlight.

Speaker #2: Our fourth-quarter performance has further strengthened our confidence in the recent financial targets we shared at our Capital Markets Day in November 2025. Later in my remarks, I will share our first-quarter and full-year guidance for 2026, which reflects the healthy momentum we experienced exiting 2025.

Speaker #2: 2025 was a transformative year for NICE, with Scott and our NICEers across the globe laying the groundwork for accelerating top-line growth in the years ahead.

Speaker #2: Before I dive further into the fourth-quarter 2025 results, there are several financial accomplishments from last year that I would like to highlight. First, our full-year 2025 results were impressive and came in at the high end of our previously communicated guidance ranges.

Beth Gaspich: First, our full year 2025 results were impressive and came in at the high end of our previously communicated guidance ranges. Full year total revenue was $2.945 billion, representing 8% year-over-year growth. Full year cloud revenue grew 13% year-over-year and 12% excluding Cognigy. 2025 reflected consistent execution in our core cloud business, with 12% cloud revenue growth delivered each quarter, excluding Cognigy. Operating margin tracked as expected, while free cash flow margin of 21% exceeded our guidance, reflecting disciplined execution while absorbing Cognigy starting in early September. Second, we completed the acquisition of Cognigy, which was financed entirely with cash on hand, supported by our strong balance sheet and robust organic operating cash flow. Third, we fully repaid $460 million of outstanding debt.

Speaker #2: Full-year total revenue was $2 billion and $945 million, representing 8% year-over-year growth. Full-year cloud revenue grew 13% year-over-year and 12% excluding Cognigy. 2025 reflected consistent execution in our core cloud business, with 12% cloud revenue growth delivered each quarter, excluding Cognigy.

Speaker #2: Operating margin tracked as expected, while free cash flow margin of 21% exceeded our guidance, reflecting disciplined execution while absorbing Cognigy starting in early September.

Speaker #2: Second, we completed the acquisition of Cognigy, which was financed entirely with cash on hand, supported by our strong balance sheet and robust organic operating cash flow.

Speaker #2: Third, we fully repaid $460 million of outstanding debt. Our balance sheet is now debt-free, providing us with significant financial flexibility to invest prudently in our business and return capital to shareholders.

Beth Gaspich: Our balance sheet is now debt-free, providing us with significant financial flexibility to invest prudently in our business and return capital to shareholders. And fourth, we continue to return significant capital to our shareholders through our share repurchase program, underscoring our confidence in the durability of our cash flow generation and long-term value creation. In 2025, we repurchased $489 million of our shares, representing 32% growth year-over-year and 79% of free cash flow generation, ending the year with approximately 60.4 million shares outstanding. Shifting to Q4 financial results, total revenue was $786 million, representing 9% year-over-year growth. Cloud revenue totaled $608 million, growing 14% year-over-year, and represented 77% of total revenue, continuing the steady mix shift toward our cloud-first model.

Speaker #2: And fourth, we continue to return significant capital to our shareholders through our share repurchase program, underscoring our confidence in the durability of our cash flow generation and long-term value creation.

Speaker #2: In 2025, we repurchased $489 million of our shares, representing 32% growth year-over-year, and 79% of free cash flow generation, ending the year with approximately 60.4 million shares outstanding.

Speaker #2: Shifting to fourth-quarter financial results, total revenue was $786 million, representing 9% year-over-year growth. Cloud revenue, totaled $608 million, growing 14% year-over-year and represented 77% of total revenue, continuing the steady mix shift toward our cloud-first model.

Beth Gaspich: Excluding Cognigy, cloud revenue increased 12% year-over-year. Cloud growth in the quarter was driven primarily by continued momentum in our CXAI offerings, with AI ARR of $328 million, up 66% year-over-year, as customers increasingly adopt our AI-powered automation across both self-service and human-assisted workflows. Cloud growth also benefited from ongoing CCaaS migrations and a very strong international performance, including a modest incremental contribution for an earlier-than-expected go-live of a large international enterprise deployment originally planned for 2026, as well as a small foreign exchange tailwind of approximately 50 basis points in the quarter. As we've noticed previously, while AI is already a meaningful contributor to growth, we remain early in fully monetizing its long-term potential. That context is important as we continue to invest in this opportunity today while building operating leverage over time as our AI revenue compounds.

Speaker #2: Excluding Cognigy cloud revenue increased 12% year-over-year. Cloud growth in the quarter was driven primarily by continued momentum in our CX AI offerings, with AI ARR of 328 million up 66% year-over-year, as customers increasingly adopt our AI-powered automation across both self-service and human-assisted workflows.

Speaker #2: Cloud growth also benefited from ongoing CCAS migrations and a very strong international performance, including a modest incremental contribution for the earlier-than-expected go-live of a large international enterprise deployment originally planned for 2026, as well as a small foreign exchange tailwind of approximately 50 basis points in the quarter.

Speaker #2: As we've noticed previously, while AI is already a meaningful contributor to growth, we remain early and fully monetizing its long-term potential. That context is important as we continue to invest in this opportunity today while building operating leverage over time as our AI revenue compounds.

Speaker #2: Our cloud net revenue retention for the trailing 12 months was 109%, remaining healthy and stable with a prior quarter reflecting continued customer retention and expansion activity.

Beth Gaspich: Our cloud net revenue retention for the trailing twelve months was 109%, remaining healthy and stable with the prior quarter, reflecting continued customer retention and expansion activity. Turning to our business segments, customer engagement revenue was $658 million in Q4, representing 84% of total revenue and growing 10% year over year, driven by double-digit cloud revenue expansion across all geographic regions, with strong performance internationally, reflecting increased enterprise adoption of CXone and growing demand for our AI-powered CX solutions. Financial crime and compliance revenue totaled $128 million, growing 2% year over year and represented 16% of total revenue. Actimize is the clear market leader and is benefiting from the positive momentum we are experiencing in shifting this segment to a higher recurring business with healthy cloud revenue growth....

Speaker #2: Turning to our business segments, customer engagement revenue was $658 million in Q4, representing 84% of total revenue and growing 10% year-over-year, driven by double-digit cloud revenue expansion across all geographic regions, with strong performance internationally, reflecting increased enterprise adoption of CXone and growing demand for our AI-powered CX solutions.

Speaker #2: Financial crime and compliance revenue totaled $128 million, growing 2% year-over-year and representing 16% of total revenue. Actimize is the clear market leader and is benefiting from the positive momentum we are experiencing in shifting this segment to a higher recurring business, with healthy cloud revenue growth.

Speaker #2: From a geographic perspective, the Americas region represented 82% of total revenue, growing 5% year-over-year, and this performance was supported by double-digit cloud revenue growth in the region, alongside the continued evolution of our revenue mix from on-premise-related revenue toward cloud-based solutions.

Beth Gaspich: From a geographic perspective, the Americas region represented 82% of total revenue, growing 5% year-over-year, and this performance was supported by double-digit cloud revenue growth in the region, alongside the continued evolution of our revenue mix from on-premise related revenue toward cloud-based solutions. EMEA revenue, which represented 13% of total revenue, grew 38% year-over-year, or 32% on a constant currency basis, and APAC revenue, representing 5% of total revenue, grew 11% year-over-year, consistent on a constant currency basis. This strong growth is reflective of continued healthy demand in international markets, one of our key growth drivers. International revenue is now majority cloud, while cloud adoption internationally remains under-penetrated, supporting a significant growth runway in 2026 and beyond. Turning to profitability, our total gross margin for the Q4 was 69.3%, consistent with our expectations.

Speaker #2: EMEA revenue, which represented 13% of total revenue, grew 38% year-over-year, or 32% on a constant currency basis, and APAC revenue, representing 5% of total revenue, grew 11% year-over-year, consistent on a constant currency basis.

Speaker #2: This strong growth is reflective of continued healthy demand in international markets, one of our key growth drivers. International revenue is now majority cloud, while cloud adoption internationally remains underpenetrated, supporting a significant growth runway in 2026 and beyond.

Speaker #2: Turning to profitability, our total gross margin for the fourth quarter was 69.3%, consistent with our expectations. Our gross margin reflects our continued investments in scaling our global cloud infrastructure and supporting increased AI workloads, particularly as usage expands across regions and use cases.

Beth Gaspich: Our gross margin reflects our continued investments in scaling our global cloud infrastructure and supporting increased AI workloads, particularly as usage expands across regions and use cases. Operating income for the quarter was $301 million, resulting in an operating margin of 31%. Earnings per share for the quarter were $3.24, a 7% increase compared to last year. Cash flow from operations in Q4 was $180 million, underscoring the strength of our operating model and our ability to fund growth internally. Free cash flow was $156 million in Q4, and we ended the year with $417 million in cash and short-term investments.

Speaker #2: Operating income for the quarter was $301 million, resulting in an operating margin of 31%. Earnings per share for the quarter were $3.24, a 7% increase compared to last year.

Speaker #2: Cash flow from operations in Q4 was $180 million, underscoring the strength of our operating model and our ability to fund growth internally. Free cash flow was $156 million, in Q4, and we ended the year with $417 million in cash and short-term investments.

Speaker #2: Our strong free cash flow and balance sheet are key strategic assets that provide us flexibility to invest in innovation, support strategic initiatives, and continue returning capital to shareholders over time.

