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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-27466

NICE LTD.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Address of principal executive offices)
Tali Mirsky
Corporate VP, General Counsel and Corporate Secretary
Tel: +972-9-7753151
E-mail: tali.mirsky@nice.com
13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol
Name of Each Exchange
On Which Registered 
American Depositary Shares, each representing
one Ordinary Share, par value one
New Israeli Shekel per share
NICENASDAQ Global Select Market

F-1


Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 63,050,434 Ordinary Shares, par value NIS 1.00 per share (which excludes 11,724,393 treasury shares)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes    ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.
☐ Yes    ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
☒ Yes    ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes    ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer 
Accelerated Filer 
Non-Accelerated Filer
Emerging Growth Company 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒    U.S. GAAP
☐    International Financial Reporting Standards as issued by the International Accounting Standards Board
☐    Other
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow:
☐ Item 17  ☐ Item 18
F-2


If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes      No
F-3


PRELIMINARY NOTE
This annual report contains historical information and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to NICE’s business, financial condition and results of operations. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “strategy,” “continue,” “goal” and “target” and similar expressions, as they relate to NICE or its management, are intended to identify forward-looking statements. Such statements reflect the current beliefs, expectations and assumptions of NICE with respect to future events and are subject to risks and uncertainties. The forward-looking statements relate to, among other things: operating results; anticipated cash flows; gross margins; adequacy of resources to fund operations; our ability to maintain our average selling prices despite the aggressive marketing and pricing strategies of our competitors; our ability to maintain and develop profitable relationships with our key distribution channels; the financial strength of our key distribution channels; and the market’s acceptance of our technologies, products and solutions.

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by us; any such statement is qualified by reference to the following cautionary statements. Many factors could cause the actual results, performance or achievements of NICE to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, competition with existing or new competitors, success and growth of cloud Software-as-a-Service business, successful execution of our growth strategy, difficulties in making additional acquisitions or effectively integrating acquired operations, dependency on third-party cloud computing platform providers, hosting facilities and service partners, rapidly changing technology, cyber security attacks or other security breaches, privacy concerns and legislation, changes in currency exchange rates and interest rates, the effects of additional tax liabilities resulting from our global operations and various other factors, both referenced and not referenced in this annual report. In addition, COVID-19 is contributing to a general slowdown in the global economy. At this time, the extent and duration of the continued impact of the pandemic is unknown, and therefore we cannot predict how it may affect the Company’s future business, results of operations, financial condition and strategic plans. Furthermore, due to our subscription-based business model, the effect of COVID-19 may not be fully reflected in our results of operations until future periods, if at all. These risks are more fully described under Item 3, “Key Information – Risk Factors” of this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. All forward-looking statements are made only as of the date hereof. NICE does not intend or assume any obligation to update these forward-looking statements. Investors should bear this in mind as they consider forward-looking statements and whether to invest or remain invested in NICE’s securities.

In this annual report, all references to “NICE,” “we,” “us,” “our” or the “Company” are to NICE Ltd., a company organized under the laws of the State of Israel, and its wholly-owned subsidiaries. For a list of our significant subsidiaries, please refer to page 52 of this annual report. 
In this annual report, unless otherwise specified or unless the context otherwise requires, all references to “$” or “dollars” are to U.S. Dollars, all references to “EUR” are to Euros, all references to “GBP” are to British Pounds, all references to “CHF” are to Swiss Francs, all references to “NIS” are to New Israeli Shekels and all references to “INR” are to Indian Rupee. Except as otherwise indicated, the financial statements of and information regarding NICE are presented in U.S. dollars.
F-4


TABLE OF CONTENTS
Page
Item 16.[Reserved]

F-5


PART I
Item 1.    Identity of Directors, Senior Management and Advisers.
Not Applicable.
Item 2.    Offer Statistics and Expected Timetable.
Not Applicable.
Item 3.    Key Information.
Selected Financial Data
The following selected consolidated balance sheet data as of December 31, 2019 and 2020 and the selected consolidated statements of income data for the years ended December 31, 2018, 2019 and 2020 have been derived from our audited consolidated financial statements included in this annual report. These financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and audited by Kost, Forer, Gabbay & Kasierer, a member of EY Global. The selected consolidated balance sheet data as of December 31, 2016, 2017 and 2018 and the selected consolidated statements of income data for the years ended December 31, 2016 and 2017 have been derived from other consolidated financial statements not included in this annual report and have also been prepared in accordance with U.S. GAAP and audited by Kost, Forer, Gabbay & Kasierer, a member of EY Global. The selected consolidated financial data set forth below should be read in conjunction with and are qualified by reference to Item 5, “Operating and Financial Review and Prospects”, the consolidated financial statements and notes thereto and other financial information included elsewhere in this annual report.
Year Ended December 31,
20162017201820192020
(In thousands, except per share data)
OPERATING DATA:
Revenue
Cloud$85,507 $361,166 $461,183 $595,748 $777,331 
Services623,783 652,040 719,531 709,064 687,532 
Product306,252 318,946 263,805 269,100 183,153 
Total revenue1,015,542 1,332,152 1,444,519 1,573,912 1,648,016 
Cost of revenue
Cloud34,679 192,588 236,079 289,852 339,985 
Services250,022 225,020 229,671 218,990 199,803 
Product53,032 51,065 31,065 22,926 22,164 
Total cost of revenue337,733 468,673 496,815 531,768 561,952 
Gross profit677,809 863,479 947,704 1,042,144 1,086,064 
Operating expenses:
Research and development, net141,528 181,107 183,830 193,718 218,182 
Selling and marketing268,349 403,230 412,935 441,687 445,102 
General and administrative133,756 129,071 153,323 168,022 180,733 
Total operating expenses543,633 713,408 750,088 803,427 844,017 
Operating income134,176 150,071 197,616 238,717 242,047 
Financial and other income (expense), net10,305 (20,411)(10,901)(4,444)(4,859)
Income before taxes on income144,481 129,660 186,715 234,273 237,188 
Taxes on income (tax benefits)21,412 (13,631)27,377 48,369 40,842 
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Year Ended December 31,
20162017201820192020
Net income from continuing operations123,069 143,291 159,338 185,904 196,346 
Loss from discontinued operations(8,235)— — — — 
Tax benefit on discontinued operations
(2,086)— — — — 
Net income from discontinued operations(6,149)— — — — 
Net income116,920 143,291 159,338 185,904 196,346 
Less: net loss attributable to non-controlling— — — — 327 
net income attributable to NICE Ltd.’s shareholders interests116,920 143,291 159,338 185,904 196,673 
Basic earnings per share from continuing operations$2.06 $2.37 $2.60 $2.99 $3.13 
Basic loss per share from discontinued operations$(0.10)$— $— $— $— 
Basic earnings per share$1.96 $2.37 $2.60 $2.99 $3.13 
Weighted average number of shares used in computing basic earnings per share 59,667 60,444 61,387 62,120 62,710 
Diluted earnings per share from continuing operations$2.02 $2.31 $2.52 $2.88 $2.98 
Diluted loss per share from discontinued operations$(0.10)$— $— $— $— 
Diluted earnings per share$1.92 $2.31 $2.52 $2.88 $2.98 
Weighted average number of shares used in computing diluted earnings per share 61,035 62,119 63,309 64,661 65,956 

At December 31,
20162017201820192020
(In thousands)
BALANCE SHEET DATA*:
Working capital**$13,713 $132,154 $201,217 $160,272 $1,121,456 
Total assets2,631,876 2,845,086 3,207,366 3,609,905 4,232,917 
Shareholders’ equity1,511,332 1,749,561 2,016,613 2,257,266 2,588,484 
*Including assets and liabilities that are accounted for as discontinued operations.
**Including deferred revenues and advances from customers that are classified as long-term liabilities.
Risk Factors
Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in our other filings with the Securities and Exchange Commission (“the SEC”), including the following risk factors which we face, and which are faced by our industry. The risks and uncertainties described below are not the only ones facing us. Other events, circumstances or factors that we do not currently anticipate or that we currently do not deem to be material risks may also affect our business, results of operations and financial condition. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks.



