Nice Ltd. — Call Transcript 2025

All right. Welcome to day two of the UBS Tech Conference. My name is Seth Gilbert. I'm one of the SMID Software Analysts, SMIDCAP Software Analysts here at UBS. And today we're joined by Beth Gaspich, the CFO of NiCE. So thank you so much for being here. Yeah, thanks, Seth, for having us. Amazing. You have a relatively new CEO. We'll just jump right into it. Sure. You have a relatively new CEO, Scott Russell. Yeah. Can you talk about some of the strategic priorities and maybe how they've changed under his leadership? Yeah, absolutely. So we were very excited this year at the start, out of the gate of 2025 to have Scott Russell join us from SAP. Scott was a key driver at SAP and really driving the transformation in that area with cloud, migrating from premise to cloud, ultimately growing from about EUR 8 billion to over EUR 17 billion for SAP. So he has great experience on continuing to drive and capitalize on the opportunity of organizations that are moving from premise to the cloud. So it was a great opportunity to have him bring in his expertise to help us really capitalize on the next transformation at NiCE. Got it. You recently hosted a Capital Markets Day as well. One of the main takeaways I think we had was you're well positioned to win in the CX/AI market and about accelerating growth. It's another key takeaway. I guess what gives you the conviction that you'll be able to hit the revenue targets and maybe you can discuss any recent acquisitions like Cognigy that might have played into that? Yeah, it's a great question. I think we're very excited. Scott came on board because he saw the opportunity in front of us at NiCE and the strength of the assets that we have. So he has really brought on some strategic priorities that will continue to allow us to drive that growth and continue to accelerate growth in the future. I think I would start with we have a great skill set of AI. It's core to what we do at NiCE and embedded in our core offering. We have recently, as you highlighted, further amplified the strength of that technology through the acquisition of Cognigy, which is a conversational and agentic AI leader in the space and customer experience. So when we bring together both the opportunity in front of us with the ongoing migration of organizations and large enterprise from being on-prem over to the cloud, where today there's still about 60% of enterprises have not yet made that shift, combined with the strength of our AI capabilities, it presents a tremendous opportunity looking ahead. Now, as you start to actually unpack that in terms of what gives us confidence, I think first of all, we see strength in our core business. Throughout this year, we've consistently achieved our expectations on our cloud growth. We have seen 12% routinely cloud growth of our core business throughout the course of this year. And most recently, at our Capital Markets Day, we disclosed our cloud backlog, which there we see a 15% growth year-over-year. That's inclusive of the acquisition of Cognigy. We also see 13% growth in the cloud, excluding Cognigy. So when you look at the indication of the strength of the recent bookings, our strong win rates, and other strong indicators, we see that there are clear signs of potential accelerated growth both in our core business, even prior to the acquisition of Cognigy. So the combination of the two really gives us this conviction looking forward and the strength of the underlying metrics in our business, and also what we've seen from Cognigy both through pre-acquisition and, of course, post-acquisition and the strength of the business that they're driving as well. Got it. Another key takeaway at the Capital Markets Day, you're doing some substantial investments in 2026 related to cloud and AI to accelerate revenue, and I just wanted to know if we could touch on this a little bit. Can you provide a little bit more detail into some of these areas? Maybe you can touch on when you expect margins to recover and how much of the margin compression might be due to M&A? Yeah, I would start with the backdrop that we have financial excellence at NiCE. If you look on the strength of our overall performance, we're about a $3 billion total revenue company driving healthy 70% or so gross margins, 30% plus operating margins. So that's really the core of where we start with our business. And I talked about the opportunity ahead of us, and those are also some of the reasons that Scott Russell decided to join NiCE, is looking at the opportunity ahead of us with the ongoing migration of on-premise to the cloud, but also the opportunity that agentic AI creates for us in terms of how we deliver that into the customer experience market. So, what we looked at is really with the indicators of the recent accelerated growth in the core business indicators, as well as the acquisition of Cognigy. We really wanted to capitalize on the opportunity now and into 2026 to invest further to drive long-term sustained top-line growth. And when you look at those investments, we've estimated to be about $160 million of investments that will be incremental during the course of 2026. And it breaks down really in, I would say, three buckets. There is a bucket of CX and AI and cloud delivery. There is a bucket of go-to-market, and there is a bucket that is related to our product roadmap. When you look at the different components of how you unpack that, first of all, I would highlight that most of this investment of the $160 million is unrelated to Cognigy and the acquisition. There is a modest level of investment there as well. However, most of this is really core to our existing business and continuing to drive growth there. So when you start to get into more of the details of what's included in that $160 million, on the cost of cloud, what you'll see is a combination of both continued investments in areas such as sovereign cloud. We offer our software and our AI cloud platforms into large enterprise. We have, in the last couple of years, had wonderful momentum internationally, seeing strong growth. Part of the area that we're investing there is continued investment in sovereign cloud, meaning that we are actually deploying our CXone cloud platform in regional areas to address data residency, to also ensure we have proper feet on the ground in those areas to support those sovereign clouds, as well as important infrastructure that's underlying those clouds as well. So that's an example of some of the areas we're investing in in cost of goods sold. Also, we're further investing in our third-party partners that we use for deploying our solutions as well. So that's kind of giving flavor around some of the cost of sales. When you move on into the R&D, we are continuing to invest in our product roadmap and our CXone offering predominantly. We today have more than 50% of our revenue that is with large enterprise customers. And so for those customers, we are continuing to add capabilities that will further provide additional functionality to those customers. And that's part of the product roadmap investment that will be consistent with the overall offering of our CX platform and inclusive of our AI capabilities. And then finally, on the go-to-market side, for the go-to-market aspect, it's a combination of both people bringing in additional subject matter experts around all of the different offering that we provide. It is also really capitalizing on a lot of the strategic partnerships that we have signed earlier this year. So with the strategic partnerships, we have either added new partnerships or strengthened existing partnerships throughout the course of this year with AWS, Salesforce, ServiceNow, Snowflake. And with those key partnerships, we are further broadening our go-to-market capabilities. Often that will also include expanding further on portals or marketplaces with some of those organizations. So that is also built into the go-to-market. And then finally, we are also investing in internal AI tools for our sales organization as well. So that's just an area of kind of some further granularity around the spend plan for next year. Got it. Super helpful. I want to switch to the competitive landscape a little bit. There's all these splashy headlines for AI-native companies nowadays. You have competitors like Zoom, Salesforce, Agentforce, and Amazon. They've been ramping as they've been in the market for a little bit longer with their respective products. Has this changed, in your view, the competitive landscape at all? Are you seeing some of those maybe AI-native competitors coming up, or are you playing in a little bit of a different market? First, I would share from our standpoint, we view it as validation that we are in a great space, that customer experience is an area where others are investing and are interested in. It means that it's an exciting opportunity, which is exactly why we're looking to capitalize on this opportunity now with the strength of our portfolio. What sets us apart at NiCE is really the power of the platform. Our platform is fully integrating omnichannel routing, analytics, workforce engagement, and agentic capabilities that we offer. It's unique in the sense that it's an interaction layer and orchestration layer that really can't be matched or paralleled by other offerings that are out in the marketplace. And of course, this is also further complemented by the strong set of proprietary data models that we have that are specific for CX and customer experience, and that actually can be used to complement our AI capabilities and drive better outcomes for our customers, both in terms of average handling time as well as the end consumer sentiment. So we're packaging all of that together in a platform that is really unparalleled and one of the reasons why we continue to be a leader in our space in customer experience. Got it. Maybe one more on the competitive landscape. You're also partners with companies like Salesforce and Amazon. So I'd be curious to know a little bit about the push and pull of those relationships. Are these partnerships creating value for you today? So we operate in a space where there is a considerable amount of co-opetition, which is normal in enterprise software. And it's yet another indication of validation that these players in the market that are partnering with us and other players as well really are looking to take advantage of the opportunity that exists in these markets. I mentioned several of the partners where we have relationships and expanded relationships. So for many years, we have been highly integrated with Salesforce and other CRMs in terms of the offering, which provides a better experience both for the employees that are using the platform as well as the experience that the consumer receives. So there's a co-opetition in terms of the nature of how we interact with the partners. So it's beneficial and ultimately a win-win both for them and us by providing this seamless integration to our customers. In many cases, most of these partners are both integration partners that we integrate the solutions and applications with. And in most cases, they are also resellers or referral partners. And at NiCE, during the course of this year, 73% of our CXone new bookings have been partner-led. So they're also really critical as we look forward to the next step of our continued growth and accelerated top-line expectation by having that extended relationship both from the technical integration aspect, but also the reseller and referral relationships that we have as well. Got it. One more on partnerships as well. We had Vlad Shmunis from