Beth Gaspich: Our strong free cash flow and balance sheet are key strategic assets that provide us flexibility to invest in innovation, support strategic initiatives, and continuing returning capital to shareholders over time. We remain committed to disciplined and thoughtful capital allocation. To further enhance our financial flexibility, yesterday, we entered into a new $300 million revolving credit facility, which provides additional liquidity and optionality while maintaining our strong balance sheet. In addition, we are announcing that our board has authorized a new $600 million share repurchase program, reinforcing our confidence in the durability of our cash flow generation and our disciplined approach to capital allocation. This brings our total remaining share repurchase authorization to approximately $1 billion.

Speaker #2: We remain committed to disciplined and thoughtful capital allocation. To further enhance our financial flexibility, yesterday we entered into a new $300 million revolving credit facility, which provides additional liquidity and optionality while maintaining our strong balance sheet.

Speaker #2: In addition, we are announcing that our board has authorized a new $600 million share repurchase program, reinforcing our confidence in the durability of our cash flow generation and our disciplined approach to capital allocation.

Speaker #2: This brings our total remaining share repurchase authorization to approximately $1 billion. Before closing with guidance, I do want to spend a few minutes on how we are thinking about 2026, specifically around the cadence of investment and how that should translate into margins throughout the year.

Beth Gaspich: Before closing with guidance, I do want to spend a few minutes on how we are thinking about 2026, specifically around the cadence of investment and how that should translate into margins throughout the year. At our Capital Markets Day, we shared a midterm framework for growth, margins, and cash generation. Today, we are confirming that framework with additional clarity on timing and cadence. 2026 will be a year of deliberate, targeted investment to support our next phase of growth to capitalize on the immense CX AI opportunity. These investments are focused on three primary areas: cost of goods sold, R&D, and sales and marketing. As we've shared, near-term margin performance expectations reflect intentional investment choices. These investments are designed to optimize our AI market-leading position, drive durable growth, expand our competitive differentiation, and position the business for long-term operating leverage.

Speaker #2: At our Capital Markets Day, we shared a midterm framework for growth, margins, and cash generation. Today, we are confirming that framework with additional clarity on timing and cadence.

Speaker #2: 2026 will be a year of deliberate, targeted investment to support our next phase of growth to capitalize on the immense CX AI opportunity. These investments are focused on three primary areas: cost of goods sold, R&D, and sales and marketing.

Speaker #2: As we've shared, near-term margin performance expectations reflect intentional investment choices. These investments are designed to optimize our AI market-leading position, drive durable growth, expand our competitive differentiation, and position the business for long-term operating leverage.

Speaker #2: While we plan to increase organic investments during 2026, our margins remain industry-leading, outperforming our market peers even with the addition of the focused spend, and we expect to build on this strength with steady margin expansion in 2027.

Beth Gaspich: While we plan to increase organic investments during 2026, our margins remain industry-leading, outperforming our market peers, even with the addition of the spoc-focused spend, and we expect to build on this strength with steady margin expansion in 2027. In tandem with investing for growth acceleration, we are investing in AI internally to enhance productivity and execution across the organization. Within our go-to-market operations, we are applying AI to accelerate customer quoting and surface key signals from customer interactions, enabling faster deal execution, improved forecast accuracy, and reduced deal risk. Beyond go-to-market, we're using AI to improve internal operations, including applying AI to HR knowledge and deploying Cognigy within our internal help desk to resolve IT queries more quickly and with a more human-like experience. These are just a few examples where we're already leveraging AI internally to deliver long-term operational efficiencies.

Speaker #2: In tandem with investing for growth acceleration, we are investing in AI internally to enhance productivity and execution across the organization. Within our go-to-market operations, we are applying AI to accelerate customer quoting and surface key signals from customer interactions, enabling faster deal execution, improved forecast accuracy, and reduced deal risk.

Speaker #2: Beyond go-to-market, we're using AI to improve internal operations, including applying AI to HR knowledge and deploying Cognigy within our internal help desk to resolve IT queries more quickly and with a more human-like experience.

Speaker #2: These are just a few examples where we're already leveraging AI internally to deliver long-term operational efficiencies. In 2026, we expect the pace of incremental margin investment to be highest in the first half of the year as we execute against our growth priorities, including integrating Cognigy and scaling its operations with operating margins improving in the second half.

Beth Gaspich: In 2026, we expect the pace of incremental margin investment to be highest in the first half of the year as we execute against our growth priorities, including integrating Cognigy and scaling its operations, with operating margins improving in the second half. This positions us to exit 2026 near the upper end of our 25 to 26% operating margin range and sets the stage for margin expansion in 2027 and beyond, driven by the benefits of our 2026 investments, including stronger cloud revenue growth, continued scaling of our AI business, and the increasingly accretive contribution from Cognigy. Cognigy remains on track to be accretive within 18 months of the acquisition close. Now, I'll close with our total revenue and non-GAAP EPS guidance for the full year and Q1 of 2026.

Speaker #2: This positions us to exit 2026 near the upper end of our 25 to 26 percent operating margin range and sets the stage for margin expansion in 2027 and beyond, driven by the benefits of our 2026 investments, including stronger cloud revenue growth, continued scaling of our AI business, and the increasingly accretive contribution from Cognigy.

Speaker #2: Cognigy remains on track to be accretive with an 18-month of the acquisition close. Now, I'll close with our total revenue and non-GAAP EPS guidance for the full year and first quarter of 2026.

Speaker #2: Full year 2026 total revenue is expected to be in a range of $3 billion and $170 million, to $3 billion and $190 million, which represents an increase of 8% at the midpoint.

Beth Gaspich: Full-year 2026 total revenue is expected to be in a range of $3.17 to $3.19 billion, which represents an increase of 8% at midpoint. We expect cloud revenue growth in 2026 to be in the range of 14.5% to 15%, with Cognigy expected to contribute approximately 200 basis points. Turning to financial income, it's important to note that our cash and short-term investment balance was reduced by approximately $1.2 billion in 2025 as we financed the Cognigy acquisition and fully repaid our outstanding debt, which will naturally impact financial income in 2026.

Speaker #2: We expect cloud revenue growth in 2026 to be in the range of $14.5 to $15%, with Cognigy expected to contribute approximately $200 basis points.

Speaker #2: Turning to financial income, it's important to note that our cash and short-term investment balance was reduced by approximately $1.2 billion in 2025 as we finance the Cognigy acquisition and fully repaid our outstanding debt, which will naturally impact financial income in 2026.

Speaker #2: We expect our effective tax rate throughout 2026 to be in the range of 20.5 to 21% due to tax law changes in certain jurisdictions that became effective at the start of this year.

Beth Gaspich: We expect our effective tax rate throughout 2026 to be in the range of 20.5% to 21%, due to tax law changes in certain jurisdictions that became effective at the start of this year. Full year 2026 fully diluted earnings per share is expected to be in a range of $10.85 to $11.05. For Q1 2026, we expect total revenue to be in the range of $755 million to $765 million, representing an 8.5% year-over-year growth at the midpoint. We expect the Q1 2026 fully diluted earnings per share to be at a range of $2.45 to $2.55.

Speaker #2: Full year 2026 fully diluted earnings per share is expected to be in a range of $10.85 to $11.05. For the first quarter of 2026, we expect total revenue to be in the range of $755 million, to $765 million, representing an 8.5% year-over-year growth at the midpoint.

Speaker #2: We expect the first quarter 2026 fully diluted earnings per share to be in a range of $2.45 to $2.55. In summary, we exited 2025 from a position of strength, anchored by a stabilized and growing cloud business, a differentiated customer experience platform with embedded agentic AI, and a strong balance sheet that supports investment and continued capital returns to our shareholders.

Beth Gaspich: In summary, we exited 2025 from a position of strength, anchored by a stabilized and growing cloud business, a differentiated customer experience platform with embedded agentic AI, and a strong balance sheet that supports investment and continued capital returns to our shareholders. Our large and expanding installed base, reflected in healthy cloud net revenue retention, continued growth in cloud backlog from both customer expansion and new large enterprise wins, and an increasing number of enterprise go lives, gives us confidence in the durability of our growth as we enter 2026. Our 2026 guidance reflects our excitement about the market opportunity ahead and our confidence in our ability to accelerate top line growth through our market leadership and unmatched assets.

Speaker #2: Our large and expanding installed base reflected in healthy cloud net revenue retention, continued growth in cloud backlog from both customer expansion and new large enterprise wins, and an increasing number of enterprise go-lives gives us confidence in the durability of our growth as we enter 2026.

Speaker #2: Our 2026 guidance reflects our excitement about the market opportunity ahead and our confidence in our ability to accelerate top-line growth through our market leadership and unmatched assets.

Speaker #2: Together with Scott, we would like to thank all our dedicated teams across NICE for their disciplined execution and focus throughout the past year, which drove our strong financial performance.

Beth Gaspich: Together with Scott, we would like to thank all our dedicated teams across NICE for their disciplined execution and focus throughout the past year, which drove our strong financial performance. We remain confident in our strategy, our execution, and our ability to deliver durable shareholder value over the long term. With that, I'll turn the call back to the operator for questions. Operator?