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Risks Relating to our Business, Competition and Markets

The markets in which we operate are highly competitive and we may be unable to compete successfully.
The markets for our products, solutions and related services are, in general, highly competitive. Our competitors include a number of large, established software development vendors. Some of our principal competitors or potential competitors may have advantages over us, including greater resources, a broader portfolio of products, applications and services, greater brand recognition, larger patent and intellectual property portfolios and access to larger customer bases, all of which would enable them to better adapt to new or emerging technologies or customer requirements or devote more resources to the marketing and sale of their products and services.
Additional competition from new potential entrants to our markets, including new technology vendors competing in specific areas of our business, may lead to the widespread availability and standardization of some of the products and services we provide, which could result in the commoditization of our products and services, reduce the demand for our products and services and drive us to lower our prices.
In recent years, some of our competitors have increased their presence in our markets through internal development, partnerships and acquisitions. Infrastructure and/or enterprise software vendors, such as those from the traditional enterprise business intelligence and business analytics sector, Customer Relationship Management (“CRM”) vendors or Platform as a Service (“PaaS”) vendors, have entered or may decide in the future to enter our market space and compete with us by offering comprehensive solutions (whether through internal development or through acquisition of any of our competitors). In addition, some Unified Communications as a Service (“UCaaS”) and video collaboration providers have acquired or may decide to build or acquire contact center as a Service (“CCaaS”) solutions. If we are not able to compete effectively with these market entrants or other competitors, we may lose market share and our business, financial condition or results of operations could be adversely affected.

In light of the intense competition in our markets, successful development, positioning and sales execution of our products is a critical factor in our ability to successfully compete and maintain growth. Therefore, we must continue making significant expenditures on research and development, marketing and sales to compete effectively. In addition, our software solutions may compete with software developed internally by potential customers, as well as software and other solutions offered by competitors. We cannot ensure that the market awareness or demand for our new products or applications will grow as rapidly as we expect, or that the introduction of new products or technological developments by others will not adversely impact the demand for our products.
Successful marketing of our products and services to our customers and partners will be critical to our ability to maintain growth. We cannot assure that our products or existing partnerships will permit us to compete successfully. The market for some of our solutions is highly fragmented and includes a broad range of product offerings, features and capabilities. Consolidation through mergers and acquisitions, or alliances formed, among our competitors in this market, who may have greater resources than we have, could substantially influence our competitive position.
As we expand into new markets, we are faced with new challenges, including new competition, which may possess specific assets, relationships, know-how, and technologies that enable our competitors to better respond to customer requirements or preferences or devote greater resources to the development, promotion and sale of their products.
Additionally, prices of our solutions may decrease throughout the market due to competitive pressures, especially at times of economic difficulty. Further, in relation to our cloud offering, we may be affected by the pricing of certain infrastructure services, such as in the area of Platform as a Service and network connectivity, which would in turn affect the rates we offer to our customers. This could have a negative effect on our gross profit and results of operations.
We may not be successful in our Cloud Software-as-a-Service business.
Our cloud-based business has grown significantly, and therefore we are more dependent now on the success of this area of our business. If we are not able to compete effectively, generate significant revenues or maintain the profitability of our cloud offerings, or if we do not successfully execute our cloud strategy or anticipate the cloud needs of our customers, our revenues could decline and our reputation may be adversely affected.
We rely on computer hardware leased, and software licensed, from third parties in order to offer our cloud services. In addition, we rely on cloud computing platforms provided by third parties, including PaaS provided by strategic partners
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such as Amazon, Microsoft, Rackspace, Equinox and Lumen. These hardware, software and cloud computing platforms may not continue to provide competitive features and functionality, or may not be available at reasonable prices or on commercially reasonable terms. In addition, some of our customers may not accept the use of such services or particular platforms. The inability to use any of these hardware, software or cloud computing platforms could have a material adverse impact on our business, increase our expenses and otherwise result in delays in providing our services until equivalent technology is either developed by us, or obtained through purchase or license and integrated into our services. As we grow our cloud-based business, we will continue to depend on both existing and new strategic relationships with such vendors. Our inability to establish and foster these relationships could adversely affect the development of our cloud-based business, our growth, reputation and our results of operations.
The increasing prevalence of cloud and Software-as-a-Service (“SaaS”) delivery models offered by us and our competitors may unfavorably impact pricing in both our on-premises enterprise software business and our cloud business, as well as overall demand for our on-premises software product and service offerings, which could reduce our revenues and profitability. With our move to cloud-based solutions, we cannot guarantee that revenues generated from our cloud offerings will compensate for a loss of business in our on-premises enterprise software business.

Further, cloud computing may make it easier for new competitors to enter our markets due to the lower up-front technology costs and easier implementation and for existing market participants to compete with us on a greater scale. Such increased competition is likely to heighten the pressure on us to decrease our pricing, which could have a negative effect on our revenues, profitability and results of operations.