RingCentral on stage yesterday. They also have a pretty substantial partnership with NiCE, and they just renewed it as well. But they also have their own solution. So I'd be curious to know how that partnership continues to evolve and how you see that relationship moving forward. Yeah, so we've been partnering with RingCentral for many years, and we're very happy that we just recently, as you highlighted, renewed that relationship with Ring. I think when you think about RingCentral, where they operate and where we operate at NiCE, it's very distinct that the offering that RingCentral has is appropriate for the lower end of the market in terms of really more of the SMB space. But they partner with NiCE specifically because as they move up market and into the large enterprise, they need a player and an offering that can support the complexity and the ability to scale in the very large enterprise. And so that's where we fit in and why they come to us to have a strong relationship with to really enter and have ability to step into the high end of the market where we really thrive at NiCE. Got it. Makes sense. AI is growing. We've seen that from at least one of your competitors, Five9, who we also have on stage. And in 3Q, Five9 came in a bit light on the non-AI subscription revenue growth. Can we spend a moment talking about AI versus non-AI? Is AI leading to a decline in seats at all? And how are you thinking about the split here? Both are important, but I'd be curious to get your thoughts. So in our business, the key driver of our business is our CXone platform. There are components and solutions as part of the platform that are AI-specific, and then there is the core of the business, which is more of omnichannel routing and WEM and analytics. So what we see in the core of the business is that the largest growth driver, not surprisingly, is our AI growth. And we've continued to report on that through the course of this year with strong growth. Recently, in Q3, 43% year-over-year growth in our AI and Salesforce capabilities off our CXone platform. So we see that as a strong growth driver. And the other aspects of our business, we continue to see nice growth there as well. But really, the key driver is the overall AI component of the offering. So as we look forward, one of the pieces of information that we're looking at that gives us confidence is both that core steady growth that we're seeing in the core of the business and the non-AI aspects, and then, of course, accelerated and being amplified further by the AI acceleration and trend that we're seeing there. And at NiCE, our pricing model is designed in a way that as AI interactions accelerate and continue to expand, our AI revenue accompanies that. And so that gives us confidence, again, in terms of the go-forward aspect with what we're seeing in AI, but also coupled with the strong kind of steady growth in the foundational layer of the platform. And why do you bother pricing? Because it's something that we hear from investors and from our channel checks as well. I think there's periods of time where you're able to take price, and then there's periods of time where we hear from the channel that pricing is moving down. So I'd be curious to get your thoughts on where we are in pricing today. Has it been moving up, down, left, right? And then also with AI, it's maybe a little bit of a new area of budget for some folks, some of your customers. And some of your customers might be willing to spend, and others may be not as willing to spend. So I guess a two-parter. One is where are we kind of in the current pricing environment, and how is AI impacting the pricing environment? Yeah, it's a great question. I think I would step back first and just highlight a little bit of the structure and how we enter into commercial agreements with customers. We sell CXone across all aspects of the market in terms of the size of customer, SMB on up to very large enterprise. However, really, where we thrive and where we see the greatest opportunity ahead is in the large enterprise. And I highlight that when you think about the commercial structure, typically what you see is those large enterprises are entering into a committed spend with us over a multi-year period. And so then you apply the pricing model that's inside of that. And how the pricing model works is it's really two-pronged. So we have a hybrid approach. One prong is based on users or seats, and the other is based on sessions or interactions. And so, for those customers, those customers can either buy the human-led agent seats under the agent-based pricing. And for more of the AI capabilities that are AI agents, for those, they tend to be interaction-based pricing. And then, of course, there are sometimes offerings that we provide, such as a co-pilot where we are actually augmenting the human agent in the contact center that will have a component of both users and sessions. So our pricing model has really been in place for some time that allows for the shift that we've been seeing to ever-increasing volumes of more and more agentless interactions or AI-based interaction volumes. So that is what we're seeing as a trend. I think when you think about the non-AI-based pricing or the user pricing, it's more or less remained stable in terms of the overall price that you would think on a per-user basis for the platform. Got it. And then as you continue to move further up market with some of these larger deals and these larger deals start to ramp, can you talk about how that will change the revenue mix and maybe even the margin mix at NiCE? And then maybe as a follow-up, can you talk about some of the puts and takes associated with this mix shift towards larger customers? Absolutely. At our most recent Capital Markets Day, I actually shared some data around the stickiness of our customers, that our customers continue to come back, and we will cross-sell and upsell into the customers with a multitude of solutions that we have on our platform. At the high end of the market, there's a high level of complexity that's required around customer experience, and that entails having all of these different capabilities that are needed to deliver upon that, so that is all embedded in the offering that we're providing. Got it. And then maybe switching over to the international side. In terms of international expansion, can you talk a little bit about the sovereign clouds and how you guys differentiate there? Yeah, with respect to our international momentum, we have seen some really great growth in the past couple of years. And in fact, we have signed two 100 million TCV deals out of our international region over the past couple of years. So we're seeing really strong momentum selling our cloud and AI platform there. As a result of that, we have continued to invest in sovereign cloud environments. And sovereign cloud is where we're deploying our CXone platform into regions to have data residency that will also include a high level of data security and compliance that's required in these different regions. So it's an area where we are distinct in terms of the ability to offer these sovereign cloud environments. It's given a great competitive advantage for those organizations, especially large enterprise and governmental agencies that are looking for the level of scalability and confidence in our security and compliance capabilities to the size and scale that we can deliver at NiCE. It's an area where we're continuing to invest in. I highlighted earlier as one of the areas that we are investing and continuing to invest in during the course of 2026 to continue to capitalize on the opportunity. Because as we look at the international markets, they're still highly underpenetrated in terms of the opportunity to shift customers onto the cloud and further that through the AI offering as well. Got it. And how does this set you apart from your competition, if at all? Are there some of your competitors where you might compete with a market that offer more of the sovereign clouds as much as you guys do? Or is it a big point of differentiation for you when you go into these meetings with customers? It's a very highlighted point of differentiation. And NiCE is very distinct in our ability to be able to offer this level of sovereign deployment in country, especially at the size and scale that is required for the large organizations that we're dealing with. And of course, these customers can continue to buy more and more of the offering as we continue to offer more AI capabilities that also allow them to continue to shift from the higher cost of human labor over to using our AI capabilities. So it's a great ROI for our customers, and it drives incremental revenue for us. Got it. Maybe we'll shift over a little bit to capital allocation, and I'd be curious to know what you're thinking about share purchases and also maybe you can touch on furthering M&A as a tool in the toolkit. Sure. When we think about our capital allocation strategy, there's essentially three pillars. One of which is continued prioritization of investment. So that's investment both back into our business organically and that we've talked a little bit about. It's also ongoing investment that may be through M&A. The second pillar would be share buybacks that we continue having a program. And then the third is just the strength of our overall financial foundation as a company, but the robust balance sheet that we have and the significant amount of cash flow we generate. So let me talk a little bit more about each one. When we think about investment, if we look at what's expected in 2026, we expect most of that prioritized investment to be the $160 million that we talked about of incremental spend back into the business. We just recently concluded the acquisition of Cognigy, and that's where most of our focus is expected to be during the course of the coming 12 to 18 months, is continuing to drive momentum in that business and prioritize the integration that we're looking forward to, the accelerated growth that will come from that acquisition. So that's with respect to acquisitions. In addition to that, we do leave ourselves open to potentially doing more tuck-in type acquisitions. And so that is something that as we look at what our customers are looking for in terms of additional capabilities into the platform, that we leave ourselves open for additional acquisitions. The second pillar I mentioned was the share buyback. So earlier this year, we mentioned a $500 million share buyback. We have already increased through the end of Q3 an 18% increase in our share buyback on a year-to-date basis. It continues to be a priority for us in terms of the buyback. And we're in a beneficial position that we generate a significant amount of healthy cash flow at NiCE. In fact, we've generated almost $700 million over the last 12 months. So that allows us to continue to utilize that $500 million buyback program that we have in place. And then finally, the health of our balance sheet. And with our balance sheet, our balance sheet currently is debt-free. We just paid off some of the debt on our balance sheet at the end of the third quarter. So we also remain open to taking on additional financing, really up to the level about one times EBITDA in terms of potential financing that we might consider taking as well. So those are kind of the three pillars and kind of adding some additional color around capital allocation. Got it. Thank you so much. I think that's all the time we have for today. Thank you for joining us, and thanks for being here. Yes, thank you for having us. Appreciate it. Thank you.