Speaker #2: We remain confident in our strategy, our execution, and our ability to deliver durable shareholder value over the long term. With that, I'll turn the call back to the operator for questions.

Speaker #2: Operator? At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again.

Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Rishi Jaluria with RBC. Please go ahead.

Speaker #2: We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster.

Speaker #2: Your first question comes from the line of Rashid. Hello Rhea with RBC. Please go ahead.

Rishi Jaluria: Hi, this is Rishi Jaluria. Thanks so much for taking my questions. Nice to see, you know, solid execution to close out the year. It may be two questions, if I may. First, looking at the market, it's pretty clear that, you know, the market is scared of AI disrupting and displacing your business. Clearly, that's spread to all of software, and it's something that we've all been dealing with, really in a big way over the past couple of months. You've made it clear, you know, over the past couple of years and at Analyst Day and now today, that you're viewing AI as a real tailwind for NICE and something that could pick up accelerating momentum in kind of the coming years.

Speaker #3: Hi, this is Rashid Jaloria. Thanks so much for taking my questions. Nice to see solid execution to close out the year. Maybe two questions, if I may.

Speaker #3: First, look, looking at the market, it's pretty clear that the market is scared of AI disrupting and displacing your business. Clearly, that spread to all of software and is something that we've all been dealing with really in a big way over the past couple of months.

Speaker #3: You've made it clear over the past couple of years and at analyst day and now today that you're viewing AI as a real tailwind for NICE and something that could pick up accelerating momentum in kind of the coming years.

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

Speaker #3: Can you maybe help us understand where is the disconnect? Where do you think the market is wrong and kind of where is your opportunity to kind of disprove those bear cases and kind of prove yourselves as an AI beneficiary?

Speaker #3: And then I've got a quick follow-up.

Scott Russell: Sure. Thanks, Rishi. So let me try to take that. So there is clearly a disconnect between the fears in the market and the reality of what we're seeing in the business. So let me try to break it down, if I can. First of all, there's a concern about competition from new AI point solution, and the reality is this: the CX AI market is expanding rapidly, and it's large enough actually to support multiple approaches. But our growth, the growth of our business, is not coming at the expense of those competitors. Actually, it's a beneficiary. If you look at NICE's business, 13% of our cloud revenue is AI. We've already proven that we've embedded it into our core platform. We're able to deliver durable value to our customers. And why is that? Well, CX is complex, and we are domain experts in CX.

Speaker #4: Sure, thanks, Rashid. So let me try to take that. So, there is clearly a disconnect between the fees in the market and the reality of what we're seeing in the business.

Speaker #4: So let me try to break it down, if I can. First of all, there's a concern about competition from new AI point solutions. And the reality is this.

Speaker #4: The CX AI market is expanding rapidly. And it's large enough actually to support multiple approaches. But our growth, the growth of our business is not coming at the expense of those competitors.

Speaker #4: Actually, it's a beneficiary. If you look at NICE's business, 13% of our cloud revenue is AI. We've already proven that we've embedded it into our core platform.

Speaker #4: We're able to deliver durable value to our customers. And why is that? Well, CX is complex. And we are domain experts in CX. You look at what is required from our customers—it requires orchestration.

Scott Russell: You look at what is required from our customers; it requires orchestration, really rich and unified data, governance. It requires deep domain expertise across the customer journey. And so while point solutions and some AI solutions can address use cases and narrow use cases, they don't actually fulfill the full customer journey. They're, in fact, in some ways, actually complicating or creating more complexity. So a unified platform that is able to deliver across voice, digital, and AI is what the market needs and expects. And that's where a combined platform that we offer, which is unique in that we've got the best in class in both cases, helps us. And I guess ultimately, we're showing that in the numbers.

Speaker #4: Really rich and unified data, governance. It requires deep domain expertise across the customer journey. And so whilst point solutions and some AI solutions can address use cases and narrow use cases, they don't actually fulfill the full customer journey.

Speaker #4: They're, in fact, in some ways, they're actually complicating or creating more complexity. So a unified platform that is able to deliver across voice, digital, and AI is what the market needs and expects.

Speaker #4: And that's where a combined platform that we offer, which is unique in that we've got the best-in-class in both cases, helps us. And I guess ultimately, we're showing that in the numbers.

Speaker #4: The growth rates are indicated at capital markets today. If you remember, Rashid, we expected our cloud growth in 2026 to be between 13% to 15%.

Scott Russell: The growth rates I indicated at Capital Markets Day, if you remember, Rishi, that we expected our cloud growth in 2026 to be between 13% to 15%. We're already indicating at the high end of 14.5% to 15%. That's on the back of customer demand, real backlog that's growing at 25%, real pipeline that we're converting into ultimately revenue for NICE, but ultimately, it's value for our customers. So I'm confident that our growth indicators reflect, you know, the tailwind that AI brings, and I'm sure the market ultimately will see a NICE in a favorable way.

Speaker #4: We're already indicating at the high end at 14.5 to 15%. That's on the back of customer demand, real backlog that's growing at 25%, real pipeline that we're converting into ultimately revenue for NICE.

Speaker #4: But ultimately, it's value for our customers. So I'm confident that our growth indicators reflect the tailwind that AI brings. And I'm sure the market ultimately will see NICE in a favorable way.

Speaker #3: All right. Thanks, Scott. That's super helpful. And maybe just a follow-up on that. In kind of the AI native space, you've obviously seen a lot of funding for voice AI startups.

Rishi Jaluria: ... All right, thanks, Scott. That's, that's super helpful. And maybe just to follow up on that, you know, in kind of the AI native space, we've obviously seen a lot of funding for voice AI startups, and it feels like, you know, maybe piggybacking on that earlier point of conversation, the market's kind of viewed it as, at least the stock market's viewed it as kind of an either/or. But it really feels like there might be opportunities for even partnerships and integrations and kind of, you know, focusing on customer success. Can you maybe talk about your opportunities? I know, Scott, you've talked a lot about increasing partner ecosystem traction, et cetera.

Speaker #3: And it feels like maybe pigging back on that earlier point of conversation, the market's kind of viewed it as, at least the stock market's viewed it as kind of an either/or.

Speaker #3: But it really feels like there might be opportunities for even partnerships and integrations and kind of focusing on customer success. Can you maybe talk about your opportunities?

Speaker #3: I know, ow, Scott, you've talked a lot about increasing partner ecosystem traction, et cetera. But maybe an opportunity to even just have deeper integrations and partnerships with some of these AI natives just to kind of leave the choice up to the customers, even if it may sound potentially competitive.

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

Speaker #3: Because at the end of the day, they do need the pipes that you have. They do need the call routing piece. Maybe help us understand what could that kind of ISV or AI partnership look like.

Speaker #3: Thanks.

Scott Russell: Yeah, it's a great question, Rishi. I'll break it into two parts. The first is, we're an open platform. We've made a very conscious decision to be a platform that allows the customers to utilize their data, 'cause it's their data, and all of the billions of interactions that sits on our platform, and being able to leverage it across not only the NICE CXone, but an open stack that supports the use of other tools. And that's why the partnerships with Salesforce, with AWS, with ServiceNow, and many others are essential to it. And we're at the enterprise, you're dealing with a complex technology landscape, and so we're able to use that to our advantage. But let me just zero in on the AI side.

Speaker #4: Yeah. It's a great question, Rashid. I'll probably break it into two parts. The first is we're an open platform. We've made a very conscious decision to be a platform that allows the customers to utilize their data.

Speaker #4: Because it's their data and all of the billions of interactions that sits on our platform and being able to leverage it across not only the NICE CX1, but an open stack that supports the use of other tools.

Speaker #4: And that's why the partnerships with Salesforce, with AWS, with ServiceNow, and many others are essential to it. And at the enterprise, you're dealing with a complex technology landscape.

Speaker #4: And so we're able to use that to our advantage. But let me just zero in on the AI side. One of the questions that we often get is, hey, these new frontier models and what does it mean and is that going to be a disruption to us?

Scott Russell: You know, one of the questions that we often get is: Hey, these new frontier models, and what does it mean, you know, and is that going to be a disruption to us? And actually, it's a benefit. It's actually a significant positive, 'cause if you look at it, the labs, these AI frontier models, they're tremendous advancements in agentic capability. But we leverage those models. We have partnerships with those AI players that we can use those models in our stack. But then we've built a purpose-built AI around customer engagement data. And so we differentiate by our specialization. Those models are really powerful, but then we process it on those billions of interactions, the specific learning loops, the optimization. So the specialization around the customer intent resolution, the compliance-heavy workflows, the guardrails that enterprise have, the real-time voice orchestration.

Speaker #4: And actually, it's a benefit. It's actually a significant positive. Because if you look at it, the labs, these frontier models, they're tremendous advancements in agentic capability.

Speaker #4: But we leverage those models. We have partnerships with

Speaker #1: With those those AI players that we can use those models in our stack . But then we've built a purpose built AI around customer engagement data .

Speaker #1: And so we differentiate by our specialization . Those models are really powerful . But then we process it on those billions of interactions .

Speaker #1: The specific learning loops , the optimization . So the specialization around the customer intent resolution , the compliance heavy . Workflows , the the guardrails that enterprise have , the real time voice orchestration .