The business model of our cloud offerings differs from the business model for the sale of products and services. Our cloud offerings are generally purchased by customers on a subscription basis and revenues from these offerings are generally recognized ratably over the term of the subscriptions. Therefore, the shift to SaaS-based sales could result in a delay in revenue recognition and materially adversely affect our results of operations and our rate of growth.
Moreover, our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription period.
The markets in which we operate are characterized by rapid technological changes and frequent new products and service introductions.
We operate in several markets, each characterized by rapidly changing technology, new product introductions and evolving industry standards. The introduction of products embodying new technology and the emergence of new industry standards might exert price pressures on our existing products or render them obsolete. Our markets are also characterized by consistent demand for state-of-the-art technology and products. Existing and potential competitors might introduce new and enhanced products that could adversely affect the competitive position of our products.
We believe that our ability to anticipate changes in technology and industry standards and to successfully develop and introduce new, enhanced and differentiated products, on a timely basis, in each of the markets in which we operate, is a critical factor in our ability to grow our business. As a result, we expect to continue to make significant expenditures on research and development, particularly with respect to new software applications, which are continuously required in all our business areas. In the event that we do not anticipate changes in technology or industry practices or fail to timely address market needs or not be able to provide the products that are in demand, we may lose market share and our results of operations may be materially adversely affected.
Further, customer adoption of new technologies may be slower than we anticipate. We cannot assure that the market or demand for our products and solutions will be sustained or grow as rapidly as we expect (if at all) that we will successfully develop new products or introduce new applications for existing products, that such new products and applications will achieve market acceptance, or that the introduction of new products or technological developments by others will not render our products obsolete. In addition, our products must readily integrate with major third-party telephone, security, front-office and back-office systems. Any changes to these third-party systems could require us to redesign our products, and any such redesign might not be possible on a timely basis or achieve market acceptance. Our inability to develop products that are competitive in technology and price and responsive to customer needs could have a material adverse effect on our business, financial condition and results of operations.
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We may not be able to successfully execute our growth strategy.
Our strategy is to continue investing in, enhancing and securing our business and operations and growing our business, both organically and through acquisitions. Investments in, among other things, new markets, products, solutions, and technologies, research and development, infrastructure and systems, geographic expansion, and additional qualified and experienced personnel, are critical to achieving our growth strategy. Growth of our revenue depends on the success of all these factors, including our ability to capture market share, attract new customers, develop our strategic partnerships, introduce our solutions and services to new global markets, strengthen and improve our solutions through significant investments in research and developments and successfully consummate and integrate acquisitions. However, such investments and efforts may not be successful, and, even if successful, may negatively impact our short-term profitability with the objective of achieving long-term expansion or growth.
Our success depends on our ability to execute our growth strategy effectively and efficiently. If we are unable to execute our growth strategy successfully and properly manage our investments and expenditures, our results of operations and stock price may be materially adversely affected. In addition, as a result of the execution of our growth strategy, our short-term profitability may be negatively impacted, including as a result of an acquisition.
We cannot guarantee that we will be able to sustain our growth in future years. Our new solutions might not achieve general market acceptance, and therefore might fail to support revenue growth. The failure to implement our growth strategy successfully could affect our ability to sustain growth and could materially adversely affect our results of operations.
Our business could be materially adversely affected as a result of the risks associated with acquisitions and investments. In particular, we may not succeed in making additional acquisitions or be effective in integrating such acquisitions.
As part of our growth strategy, we have made a significant number of acquisitions (see Item 5, “Operating and Financial Review and Prospects—Recent Acquisitions” in this annual report for a description of certain recent acquisitions). We expect to continue to make acquisitions and investments in the future as part of our growth strategy. We frequently evaluate the strategic or tactical opportunities available related to complementary businesses, products or technologies. There can be no assurance that we will be successful in making additional acquisitions. Even if we are successful in making additional acquisitions, integrating an acquired business into our operations or investing in new technologies may: (1) result in unforeseen operating difficulties and large expenditures; and (2) absorb significant management attention that would otherwise be available for the ongoing development of our business, both of which may result in the loss of key customers or personnel and expose us to unanticipated liabilities.
Other risks commonly encountered with acquisitions include the effect of acquisitions on our financial and strategic position, the inability to integrate successfully or commercialize acquired technologies and achieve expected synergies or economies of scale on a timely basis and the potential impairment of acquired assets. Further, we may not be able to retain the key employees that may be necessary to operate the businesses we acquire and we may not be able to attract, in a timely manner, new skilled employees and management to replace them.
In recent years, several of our competitors have also completed acquisitions of companies in our markets or in complementary markets. As a result, it may be more difficult for us to identify suitable acquisitions or investment targets or to consummate acquisitions or investments once identified on acceptable terms or at all. If we are not able to execute on our acquisition strategy, we may not be able to achieve our growth strategy, may lose market share, or may lose our leadership position in one or more of our markets.
We often compete with others to acquire companies, and such competition may result in decreased availability of, or an increase in price for, suitable acquisition candidates. We also may not be able to consummate acquisitions or investments that we have identified as crucial to the implementation of our strategy for other commercial or economic reasons. Further, we may not be able to obtain the necessary regulatory approvals, including those of competition authorities and foreign investment authorities, in countries where we seek to consummate acquisitions or make investments. For those and other reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition. Also, even if we do consummate acquisitions, we may do so on less favorable terms and/or may be subject to certain conditions or commitments imposed by such authorities and agencies that may impact post-acquisition integration or have an adverse effect on our business.
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We may require significant financing to complete an acquisition or investment, whether through bank loans, raising of debt or otherwise. For example, in connection with our acquisition of inContact, we incurred debt through a term loan and the issuance of exchangeable senior notes in 2017 (the “2017 Notes”) (through our wholly-owned subsidiary NICE Systems, Inc. (“Nice Systems”)), as further described in Item10, “Material Contracts” in this annual report. In the future, we cannot assure that such financing options will be available to us on reasonable terms, or at all. If we are not able to obtain the necessary financing, we may not be able to consummate a substantial acquisition or investment and execute our growth strategy. In addition, if we consummate one or more significant acquisitions in which the consideration consists, in whole or in part, of our ordinary shares or American Depositary Shares (“ADSs”) representing our ordinary shares, our shareholders may suffer immediate dilution of their interests in us or the value of their interests in us, or may suffer future dilution if we issue exchangeable or convertible debt to finance a significant acquisition..
Future acquisitions or investments may also require us to incur contingent liabilities, amortization expenses related to intangible assets and impairment of goodwill, any of which could have a material adverse effect on our operating results and financial condition. In addition, we may knowingly enter into an acquisition that will have a dilutive impact on our earnings per share.
If we are unable to develop or maintain our relationships with existing and new distributors and strategic partners, our business and financial results could be materially adversely affected.
In addition to our direct sales force, we have agreements in place with many distributors, dealers and resellers to market and sell our products and services across the business lines and geographies in which we operate. Our financial results could be materially adversely affected if our agreements with distribution channel partners or our other strategic partners were terminated, if our relationship with our distribution channel partners or our other strategic partners were to deteriorate, or if the financial condition of such partners were to weaken.
The execution of our growth strategy also depends on our ability to create new alliances and enter into strategic partnerships with certain market players. Additionally, as our market opportunities change and we grow our business and expand in certain markets and territories, our dependency on particular distribution channels and strategic partners may increase or we may need to create new strategic partnerships and alliances to address changing market needs. We may not be successful in maintaining, creating or expanding these channels and partnerships, which may negatively impact the development of our business, our growth, gross margins and results of operations. We may also develop dependency on certain strategic partners and vendors, and to the extent that we have to find alternatives in the market, our development efforts and business may be negatively impacted. If we are not successful at creating and maintaining strategic partnerships under favorable terms, we may lose sales opportunities, customers and market share, which may have a material adverse effect on our business and results of operations.
Risks Relating to Our Offerings and Operations
Customers’ move to communication channels other than voice could materially and adversely affect the success of our voice solutions.
Our voice solutions currently generate, and in recent years have generated, a significant portion of our revenues, and we will continue to rely on the sales of our voice solutions and recurring revenues, such as subscription and maintenance services, in the next several years. The trend of enterprise customers moving from voice to other means of communication with the enterprise (such as self-service, e-mail, messaging applications, social media and chat), may result in a reduction in the demand for our voice platform and applications. Although we have expanded our product portfolio to adjust to such changing demands in alternative communication channels, there can be no assurance that the voice solutions market will not decline significantly or that revenues generated from our voice solutions will not be significantly impacted. In addition, changes in regulations could reduce the need for voice recording, which would reduce the demand for our voice recording solutions. Any of the above may have a material adverse effect on our business, financial condition or results of operations.

