- Total Revenue: $782 million, up 8% year-over-year, above the high end of guidance.
- Cloud Revenue: $609 million, representing 78% of total revenue, growing 12.6% year-over-year.
- Product Revenue: $49 million, representing 6% of total revenue, an increase of 7% year-over-year.
- Services Revenue: $125 million, representing 16% of total revenue, declining 11% year-over-year.
- Gross Margin: 68.4% for the quarter; cloud gross margin improved 40 basis points year-over-year to 69%.
- Operating Income: $198 million, resulting in an operating margin of 25.3%.
- Earnings Per Share (EPS): Non-GAAP EPS of $2.70, at the high end of guidance.
- Cash Flow: Operating cash flow of $123 million and free cash flow of $93 million for the quarter.
- CX AI and Self-Service ARR: $362 million, growing 52% year-over-year, representing 15% of cloud revenue.
- Cloud Backlog: Increased 19% year-over-year.
- Cloud Net Revenue Retention: 106%.
- Customer Engagement Segment Revenue: $645 million, representing 82% of total revenue, up 8% year-over-year.
- Financial Crime and Compliance Segment Revenue: $137 million, representing 18% of total revenue, up 6% year-over-year.
- Americas Revenue: Represented 82% of total revenue, grew 5% year-over-year.
- EMEA Revenue: Represented 13% of total revenue, grew 30% year-over-year (28% on a constant currency basis).
- APAC Revenue: Represented 5% of total revenue, grew 8% year-over-year (5% on a constant currency basis).
- International Cloud Revenue: Increased 34% year-over-year on a constant currency basis.
- Share Repurchases: $58 million in Q2; $311 million year-to-date.
- Full-Year 2026 Guidance: Total revenue expected in the range of $3,170 million to $3,190 million; EPS expected in the range of $11.06 to $11.26.
- Third-Quarter 2026 Guidance: Total revenue expected in the range of $780 million to $790 million; EPS expected in the range of $2.73 to $2.83.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NICE Ltd NICE delivered total revenue of $782 million, above the high end of its guidance range, with non-GAAP EPS of $2.70 at the high end of expectations.
- Cloud revenue grew 12.6% year-over-year, with a record quarter for new cloud ACV bookings and cloud backlog growth of 19%.
- AI ARR increased 52% year-over-year, now representing 15% of cloud revenue, with AI backlog growth of 72% and a record quarter for AI bookings.
- International revenue grew 22% year-over-year, driven by strong performance in EMEA (up 30%) and international cloud revenue growth of 34% on a constant currency basis.
- The company secured its largest CXone and Cognigy deal ever with HMRC (eight-digit ACV), along with another eight-digit ACV win in US healthcare, demonstrating strong competitive momentum.
- NICE Ltd (NICE) raised its full-year 2026 EPS guidance and reiterated its medium-term targets, including the $3.5 billion revenue goal for 2028.
- The company's partner ecosystem is expanding, with ACV booked through GSI partners in Q2 being multiples higher than the prior year, and a renewed partnership with RingCentral.
- Cloud gross margin improved 40 basis points year-over-year to 69%, reflecting operational efficiency and scale.
- NICE Ltd (NICE) continues to return capital to shareholders, repurchasing $311 million year-to-date, representing 5% of market capitalization.
- The company's AI solutions are delivering measurable results, with examples like Tripadvisor achieving a 90% customer sentiment score (vs. 71% for human agents) and GXBank resolving 70% of chat interactions autonomously.
Negative Points
- Cloud net revenue retention (NRR) declined to 106% from Q1, reflecting the impact of strategic renewals completed with certain customers.
- There is a lag between strong bookings momentum and revenue recognition, as customers take a measured approach to deploying AI at scale, impacting short-term cloud revenue growth.
- Organic AI growth (excluding Cognigy) appears to have slowed to sub-30% from 40% last quarter, though management attributes this to the consolidation of Cognigy and timing.
- Services revenue declined 11% year-over-year due to the ongoing migration of customers from on-premise to cloud deployments.
- The company noted stronger-than-expected on-premise demand in its non-CX business, which could affect the mix between product and cloud revenue and the timing of cloud growth.
- Q2 operating cash flow was $123 million and free cash flow was $93 million, reflecting timing of working capital movements, including prepaying certain expenses and capital expenditures.
- The company's cloud revenue growth guidance for Q3 is expected to be similar to Q2 (12.6%), indicating no immediate reacceleration in the near term.
- The HMRC deal was not included in Q2 cloud backlog metrics due to contractual requirements, which could create some uncertainty in reported backlog figures.
- The company faces intense competition from AI-native point solutions and larger enterprise software platforms, requiring continued differentiation on unified platform capabilities.
- Customers are still in early stages of AI adoption, and the pace of moving from pilots to production can influence the timing of monetization, creating variability in quarterly results.
Q & A Highlights
Q: Can you provide more detail on the impact of strategic renewals on cloud growth, and how confident are you in the re-acceleration of cloud revenue in the second half of 2026?