Speaker #1: So the reality is it's not replacing . It's enabling a more powerful and differentiated outcome with the combination of what we bring and what they bring to give a better outcome for our customers .

Scott Russell: So the reality is, it's not replacing, it's enabling a more powerful and differentiated outcome with the combination of what we bring and what they bring to give a better outcome for our customers. So it's not replacement, it's actually expansion and extension from what we've already done, and it gives us more opportunity to deliver ROI. Again, that's why we're seeing the backlog and the bookings growth that we're getting, because the customers are voting by their choice of NICE, and we're benefiting that in our revenue outlook.

Speaker #1: So it's not replacement, it's actually expansion and extension from what we've already done. And it gives us more opportunity to deliver ROI again.

Speaker #1: That's why we're seeing the backlog and the bookings growth that we're getting , because the customers are voting by by their choice of nice .

Speaker #1: And we're benefiting that in our revenue outlook .

Speaker #2: Very helpful . Thank you so much .

Rishi Jaluria: Very helpful. Thank you so much.

Speaker #3: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.

Operator: Your next question comes from the line of Samad Samana with Jefferies. Please go ahead.

Speaker #4: Hi. Good morning, and great to see the solid four key results. And I appreciate you taking my questions. Maybe first, just one on the guidance.

Samad Samana: Hi, good morning, and great to see the solid Q4 results, and appreciate you taking my questions. Maybe first, just one on the guidance. You know, I think we're all happy to see the upward revision to the 2026 cloud revenue growth forecast. I was curious, Beth or Scott, if you guys could break down what led to the upward revision. Is it the core organic cloud revenue? Is it Cognigy doing better than expected? Because if we assume Cognigy is at 200 basis points of revenue growth contribution, that kind of implies an acceleration for the organic business. Just help us unpack that, and then I have one follow-up. Thank you.

Speaker #4: I think we were all happy to see the upward revision to the 2026 cloud revenue growth forecast . I was curious , Beth , or Scott , if you guys could break down what led to the upward revision ?

Speaker #4: Is it the the core organic cloud revenue ? Is it cognizant doing better than expected ? Because if we assume cognitive is at 200 basis points of revenue growth contribution , that kind of implies an acceleration for the organic business .

Speaker #4: Just help us unpack that . And then I have one follow up . Thank you

Speaker #5: Yeah . Thanks for the question , Samad . And I'll take that . And Scott , feel free to chime here . I think generally , you know , as the starting point , we feel confident that both will contribute to that mix and give us that confidence as we step into 2026 .

Rishi Jaluria: Yeah. Thanks for the question, Samad, and I'll take that, and Scott, feel free to, chime in here. I, I think generally, you know, as a starting point, we feel confident that, both will contribute to that mix and give us that confidence as we step into 2026. You know, Scott has already highlighted the strength of the backlog. We had a record in terms of new cloud ACV bookings in the Q4 that led to that strength of the 25% growth and, and our cloud backlog looking ahead. So that's a mix of both the strength of, of that, AI force that we see, inclusive of both our own, homegrown AI, and of course, amplified by the addition of Cognigy.

Scott Russell: Yeah. Thanks for the question, Samad, and I'll take that, and Scott, feel free to, chime in here. I, I think generally, you know, as a starting point, we feel confident that, both will contribute to that mix and give us that confidence as we step into 2026. You know, Scott has already highlighted the strength of the backlog. We had a record in terms of new cloud ACV bookings in the Q4 that led to that strength of the 25% growth and, and our cloud backlog looking ahead. So that's a mix of both the strength of, of that, AI force that we see, inclusive of both our own, homegrown AI, and of course, amplified by the addition of Cognigy.

Speaker #5: You know , Scott is already highlighted . The strength of the backlog . We had a record in terms of new cloud ACV bookings in the fourth quarter .

Speaker #5: That led to that strength Of the 25% growth and our cloud backlog . Looking ahead . So that's a mix of both the strength of of that AI force that we see , inclusive of both our own homegrown AI and of course , amplified by the addition of Carnegie .

Speaker #5: So when we look both at the core , which you've seen was consistent at a 12% growth throughout the each and every quarter this year , we feel confident that there is a opportunity to accelerate growth , both in that core as well as continue to drive that growth through Cognigni , which had a very strong fourth quarter showing as well .

Rishi Jaluria: So when we look both at the core, which you've seen was consistent at a 12% growth throughout the each and every quarter this year, we feel confident that there is opportunity to accelerate growth both in that core as well as continue to derive that growth through Cognigy, which had a very strong Q4 showing as well. So it comes from a combination of both those places.

Speaker #5: So it comes from a combination of of both those places

Speaker #4: Great . And then , Scott , a follow up for you , and I know that this this topic came up at the at the Capital Markets Day as well .

Samad Samana: Great. And then, Scott, a follow-up for you, and I know that this topic came up at the Capital Markets Day as well. I think it's, you know, appreciated by investors that the company is putting the foot on the gas with AI being this massive opportunity, right? You guys are literally putting your money where your mouth is. I'm curious, maybe as you think about deploying new investments and how that's going inside the organization, and are you starting to see a shift inside of the sales organization, whether it's win rates, whether it's productivity, as maybe the accelerated investments drive enthusiasm in the organization as well?

Speaker #4: I think it's , you know , appreciated by investors that the company is is putting the foot on the gas with AI being this massive opportunity .

Speaker #4: Right . You guys are literally putting your money where your mouth is . I'm curious maybe as you think about deploying new investments and how that's going inside the organization .

Speaker #4: And are you starting to see a shift inside of the sales organization , whether it's win rates , whether it's productivity as as maybe the accelerated investments drive enthusiasm in the organization as well

Speaker #1: Yeah , it's good . Good question . So first of all , there is a I guess a a positive energy and momentum that we're seeing in the business .

Scott Russell: Yeah, it's good, good question, Samad. So first of all, there is, I guess, a positive energy and momentum that we're seeing in the business, and that's obviously on the back of the bookings and the backlog generated in Q4, the momentum that we've been able to generate, but also the pipeline and what we see. What was interesting is the Cognigy business continues to grow remarkably on a standalone basis, just acquisition of new market where NICE has no, you know, no footprint at all, and our ability to be able to go and compete and win in that new marketplace where they don't have a need for a CCaaS, but they really want an AI CX platform as a leadership.

Speaker #1: And that's obviously on the back of the bookings and the , the , the backlog generated in Q4 . The momentum that we've been able to to generate , but also the pipeline and what we see , what was interesting is the cognitive business continues to grow remarkably on a standalone basis .

Speaker #1: Just acquisition of new market where Nice has no , you know , no footprint at all . And our ability to be able to go and compete and win in that new marketplace where they don't have a need for a CAS , but they really want an AI platform as a leadership that's given a real positive energy inside of of our of our sales organization , combined with the obvious , you know , opportunity that we see with existing install base , the large customer base that we have and our ability to be able to serve that .

Scott Russell: That's given a real positive energy inside of our sales organization, combined with the obvious, you know, opportunity that we see with existing install base, the large customer base that we have, and our ability to be able to serve that. So I think first on the positive momentum, fantastic. I think the other point, and Beth touched on this in her opening comments, we're embracing the use of AI inside of our business as much as we expect our customers to. You know, we're living and breathing that reality.

Speaker #1: So I think first , on the positive momentum , fantastic . The other point and best touched on this in her opening comments , where embracing the use of AI inside of our business as much as we expect our customers to , you know , we're living and breathing that reality .

Speaker #1: So for our sales teams , being able to use it , to be able to get better understanding of customer signals , intent , our ability to automate quoting and being able to do fast turnaround for business for our customers when we're competing .

Scott Russell: So for our sales teams, being able to use it to be able to get better understanding of customer signals, intent, our ability to automate quoting and, and being able to do fast turnaround, for business for our customers when we're competing, we're deployed and we're up and running, so I think our, our go-to-market are also seeing higher productivity that allows them to get more at bats, to be able to get, more customers engaged and ultimately improve our win rate. So you, you need to do both. You need to have a great capability that you take in a market, but you've got to walk the talk, and, we're definitely doing that. Great. Thank you so much, Scott.

Speaker #1: These tools , we're deployed and we're up and running . So I think our our go to market are also seeing higher productivity that allows them to get more at bats , to be able to get more customers engaged and ultimately improve our win rates .

Speaker #1: So you need to do both. You need to have a great capability that you're taking to market, but you've got to walk the talk.

Speaker #1: And we're definitely doing that

Speaker #4: Great . Thank you so much , Scott .

Speaker #3: Your next question comes from the line of Arjun Bhatia with William Blair & Company. Please go ahead.

Operator: Your next question comes from the line of Arjun Bhatia with William Blair & Company. Please go ahead.

Speaker #6: Perfect . Thank you so much , Scott . Maybe one for you to start out with . Obviously it's good to see the continued traction in your AI and self-service RR .

Arjun Bhatia: Perfect. Thank you so much. Scott, maybe the one for you to start out with. Obviously, it's good to see the continued traction in your AI and self-service ARR. You know, I imagine the distribution of customers in that group, of those that are advanced versus those that are still starting, is quite wide. But when you're looking at your more sort of advanced customers, what are you seeing in terms of seat dynamics there? Has that changed at all over the past couple of quarters, or is this still, like, something that's being contemplated for, you know, years or quarters in the, in the future in terms of what they do with their seat counts and, you know, agent counts?