Speaker 2: All right. Welcome to day two of the UBS Tech Conference. My name is Seth Gilbert. I'm one of the SMID Software Analysts, SMIDCAP Software Analysts here at UBS. And today we're joined by Beth Gaspich, the CFO of NiCE. So thank you so much for being here. All right. all right Welcome to day two of the UBS Tech Conference. welcome to day two of the ubs tech conference My name is Seth Gilbert. my name is seth gilbert I'm one of the SMID Software Analysts, SMIDCAP Software Analysts here at UBS. i'm one of the smid software analysts smidcap software analysts here at ubs And today we're joined by Beth Gaspich, the CFO of NiCE. and today we're joined by beth gaspich the cfo of nice So thank you so much for being here. so thank you so much for being here

Speaker 1: Yeah, thanks, Seth, for having us. Yeah, thanks, Seth, for having us. yeah thanks seth for having us

Speaker 2: Amazing. You have a relatively new CEO. We'll just jump right into it. Amazing. amazing You have a relatively new CEO. you have a relatively new ceo We'll just jump right into it. we'll just jump right into it

Speaker 1: Sure. Sure. sure

Speaker 2: You have a relatively new CEO, Scott Russell. You have a relatively new CEO, Scott Russell. you have a relatively new ceo scott russell

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Can you talk about some of the strategic priorities and maybe how they've changed under his leadership? Can you talk about some of the strategic priorities and maybe how they've changed under his leadership? can you talk about some of the strategic priorities and maybe how they've changed under his leadership

Speaker 1: Yeah, absolutely. So we were very excited this year at the start, out of the gate of 2025 to have Scott Russell join us from SAP. Scott was a key driver at SAP and really driving the transformation in that area with cloud, migrating from premise to cloud, ultimately growing from about EUR 8 billion to over EUR 17 billion for SAP. So he has great experience on continuing to drive and capitalize on the opportunity of organizations that are moving from premise to the cloud. So it was a great opportunity to have him bring in his expertise to help us really capitalize on the next transformation at NiCE. Yeah, absolutely. yeah absolutely So we were very excited this year at the start, out of the gate of 2025 to have Scott Russell join us from SAP. so we were very excited this year at the start out of the gate of 2025 to have scott russell join us from sap Scott was a key driver at SAP and really driving the transformation in that area with cloud, migrating from premise to cloud, ultimately growing from about EUR 8 billion to over EUR 17 billion for SAP. scott was a key driver at sap and really driving the transformation in that area with cloud migrating from premise to cloud ultimately growing from about eur 8 billion to over eur 17 billion for sap So he has great experience on continuing to drive and capitalize on the opportunity of organizations that are moving from premise to the cloud. so he has great experience on continuing to drive and capitalize on the opportunity of organizations that are moving from premise to the cloud So it was a great opportunity to have him bring in his expertise to help us really capitalize on the next transformation at NiCE. so it was a great opportunity to have him bring in his expertise to help us really capitalize on the next transformation at nice

Speaker 2: Got it. You recently hosted a Capital Markets Day as well. One of the main takeaways I think we had was you're well positioned to win in the CX/AI market and about accelerating growth. It's another key takeaway. I guess what gives you the conviction that you'll be able to hit the revenue targets and maybe you can discuss any recent acquisitions like Cognigy that might have played into that? Got it. got it You recently hosted a Capital Markets Day as well. you recently hosted a capital markets day as well One of the main takeaways I think we had was you're well positioned to win in the CX/AI market and about accelerating growth. one of the main takeaways i think we had was you're well positioned to win in the cx/ai market and about accelerating growth It's another key takeaway. it's another key takeaway I guess what gives you the conviction that you'll be able to hit the revenue targets and maybe you can discuss any recent acquisitions like Cognigy that might have played into that? i guess what gives you the conviction that you'll be able to hit the revenue targets and maybe you can discuss any recent acquisitions like cognigy that might have played into that

Speaker 1: Yeah, it's a great question. I think we're very excited. Scott came on board because he saw the opportunity in front of us at NiCE and the strength of the assets that we have. So he has really brought on some strategic priorities that will continue to allow us to drive that growth and continue to accelerate growth in the future. I think I would start with we have a great skill set of AI. It's core to what we do at NiCE and embedded in our core offering. We have recently, as you highlighted, further amplified the strength of that technology through the acquisition of Cognigy, which is a conversational and agentic AI leader in the space and customer experience. Yeah, it's a great question. yeah it's a great question I think we're very excited. i think we're very excited Scott came on board because he saw the opportunity in front of us at NiCE and the strength of the assets that we have. scott came on board because he saw the opportunity in front of us at nice and the strength of the assets that we have So he has really brought on some strategic priorities that will continue to allow us to drive that growth and continue to accelerate growth in the future. so he has really brought on some strategic priorities that will continue to allow us to drive that growth and continue to accelerate growth in the future I think I would start with we have a great skill set of AI. i think i would start with we have a great skill set of ai It's core to what we do at NiCE and embedded in our core offering. it's core to what we do at nice and embedded in our core offering We have recently, as you highlighted, further amplified the strength of that technology through the acquisition of Cognigy, which is a conversational and agentic AI leader in the space and customer experience. we have recently as you highlighted further amplified the strength of that technology through the acquisition of cognigy which is a conversational and agentic ai leader in the space and customer experience So when we bring together both the opportunity in front of us with the ongoing migration of organizations and large enterprise from being on-prem over to the cloud, where today there's still about 60% of enterprises have not yet made that shift, combined with the strength of our AI capabilities, it presents a tremendous opportunity looking ahead. Now, as you start to actually unpack that in terms of what gives us confidence, I think first of all, we see strength in our core business. Throughout this year, we've consistently achieved our expectations on our cloud growth. We have seen 12% routinely cloud growth of our core business throughout the course of this year. And most recently, at our Capital Markets Day, we disclosed our cloud backlog, which there we see a 15% growth year-over-year. That's inclusive of the acquisition of Cognigy. So when we bring together both the opportunity in front of us with the ongoing migration of organizations and large enterprise from being on-prem over to the cloud, where today there's still about 60% of enterprises have not yet made that shift, combined with the strength of our AI capabilities, it presents a tremendous opportunity looking ahead. so when we bring together both the opportunity in front of us with the ongoing migration of organizations and large enterprise from being on-prem over to the cloud where today there's still about 60% of enterprises have not yet made that shift combined with the strength of our ai capabilities it presents a tremendous opportunity looking ahead Now, as you start to actually unpack that in terms of what gives us confidence, I think first of all, we see strength in our core business. now as you start to actually unpack that in terms of what gives us confidence i think first of all we see strength in our core business Throughout this year, we've consistently achieved our expectations on our cloud growth. throughout this year we've consistently achieved our expectations on our cloud growth We have seen 12% routinely cloud growth of our core business throughout the course of this year. we have seen 12% routinely cloud growth of our core business throughout the course of this year And most recently, at our Capital Markets Day, we disclosed our cloud backlog, which there we see a 15% growth year-over-year. and most recently at our capital markets day we disclosed our cloud backlog which there we see a 15% growth year-over-year That's inclusive of the acquisition of Cognigy. that's inclusive of the acquisition of cognigy We also see 13% growth in the cloud, excluding Cognigy. So when you look at the indication of the strength of the recent bookings, our strong win rates, and other strong indicators, we see that there are clear signs of potential accelerated growth both in our core business, even prior to the acquisition of Cognigy. So the combination of the two really gives us this conviction looking forward and the strength of the underlying metrics in our business, and also what we've seen from Cognigy both through pre-acquisition and, of course, post-acquisition and the strength of the business that they're driving as well. We also see 13% growth in the cloud, excluding Cognigy. we also see 13% growth in the cloud excluding cognigy So when you look at the indication of the strength of the recent bookings, our strong win rates, and other strong indicators, we see that there are clear signs of potential accelerated growth both in our core business, even prior to the acquisition of Cognigy. so when you look at the indication of the strength of the recent bookings our strong win rates and other strong indicators we see that there are clear signs of potential accelerated growth both in our core business even prior to the acquisition of cognigy So the combination of the two really gives us this conviction looking forward and the strength of the underlying metrics in our business, and also what we've seen from Cognigy both through pre-acquisition and, of course, post-acquisition and the strength of the business that they're driving as well. so the combination of the two really gives us this conviction looking forward and the strength of the underlying metrics in our business and also what we've seen from cognigy both through pre-acquisition and of course post-acquisition and the strength of the business that they're driving as well