A: Scott Russell (CEO): The renewals were targeted, smart commercial decisions to accelerate AI adoption and secure long-term commitments, not a reflection of deteriorating demand. We completed them as expected with no further concerns for the year. We feel great about our record backlog and bookings, and if you include the HMRC deal, our AI backlog is accelerating. The challenge is converting this backlog into revenue, as customers are taking a measured approach to deploying AI at scale, preparing data, governance, and operating models. This impacts short-term revenue but secures long-term growth.
Q: How do you view the competitive landscape against AI-native point solutions, and what is your philosophy on partnering versus competing with them?
A: Scott Russell (CEO): While the market is competitive, our differentiation lies in being the only platform that can run a hybrid workforce at scale with best-in-class AI, orchestrated seamlessly with voice, digital, and human agents. We focus on mission-critical scale and reliability. We also take an open, interoperable approach, integrating with other AI solutions and LLMs. Our native data advantage is crucial, as AI platforms require deep knowledge of interactions. We back our competitive differentiation but also collaborate where we have value to provide.
Q: Are the medium-term growth targets outlined at your Analyst Day in November still on track given the current buying behavior?
A: Scott Russell (CEO) & Beth Gaspich (CFO): We are confident in our medium-term outlook. Our focus has been on winning the AI and CCaaS markets, growing backlog and bookings, and completing investments ahead of schedule. We are on track with our strategic priorities, including international growth and expanding our partner ecosystem. The record backlog and largest-ever deals, both internationally and for Cognigy, reinforce our confidence in achieving our medium-term targets.
Q: Can you elaborate on the strength in product revenue and your expectations for the on-premise business in the second half of the year?
A: Beth Gaspich (CFO): The strong product revenue in Q2 was driven by greater-than-expected term renewals in our non-CX businesses, highlighting the durability of our ongoing business. Our strategy remains to migrate legacy customers to the cloud, which is factored into our back-half expectations. However, there is potential that some large financial institutions may choose to stay on-premise on a term basis, which could affect the mix between product and cloud revenue.
Q: What was the rationale behind renewing and expanding the partnership with RingCentral, and how does it impact your UCaaS offering?
A: Scott Russell (CEO): Our decade-long partnership with RingCentral is mutually beneficial for both companies and our customers. Strategic partnerships don't mean exclusivity. Many customers want a world-class UCaaS platform alongside their CCaaS or CX AI platform. This expanded partnership offers customers better choice and deployment flexibility, with RingCentral offering our CXone platform and we now offer their UCaaS solution. It is accretive to what we can offer and we look forward to building it out.
Q: The AI ARR growth seems to be slowing when excluding Cognigy. What is driving this organic AI slowdown?
A: Beth Gaspich (CFO): You cannot look at organic versus inorganic growth with respect to Cognigy. After the acquisition, we discontinued selling our previous comparable solutions. Therefore, you must view the AI business in consolidation, not in a segmented way. The combined AI offering is the relevant metric for our performance.
Q: Given record bookings, why isn't the net new AI ARR addition reflecting this strength, and is there an offset from churn or timing?
A: Beth Gaspich (CFO): The discrepancy is simply related to the timing of conversion from bookings to revenue. We see strength in our backlog, but there can be variability from quarter to quarter in how that converts. We expect to see the expansion in forward-looking ARR in the back half of the year as deployments ramp.
Q: Would you consider extending the strategic renewal offers to customers beyond the initial group if the strategy proves successful?
A: Scott Russell (CEO): We have a very clear view of our renewals and customer deployment journeys for 2026, 2027, and 2028. We are proactively engaging customers on how to best deploy AI within their CXone environment. With Cognigy now fully native to CXone, customers can activate AI capabilities with a click of a button. We do not expect adverse impacts on our growth outlook; in fact, we see opportunities to bring AI capabilities to customers well in advance of renewal events, which will be creative for our growth.
Q: Who are you typically competing against for these large eight-figure deals, and how does the competitive dynamic play out?
A: Scott Russell (CEO): We compete against a range of players, including AI-native solutions, historical CCaaS peers, and potentially new entrants. Customers are evaluating how to achieve business outcomes without integrating disparate technologies. When they look at a unified platform, we stand apart with our end-to-end capability. However, even on a standalone basis, NiCE Cognigy competes favorably against AI-native players. Our sweet spot is the unified platform, which drives large enterprise wins.
Q: Can you confirm that you are reiterating the $3.5 billion revenue target for 2028?
A: Beth Gaspich (CFO): Yes, that is correct. We are standing by our expectation to meet all of the topline guidance and other targets we communicated last November, including the $3.5 billion revenue target for 2028.
Q: Can you frame the near-term proportion of cloud ARR exposed to compression and what milestones would indicate NRR has reached a trough?
A: Beth Gaspich (CFO): The cloud NRR of 106% was as anticipated and directly tied to the strategic renewal opportunities we addressed last quarter. The modest change from Q1 was expected and is reflected in our guidance. We do not see further compression from these targeted renewals.
Q: What are your GSI partners offering that can't be replicated, and how durable is this differentiation in driving larger opportunities?
A: Scott Russell (CEO): We have invested heavily in our GSI partnerships, with a record number of certified consultants and a new Chief Partner Officer. These partners see a durable growth opportunity and
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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