Speaker #6: You know , I imagine the distribution of customers in that group of those that are advanced versus those that are still starting is quite wide .

Speaker #6: But but when you're looking at your more sort of advanced customers , what are you seeing in terms of seat dynamics ? There ?

Speaker #6: Has that changed at all over the past couple of quarters , or is this still like something that's being contemplated for , you know , years or quarters in the in the future in terms of what they do with their , with their seat counts and , you know , agent agent counts .

Speaker #1: Yeah . That's a great question , Arjun . So so I think there's a there's a couple of things to maybe highlight here .

Scott Russell: Yeah, that's a great question, Arjun. So I think there's a couple of things to maybe highlight here. As I mentioned in my opening comments, our core CX CCaaS platform is really strong, and to Beth's earlier comment, we see re-acceleration in our outlook for 2026 and beyond. Why is that? Well, I guess I'll best answer it by discussions that I've been having. This week I had a number of meetings with customers, CEO, CTO, and we were just talking about their CX environment and their existing use of their contact center. And right now, they both had indicated that their contact centers are capacity constrained. They're not overstaffed, and so they plan to use AI to actually free up their agents for higher value engagement, proactive outreach, more revenue generation or more value-oriented.

Speaker #1: As I mentioned in my opening comments , our , our core platform is really strong . And and to Beth's earlier comment , we we see acceleration and in our outlook for 26 and beyond .

Speaker #1: Why is that ? Well I guess I'd best answer it by discussions that I've been having this week . I had a number of meetings with customers , CEOs , CTO , and we were just talking about their their environment and their existing use of their their contact center .

Speaker #1: And right now , the both had indicated that their contact centers are capacity constrained . They're not overstaffed . And so they plan to use AI to actually free up their agents for higher value engagement , proactive outreach , more revenue generation or or value orientated .

Speaker #1: So , so rather than elimination of roles , they're using it as an efficiency driver . So they're people can be driving more value added activities .

Scott Russell: So rather than elimination of roles, they're using it as a, an efficiency driver so their people can be driving more value-added activities. And so they had no plans, no plans, to reduce agents in the, in the short to mid-term. Now, that's not to say that as we continue to build out our platform, that we don't see the opportunity to be able to reduce the human capacity as the AI picks up. But we. That's why in these complex environments, because remember, CX is tough. You've got, you've got to have accuracy of data at high volume, the guardrails, the domain expertise, and ultimately, it's got to fulfill a great consumer experience for the brand.

Speaker #1: And so they had no plans no plans to reduce agents in the in the short to mid-term . Now that's not to say that as we continue to build out our platform , that we don't see the opportunity to be able to reduce the human capacity as the AI picks up .

Speaker #1: But we that's why in these complex environments , because remember , KCS is tough . You've got you've got to have accuracy of data at high volume .

Speaker #1: The guardrails the domain expertise and ultimately it's got to fulfill a great consumer experience for the brand . And so what they don't want is a point solution that gives them a bit of automation .

Scott Russell: And so what they don't want is a point solution that gives them a bit of automation, but then increases the complexity when it has to interoperate with their, their AI agents. And I think we've really seized upon this. What we see at the top end is that customers value a unified customer engagement platform. We call it the front door. So the whether it's voice, whether it's digital, whether it's AI, or what is most likely to be a combination of all three at the same time, real time, enterprises at the top end, they need a platform that can give that in a scalable, reliable way, and obviously, we differentiate on that basis. So it's interesting about the, I guess, the perceived concerns that you're going to see this erosion of the seats.

Speaker #1: But then increases the complexity when it has to interoperate with their their AI agents . And I think we've really seized upon this .

Speaker #1: What we see at the top end is that customers value a unified customer engagement platform . We call it the front door . So the whether it's voice , whether it's digital , whether it's AI or what is most likely to be a combination of all three at the same time , real time at at the top end , they need a platform that can give that in a in a scalable , reliable way .

Speaker #1: And obviously, we differentiate on that basis. So, it's interesting about the, I guess, the perceived concerns that you're going to see this erosion of the seats.

Speaker #1: We the data does not support that assertion . But we're we're growing on both levers and we continue to expect to do so

Scott Russell: The data does not support that assertion, but we're growing on both levers, and we continue to expect to do so.

Speaker #6: All right . Perfect . Yep . That's that's super helpful . Color . And then Beth , I had one for you just in terms of the investments that you're making , I think I fully appreciate .

Arjun Bhatia: All right, perfect. Yep, that's, that's super helpful color. And then, Beth, I had one for you. Just in terms of the investments that you're making, I think, I fully appreciate, right, it's, it's the right time to sort of lean in, you know, given the precipice of the tech change here. But, how are you just monitoring, you know, that you're making the sort of right investments and you're allocating capital, appropriately? Like, what are the ROI signals you're looking for, or is it just, you know, continued sort of revenue, revenue re-acceleration here?

Speaker #6: Right . It's the right time to sort of lean in , you know , given the precipice of the tech change here . But how are you just monitoring , you know , that you're making the sort of the right investments and you're allocating capital appropriately , like what are the ROI signals you're looking for ?

Speaker #6: Or is it just , you know , continued sort of revenue , revenue acceleration here ?

Speaker #5: Yeah . Thank you . We're very excited about the opportunity ahead of us . And we absolutely believe this is the appropriate time to to lean in .

Beth Gaspich: ... Yeah, thank you. We're very excited about the opportunity ahead of us, and we absolutely believe this is the appropriate time to lean in. We really have, at NiCE, a fenced investment approach, where we are very closely monitoring very tightly the exact areas that we plan to invest, which we've talked a lot about. It's around the go-to-market. It's bringing in more integration of Cognigy into the platform, agentic capabilities, as well as using additional AI technologies internally, accelerating our delivery timeline. All of those areas are very intentional, and we are very much closely monitoring that the dollars are being spent in the right places. In parallel, as a general muscle that we have in NiCE, we are constantly also driving initiatives that drive long-term operating leverage. Scott talked about the use of AI.

Speaker #5: We really have a nice, fenced investment approach where we are very closely monitoring, very tightly, the exact areas that we plan to invest, which we've talked a lot about.

Speaker #5: It's around the go to market , it's bringing in more integration of Carnegie into the platform . Agenda , capabilities , as well as using additional AI technologies internally , accelerating our delivery timeline .

Speaker #5: All of those areas are very intentional and we are very much closely monitoring that the dollars are being spent in the right places .

Speaker #5: In parallel , as a as a general muscle that we have in nice , we are constantly also driving initiatives that drive long term operating leverage .

Speaker #5: Scott talked about the use of AI . There are other initiatives as well that we're always putting in place . So we're also monitoring the effectiveness and seeing that we get the ROI from those initiatives .

Beth Gaspich: There are other initiatives as well that we're always putting in place. So we're also monitoring the effectiveness and seeing that we get the ROI from those initiatives and investments through key specific metrics. And when you add all of those together, ultimately, the big test is that we see that we are delivering on the growth that we've signed up for on the top line. And so those are a combination of all of the things we monitor very, very closely to ensure we're on track and that we're getting the ROI from those investments.

Speaker #5: And investments through key specific metrics . And when you add all of those together , ultimately , the big test is that we see that we are delivering on the growth that we've signed up for on the top line .

Speaker #5: And so those are a combination of all of the things we monitor very , very closely to ensure we're on track and that we're getting the row , the eye from those investments

Speaker #6: Understood . Perfect . Thank you .

Scott Russell: Understood, perfect. Thank you.

Speaker #3: Your next question comes from the line of Tyler Radke with Citi . Please go ahead .

Operator: Your next question comes from the line of Tyler Radke with Citi. Please go ahead.

Speaker #7: Hi . This is Kylie on for Tyler . It was great to see the significant acceleration in international revenue . And I'd be curious to hear how you'd expect that trend to continue into FY 26 .

Tyler Radke: Hi, this is Kylie on for Tyler. It was great to see the significant acceleration in international revenue, and I'd be curious to hear how you'd expect that trend to continue into FY 2026, and what maybe any color on what would be embedded in the total revenue guidance on a constant currency basis. Thanks.

Speaker #7: And what maybe any color on on what would be embedded in the total revenue guidance on a on a constant currency basis . Thanks .

Speaker #1: So let me let me cover the , the , the international expansion . So first of all I need to highlight I , you know , I've inherited an beneficiary from a significant investment that had been made .

Scott Russell: So let me cover the international expansion. So first of all, I need to highlight, I, you know, I've inherited a beneficiary from a significant investment that had been made and in our international expansion. So the footprint of our data centers, the sovereign cloud, the capacity in key markets in UK, Europe, in parts of Asia. So what we saw in 25 was a real breakthrough in terms of our, obviously, our bookings and the backlog. We saw in Q4 a significant acceleration of our revenue that you you saw in those results. And so for 26 and beyond, what we see is expansion opportunity. And if I give you a couple of data points to color.

Speaker #1: And in our international expansion . So the footprint of our data centers , the sovereign cloud , the capacity and key markets in UK , Europe , in parts of Asia .

