Q2 2026 Nice Ltd Earnings Call Transcript
Key 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.
- 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.
Welcome to the NiCE conference call discussing second quarter 2026 results, and thank you all for holding. (Operator Instructions) As a reminder, this conference is being recorded August 5, 2026.
I would now like to turn this call over to Mr. Ryan Gilligan, Vice President in Investor Relations at NICE. Please go ahead.
Thank you, operator. With me on today's call are Scott Russell, Chief Executive Officer; and Beth Gaspich, Chief Financial Officer.
Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward-looking statements.
Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the
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