Speaker 2: Got it. Another key takeaway at the Capital Markets Day, you're doing some substantial investments in 2026 related to cloud and AI to accelerate revenue, and I just wanted to know if we could touch on this a little bit. Can you provide a little bit more detail into some of these areas? Maybe you can touch on when you expect margins to recover and how much of the margin compression might be due to M&A? Got it. got it Another key takeaway at the Capital Markets Day, you're doing some substantial investments in 2026 related to cloud and AI to accelerate revenue, and I just wanted to know if we could touch on this a little bit. another key takeaway at the capital markets day you're doing some substantial investments in 2026 related to cloud and ai to accelerate revenue and i just wanted to know if we could touch on this a little bit Can you provide a little bit more detail into some of these areas? can you provide a little bit more detail into some of these areas Maybe you can touch on when you expect margins to recover and how much of the margin compression might be due to M&A? maybe you can touch on when you expect margins to recover and how much of the margin compression might be due to m&a

Speaker 1: Yeah, I would start with the backdrop that we have financial excellence at NiCE. If you look on the strength of our overall performance, we're about a $3 billion total revenue company driving healthy 70% or so gross margins, 30% plus operating margins. So that's really the core of where we start with our business. And I talked about the opportunity ahead of us, and those are also some of the reasons that Scott Russell decided to join NiCE, is looking at the opportunity ahead of us with the ongoing migration of on-premise to the cloud, but also the opportunity that agentic AI creates for us in terms of how we deliver that into the customer experience market. Yeah, I would start with the backdrop that we have financial excellence at NiCE. yeah i would start with the backdrop that we have financial excellence at nice If you look on the strength of our overall performance, we're about a $3 billion total revenue company driving healthy 70% or so gross margins, 30% plus operating margins. if you look on the strength of our overall performance we're about a $3 billion total revenue company driving healthy 70% or so gross margins 30% plus operating margins So that's really the core of where we start with our business. so that's really the core of where we start with our business And I talked about the opportunity ahead of us, and those are also some of the reasons that Scott Russell decided to join NiCE, is looking at the opportunity ahead of us with the ongoing migration of on-premise to the cloud, but also the opportunity that agentic AI creates for us in terms of how we deliver that into the customer experience market. and i talked about the opportunity ahead of us and those are also some of the reasons that scott russell decided to join nice is looking at the opportunity ahead of us with the ongoing migration of on-premise to the cloud but also the opportunity that agentic ai creates for us in terms of how we deliver that into the customer experience market So, what we looked at is really with the indicators of the recent accelerated growth in the core business indicators, as well as the acquisition of Cognigy. We really wanted to capitalize on the opportunity now and into 2026 to invest further to drive long-term sustained top-line growth. And when you look at those investments, we've estimated to be about $160 million of investments that will be incremental during the course of 2026. And it breaks down really in, I would say, three buckets. There is a bucket of CX and AI and cloud delivery. There is a bucket of go-to-market, and there is a bucket that is related to our product roadmap. When you look at the different components of how you unpack that, first of all, I would highlight that most of this investment of the $160 million is unrelated to Cognigy and the acquisition. So, what we looked at is really with the indicators of the recent accelerated growth in the core business indicators, as well as the acquisition of Cognigy. so what we looked at is really with the indicators of the recent accelerated growth in the core business indicators as well as the acquisition of cognigy We really wanted to capitalize on the opportunity now and into 2026 to invest further to drive long-term sustained top-line growth. we really wanted to capitalize on the opportunity now and into 2026 to invest further to drive long-term sustained top-line growth And when you look at those investments, we've estimated to be about $160 million of investments that will be incremental during the course of 2026. and when you look at those investments we've estimated to be about $160 million of investments that will be incremental during the course of 2026 And it breaks down really in, I would say, three buckets. and it breaks down really in i would say three buckets There is a bucket of CX and AI and cloud delivery. there is a bucket of cx and ai and cloud delivery There is a bucket of go-to-market, and there is a bucket that is related to our product roadmap. there is a bucket of go-to-market and there is a bucket that is related to our product roadmap When you look at the different components of how you unpack that, first of all, I would highlight that most of this investment of the $160 million is unrelated to Cognigy and the acquisition. when you look at the different components of how you unpack that first of all i would highlight that most of this investment of the $160 million is unrelated to cognigy and the acquisition There is a modest level of investment there as well. However, most of this is really core to our existing business and continuing to drive growth there. So when you start to get into more of the details of what's included in that $160 million, on the cost of cloud, what you'll see is a combination of both continued investments in areas such as sovereign cloud. We offer our software and our AI cloud platforms into large enterprise. We have, in the last couple of years, had wonderful momentum internationally, seeing strong growth. There is a modest level of investment there as well. there is a modest level of investment there as well However, most of this is really core to our existing business and continuing to drive growth there. however most of this is really core to our existing business and continuing to drive growth there So when you start to get into more of the details of what's included in that $160 million, on the cost of cloud, what you'll see is a combination of both continued investments in areas such as sovereign cloud. so when you start to get into more of the details of what's included in that $160 million on the cost of cloud what you'll see is a combination of both continued investments in areas such as sovereign cloud We offer our software and our AI cloud platforms into large enterprise. we offer our software and our ai cloud platforms into large enterprise We have, in the last couple of years, had wonderful momentum internationally, seeing strong growth. we have in the last couple of years had wonderful momentum internationally seeing strong growth Part of the area that we're investing there is continued investment in sovereign cloud, meaning that we are actually deploying our CXone cloud platform in regional areas to address data residency, to also ensure we have proper feet on the ground in those areas to support those sovereign clouds, as well as important infrastructure that's underlying those clouds as well. So that's an example of some of the areas we're investing in in cost of goods sold. Also, we're further investing in our third-party partners that we use for deploying our solutions as well. So that's kind of giving flavor around some of the cost of sales. When you move on into the R&D, we are continuing to invest in our product roadmap and our CXone offering predominantly. We today have more than 50% of our revenue that is with large enterprise customers. Part of the area that we're investing there is continued investment in sovereign cloud, meaning that we are actually deploying our CXone cloud platform in regional areas to address data residency, to also ensure we have proper feet on the ground in those areas to support those sovereign clouds, as well as important infrastructure that's underlying those clouds as well. part of the area that we're investing there is continued investment in sovereign cloud meaning that we are actually deploying our cxone cloud platform in regional areas to address data residency to also ensure we have proper feet on the ground in those areas to support those sovereign clouds as well as important infrastructure that's underlying those clouds as well So that's an example of some of the areas we're investing in in cost of goods sold. so that's an example of some of the areas we're investing in in cost of goods sold Also, we're further investing in our third-party partners that we use for deploying our solutions as well. also we're further investing in our third-party partners that we use for deploying our solutions as well So that's kind of giving flavor around some of the cost of sales. so that's kind of giving flavor around some of the cost of sales When you move on into the R&D, we are continuing to invest in our product roadmap and our CXone offering predominantly. when you move on into the r&d we are continuing to invest in our product roadmap and our cxone offering predominantly We today have more than 50% of our revenue that is with large enterprise customers. we today have more than 50% of our revenue that is with large enterprise customers And so for those customers, we are continuing to add capabilities that will further provide additional functionality to those customers. And that's part of the product roadmap investment that will be consistent with the overall offering of our CX platform and inclusive of our AI capabilities. And then finally, on the go-to-market side, for the go-to-market aspect, it's a combination of both people bringing in additional subject matter experts around all of the different offering that we provide. It is also really capitalizing on a lot of the strategic partnerships that we have signed earlier this year. So with the strategic partnerships, we have either added new partnerships or strengthened existing partnerships throughout the course of this year with AWS, Salesforce, ServiceNow, Snowflake. And with those key partnerships, we are further broadening our go-to-market capabilities. And so for those customers, we are continuing to add capabilities that will further provide additional functionality to those customers. and so for those customers we are continuing to add capabilities that will further provide additional functionality to those customers And that's part of the product roadmap investment that will be consistent with the overall offering of our CX platform and inclusive of our AI capabilities. and that's part of the product roadmap investment that will be consistent with the overall offering of our cx platform and inclusive of our ai capabilities And then finally, on the go-to-market side, for the go-to-market aspect, it's a combination of both people bringing in additional subject matter experts around all of the different offering that we provide. and then finally on the go-to-market side for the go-to-market aspect it's a combination of both people bringing in additional subject matter experts around all of the different offering that we provide It is also really capitalizing on a lot of the strategic partnerships that we have signed earlier this year. it is also really capitalizing on a lot of the strategic partnerships that we have signed earlier this year So with the strategic partnerships, we have either added new partnerships or strengthened existing partnerships throughout the course of this year with AWS, Salesforce, ServiceNow, Snowflake. so with the strategic partnerships we have either added new partnerships or strengthened existing partnerships throughout the course of this year with aws salesforce servicenow snowflake And with those key partnerships, we are further broadening our go-to-market capabilities. and with those key partnerships we are further broadening our go-to-market capabilities Often that will also include expanding further on portals or marketplaces with some of those organizations. So that is also built into the go-to-market. And then finally, we are also investing in internal AI tools for our sales organization as well. So that's just an area of kind of some further granularity around the spend plan for next year. Often that will also include expanding further on portals or marketplaces with some of those organizations. often that will also include expanding further on portals or marketplaces with some of those organizations So that is also built into the go-to-market. so that is also built into the go-to-market And then finally, we are also investing in internal AI tools for our sales organization as well. and then finally we are also investing in internal ai tools for our sales organization as well So that's just an area of kind of some further granularity around the spend plan for next year. so that's just an area of kind of some further granularity around the spend plan for next year