Speaker #1: So what we saw in '25 was a real breakthrough in terms of, obviously, our bookings and the backlog we saw in Q4.

Speaker #1: A significant acceleration of our revenue that you you saw in those results . And so for 26 and beyond , what we see is expansion , opportunity .

Speaker #1: And if I give you a couple of data points to color, first is the cash shift in the international markets is not as progressed as what it is in North America.

Scott Russell: First is, the CCaaS shift in the international markets is not as progressed as what it is in North America. So there are more opportunities with our platform to be able to win the on-prem to cloud migration, leveraging those investments, leveraging our momentum. The second is, they're doing it with AI from the get-go. They're not doing this in a two-part move or, you know, sequential. They're doing it at the same time. So the unified platform where we can embed Cognigy and our AI agentic capabilities in that, in those deals, gives us competitive edge, but it also allows us to be able to accelerate our revenue because the AI adoption time frames are faster, you know, whilst often the CCaaS migration is a complex one-time undertaking.

Speaker #1: So there are more opportunities with our platform to be able to win the the on prem , to cloud migration , leveraging those investments , leveraging our momentum .

Speaker #1: The second is they're doing it with AI from the get go . They're not doing this in a two part move or , you know , sequential .

Speaker #1: They're doing it at the same time . So the unified platform where we can embed cognitive and our AI capabilities in that , in those in those deals , gives us competitive edge .

Speaker #1: But it also allows us to be able to accelerate revenue because the AI adoption time frames are faster . You know , whilst often the , the , the cars migration is a is a complex one time undertaking .

Speaker #1: And the last what I would say is , is those international markets are benefiting from our investments in the ecosystem . Practically all of our go to market in international is through our partners .

Scott Russell: And then the last, what I would say is, those international markets are benefiting from our investments in the ecosystem. Practically all of our go-to-market in international is through our partners, and so the strategic ecosystem is part of the reason why our international expansion is performing strongly, because we've really made sure our go-to-market motions with both SI partners, resellers, technology partners internationally be the core vehicle that we use. And that gives us reach that goes beyond the four walls of the NICE capability. We really do leverage their breadth and strength in those international markets. So it is, you'll you can expect to see continued momentum in that area.

Speaker #1: And so the strategic ecosystem is part of the reason why our international expansion is performing strongly , because we've really made sure our go to market motions with both see partners , resellers , technology partners internationally because the core vehicle that we use , and that gives us reach , that goes beyond the the four walls of the nice capability .

Speaker #1: We really do leverage their their breadth and strength in those in those international markets . So it is you'll you can expect to see continued momentum in that area .

Speaker #5: And then I would just quickly Kylie address on the the currency side . I think , you know , first of all I'll start with the overall outlook for nice in totality .

Beth Gaspich: Then I would just quickly, Kylie, address on the currency side. I think, you know, first of all, I'll start with the overall outlook for NICE in totality. I think it's important to highlight that in total, NICE is still predominantly concentrated in terms of mix out of the Americas, which is mostly USD denominated. So 82%, for example, of our revenue in the Q4 was coming from the Americas, mostly USD. Any impact that we may see within the international business, which is thriving and growing for us, has been considered and is factored in. We're always looking at the environment generally on a macro for exchange rates and other factors as well. That is inclusive in the expectations that we're looking at.

Speaker #5: I think it's important to highlight that in total , Nice is still predominantly concentrated in terms of mix out of the Americas , which is mostly USD denominated .

Speaker #5: So 82% , for example , of of our revenue in the fourth quarter was coming from the Americas , mostly USD . Any impact that we may see within the international business , which is a thriving and growing for us , has been considered and is factored in .

Speaker #5: We're always looking at the environment generally on a macro for exchange rates and other factors as well. That is inclusive in the expectations that we're looking at.

Speaker #5: Again , you may see that more , you know , noticeable as you've seen in the fourth quarter in terms of the impact on the international markets .

Beth Gaspich: Again, you may see that, more, you know, noticeable as you've seen in the fourth quarter in terms of the impact on the international markets, but not any expectation that is not already baked into our expectation for the full year.

Speaker #5: But not any expectation that is not already baked into our expectation for the full year

Tyler Radke: Understood. And then regarding the better together story with NICE and Cognigy, you know, the ability to win more deals as a combined CCaaS and AI domain expert, how did the joint go-to-market motion play out in Q4? I know it's early, but you know, also, how to think about the Cognigy opportunities from current CXone customers versus sales to customers on competitor CCaaS platforms as well. Thank you.

Speaker #7: Understood . And then regarding the better Together story with nice and , you know , the ability to win more deals as a combined cast and AI domain expert .

Speaker #7: How did how did the joint go to market motion play out in for Q ? I know it's early , but you know , also how to think about the energy opportunity from current Kcs1 customers versus sales to customers on on competitor platforms as well .

Speaker #7: Thank you

Scott Russell: ... I'll let me take that one. So, I was really pleased. I've got to say that despite it being, you know, we-- with Cognigy coming into the NICE family at the in September, coming into our busiest and most hectic quarter of the year, it was remarkable to see two things. One, Cognigy and our ability to win and grow as a standalone AI market-leading platform, it, it was fantastic. But then secondly, our-- I, I've got to give it to our the NICE go-to-market team. We were able to quickly pivot, and so the fourth quarter performance also on a better together, where we were able to embed it into our our big wins and the strong performance we had in fourth quarter.

Speaker #1: I'll let me take that one . So I was really pleased . I gotta say that despite it being , you know , we with cognitive coming into the nice family at the in September , coming into our busiest and most hectic quarter of the year , it was remarkable to see two things .

Speaker #1: One , cognitive and our ability to win . And grow as a standalone AI market leading platform . It it was fantastic . But then secondly , our I've got to give it to our the nice go to market team .

Speaker #1: We were able to quickly pivot . And so the fourth quarter performance also on a better together where we were able to embed it into our our big wins and the strong performance we had in fourth quarter .

Speaker #1: Cognitive was was well and truly a part of that , which is why , by the way , 100% of our seven digit deals included AI and pretty much nearly all of them was inclusive of cognitive .

Scott Russell: Cognigy was well and truly a part of that, which is why, by the way, 100% of our seven-digit deals included AI, and then pretty much nearly all of them was inclusive of Cognigy. So the early go, you know, collaboration was really strong. What we're really now focused on is how do we then capitalize and expanding on that, rapidly in 2026. So we're very early days in the AI expansion. We see obviously new competitors with AI point solutions. We've got a differentiated offer. So really, we're doubling down on the better together, unified platform, but also winning and competing in the AI-only market, where the situation exists and being able to win and win well. So competitive win rates were good.

Speaker #1: So the early go , you know , collaboration was really strong . What we're really now focused on is how do we then capitalize and expanding on that rapidly in 26 .

Speaker #1: So we're very early days in the AI expansion . We see obviously new competitors with AI point solutions . We've got a differentiated offer .

Speaker #1: So really we're we're doubling down on the better together unified platform , but also winning and competing in the AI only market where the situation exists and being able to win and win .

Speaker #1: Well . So competitive win rates were good . Yeah , I feel very good about the the fast integration . And it's credit to Phil and the team and the way they've really embraced and and coming to the nice team and led the way

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

Speaker #3: Your next question comes from the line of Siti Panigrahi with Mizuho . Please go ahead

Operator: Your next question comes from the line of Siddharth Panigrahi with Mizuho. Please go ahead.

Speaker #8: Great . Thanks for taking my question . If I look at your cloud backlog , that excluding cognitive organic cloud backlog , now 22% growth , that is quite a step up from 13% in Q3 .

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

Speaker #8: So, a few things—like, what's the composition like for that step up? And you guys earlier talked about how it takes longer to convert to recognized revenue.

Speaker #8: So how should we think about that lag from the backlog to cloud revenue growth over the next 2 or 3 years ? 2 or 3 quarters ?

Speaker #5: Yeah .

Beth Gaspich: Yeah. Thanks. Yeah, thanks, Siddharth, for the question. I would start and just say that, you know, when you think about the 25% growth we had in the backlog, you highlighted the 22% growth that we had, excluding Cognigy. When you think about how that will play out in the coming years and months, essentially, the substantial majority of that will actually be recognized in the next 24 months. It is not, however, linear. Of course, it is dependent upon various go lives that happen throughout that period. So the expectation is, as we continue to shift that from the backlog over into recognized revenue, you should see that gradual expansion playing out in the cloud revenue growth over that period.

Speaker #9: Thanks . Yeah .

Speaker #5: Thanks for the question . I would start and just say that , you know , when you think about the the 25% growth we had in the backlog , you highlighted the 22% growth that we had , excluding Carnegie .

Speaker #5: When you think about how that will play out in the coming years and months , essentially the substantial majority of that will actually be recognized in the next 24 months .

Speaker #5: It is not , however , linear . Of course . It is dependent upon various go lives that happen throughout that period . So the expectation is we continue to shift that from the backlog over into revenue .

Speaker #5: You should see that gradual expansion playing out in the cloud . Revenue growth over that period .

Speaker #8: Okay . Thanks . And then on the cognitive side , Beth , you talked about before exiting Q4 , 85 million error , is that still does that still holds good based on what you're guiding for the year ?