Some of our enhanced services are dependent on leased network connectivity lines, and a significant disruption or change in these services could adversely affect our business.
A significant portion of our cloud software solutions are provided to customers through a dedicated network of equipment we own that is connected through leased network connectivity lines based on Internet protocol with capacity dedicated to us. We also move a portion of our voice long distance service over this dedicated network.
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We lease network connectivity lines and space at co-location facilities for our equipment from third-party suppliers. These co-location facilities represent the backbone of our dedicated network. If any of these suppliers is unable or unwilling to provide or, if we desire, expand their current levels of service to us, the services we offer to customers may be adversely affected. We may not be able to obtain substitute services from other providers at reasonable or comparable prices or in a timely fashion. Any resulting disruptions in the services we offer that are provided over our dedicated network would likely result in customer dissatisfaction and adversely affect our operations. Furthermore, pricing increases by any of the suppliers we rely on for our dedicated network could adversely affect our results of operations if we are unable to pass-through pricing increases.
We rely on multiple internet service providers to provide our customers and their clients with connectivity to our cloud contact center software. While we have multiple redundancies and backups, a failure by these service providers to provide reliable services could cause us to lose customers and subject us to claims for credits or damages.
We depend on internet service providers to provide uninterrupted and error-free service through their telecommunications networks. We exercise little control over these third-party providers, which increases our vulnerability to problems with the services they provide, including failures relating to internet accessibility in general. When problems occur, it may be difficult to identify the source of the problem. Service disruption or outages, even if not caused by our products or services, may result in loss of market acceptance of our offering and any necessary remedial actions may force us to incur significant costs and expenses.
We rely on third-party network service providers to originate and terminate public switched telephone network calls, and thus significant failures in these networks could harm our operations.
For our business in the unified communications market, we leverage the infrastructure of third-party network service providers to provide telephone numbers, public switched telephone network call termination and origination services, and local number portability for our customers rather than deploying our own network throughout the United States. If any of these network service providers ceases operations or otherwise terminate the services that we depend on, the delay in switching our technology to another network service provider, if available, could have an adverse effect on our business, financial condition or operating results.
Sale of software applications and a multi-product offering may require significant resources and delay our recognition of revenues.
Sale of software applications and a multi-product offering may be complex, and require, among other things, customization and implementation, and be subject to a prolonged sale process. These factors could result in a delay in revenue recognition and materially adversely affect our results of operations.
A significant portion of our business relies on software applications. We cannot guarantee that our customers’ adoption of software applications will meet our expectation and planning. As a result, certain applications may not reach the critical mass in sales and revenues necessary to offset the high cost of developing and maintaining such applications, which could negatively affect our results of operation.
We rely on software from third parties. If we lose the right to use that software, we will have to spend additional capital to redesign our existing software to adhere to new third-party providers or develop new software.
We integrate and utilize various third-party software products as components of our products and solutions to enhance their functionality. Our business could be disrupted if functional versions of these software products were either no longer available to us or no longer made available to us on commercially reasonable terms. Also, in the event that any of these third-party vendors is unable to meet our requirements in a timely manner or that our relationship with any such vendor is terminated, we may experience disruption in our business until an alternative source of supply can be obtained. Any disruption, or any other interruption in a vendor’s ability to provide components to us, could result in delays in making product deliveries or inability to deliver, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, some of our third-party vendors use proprietary technology and software code that could require significant redesign of our products in the case of a change in vendor. If we lost the right to use such third-party software, we would be required to spend additional capital to either redesign our software to function with alternate third-party software or
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develop these components ourselves. As a result, we might be forced to limit the features available in our current or future products and solutions offerings and the commercial release of our products and solutions could be delayed.
Incorrect or improper use of our products and services or failure to properly provide professional services and maintenance services could result in negative publicity and legal liability.
Our products and solutions are complex and are deployed in a wide variety of network environments. The proper use of our software requires training and, if our software products are not used correctly or as intended, there may be inaccurate results. Our products may also be intentionally misused or abused by customers who use our products. The incorrect or improper use of our products and solutions or our failure to properly provide professional services and maintenance services, including installation, training, project management, product customizations and consulting to our customers may result in losses suffered by our customers, which could result in negative publicity and product liability or other legal claims against us.
Undetected errors or malfunctions in our products or services could impact demand for our products and services, and we could face potential product liability claims directly impairing our financial results.

Despite extensive testing by us and by our customers, our products and services may include errors, defects, failures, bugs or other weaknesses that could result in unanticipated downtime for our customers, product returns, loss of or delay in market acceptance of our products and services, loss of competitive position, or claims by customers or others. In addition, our customers may inadvertently use our services in inadvertent ways that may cause a disruption in services for other customers attempting to use our services. Correcting and repairing such errors, failures or bugs could entail significant costs and could cause interruptions, delays or cessation of our products and services.

As our customers use our services for important aspects of their business, any errors, defects, disruptions in service or other performance problems could significantly damage our customers’ businesses and ultimately harm our reputation. As a result, customers could elect not to renew our services or delay or withhold payment to us. We could also lose future sales or customers may make warranty or other liability claims against us, which may harm our business and adversely affect our results. In particular, some of our customers, including financial institutions, may suffer significant damages as a result of a failure of our solutions to perform their functions. The occurrence of any of these events could result in our inability to attract or retain customers, and adversely affect our revenues, financial condition and results of operations.

Although we attempt to limit any potential exposure through quality assurance programs, insurance and contractual terms, we cannot assure that we will be able to eliminate or successfully limit our liability for any failure of our solutions. Any product liability insurance we carry may not be sufficient to cover our losses resulting from any such product liability claims. The successful assertion of one or more large product liability claims against us could have a material adverse effect on our results of operations and financial condition.
We provide certain service level commitments to our customers, which could cause us to provide credits for future services if the stated service levels are not met for a given period and could adversely impact our revenue.
Our customer agreements for cloud offerings provide service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our service, including for reasons related to PaaS providers, we may be contractually obligated to provide these customers with credits for future services, and in some cases refunds, or be liable for penalties. Our revenue could be adversely impacted if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers. Any such extended service outages could harm our reputation, revenue and operating results.
Risks Relating to Information and Product Security and Intellectual Property
If our security and cybersecurity measures or those of our third-party hosting facility providers, cloud computing platform providers, or third-party service partners are breached, and unauthorized access is obtained to customers’ data, our data or our IT systems, our reputation may be harmed, and we may incur significant legal and financial exposure and liabilities.
Our products and services involve the storage and transmission of customers’ and their end users’ proprietary and other sensitive information, including financial information and other personally identifiable information. In addition, some of our customers use our products to compile and analyze highly sensitive or confidential information, and we may encounter
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such information or data when we perform service or maintenance functions for our customers. Security breaches could expose us to a risk of loss or unauthorized use of this information, litigation and possible liability. While we have security measures in place, we may from time to time be subject to security breaches, including as a result of intentional misconduct by computer hackers, employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our IT systems, our customers’ data or our data, including our intellectual property and other confidential business information. In addition, while we have internal policies and procedures for employees in connection with performing services involving our customers’ confidential information, the perception or fact that any of our employees has improperly handled sensitive information of a customer or a customer’s end user could negatively affect our business.
Cyber security attacks are becoming increasingly sophisticated and, in many cases, may not be identified until a security breach occurs. If we fail to recognize and deal with such security attacks and threats and if we fail to update our products and solutions and prevent such threatened attacks in real time to protect our customers’ or other parties’ sensitive information, whether retained in our systems or by our customers using our products and services, our business and reputation will be harmed. The costs of recognizing and addressing security attacks and threats and updating our products and solutions, may be significant.
Our products and services, including our cloud offerings, may be vulnerable to cyber-attacks, even if they do not contain defects. If there is a successful cyber-attack on one of our products or offerings, even absent a defect or error, it may also result in questions regarding the integrity of our products or services generally, which could cause adverse publicity and impair their market acceptance and could have a material adverse effect on our results or financial condition.
Third parties may attempt to breach our security measures or inappropriately take advantage of our solutions, including our SaaS and hosting services, through computer viruses, electronic break-ins and other disruptions. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information to gain access to our customers’ data, our data or our systems. Furthermore, our customers may authorize third-party technology providers to access their customer data, and some of our customers may not have adequate security measures in place to protect their data that is stored on our services. Because we do not control our customers or third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the integrity or security of such transmissions or processing. Malicious third parties may also conduct attacks designed to temporarily deny customers access to our services. Any security breach could result in a loss of confidence in the security of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability.