Speaker 2: Got it. Super helpful. I want to switch to the competitive landscape a little bit. There's all these splashy headlines for AI-native companies nowadays. You have competitors like Zoom, Salesforce, Agentforce, and Amazon. They've been ramping as they've been in the market for a little bit longer with their respective products. Has this changed, in your view, the competitive landscape at all? Are you seeing some of those maybe AI-native competitors coming up, or are you playing in a little bit of a different market? Got it. got it Super helpful. super helpful I want to switch to the competitive landscape a little bit. i want to switch to the competitive landscape a little bit There's all these splashy headlines for AI-native companies nowadays. there's all these splashy headlines for ai-native companies nowadays You have competitors like Zoom, Salesforce, Agentforce, and Amazon. you have competitors like zoom salesforce agentforce and amazon They've been ramping as they've been in the market for a little bit longer with their respective products. they've been ramping as they've been in the market for a little bit longer with their respective products Has this changed, in your view, the competitive landscape at all? has this changed in your view the competitive landscape at all Are you seeing some of those maybe AI-native competitors coming up, or are you playing in a little bit of a different market? are you seeing some of those maybe ai-native competitors coming up or are you playing in a little bit of a different market

Speaker 1: First, I would share from our standpoint, we view it as validation that we are in a great space, that customer experience is an area where others are investing and are interested in. It means that it's an exciting opportunity, which is exactly why we're looking to capitalize on this opportunity now with the strength of our portfolio. What sets us apart at NiCE is really the power of the platform. Our platform is fully integrating omnichannel routing, analytics, workforce engagement, and agentic capabilities that we offer. It's unique in the sense that it's an interaction layer and orchestration layer that really can't be matched or paralleled by other offerings that are out in the marketplace. First, I would share from our standpoint, we view it as validation that we are in a great space, that customer experience is an area where others are investing and are interested in. first i would share from our standpoint we view it as validation that we are in a great space that customer experience is an area where others are investing and are interested in It means that it's an exciting opportunity, which is exactly why we're looking to capitalize on this opportunity now with the strength of our portfolio. it means that it's an exciting opportunity which is exactly why we're looking to capitalize on this opportunity now with the strength of our portfolio What sets us apart at NiCE is really the power of the platform. what sets us apart at nice is really the power of the platform Our platform is fully integrating omnichannel routing, analytics, workforce engagement, and agentic capabilities that we offer. our platform is fully integrating omnichannel routing analytics workforce engagement and agentic capabilities that we offer It's unique in the sense that it's an interaction layer and orchestration layer that really can't be matched or paralleled by other offerings that are out in the marketplace. it's unique in the sense that it's an interaction layer and orchestration layer that really can't be matched or paralleled by other offerings that are out in the marketplace And of course, this is also further complemented by the strong set of proprietary data models that we have that are specific for CX and customer experience, and that actually can be used to complement our AI capabilities and drive better outcomes for our customers, both in terms of average handling time as well as the end consumer sentiment. So we're packaging all of that together in a platform that is really unparalleled and one of the reasons why we continue to be a leader in our space in customer experience. And of course, this is also further complemented by the strong set of proprietary data models that we have that are specific for CX and customer experience, and that actually can be used to complement our AI capabilities and drive better outcomes for our customers, both in terms of average handling time as well as the end consumer sentiment. and of course this is also further complemented by the strong set of proprietary data models that we have that are specific for cx and customer experience and that actually can be used to complement our ai capabilities and drive better outcomes for our customers both in terms of average handling time as well as the end consumer sentiment So we're packaging all of that together in a platform that is really unparalleled and one of the reasons why we continue to be a leader in our space in customer experience. so we're packaging all of that together in a platform that is really unparalleled and one of the reasons why we continue to be a leader in our space in customer experience

Speaker 2: Got it. Maybe one more on the competitive landscape. You're also partners with companies like Salesforce and Amazon. So I'd be curious to know a little bit about the push and pull of those relationships. Are these partnerships creating value for you today? Got it. got it Maybe one more on the competitive landscape. maybe one more on the competitive landscape You're also partners with companies like Salesforce and Amazon. you're also partners with companies like salesforce and amazon So I'd be curious to know a little bit about the push and pull of those relationships. so i'd be curious to know a little bit about the push and pull of those relationships Are these partnerships creating value for you today? are these partnerships creating value for you today

Speaker 1: So we operate in a space where there is a considerable amount of co-opetition, which is normal in enterprise software. And it's yet another indication of validation that these players in the market that are partnering with us and other players as well really are looking to take advantage of the opportunity that exists in these markets. I mentioned several of the partners where we have relationships and expanded relationships. So for many years, we have been highly integrated with Salesforce and other CRMs in terms of the offering, which provides a better experience both for the employees that are using the platform as well as the experience that the consumer receives. So there's a co-opetition in terms of the nature of how we interact with the partners. So it's beneficial and ultimately a win-win both for them and us by providing this seamless integration to our customers. So we operate in a space where there is a considerable amount of co-opetition, which is normal in enterprise software. so we operate in a space where there is a considerable amount of co-opetition which is normal in enterprise software And it's yet another indication of validation that these players in the market that are partnering with us and other players as well really are looking to take advantage of the opportunity that exists in these markets. and it's yet another indication of validation that these players in the market that are partnering with us and other players as well really are looking to take advantage of the opportunity that exists in these markets I mentioned several of the partners where we have relationships and expanded relationships. i mentioned several of the partners where we have relationships and expanded relationships So for many years, we have been highly integrated with Salesforce and other CRMs in terms of the offering, which provides a better experience both for the employees that are using the platform as well as the experience that the consumer receives. so for many years we have been highly integrated with salesforce and other crms in terms of the offering which provides a better experience both for the employees that are using the platform as well as the experience that the consumer receives So there's a co-opetition in terms of the nature of how we interact with the partners. so there's a co-opetition in terms of the nature of how we interact with the partners So it's beneficial and ultimately a win-win both for them and us by providing this seamless integration to our customers. so it's beneficial and ultimately a win-win both for them and us by providing this seamless integration to our customers In many cases, most of these partners are both integration partners that we integrate the solutions and applications with. And in most cases, they are also resellers or referral partners. And at NiCE, during the course of this year, 73% of our CXone new bookings have been partner-led. So they're also really critical as we look forward to the next step of our continued growth and accelerated top-line expectation by having that extended relationship both from the technical integration aspect, but also the reseller and referral relationships that we have as well. In many cases, most of these partners are both integration partners that we integrate the solutions and applications with. in many cases most of these partners are both integration partners that we integrate the solutions and applications with And in most cases, they are also resellers or referral partners. and in most cases they are also resellers or referral partners And at NiCE, during the course of this year, 73% of our CXone new bookings have been partner-led. and at nice during the course of this year 73% of our cxone new bookings have been partner-led So they're also really critical as we look forward to the next step of our continued growth and accelerated top-line expectation by having that extended relationship both from the technical integration aspect, but also the reseller and referral relationships that we have as well. so they're also really critical as we look forward to the next step of our continued growth and accelerated top-line expectation by having that extended relationship both from the technical integration aspect but also the reseller and referral relationships that we have as well

