NICE Systems reported a solid quarter with revenue in line with Street consensus and pro forma earnings per share exceeding consensus by $0.07, following a reset in expectations last quarter to more achievable levels. The bottom‐line outperformance for the quarter was driven primarily by a favorable tax rate, but the company still exceeded expectations by $0.02, excluding the tax benefits. While the macro environment remains challenging and we believe the company still faces increased risk from unpredictability of deal closures, we view the strong quarter as evidence that it can execute well and grow even in a tough environment.
The company maintained its full‐year revenue guidance but increased its bottom‐line guidance range, primarily reflecting the company’s outperformance in the third quarter, as well as expense controls. We believe maintaining revenue guidance at current levels reflects a macro environment that seems similar to last quarter. Nevertheless, the company expects the fourth quarter bookings activity to be strong and has a record pipeline of opportunities. Deal closure rates remain more conservative than in the past and remain difficult to predict resulting in a wider range of potential results.
The company’s book‐to‐bill metric was slightly below 1.0 for the quarter, while backlog remained at its prior level of two quarters’ worth of revenue. Bookings were strong in the financial crime/compliance business, as well as the security business and the company expects full year book‐to‐bill to be above one.
Geographically, EMEA delivered solid growth of 11% and APAC experienced another strong quarter with 18% growth. We were encouraged by the strong EMEA results with the company not seeing any specific weakness in the region.
Public safety and security posted revenue of $50 million, slightly above our forecast of $49.3 million. The company’s enterprise interaction business posted revenue of $171 million, below our forecast of $171.9 million