While we maintain insurance coverage to protect us against a broad range of risks, including in relation to security breaches and cyber security attacks, we could still be subject to risks of losses that might be beyond the limits, or outside the scope, of coverage of our insurance and that may limit or prevent indemnification under our insurance policies. This potential insufficiency of insurance coverage could result in an adverse effect on our business, financial position, profit, and cash flows.
Interruptions or delays in our services through security breaches, failures, or disruptions could impede on our ability to deliver services, harm our reputation and our relationships with customers and partners, adversely affect our results of operation and subject us to liability.

Any interruptions or delays to our services, whether as a result of error or security breaches, and whether accidental or willful, could harm our reputation and our relationships with customers and partners, subject us to liability, and adversely affect our business and results of operations. In the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.

We currently serve our customers using third-party data center hosting facilities and cloud computing platform providers. While we have security measures in place that are aligned with applicable industry standards, they may be breached due to third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise, and result in someone obtaining unauthorized access to our or our third-party vendors’ systems and infrastructure. Moreover, such facilities and platforms may be vulnerable to interruptions resulting from power or network connectivity issues, criminal acts and other misconduct. Occurrence of such damage or interruptions could result in disruptions in our services. Despite precautions such vendors are required to take, the occurrence of such damage or interruption or other unanticipated problems at these facilities, could result in lengthy interruptions in our services, subject us to liability and require the issuance of credits or payment of penalties pursuant to our customer agreements, and/or cause customers to terminate their subscriptions and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenues. Also, we may not be entitled to indemnification or to recoup any such loss or damage from such service providers, which may result in us bearing the burden of any such liability or losses.
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In addition, we are also dependent on our computer databases, billing systems and accounting computer programs, network and computer hardware that houses these systems to effectively operate our business and market our services. Our customers may become dissatisfied by any failures of such systems that interrupt our ability to deliver our services. Therefore, significant disruption or failure in the operation of these systems could adversely affect our business and results of operations.

Furthermore, we provide some of our services through computer hardware that we own and that is currently located in third-party web hosting co-location facilities and data centers maintained and operated in various locations globally. Our hosting providers do not guarantee that our customers’ access to our solutions will be uninterrupted, error-free or secure. Our operations depend on our providers’ ability to protect their and our systems in their facilities against such damage or interruption. Our back-up computer hardware and systems may not have sufficient capacity to recover all data and services in the event of an outage occurring simultaneously at all facilities. In the event that our hosting arrangements are terminated, or there is a lapse of service or accidental or willful damage to such facilities, we could experience lengthy interruptions in our service as well as delays and/or additional expense in arranging new facilities and services. Any or all of these events could cause interruptions in our services.

We may face risks relating to inadequate intellectual property protection and liability resulting from infringement by our products or solutions of third-party proprietary rights.
Our success is dependent, to a significant extent, upon our proprietary technology. We currently hold 381 U.S. patents and 64 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have 130 patent applications pending in the United States and other countries. We rely on a combination of patent, trade secret, copyright and trademark law, together with non-disclosure and non-competition agreements, as well as third-party licenses to establish and protect the technology used in our systems. However, we cannot assure that such measures will be adequate to protect our proprietary technology, that competitors will not develop products with features based upon, or otherwise similar to our systems, that third-party licenses will be available to us or that we will prevail in any proceeding instituted by us in order to enjoin competitors from selling similar products. In most of the areas in which we operate, third parties also have patents which could be found applicable to our technology and products. Such third parties may include competitors, as well as large companies, which heavily invest in their patent portfolios, regardless of their actual field of business. Although we believe that our products and solutions do not infringe upon the proprietary rights of third parties, we cannot assure that one or more third parties will not make a claim or that we will be successful in defending such claim.
We generally distribute our software products under software license agreements that restrict the use of our products by terms and conditions prohibiting unauthorized reproduction or transfer of the software products. However, effective copyrights and other intellectual property rights protection may be inadequate or unavailable to us in every country in which our software products are available, and the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States and Israel. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our technology. Policing the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.
From time to time third parties allege or claim patent infringements. In defending ourselves against any such claims or actions we could be subject to substantial costs and diversion of management resources.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which may not be available on reasonable terms. Any of these may have a material adverse impact on our business or financial condition.
We face risks relating to our use of certain “open source” software tools.
Certain of our software products contain a limited amount of open source code and we may use more open source code in the future. In addition, certain third-party software that we embed in our products contains open source code. Open
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source code is code that is covered by a license agreement that permits the user to liberally use, copy, modify and distribute the software without cost, provided that users and modifiers abide by certain licensing requirements. The original developers of the open source code provide no warranties on such code.
As a result of our use of open source software, we could be subject to suits by parties claiming ownership of what we believe to be open source code and we may incur expenses in defending claims that we did not abide by the open source code license. In addition, third-party licensors do not provide intellectual property protection with respect to the open source components of their products, and therefore we may not be indemnified by such third-party licensors in the event that we or our customers are held liable in respect of the open source software contained in such third-party software. If we are not successful in defending against any such claims that may arise, we may be subject to injunctions and/or monetary damages or be required to remove the open source code from our products. Such events could disrupt our operations and the sales of our products, which would negatively impact our revenues and cash flow.
Moreover, under certain conditions, the use of open source code to create derivative code may obligate us to make the resulting derivative code available to others at no cost. The circumstances under which our use of open source code would compel us to offer derivative code at no cost are subject to varying interpretations. If we are required to publicly disclose the source code for such derivative products or to license our derivative products that use an open source license, our previously proprietary software products may be available to others without charge. If this happens, our customers and our competitors may have access to our products without cost to them, which could harm our business.
We monitor our use of such open source code to avoid subjecting our products to conditions we do not intend. The use of such open source code, however, may ultimately subject some of our products to unintended conditions so that we are required to take remedial action that may divert resources away from our development efforts.
Risks Relating to Regulatory Environment
Privacy concerns, legislation and other regulations may limit the use and adoption of our offering, adversely affect our business, increase compliance costs and expose us to increased liability.
Governments and other international organizations in various jurisdictions around the world (such as the legislative and regulatory institutions of the European Union) are adopting new laws, regulations and guidelines addressing data privacy and the processing (collection, storage, use, etc.) of personal information. These laws, regulations and guidelines may be inconsistent across jurisdictions and are subject to evolving and differing (sometimes conflicting) interpretations. In some cases, different sets of data privacy laws and regulations, such as the European Union’s General Data Protection Directive (“GDPR”), Israeli Privacy Law and the regulations promulgated thereunder (the “Israeli Privacy Law”), local laws and regulations and certain state laws in the U.S. on privacy, data and related technologies, such as the California Consumer Privacy Act (“CCPA”), also govern the processing of personal information. While we have invested in readiness to comply with applicable requirements, these and other requirements slow the pace at which we close sales or procurement transactions, restrict our ability to store and process data or, in some cases, impact our ability to offer some of our solutions and services for use in relation to data subjects that reside in certain locations or our customers’ ability to deploy our solutions globally. Compliance with these regulatory requirements may be onerous, time consuming and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction or where the jurisdictional reach of certain requirements is not clearly defined or seeks to reach across national borders.