Siti Panigrahi: Okay, thanks. And then on the Cognigy side, but you talked about before exiting Q4, $85 million ARR, is that still—does that still holds good based on what you're guiding, for the year?

Speaker #5: It is . We had a very nice performance of cognitive . And since the start of the the acquisition and the close . So yes , very much on track and looking forward and excited about our ongoing opportunity during the course of 26 .

Beth Gaspich: It is. We had a very nice performance of Cognigy and, since the start of the acquisition and the close. So yes, very much on track and, looking forward and excited about our ongoing opportunity, during the course of 2026.

Speaker #8: Great . Thank you .

Siti Panigrahi: Great. Thank you.

Speaker #3: Your next question comes from the line of Jamie Reynolds with Morgan Stanley . Please go ahead .

Operator: Your next question comes from the line of Jamie Reynolds with Morgan Stanley. Please go ahead.

Speaker #10: Great . Thanks . This is Jamie on for Elizabeth and congrats on the strong quarter . It's just the the first question . It'd be great to just unpack a little bit more about how that displacement with the CRM vendor materialized .

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

Speaker #10: You know , what capabilities did nice bring where that vendor fell short .

Speaker #1: Yeah , it I'll I'll answer this one . Jamie . So there's a couple of factors here . First of all , customers , the customer that we're referring to had a need of an integrated and customer engagement platform .

Scott Russell: Yeah, I'll answer this one, Jamie. So there's a couple of factors here. First of all, customers, the customer that we're referring to had a need of an integrated customer engagement platform. What they didn't want is, one platform to handle the AI piece, another platform to handle digital, and another platform to handle voice. Because what it did was it created, friction in their engagement, and it was, actually impacting a positive customer experience. What they wanted was the data, the operational flows, the process to be orchestrated end to end. So it was more about clear, conscious strategy for customers, and we're seeing this more and more, where they're distinguishing a customer engagement platform, the front door to the enterprise by their customers in a unified, single, approach, rather than fragmented through differing technologies.

Speaker #1: What they didn't want is one platform to handle the AI piece , another platform to handle digital , and another platform to handle voice .

Speaker #1: Because what it did was it created friction in their engagement , and it was actually impacting a positive customer experience . What they wanted was the data , the operational flows , the process to be orchestrated end to end .

Speaker #1: So it was more about clear , conscious strategy for customers . And we're seeing this more and more where they're distinguishing a customer engagement platform .

Speaker #1: The front door to the enterprise by their customers in a unified single approach rather than fragmented through differing technologies . Now , that's not to say that they don't need an orchestrate with the CRM , because you still want your sales data , your commerce data , your other information , your customer data that you've got there .

Scott Russell: Now, that's not to say that they don't need and orchestrate with the CRM because you still want your sales data, your commerce data, your other information, your customer data that you've got there. But when it comes to the interaction and understanding the customer's intent, and then having a simple way of being able to orchestrate between a human agent, an AI agent, synchronous, asynchronous, inbound, and outbound, they wanted it on a single stack. And obviously, we see the benefits of that. Ultimately, they chose it because it will deliver better ROI, better customer experience, and it was one customer example. We've got many others that are doing the same journey.

Speaker #1: But when it comes to the interaction and understanding , the customer's intent , and then having a simple way of being able to orchestrate between a human agent , an AI agent , synchronous , asynchronous , inbound and outbound , they wanted it on a single stack and obviously we see the benefits of that .

Speaker #1: Ultimately , they chose it because it will deliver better ROI , better customer experience . And it was one customer example . We've got many others that are doing the same journey .

Speaker #10: Got it . Thanks . That's helpful . And then just as a quick follow up , it'd be great to get any color on how the performance among the more seasonal customers kind of trended in the fourth quarter relative to your expectations

Jamie Reynolds: ... Got it. Thanks. That's helpful. And then just as a quick follow-up, it'd be great to get any color on how the performance among the more seasonal customers kind of trended in Q4 relative to your expectations.

Speaker #5: Yes , thanks . When we looked at the seasonality , you know , we had highlighted that we had a strong bar to to climb when compared to the fourth quarter of 2024 .

Scott Russell: Yes, thanks. When we looked at the seasonality, you know, we had highlighted that we had a strong bar to climb when compared to the fourth quarter of 2024, but we were quite pleased with the seasonality that we experienced in the fourth quarter this year. I did highlight a couple of things in my formal remarks around, you know, we had about a 50 basis point tailwind coming into the cloud revenue in the fourth quarter, coming from foreign exchange that was included there. We also ended up having a go-live of a very large international deal earlier than anticipated. That came into that.

Speaker #5: But we were quite pleased with the seasonality that we experienced in the fourth quarter this year . I did highlight a couple of things in my formal remarks around , you know , we had about a 50 basis point tailwind coming into the cloud revenue in the fourth quarter , coming from a foreign exchange that was included there .

Speaker #5: We also ended up having a go live of a very large international deal earlier than anticipated . That came into that . So so those also triggered some some health in the quarter , but generally we were pleased with the the seasonality that we saw , which was healthy for for our fourth quarter across , you know , our diversified and vertical customer base

Scott Russell: So, those also kind of triggered some health in the quarter, but generally, we were pleased with the seasonality that we saw, which was healthy for our fourth quarter across, you know, our diversified vertical customer base.

Speaker #10: Great . Thank you so much .

Jamie Reynolds: Great. Thank you so much.

Speaker #3: Your next question comes from the line of Michael Funk with Bank of America . Please go ahead .

Operator: Your next question comes from the line of Michael Funk with Bank of America. Please go ahead.

Speaker #11: Yeah . Hi . Good morning . Thank you for the questions . So Scott , earlier you mentioned I think you mentioned that only 40% of enterprises have moved from on prem into the cloud .

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

Speaker #11: So I'd love to hear more color around the pace of that migration . And then , you know , net new versus migration internally in the increase you see in TCV when customers do migrate internally .

Speaker #1: Yeah . So as I mentioned , there's a significant market in front of us . And at the international side , Michael is particularly strong because you they they've not progressed in the migration compared to the Americas .

Scott Russell: Yeah. So, as I mentioned, there's a significant market in front of us. Now, the international side, Michael, is particularly strong because you-- they, they've not progressed in the migration compared to the Americas. So just from a geographic standpoint, we see real momentum on the international side, and obviously, we're benefiting from it. I think what-- If I take a step back, what's happening in the market is customers were previously forced to choose, do they do the on-prem to cloud migration? Do they do an AI move? You know, they had to distinguish between their methods. Now, we give them the choice to do that as well. But what we've now seen, and the results are undeniable around all of our big wins, all of our CCaaS moves are embedding AI in.

Speaker #1: So just from a geographic standpoint , we see real momentum on the the international side . And obviously we're benefiting from it . I think what if I take a step back .

Speaker #1: What what's happening in the market is customers were previously forced to choose . Do they do the on prem to cloud migration ? Do they do an AI move ?

Speaker #1: You know , they had to distinguish between their their methods . Now we give them the choice to do that as well . But what we've now seen and and the results are undeniable around all of our big wins , all of our CAS moves are embedding AI in .

Speaker #1: So what we're seeing now is the using AI to be able to drive the automation capability , give them fast , return early deployment while they're doing , still doing their their shift .

Scott Russell: So what we're seeing now is, they're using AI to be able to drive the automation capability, give them fast return, early deployment while they're still doing their CCaaS shift. And that is able to help make sure that they got early return on investment. It gives us a competitive differentiation because we unify the journey of not just the on-prem to cloud and the AI, but it's combined together. So it actually has given us a really significant differentiation compared to where we were a year ago, where we were obviously able to still capitalize on that. The last comment I would make is the routes that customers are choosing, migration paths will continue to be a key part of the differentiator.

Speaker #1: And that is able to help make sure that they got early return on investment . It gives us a competitive differentiation because we unify the journey of not just the on prem to cloud and the and the AI , but it's combined together .

Speaker #1: So it actually has given us a really significant differentiation compared to where we were a year ago , where we were obviously able to still capitalize on that .

Speaker #1: The last comment I would make is , is the the routes that customers are choosing will that they will migration paths will continue to be a key part of the differentiator .

Speaker #1: What customers aren't prepared to do on the on the CAS migration is long time to to transition . So the other thing that we've really focused on is reducing the time to turn up or the time to value .

Scott Russell: What customers aren't prepared to do on the CCaaS migration is long time to transition. So the other thing that we've really focused on is reducing the time to turn up or the time to value. We improved our delivery time frames and by 20% during 2025. I mentioned that that was a focus area at the beginning of last year. I think the more we're able to show that we can do a time-bound, efficient migration while capitalizing on the AI capability, we're gonna be able to seize an acceleration of those CCaaS moves, you know, as the customers evaluate the use of this technology in their landscape.

Speaker #1: We improved our our delivery timeframes or and by 20% during 2025 . I mentioned that that was a focus area at the beginning of last year .

Speaker #1: think the more we're able to show that we can do a time , time bound , efficient migration while capitalizing on the AI capability , we're going to be able to seize an acceleration of those cars moves , you know , as the customers evaluate the the use of this technology in their landscape

Speaker #11: Thank you . Scott . Maybe one more . If I could quickly financial crime and compliance business . I'd love to hear your thoughts on the operating strategic benefits of owning that business versus maybe some strategic alternatives .