Speaker 2: Got it. One more on partnerships as well. We had Vlad Shmunis from RingCentral on stage yesterday. They also have a pretty substantial partnership with NiCE, and they just renewed it as well. But they also have their own solution. So I'd be curious to know how that partnership continues to evolve and how you see that relationship moving forward. Got it. got it One more on partnerships as well. one more on partnerships as well We had Vlad Shmunis from RingCentral on stage yesterday. we had vlad shmunis from ringcentral on stage yesterday They also have a pretty substantial partnership with NiCE, and they just renewed it as well. they also have a pretty substantial partnership with nice and they just renewed it as well But they also have their own solution. but they also have their own solution So I'd be curious to know how that partnership continues to evolve and how you see that relationship moving forward. so i'd be curious to know how that partnership continues to evolve and how you see that relationship moving forward

Speaker 1: Yeah, so we've been partnering with RingCentral for many years, and we're very happy that we just recently, as you highlighted, renewed that relationship with Ring. I think when you think about RingCentral, where they operate and where we operate at NiCE, it's very distinct that the offering that RingCentral has is appropriate for the lower end of the market in terms of really more of the SMB space. But they partner with NiCE specifically because as they move up market and into the large enterprise, they need a player and an offering that can support the complexity and the ability to scale in the very large enterprise. And so that's where we fit in and why they come to us to have a strong relationship with to really enter and have ability to step into the high end of the market where we really thrive at NiCE. Yeah, so we've been partnering with RingCentral for many years, and we're very happy that we just recently, as you highlighted, renewed that relationship with Ring. yeah so we've been partnering with ringcentral for many years and we're very happy that we just recently as you highlighted renewed that relationship with ring I think when you think about RingCentral, where they operate and where we operate at NiCE, it's very distinct that the offering that RingCentral has is appropriate for the lower end of the market in terms of really more of the SMB space. i think when you think about ringcentral where they operate and where we operate at nice it's very distinct that the offering that ringcentral has is appropriate for the lower end of the market in terms of really more of the smb space But they partner with NiCE specifically because as they move up market and into the large enterprise, they need a player and an offering that can support the complexity and the ability to scale in the very large enterprise. but they partner with nice specifically because as they move up market and into the large enterprise they need a player and an offering that can support the complexity and the ability to scale in the very large enterprise And so that's where we fit in and why they come to us to have a strong relationship with to really enter and have ability to step into the high end of the market where we really thrive at NiCE. and so that's where we fit in and why they come to us to have a strong relationship with to really enter and have ability to step into the high end of the market where we really thrive at nice

Speaker 2: Got it. Makes sense. AI is growing. We've seen that from at least one of your competitors, Five9, who we also have on stage. And in 3Q, Five9 came in a bit light on the non-AI subscription revenue growth. Can we spend a moment talking about AI versus non-AI? Is AI leading to a decline in seats at all? And how are you thinking about the split here? Both are important, but I'd be curious to get your thoughts. Got it. got it Makes sense. makes sense AI is growing. ai is growing We've seen that from at least one of your competitors, Five9, who we also have on stage. we've seen that from at least one of your competitors five9 who we also have on stage And in 3Q, Five9 came in a bit light on the non-AI subscription revenue growth. and in 3q five9 came in a bit light on the non-ai subscription revenue growth Can we spend a moment talking about AI versus non-AI? can we spend a moment talking about ai versus non-ai Is AI leading to a decline in seats at all? is ai leading to a decline in seats at all And how are you thinking about the split here? and how are you thinking about the split here Both are important, but I'd be curious to get your thoughts. both are important but i'd be curious to get your thoughts

Speaker 1: So in our business, the key driver of our business is our CXone platform. There are components and solutions as part of the platform that are AI-specific, and then there is the core of the business, which is more of omnichannel routing and WEM and analytics. So what we see in the core of the business is that the largest growth driver, not surprisingly, is our AI growth. And we've continued to report on that through the course of this year with strong growth. Recently, in Q3, 43% year-over-year growth in our AI and Salesforce capabilities off our CXone platform. So we see that as a strong growth driver. And the other aspects of our business, we continue to see nice growth there as well. But really, the key driver is the overall AI component of the offering. So in our business, the key driver of our business is our CXone platform. so in our business the key driver of our business is our cxone platform There are components and solutions as part of the platform that are AI-specific, and then there is the core of the business, which is more of omnichannel routing and WEM and analytics. there are components and solutions as part of the platform that are ai-specific and then there is the core of the business which is more of omnichannel routing and wem and analytics So what we see in the core of the business is that the largest growth driver, not surprisingly, is our AI growth. so what we see in the core of the business is that the largest growth driver not surprisingly is our ai growth And we've continued to report on that through the course of this year with strong growth. and we've continued to report on that through the course of this year with strong growth Recently, in Q3, 43% year-over-year growth in our AI and Salesforce capabilities off our CXone platform. recently in q3 43% year-over-year growth in our ai and salesforce capabilities off our cxone platform So we see that as a strong growth driver. so we see that as a strong growth driver And the other aspects of our business, we continue to see nice growth there as well. and the other aspects of our business we continue to see nice growth there as well But really, the key driver is the overall AI component of the offering. but really the key driver is the overall ai component of the offering So as we look forward, one of the pieces of information that we're looking at that gives us confidence is both that core steady growth that we're seeing in the core of the business and the non-AI aspects, and then, of course, accelerated and being amplified further by the AI acceleration and trend that we're seeing there. And at NiCE, our pricing model is designed in a way that as AI interactions accelerate and continue to expand, our AI revenue accompanies that. And so that gives us confidence, again, in terms of the go-forward aspect with what we're seeing in AI, but also coupled with the strong kind of steady growth in the foundational layer of the platform. So as we look forward, one of the pieces of information that we're looking at that gives us confidence is both that core steady growth that we're seeing in the core of the business and the non-AI aspects, and then, of course, accelerated and being amplified further by the AI acceleration and trend that we're seeing there. so as we look forward one of the pieces of information that we're looking at that gives us confidence is both that core steady growth that we're seeing in the core of the business and the non-ai aspects and then of course accelerated and being amplified further by the ai acceleration and trend that we're seeing there And at NiCE, our pricing model is designed in a way that as AI interactions accelerate and continue to expand, our AI revenue accompanies that. and at nice our pricing model is designed in a way that as ai interactions accelerate and continue to expand our ai revenue accompanies that And so that gives us confidence, again, in terms of the go-forward aspect with what we're seeing in AI, but also coupled with the strong kind of steady growth in the foundational layer of the platform. and so that gives us confidence again in terms of the go-forward aspect with what we're seeing in ai but also coupled with the strong kind of steady growth in the foundational layer of the platform

Speaker 2: And why do you bother pricing? Because it's something that we hear from investors and from our channel checks as well. I think there's periods of time where you're able to take price, and then there's periods of time where we hear from the channel that pricing is moving down. So I'd be curious to get your thoughts on where we are in pricing today. Has it been moving up, down, left, right? And then also with AI, it's maybe a little bit of a new area of budget for some folks, some of your customers. And some of your customers might be willing to spend, and others may be not as willing to spend. So I guess a two-parter. One is where are we kind of in the current pricing environment, and how is AI impacting the pricing environment? And why do you bother pricing? and why do you bother pricing Because it's something that we hear from investors and from our channel checks as well. because it's something that we hear from investors and from our channel checks as well I think there's periods of time where you're able to take price, and then there's periods of time where we hear from the channel that pricing is moving down. i think there's periods of time where you're able to take price and then there's periods of time where we hear from the channel that pricing is moving down So I'd be curious to get your thoughts on where we are in pricing today. so i'd be curious to get your thoughts on where we are in pricing today Has it been moving up, down, left, right? has it been moving up down left right And then also with AI, it's maybe a little bit of a new area of budget for some folks, some of your customers. and then also with ai it's maybe a little bit of a new area of budget for some folks some of your customers And some of your customers might be willing to spend, and others may be not as willing to spend. and some of your customers might be willing to spend and others may be not as willing to spend So I guess a two-parter. so i guess a two-parter One is where are we kind of in the current pricing environment, and how is AI impacting the pricing environment? one is where are we kind of in the current pricing environment and how is ai impacting the pricing environment