Should we, or any party on our behalf, fail to comply with privacy legislation or procedures or other agreed security measures, we may incur substantive civil liability to government agencies, customers, shareholders and individuals whose privacy may have been compromised. As privacy legislation is increasing globally, and more government agencies are granted with authority to fine organizations for non-compliance with applicable data privacy laws and regulations, and require companies to take certain steps to remediate such non-compliance, we may find ourselves forced to pay damages penalties, fines, remediation costs, reimbursement of customer costs and other significant expenses due to our (or our vendors’) non-compliance with data privacy laws and regulations. Moreover, even the perception that the privacy of personal information that we process or control is not adequately protected or does not meet regulatory requirements could damage our reputation, inhibit sales of our products or services and could limit adoption of our products or services, including our cloud-based solutions.

In addition to legal and regulatory requirements, we are contractually obligated to certain customers, and may in the future be expected by prospective customers, to meet certain information security certifications or other standards established
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by third parties, such as the ISO 27001:2013 on information security management certification. If we are unable to obtain or maintain these certifications or meet these standards, it could harm our business and subject us to liability.

Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.
Our customers and potential customers conduct business in a variety of industries, including financial services and telecommunications. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. If in the future we are unable to achieve or maintain industry specific certifications or other requirements or standards relevant to our customers, it may harm our business and adversely affect our results.
Our revenues would be adversely affected if we fail to adapt our products and services to changes in rules and regulations applicable to the business of certain customers, such as rules and regulations regarding securities trading, broker sales compliance and anti-money laundering, which could have an impact on their need for our products and services.
In certain industries in which we operate, there may be regulations or guidelines for use of SaaS, hosting and cloud-based services that mandate specific controls or require enterprises to obtain certain approvals prior to outsourcing certain functions. In addition, we may be limited in our ability to transfer or outsource business to certain jurisdictions and may be limited in our ability to undertake development activity in certain jurisdictions, which may impede on our efficiency and adversely affect our business results of operations.

Changes in the legal and regulatory environment could materially and adversely affect our business, results of operations and financial condition.
Our business, results of operations and financial condition could be materially and adversely affected if laws, regulations or standards relating to our business and products, us or our employees (including labor laws and regulations) are changed or new ones are implemented. Such implemented laws and regulations include requirements in the United States, Europe and other territories in relation to data privacy and protection, anti-bribery and anti-corruption, foreign investment, import and export, labor, tax and environmental and social issues.
While we attempt to prepare in advance for these new initiatives and standards, we cannot assure that we will be successful in our efforts, that such changes will not negatively affect the demand for our products and services, or that our competitors will not be more successful or prepared than us.
Alternatively, any substantial changes resulting in a reduction in the implementation or elimination of rules and regulations that apply to a certain sector of our business, such as deregulation in the area of compliance, could result in a decrease in demand by customers, which could materially and adversely affect our business and results of operations.
Risks Relating to Our Financial Condition
Our quarterly results may be volatile at times, which could cause us to miss our forecasts.
We generally provide forecasts as to expected future revenues in the coming fiscal quarters and fiscal year. Our revenue and operating results can vary and have varied in the past, sometimes substantially, from one quarter to another. These forecasts are based on management estimation and expectations, our then-existing backlog and an analysis of assumptions and assessments that may not materialize or end up being inaccurate. We may not meet our expectations or those of industry analysts in a particular future quarter. Our quarterly operating results may be subject to significant fluctuations due to the following factors: the timing and size of customer orders, delays in issuance or shifting of customer orders (as often happens when customers postpone their buying decisions to the end of the budgetary year), variations in distribution
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channels, mix of products and services, new product introductions, competitive pressures and general economic conditions. It is difficult to predict the exact mix of products and services for any period, as well as within the product category between interaction-related platforms and related applications and transactional related platforms and applications. Changes in the mix of products and services across our different business lines may significantly impact our revenues. Further, the period of time from order to delivery of our platforms and applications is short, and therefore our backlog for such products and cloud solutions is currently, and is expected to continue to be, small and substantially unrelated to the level of sales in subsequent periods.
In addition, we derive a substantial portion of our sales through indirect channels, making it more difficult for us to predict revenues because we depend partially on estimates of future sales provided by third parties. Changes in our arrangements with our network of channel partners or in the products they offer, such as the introduction of new support programs for our customers, which combines support from our channel partners with back-end support from us, could affect the timing and volume of orders. Furthermore, our expense levels are based, in part, on our expectations as to future revenues. If our revenue levels are below expectations, our operating results are likely to be adversely affected, as most of our expenses are not variable in the short term.
Fluctuations in our results of operations may result from, among other things, our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements, the timing and success of new product and solution introductions and enhancements or product initiation by our competitors, the purchasing and budgeting cycles of our customers and general economic, industry and market conditions. Additionally, as a high percentage of our expenses, particularly employee compensation and other overhead costs, are relatively fixed, a variation in the level of sales, especially at or near the end of any quarter, may have a material adverse impact on our quarterly operating results.
While seasonality and other factors mentioned above are common in the software and technology industry, this pattern should not be considered a reliable indicator of our future revenue or financial performance. Many other factors, including general economic conditions, may also have an impact on our business and financial results.
We face foreign exchange currency risks.
Exchange rate fluctuations affect our operations. We experience risks from fluctuations in the value of the NIS, EUR, GBP, INR and other currencies compared to the U.S. dollar, the functional currency in our financial statements. A significant portion of the expenses associated with our Israeli and Indian operations, including personnel and facilities related expenses, are incurred in NIS and INR, respectively, whereas most of our business and revenues are generated in dollars, and to a certain extent, in GBP, EUR and other currencies. If the value of the dollar decreases against these foreign currencies, our earnings may be negatively affected. As a result, we may experience an increase in the costs of our operations, as expressed in dollars, which could adversely affect our earnings.
We monitor foreign currency exposure and may use various instruments to preserve the value of sales transactions, expenses and commitments, however this cannot assure our full protection against risks of currency fluctuations that could affect our financial results. As part of our efforts to mitigate these risks, we use foreign currency hedging mechanisms, which may be ineffective in protecting us against adverse currency fluctuations and can also limit opportunities to profit from exchange rate fluctuations that would otherwise be favorable. For information on the market risks relating to foreign exchange, please see Item 11, “Quantitative and Qualitative Disclosures about Market Risk” in this annual report.
We currently benefit from local government programs as well as international programs and local tax benefits that may be discontinued or reduced, or may result in liabilities if underlying conditions are not met.
We derive and expect to continue to derive significant benefits from various programs, including Israeli tax benefits relating to our “Preferred Technology Enterprise” programs, and certain other grants and tax benefits, including grants from the Israel Innovation Authority (formerly known as the Office of the Chief Scientist of the Ministry of Economy) of the State of Israel (the “IIA”), for research and development.
To be eligible for tax benefits as a Preferred Technology Enterprise, we must continue to meet certain conditions. While we believe that we have met and continue to meet the conditions that entitle us to previously obtained Israeli tax benefits, there can be no assurance that we will in the future or that the Israeli Tax Authorities will agree.
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To be eligible for IIA-related grants and benefits, we must continue to meet certain conditions, including conducting the research, development, manufacturing of products developed with such IIA grants in Israel, and providing the IIA with an undertaking that the know-how to be funded, and any derivatives thereof, is wholly-owned by us, upon its creation. In addition, we are prohibited from transferring to third parties the know-how developed with these grants without the prior approval of a governmental committee and, possibly, paying a fee. See Item 4, “Information on the Company—Research and Development” in this annual report, for additional information about IIA programs.
If the local and international grants, programs and benefits available to us or the laws, rules and regulations under which they were granted are eliminated or their scope is further reduced, or if we fail to meet the conditions of existing grants, programs or benefits and are required to refund grants or tax benefits already received (together with interest and certain inflation adjustments) or fail to meet the criteria for future Israeli Preferred Technology Enterprises, our business, financial condition and results of operations could be materially adversely affected.
Additional tax liabilities resulting from our global operations could materially adversely affect our results of operations and financial condition.
As a global corporation, we are subject to income, non-income and transactional tax regimes in Israel, the United States, India and various foreign jurisdictions, which are unsettled and may be subject to significant change. Our effective tax rate could be materially affected by changes in tax rulings, tax laws, regulations, administrative practices, principles, applicability of special tax regimes, or changes in interpretations of existing tax laws, including changes to the global tax framework, in the jurisdictions in which we do business. Such changes could come about as a result of economic, political, and other conditions. Additionally, our effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuations of our deferred tax assets and liabilities, tax implications of acquisitions, expansion into new territories, intercompany transactions, changes in foreign currency exchange rates, changes in our stock price and uncertain tax positions. Although we believe that our provision for income taxes and our tax estimates are reasonable, tax authorities may disagree with certain positions we have taken. From time to time, we are subject to income and other tax audits in various jurisdictions, the timing of which is unpredictable. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our tax accruals. While we believe we comply with applicable tax laws and have adequate balance sheet reserves related to tax positions, there can be no assurance that a governing tax authority will not have a different interpretation of the law and assess us with additional taxes. If we are assessed additional taxes, it could have a material adverse effect on our results of operations and financial condition.