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

Speaker #1: Yeah , it's such a great business . You know what ? What what makes me smile is it continues to be seen and perceived and understood as the market leader .

Scott Russell: Yeah, it, it's such a great business. You know what makes me smile is, it continues to be seen and perceived and understood as the market leader. We serve the most sophisticated financial institutions with a level of trust that, honestly, it is a joy. I meet with banking executives and our clients, and the first thing they tell me is: "We trust Actimize. We rely upon it. We need your help to continue to support our ability to fight financial crime, fraud, and compliance factors." So from a brand point of view and from a trust point of view of that segment, which is also a big segment inside of our CX business, it really does hand- enhance our, the trust position that we have as a company.

Speaker #1: We we serve the most sophisticated financial institutions with a level of trust that honestly , it is it is a joy . I meet with banking executives and and our clients , and the first thing they tell me is we trust arctomys .

Speaker #1: We rely upon it . We need your your help to continue to support our ability to fight financial crime , fraud and compliance factors .

Speaker #1: So from a brand point of view and from a trust point of view of that , that segment , which is also a big segment inside of our business , it really does enhance our the trust position that we have as a company .

Speaker #1: So great business , strong performance , really profitable . And yeah , we're proud for it to be a part of the nice family .

Scott Russell: So great business, strong performance, really profitable, and, yeah, we're proud for it to be a part of the NICE family.

Speaker #11: Great . Thank you so much .

Michael Funk: Great. Thank you so much.

Speaker #3: Your next question comes from the line of Thomas Blakey with Cantor Fitzgerald . Please go ahead

Operator: Your next question comes from the line of Thomas Blakey with Cantor Fitzgerald. Please go ahead.

Speaker #2: Hi . Good morning everyone . Thanks for squeezing me in here . Maybe just first one . Scott , just wanted to talk about these increased win rates that you're talking about .

Thomas Blakey: Hi, good morning, everyone. Thanks for squeezing me in here. Maybe just first one, Scott, just wanted to talk about these increased win rates that you're talking about, and obviously evidenced by the increase in backlog. If you could maybe, you know, in answering, you know, another way about the increased win rates on pricing and any levers you might have there with regard to your, you know, to Cognigy or other, you know, kind of consumption-based AI, you know, levers that you have here in the market, that'd be helpful.

Speaker #2: And obviously evidenced by the increase in backlog . If you could maybe , you know , in answering another way about the increased win rates on on pricing and any levers you might have there with regard to your , you know , to or other , you know , kind of consumption based AI levers that you have here in the market , that'd be helpful .

Speaker #1: Yeah, I'll try to answer it simply. We’re definitely seeing customers being more astute in their expectations of ROI, and that leads to more quantifiable outcomes.

Scott Russell: Yeah. I'll try to answer it simply. We're definitely seeing customers being more astute in their expectations of ROI, and that leads to more quantifiable outcome. Now, they're not buying outcome-based pricing, but they're negotiating and understanding proven ROI that we're able to deliver. One of the advantages we obviously have is that we understand their volumes, their interactions on their existing seats, how efficient their platform is. We use data to inform them about what the automation that AI can do to improve upon that, and then how that then delivers measurable return, and we put that into our offers. So look, we've seen, you know, our pricing continue to be effective in terms of, you know, profitable business for NICE, but also as a differentiator. But we're watching it closely.

Speaker #1: Now they're not buying outcome based pricing , but their negotiating and understanding proven ROI that able to deliver . One of the advantages we obviously have is that we understand their volumes , their interactions on their existing seats , how efficient their their platform is .

Speaker #1: We use data to inform them about what the automation that AI can do to improve upon that . And then how that then delivers measurable return .

Speaker #1: And we put that into our offers . So look , we've seen , you know , our pricing continue to be effective in terms of , you know , profitable business for nice , but also as a differentiator .

Speaker #1: But we're watching it closely . I think the market in AI will continue to be scrutinize the promise versus the reality . It's easy to come in with an AI solution and say , we'll build you a bunch of AI agents , but if it doesn't deliver the real value , they go to vendors and partners that have proven to deliver that before .

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

Speaker #1: And we we leverage that . There is no doubt that we're using our historical strength and benefits to our advantage . And if that means updating our pricing models , we'll do so .

Speaker #2: Yeah . No . That's helpful . And you definitely balancing that that well , in terms of the backlog growth , maybe , maybe for Beth , you've broken out in the past , the consumption based AI IRR .

Thomas Blakey: Yeah. No, that's helpful, and you're definitely balancing that well in terms of the backlog of growth. Maybe for Beth. So you've broken out in the past the consumption-based AI ARR. I don't know if that's something you'd wanna help with here. And just understanding the increase in backlog and the jump in AI ARR in total, wanted to know if consumption is driving that. And when we can kind of expect, you know, as folks are finding value here, looking into to expand AI in terms of the CX role inter-internally, you know, NRR to start, you know, maybe expanding, is that more of a 2026 or more of a kind of an out year kind of environment when you kind of look at your contracts and backlog wins? That'd be helpful. Thank you.

Speaker #2: I don't know if it's something you'd you'd want to help with here . And just understanding the increase in backlog and the jump in AI RR in total wanted to know if consumption is driving that .

Speaker #2: And when . We can kind of expect , you know , as as folks are finding value here looking to expand AI in terms of the role internally , you know , ner to start , maybe expanding , is that more of a 26 or more of a kind of an out year kind of environment when you kind of look at your contracts and backlog wins , that'd be helpful .

Speaker #2: Thank you .

Speaker #5: Yeah , sure . So I think I would start with , you know , where Scott just led to , which is we have a flexible pricing model that allows that fluidity .

Beth Gaspich: Yeah, sure. So I think I would start with, you know, where Scott just led to, which is we have a flexible pricing model that allows that fluidity, and we're driving more and more increasingly towards interaction and consumption-based pricing, which is demonstrated on-- in our overall AI ARR growth, where we're leaning in more and more towards pricing, which is coming from that increasing and ongoing expansion of interactions that we see. With respect to our backlog, we actually-- it demonstrates we have even further upside. When we look at our backlog, we're actually only including there our minimum contractual commitments. So our pricing model and the way we commercialize with our customers generally is on a subscription basis over a multi-year period. So that's what's being reflected in our model.

Speaker #5: And we're driving more and more increasingly towards interaction and consumption based pricing , which is is demonstrated on our overall IRR growth , where we're leaning in more and more towards pricing , which is coming from that increasing and ongoing expansion of interactions that we see with respect to our backlog .

Speaker #5: We actually—it demonstrates we have even further upside when we look at our backlog. We're actually only including there our minimum contractual commitments.

Speaker #5: So our pricing model and the way we commercialize with our customers generally is on a subscription basis over a multiyear period. So that's what's being reflected in our model.

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

Speaker #5: We're still in very early stages of deployment with a lot of those enterprise customers . So as we continue to see those interactions increasing , that's further upside that we have even beyond what's already captured in our backlog .

Speaker #2: Super helpful . Thank you . Beth

Thomas Blakey: Super helpful. Thank you, Beth.

Speaker #3: Your final question comes from the line of Patrick Walravens with Citizens. Please go ahead.

Operator: Your final question comes from the line of Patrick Walravens with Citizens. Please go ahead.

Speaker #6: Oh , great .

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

Speaker #12: Thank you so much . And let me add my congratulations . I was wondering if you could give us an update on your $200 million deals .

Speaker #12: I think you had one that was in APAC and one was . That was in EMEA . And Beth , maybe you commented on that when you talked about something that went live .

Speaker #12: So what's the state of those two now? And then? Are there anything else? Are there any more this big that are in the pipeline?

Speaker #5: Yeah . So I'll take the first part , which is , you know , thanks for the question . Those both of those deals that were internationally driven are actually within our recognized revenue .

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

Speaker #5: They have both gone live . We're very excited about them . We're delivering to the customers . I would also add that , you know , there are additional opportunities .

Speaker #5: Those customers are continuing to look to do more with us . So we're often an a great start of those relationships . And and we'll have more to come .

Speaker #5: But yes , they are already live and contributing to our revenue .

Speaker #1: Yeah. And in terms of the outlook, look, I guess you're getting a sense on this call both with our backlog but also our optimism.

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

Speaker #1: There are some big opportunities that are in front of us. It's highly competitive out there. But I think we're proving that we've got a differentiated ability to win those.

Speaker #1: And so, I look forward to being able to share more significant wins going forward, both internationally, but also in North America.

Speaker #12: All right. Fantastic. Thank you.

Patrick Walravens: All right. Fantastic. Thank you.

Speaker #3: That concludes our question and answer session . I will now turn the call back over to Scott for closing remarks .

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

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

Speaker #1: Look , I just wanted to first of all , thank everybody for the engagement . Not only today but throughout 25 . It was a year of clear transition , but , you know , we're really excited about what we delivered .

Speaker #1: But also about the future in front of us . And and in in particular , I just wanted to thank all the nice employees .

Speaker #1: The Nice's all around the world . Our partners and our customers that contributed towards this . We've got exciting times ahead . It is an exciting market , but , you know , we've got the the momentum to be able to seize upon it , which we will do .

Speaker #1: So appreciate the time . Everyone today

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

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