Speaker 1: Yeah, it's a great question. I think I would step back first and just highlight a little bit of the structure and how we enter into commercial agreements with customers. We sell CXone across all aspects of the market in terms of the size of customer, SMB on up to very large enterprise. However, really, where we thrive and where we see the greatest opportunity ahead is in the large enterprise. And I highlight that when you think about the commercial structure, typically what you see is those large enterprises are entering into a committed spend with us over a multi-year period. And so then you apply the pricing model that's inside of that. And how the pricing model works is it's really two-pronged. So we have a hybrid approach. One prong is based on users or seats, and the other is based on sessions or interactions. Yeah, it's a great question. yeah it's a great question I think I would step back first and just highlight a little bit of the structure and how we enter into commercial agreements with customers. i think i would step back first and just highlight a little bit of the structure and how we enter into commercial agreements with customers We sell CXone across all aspects of the market in terms of the size of customer, SMB on up to very large enterprise. we sell cxone across all aspects of the market in terms of the size of customer smb on up to very large enterprise However, really, where we thrive and where we see the greatest opportunity ahead is in the large enterprise. however really where we thrive and where we see the greatest opportunity ahead is in the large enterprise And I highlight that when you think about the commercial structure, typically what you see is those large enterprises are entering into a committed spend with us over a multi-year period. and i highlight that when you think about the commercial structure typically what you see is those large enterprises are entering into a committed spend with us over a multi-year period And so then you apply the pricing model that's inside of that. and so then you apply the pricing model that's inside of that And how the pricing model works is it's really two-pronged. and how the pricing model works is it's really two-pronged So we have a hybrid approach. so we have a hybrid approach One prong is based on users or seats, and the other is based on sessions or interactions. one prong is based on users or seats and the other is based on sessions or interactions And so, for those customers, those customers can either buy the human-led agent seats under the agent-based pricing. And for more of the AI capabilities that are AI agents, for those, they tend to be interaction-based pricing. And then, of course, there are sometimes offerings that we provide, such as a co-pilot where we are actually augmenting the human agent in the contact center that will have a component of both users and sessions. So our pricing model has really been in place for some time that allows for the shift that we've been seeing to ever-increasing volumes of more and more agentless interactions or AI-based interaction volumes. So that is what we're seeing as a trend. And so, for those customers, those customers can either buy the human-led agent seats under the agent-based pricing. and so for those customers those customers can either buy the human-led agent seats under the agent-based pricing And for more of the AI capabilities that are AI agents, for those, they tend to be interaction-based pricing. and for more of the ai capabilities that are ai agents for those they tend to be interaction-based pricing And then, of course, there are sometimes offerings that we provide, such as a co-pilot where we are actually augmenting the human agent in the contact center that will have a component of both users and sessions. and then of course there are sometimes offerings that we provide such as a co-pilot where we are actually augmenting the human agent in the contact center that will have a component of both users and sessions So our pricing model has really been in place for some time that allows for the shift that we've been seeing to ever-increasing volumes of more and more agentless interactions or AI-based interaction volumes. so our pricing model has really been in place for some time that allows for the shift that we've been seeing to ever-increasing volumes of more and more agentless interactions or ai-based interaction volumes So that is what we're seeing as a trend. so that is what we're seeing as a trend I think when you think about the non-AI-based pricing or the user pricing, it's more or less remained stable in terms of the overall price that you would think on a per-user basis for the platform. I think when you think about the non-AI-based pricing or the user pricing, it's more or less remained stable in terms of the overall price that you would think on a per-user basis for the platform. i think when you think about the non-ai-based pricing or the user pricing it's more or less remained stable in terms of the overall price that you would think on a per-user basis for the platform

Speaker 2: Got it. And then as you continue to move further up market with some of these larger deals and these larger deals start to ramp, can you talk about how that will change the revenue mix and maybe even the margin mix at NiCE? And then maybe as a follow-up, can you talk about some of the puts and takes associated with this mix shift towards larger customers? Got it. got it And then as you continue to move further up market with some of these larger deals and these larger deals start to ramp, can you talk about how that will change the revenue mix and maybe even the margin mix at NiCE? and then as you continue to move further up market with some of these larger deals and these larger deals start to ramp can you talk about how that will change the revenue mix and maybe even the margin mix at nice And then maybe as a follow-up, can you talk about some of the puts and takes associated with this mix shift towards larger customers? and then maybe as a follow-up can you talk about some of the puts and takes associated with this mix shift towards larger customers

Speaker 1: Absolutely. At our most recent Capital Markets Day, I actually shared some data around the stickiness of our customers, that our customers continue to come back, and we will cross-sell and upsell into the customers with a multitude of solutions that we have on our platform. At the high end of the market, there's a high level of complexity that's required around customer experience, and that entails having all of these different capabilities that are needed to deliver upon that, so that is all embedded in the offering that we're providing. Absolutely. absolutely At our most recent Capital Markets Day, I actually shared some data around the stickiness of our customers, that our customers continue to come back, and we will cross-sell and upsell into the customers with a multitude of solutions that we have on our platform. at our most recent capital markets day i actually shared some data around the stickiness of our customers that our customers continue to come back and we will cross-sell and upsell into the customers with a multitude of solutions that we have on our platform At the high end of the market, there's a high level of complexity that's required around customer experience, and that entails having all of these different capabilities that are needed to deliver upon that, so that is all embedded in the offering that we're providing. at the high end of the market there's a high level of complexity that's required around customer experience and that entails having all of these different capabilities that are needed to deliver upon that so that is all embedded in the offering that we're providing

Speaker 2: Got it. And then maybe switching over to the international side. In terms of international expansion, can you talk a little bit about the sovereign clouds and how you guys differentiate there? Got it. got it And then maybe switching over to the international side. and then maybe switching over to the international side In terms of international expansion, can you talk a little bit about the sovereign clouds and how you guys differentiate there? in terms of international expansion can you talk a little bit about the sovereign clouds and how you guys differentiate there

Speaker 1: Yeah, with respect to our international momentum, we have seen some really great growth in the past couple of years. And in fact, we have signed two 100 million TCV deals out of our international region over the past couple of years. So we're seeing really strong momentum selling our cloud and AI platform there. As a result of that, we have continued to invest in sovereign cloud environments. And sovereign cloud is where we're deploying our CXone platform into regions to have data residency that will also include a high level of data security and compliance that's required in these different regions. So it's an area where we are distinct in terms of the ability to offer these sovereign cloud environments. Yeah, with respect to our international momentum, we have seen some really great growth in the past couple of years. yeah with respect to our international momentum we have seen some really great growth in the past couple of years And in fact, we have signed two 100 million TCV deals out of our international region over the past couple of years. and in fact we have signed two 100 million tcv deals out of our international region over the past couple of years So we're seeing really strong momentum selling our cloud and AI platform there. so we're seeing really strong momentum selling our cloud and ai platform there As a result of that, we have continued to invest in sovereign cloud environments. as a result of that we have continued to invest in sovereign cloud environments And sovereign cloud is where we're deploying our CXone platform into regions to have data residency that will also include a high level of data security and compliance that's required in these different regions. and sovereign cloud is where we're deploying our cxone platform into regions to have data residency that will also include a high level of data security and compliance that's required in these different regions So it's an area where we are distinct in terms of the ability to offer these sovereign cloud environments. so it's an area where we are distinct in terms of the ability to offer these sovereign cloud environments It's given a great competitive advantage for those organizations, especially large enterprise and governmental agencies that are looking for the level of scalability and confidence in our security and compliance capabilities to the size and scale that we can deliver at NiCE. It's an area where we're continuing to invest in. I highlighted earlier as one of the areas that we are investing and continuing to invest in during the course of 2026 to continue to capitalize on the opportunity. Because as we look at the international markets, they're still highly underpenetrated in terms of the opportunity to shift customers onto the cloud and further that through the AI offering as well. It's given a great competitive advantage for those organizations, especially large enterprise and governmental agencies that are looking for the level of scalability and confidence in our security and compliance capabilities to the size and scale that we can deliver at NiCE. it's given a great competitive advantage for those organizations especially large enterprise and governmental agencies that are looking for the level of scalability and confidence in our security and compliance capabilities to the size and scale that we can deliver at nice It's an area where we're continuing to invest in. it's an area where we're continuing to invest in I highlighted earlier as one of the areas that we are investing and continuing to invest in during the course of 2026 to continue to capitalize on the opportunity. i highlighted earlier as one of the areas that we are investing and continuing to invest in during the course of 2026 to continue to capitalize on the opportunity Because as we look at the international markets, they're still highly underpenetrated in terms of the opportunity to shift customers onto the cloud and further that through the AI offering as well. because as we look at the international markets they're still highly underpenetrated in terms of the opportunity to shift customers onto the cloud and further that through the ai offering as well