In recent years we have seen tax law and regulatory changes in the U.S., EU, UK, India and other jurisdictions, including changes that may be impacted as a result of tax policy recommendations from organizations such as the Organization for Economic Co-operation and Development (“OECD”). Such legislative changes in one or more jurisdictions in which we operate may require us to change the manner in which we operate our business, may have implications on our tax liability and have a material adverse effect on our results of operations and financial condition.

In October 2015, the OECD published its final package of measures for reform of the international tax rules as a product of its Base Erosion and Profit Shifting (“BEPS”) initiative, which was endorsed by the G20 finance ministers. Many of the initiatives in the BEPS package required and resulted in specific amendments to the domestic tax legislation of various jurisdictions and to existing tax treaties. We continuously monitor these developments. Although many of the BEPS measures have already been implemented or are currently being implemented globally (including, in certain cases, through adoption of the OECD’s ‘multilateral convention’ to effect changes to tax treaties which entered into force on July 1, 2018 and through the EU’s ‘Anti-Tax Avoidance’ Directives), it is still difficult in some cases to assess to what extent these changes would impact our tax liabilities in the jurisdictions in which we conduct our business or to what extent they may impact the way in which we conduct our business or our effective tax rate due to the unpredictability and interdependency of these potential changes. Further, for the past several years, the OECD has had a specific focus on the taxation implications of e-commerce business, generally referred by the OECD as the “digital economy.” In the fourth quarter of 2019, the OECD released details on its proposed approach which would, among other changes, create a new allocation of taxing rights between jurisdictions for certain “digital economy” income, not necessarily based on traditional nexus concepts nor on the “arm’s length principle”. In October 2020, the OECD hosted a public consultation with representatives of over 135 countries, however, there is a lack of consensus agreement among the key members to the latest proposal. The OECD’s objective is to reach a consensus for an agreement by mid-2021.

However, though there is a wide support for an international unified solution, the delay in reaching a full consensus on an executable plan has resulted in individual jurisdictions legislating digital tax provisions in an uncoordinated and unilateral manner, and further result in greater or even double taxation that companies may not have sufficient means to
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remedy. For example, a number of jurisdictions, including the UK, India and some EU countries, have already adopted or formally proposed legislation to effect the taxation of certain digital and e-commerce business based on differing criteria and metrics. Further, on January 14, 2021, the European Commission published a roadmap for the introduction of a unified digital levy, which is expected to become effective on January 1, 2023.

Efforts to alleviate this increased tax burden will increase the cost of structuring and compliance as well as the cost of doing business internationally. It is not yet clear to what extent these digital tax provisions would apply to us. Any changes to the taxation of our international activities may increase our worldwide effective tax rate and adversely impact our financial position and results of operations. Further, the prospective taxation by multiple jurisdictions of digital and e-commerce businesses could subject us to exposure to withholding, sales, VAT and/or other transaction taxes, in such jurisdictions where we currently or in the future may be required to report taxable transactions. The imposition of new laws requiring the registration for, collection of, and payment of such taxes, could result in substantial tax liabilities, create increased administrative burdens and costs, require us to change the manner in which we operate or otherwise adversely affect our business and results of operations.

The U.S. Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Reform”), significantly changed how corporate business entities are taxed in the U.S. The application of the U.S. Tax Reform is subject to uncertainties. The U.S. Tax Reform includes certain provisions that have applied to us and that may change the valuations of our deferred tax assets and liabilities and may increase our overall tax liabilities. We have implemented certain steps to optimize our global tax structure, but there can be no assurance that our global tax liabilities would not increase as a result of the U.S. Tax Reform. In addition, due to the uncertainty involved in applying certain provisions of the U.S. Tax Reform to our group, we made reasonable estimates for the effects on our financial statements. The U.S. Treasury Department, the Internal Revenue Service and other standards-setting bodies may issue guidance on how the provisions of the U.S. Tax Reform will be applied that is different from our interpretation. The U.S. Tax Reform requires complex computations not previously required or produced, and significant judgments and assumptions in the interpretation of the law were made in producing our provisional estimates. As we continue our analyses, and interpret any additional guidance, it is possible that the final impact may differ from our current assessment of our business and effective income tax rate, and our profitability may be adversely affected.

In addition, in response to significant market volatility and disruptions to business operations resulting from the global spread of COVID-19, legislatures and taxing authorities in many jurisdictions in which we operate may propose changes to their tax rules. These changes could include modifications that have temporary effect, and more permanent changes. These potential new rules could have an impact on us, our long-term tax planning and our effective tax rate.

We might recognize a loss with respect to our financial investments.
We invest most of our cash through a variety of financial investments. If the obligor of any of our financial investments defaults or undergoes reorganization in bankruptcy, we may lose a portion of such investment and our assets and income may decrease. In addition, a downturn in the credit markets or the downgrading of the credit rating of our investments could result in a reduction in the market value of our holdings and reduce the liquidity of our investments, which could require us to recognize a loss at the time of liquidation and would adversely affect our assets and income.
Our debt could adversely affect our financial condition and impact our business needs and plans.
We incurred indebtedness pursuant to the issuance of the Notes (as defined in “Item 10. Additional Information - Material Contracts - Notes and Indenture”). The debt incurred could have adverse consequences to our financial condition and business. For example, it could:
increase our vulnerability to general adverse economic and industry conditions;
make it more difficult for us to satisfy our other financial obligations;
make it more difficult for us to make strategic acquisitions;
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby limiting the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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limit to some extent our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
place us at a competitive disadvantage compared to our competitors that have less debt and comparable resources;
limit to some extent our ability to borrow additional funds as needed;
restrict our ability to prepay the Notes or to pay cash upon exchanges of the Notes; and
limit to some extent our ability to pay dividends, redeem stock or make other distributions.
Our ability to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability to continue to generate cash in the future. This is subject to general economic, financial, competitive, business, regulatory and other factors that may be beyond our control. We cannot assure that our business will continue to generate sufficient cash flow from operations or that future financing will be available to us in an amount sufficient to enable us to service our debt, or to fund our other liquidity needs or execute on our strategic plans.

