Nice Exceeds Revenue Forecasts Amid Profitability Decline, Plans 5% Workforce Reduction

Israeli software company NICE, specializing in customer experience management and AI solutions, announced its third-quarter 2026 financial results, reporting revenue growth alongside a decrease in profitability. The company surpassed its own upper-range revenue and adjusted earnings-per-share (EPS) forecasts, raised its annual profit outlook, and initiated a restructuring plan expected to reduce its global workforce by approximately 5%.

NICE's third-quarter revenues reached $790.7 million, an 8% increase from the $732 million reported in the same period last year. Cloud revenues, which constitute the majority of the company's business, grew by 10.6% to $622.7 million. Excluding a $10 million customer credit, overall revenue growth would have been 9.4%, and cloud revenue growth 12.2%.

Despite revenue increases, NICE experienced a significant drop in profitability. Operating income under Generally Accepted Accounting Principles (GAAP) fell to $120.6 million from $160.8 million a year prior, with the operating margin shrinking from 22% to 15.3%. Net income decreased by 34.4% to $95.1 million, compared to $144.9 million in the previous year's quarter. Adjusted (Non-GAAP) results also showed a decline, with operating income dropping to $213.8 million from $230.9 million, and adjusted EPS falling to $2.84 from $3.18.

Artificial intelligence is a key growth driver for NICE, with annual recurring revenue (ARR) from its AI operations reaching $392 million, a 46% increase year-over-year, representing about 16% of total cloud ARR. International market revenues also grew by 33%.

CEO Scott Russell stated that the company is strengthening its position in the customer experience AI market, anticipating increased demand for platforms managing human-AI interactions due to the rise of personal AI agents. The restructuring plan aims to streamline decision-making, reduce management layers, and enhance operational efficiency through AI. NICE estimates one-time pre-tax expenses of $15 million to $20 million for this initiative in the fourth quarter, which will not be included in adjusted results.

The company reaffirmed its 2026 revenue forecast of $3.17 billion to $3.19 billion, projecting about 8% annual growth. It also raised its adjusted EPS forecast for the year to between $11.12 and $11.32. NICE reported $97.7 million in cash flow from operations for the quarter and repurchased $72.2 million of its stock. As of the end of September, the company held $350.9 million in cash, cash equivalents, and short-term investments with no debt.