Speaker 2: Got it. And how does this set you apart from your competition, if at all? Are there some of your competitors where you might compete with a market that offer more of the sovereign clouds as much as you guys do? Or is it a big point of differentiation for you when you go into these meetings with customers? Got it. got it And how does this set you apart from your competition, if at all? and how does this set you apart from your competition if at all Are there some of your competitors where you might compete with a market that offer more of the sovereign clouds as much as you guys do? are there some of your competitors where you might compete with a market that offer more of the sovereign clouds as much as you guys do Or is it a big point of differentiation for you when you go into these meetings with customers? or is it a big point of differentiation for you when you go into these meetings with customers

Speaker 1: It's a very highlighted point of differentiation. And NiCE is very distinct in our ability to be able to offer this level of sovereign deployment in country, especially at the size and scale that is required for the large organizations that we're dealing with. And of course, these customers can continue to buy more and more of the offering as we continue to offer more AI capabilities that also allow them to continue to shift from the higher cost of human labor over to using our AI capabilities. So it's a great ROI for our customers, and it drives incremental revenue for us. It's a very highlighted point of differentiation. it's a very highlighted point of differentiation And NiCE is very distinct in our ability to be able to offer this level of sovereign deployment in country, especially at the size and scale that is required for the large organizations that we're dealing with. and nice is very distinct in our ability to be able to offer this level of sovereign deployment in country especially at the size and scale that is required for the large organizations that we're dealing with And of course, these customers can continue to buy more and more of the offering as we continue to offer more AI capabilities that also allow them to continue to shift from the higher cost of human labor over to using our AI capabilities. and of course these customers can continue to buy more and more of the offering as we continue to offer more ai capabilities that also allow them to continue to shift from the higher cost of human labor over to using our ai capabilities So it's a great ROI for our customers, and it drives incremental revenue for us. so it's a great roi for our customers and it drives incremental revenue for us

Speaker 2: Got it. Maybe we'll shift over a little bit to capital allocation, and I'd be curious to know what you're thinking about share purchases and also maybe you can touch on furthering M&A as a tool in the toolkit. Got it. got it Maybe we'll shift over a little bit to capital allocation, and I'd be curious to know what you're thinking about share purchases and also maybe you can touch on furthering M&A as a tool in the toolkit. maybe we'll shift over a little bit to capital allocation and i'd be curious to know what you're thinking about share purchases and also maybe you can touch on furthering m&a as a tool in the toolkit

Speaker 1: Sure. When we think about our capital allocation strategy, there's essentially three pillars. One of which is continued prioritization of investment. So that's investment both back into our business organically and that we've talked a little bit about. It's also ongoing investment that may be through M&A. The second pillar would be share buybacks that we continue having a program. And then the third is just the strength of our overall financial foundation as a company, but the robust balance sheet that we have and the significant amount of cash flow we generate. So let me talk a little bit more about each one. When we think about investment, if we look at what's expected in 2026, we expect most of that prioritized investment to be the $160 million that we talked about of incremental spend back into the business. Sure. sure When we think about our capital allocation strategy, there's essentially three pillars. when we think about our capital allocation strategy there's essentially three pillars One of which is continued prioritization of investment. one of which is continued prioritization of investment So that's investment both back into our business organically and that we've talked a little bit about. so that's investment both back into our business organically and that we've talked a little bit about It's also ongoing investment that may be through M&A. it's also ongoing investment that may be through m&a The second pillar would be share buybacks that we continue having a program. the second pillar would be share buybacks that we continue having a program And then the third is just the strength of our overall financial foundation as a company, but the robust balance sheet that we have and the significant amount of cash flow we generate. and then the third is just the strength of our overall financial foundation as a company but the robust balance sheet that we have and the significant amount of cash flow we generate So let me talk a little bit more about each one. so let me talk a little bit more about each one When we think about investment, if we look at what's expected in 2026, we expect most of that prioritized investment to be the $160 million that we talked about of incremental spend back into the business. when we think about investment if we look at what's expected in 2026 we expect most of that prioritized investment to be the $160 million that we talked about of incremental spend back into the business We just recently concluded the acquisition of Cognigy, and that's where most of our focus is expected to be during the course of the coming 12 to 18 months, is continuing to drive momentum in that business and prioritize the integration that we're looking forward to, the accelerated growth that will come from that acquisition. So that's with respect to acquisitions. In addition to that, we do leave ourselves open to potentially doing more tuck-in type acquisitions. And so that is something that as we look at what our customers are looking for in terms of additional capabilities into the platform, that we leave ourselves open for additional acquisitions. The second pillar I mentioned was the share buyback. So earlier this year, we mentioned a $500 million share buyback. We have already increased through the end of Q3 an 18% increase in our share buyback on a year-to-date basis. We just recently concluded the acquisition of Cognigy, and that's where most of our focus is expected to be during the course of the coming 12 to 18 months, is continuing to drive momentum in that business and prioritize the integration that we're looking forward to, the accelerated growth that will come from that acquisition. we just recently concluded the acquisition of cognigy and that's where most of our focus is expected to be during the course of the coming 12 to 18 months is continuing to drive momentum in that business and prioritize the integration that we're looking forward to the accelerated growth that will come from that acquisition So that's with respect to acquisitions. so that's with respect to acquisitions In addition to that, we do leave ourselves open to potentially doing more tuck-in type acquisitions. in addition to that we do leave ourselves open to potentially doing more tuck-in type acquisitions And so that is something that as we look at what our customers are looking for in terms of additional capabilities into the platform, that we leave ourselves open for additional acquisitions. and so that is something that as we look at what our customers are looking for in terms of additional capabilities into the platform that we leave ourselves open for additional acquisitions The second pillar I mentioned was the share buyback. the second pillar i mentioned was the share buyback So earlier this year, we mentioned a $500 million share buyback. so earlier this year we mentioned a $500 million share buyback We have already increased through the end of Q3 an 18% increase in our share buyback on a year-to-date basis. we have already increased through the end of q3 an 18% increase in our share buyback on a year-to-date basis It continues to be a priority for us in terms of the buyback. And we're in a beneficial position that we generate a significant amount of healthy cash flow at NiCE. In fact, we've generated almost $700 million over the last 12 months. So that allows us to continue to utilize that $500 million buyback program that we have in place. And then finally, the health of our balance sheet. And with our balance sheet, our balance sheet currently is debt-free. We just paid off some of the debt on our balance sheet at the end of the third quarter. So we also remain open to taking on additional financing, really up to the level about one times EBITDA in terms of potential financing that we might consider taking as well. So those are kind of the three pillars and kind of adding some additional color around capital allocation. It continues to be a priority for us in terms of the buyback. it continues to be a priority for us in terms of the buyback And we're in a beneficial position that we generate a significant amount of healthy cash flow at NiCE. and we're in a beneficial position that we generate a significant amount of healthy cash flow at nice In fact, we've generated almost $700 million over the last 12 months. in fact we've generated almost $700 million over the last 12 months So that allows us to continue to utilize that $500 million buyback program that we have in place. so that allows us to continue to utilize that $500 million buyback program that we have in place And then finally, the health of our balance sheet. and then finally the health of our balance sheet And with our balance sheet, our balance sheet currently is debt-free. and with our balance sheet our balance sheet currently is debt-free We just paid off some of the debt on our balance sheet at the end of the third quarter. we just paid off some of the debt on our balance sheet at the end of the third quarter So we also remain open to taking on additional financing, really up to the level about one times EBITDA in terms of potential financing that we might consider taking as well. so we also remain open to taking on additional financing really up to the level about one times ebitda in terms of potential financing that we might consider taking as well So those are kind of the three pillars and kind of adding some additional color around capital allocation. so those are kind of the three pillars and kind of adding some additional color around capital allocation

Speaker 2: Got it. Thank you so much. I think that's all the time we have for today. Thank you for joining us, and thanks for being here. Got it. got it Thank you so much. thank you so much I think that's all the time we have for today. i think that's all the time we have for today Thank you for joining us, and thanks for being here. thank you for joining us and thanks for being here

Speaker 1: Yes, thank you for having us. Appreciate it. Thank you. Yes, thank you for having us. yes thank you for having us Appreciate it. appreciate it thank you Thank you. thank you