If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of our debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial condition or results of operations. If we are unable to generate sufficient cash flow to repay our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. A failure to comply with the provisions of our outstanding debt could result in events of default under such instruments, which could permit acceleration of our Notes.

Any required prepayment or exchange of our Notes, including as a result of an optional redemption, event of default or fundamental change triggering such right, would lower our current cash on hand such that we would not have those funds available for use in our business, which could adversely affect our operating results.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a material effect on our reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components of convertible or exchangeable debt instruments (such as the Notes) that may be settled entirely or partially in cash upon exchange in a manner that reflects our economic interest cost. The effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be included in the additional paid-in capital section of shareholders’ equity on our consolidated balance sheet, and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to their principal amount over the term of the Notes. We will report lower net income (or greater net loss) in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results.
For our 2017 Notes, we have the intent and ability to settle the convertible debt in cash and as such, the potential issuance of shares related to the 2017 Notes does not affect diluted shares (prior to adoption of ASU 2020-06). If we elect to settle the 2017 Notes in ADSs, according to the treasury stock method, the transaction is accounted for in the diluted share count, as if the number of ADSs that would be necessary to settle the Notes are deemed issued. We cannot be sure that we will be able to continue to demonstrate the ability or intent to settle the 2017 Notes in cash.

For our 2020 Notes, we have the intent and ability to settle the convertible debt principal amount in cash and as such, the potential issuance of shares related to the 2020 Notes principal amount does not affect diluted shares. If we elect to settle the 2020 Notes in ADSs, according to the treasury stock method, the transaction is accounted for in the diluted share count, as if the number of ADSs that would be necessary to settle the Notes are deemed issued. We cannot be sure that we will be able to continue to demonstrate the ability or intent to settle the principal amount of the 2020 Notes in cash.

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Prior to the adoption of ASU 2020-06, the 2020 Notes may have a dilutive effect on our earnings per share to the extent the stock price exceeds the conversion price of the Notes as we only have the intent and ability to settle the principal amount in cash. In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, issuers will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for issuers that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an issuer to rebut this presumption if it has a history or policy of cash settlement as we did for the 2017 and 2020 Notes. Furthermore, ASU 2020-06 requires the application of the “if-converted” method for calculating diluted earnings per share and that the treasury stock method will no longer be available. The adoption of ASU 2020-06, that will become effective in January 2022, may adversely affect our diluted earnings per share.

If we fail to maintain effective internal controls over financial reporting and operations, it could have a material adverse effect on our business, operating results, and the price of our ordinary shares and ADSs.
Effective internal controls are necessary for us to provide reliable financial reports and prepare consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles and U.S. securities laws, as well as to effectively prevent material fraud. Because of inherent limitations, even effective internal control over financial reporting may not prevent or detect every misstatement. In addition, if we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting and operations. Furthermore, as we grow our business or acquire businesses, our internal controls may become more complex and we may require significantly more resources to ensure they remain effective. In addition, we may identify material weaknesses or significant deficiencies in our internal control over financial reporting. Failure to maintain effective internal control over financial reporting and operations could result in investigation or sanctions by regulatory authorities and could have a material adverse effect on our business and operating results, investor confidence in our reported financial information, and the market price of our ordinary shares and ADSs.
Current and future accounting pronouncements and other financial reporting standards and principles might have a significant impact on our financial position and negatively impact our financial results.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls. Changes resulting from these new standards may result in materially different financial results and may require that we change how we process, analyze and report financial information and that we change financial reporting controls.
We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies.
This could lead to risks associated with our ability to react in a timely manner to new accounting pronouncements and financial reporting standards and unpredictable changes in interpretation of standards. Any one or more of these events could have an adverse effect on our business, financial position, and profit.
Risks Relating to our Securities
The market price of each of our ADSs, ordinary shares and the Notes is volatile and may decline.
Numerous factors, some of which are beyond our control, may cause the market price of our ADSs, ordinary shares and the Notes to fluctuate significantly. These factors include, among other things:
Quarterly variations in our operating results;
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Changes in expectations as to our future financial performance, including financial estimates by securities;
Perceptions of our company held by analysts and investors;
Additions or departures of key personnel;
Announcements related to dividends;
Development of or disputes concerning our intellectual property rights;
Announcements of technological innovations;
Customer orders or new products and services by us or our competitors;
Acquisitions or investments by us or by our competitors and partners;
The exchangeability of the Notes for ADSs;
Hedging or arbitrage trading activity involving ADSs by holders of the 2017 Notes;
Modification of hedge positions by counterparties to the hedge transactions we entered into simultaneously with the issuance of the Notes, including the possible entry into or unwinding of derivative transactions with respect to the ADSs or the purchase or sale of the ADSs or other NICE securities in secondary market transactions;
Currency exchange rate fluctuations;
Earnings releases by us, our partners or our competitors;
General financial, economic and market conditions;
Political changes and unrest in regions, natural catastrophes;
Market conditions in the industry and the general state of the securities markets, with particular emphasis on the technology and Israeli sectors of the securities markets; and
General stock market volatility.
Our ADSs and ordinary shares are traded on different markets and this may result in price variations.
Our ADSs have been listed on The NASDAQ Stock Market since 1996 and our ordinary shares have been traded on the Tel Aviv Stock Exchange, or the “TASE,” since 1991. Trading in our securities on these markets takes place in different currencies (our ADSs are traded in U.S. dollars and our ordinary shares are traded in New Israeli Shekels), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Israel). As a result, the trading prices of our securities on these two markets may differ due to these factors. In addition, any decrease in the price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.
Substantial future sales or the perception of sales of our ADSs or ordinary shares, or the exchange, or conversion of a substantial amount of Notes, or perception thereof, could cause the price of our ADSs or ordinary shares to decline.
Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the price of our ADSs and ordinary shares and could impair our ability to raise capital through the sale of additional shares. Such sales may also make it more difficult for us to sell equity or equity-related securities in the future at a time and at a desirable price.
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Additionally, the issuance of ADSs upon future exchanges or conversions of the Notes for ADSs, or the perception that these exchanges or conversions may occur, could dilute shareholders and reduce the market price of the ordinary shares or ADSs. This could also impair NICE’s abilities to raise additional capital through the sale of its securities.
The market prices of the ordinary shares and the ADSs, which may fluctuate significantly, will directly affect the market price for the Notes.
We expect that the market price of the ordinary shares and the ADSs will affect the market price of the Notes. This may result in greater volatility in the market price of the Notes than would be expected for non-exchangeable notes. The market price of the ordinary shares and the ADSs will likely fluctuate in response to a number of factors, many of which are beyond our control. Holders who receive ADSs upon exchange of the Notes will therefore be subject to the risk of volatility and depressed prices of ADSs. In addition, we expect that the market price of the Notes will be influenced by yield and interest rates in the capital markets, our creditworthiness and the occurrence of certain events affecting us that do not require an adjustment to the exchange rate. Fluctuations in yield rates in particular may give rise to arbitrage opportunities based upon changes in the relative values of the Notes and ADSs. Any such arbitrage could, in turn, affect the market prices of ADSs and the Notes.
We have not registered, and do not currently intend to register, the 2020 Notes, the ADSs into which the 2020 Notes are exchangeable or convertible or the ordinary shares represented thereby. There are restrictions on noteholders’ ability to transfer or resell the 2020 Notes, ADSs and the underlying ordinary shares.
The 2020 Notes (as defined in “Item 10. Additional Information - Material Contracts - Notes and Indenture”), the ADSs deliverable upon exchange or conversion of the 2020 Notes and the ordinary shares represented thereby were offered and sold pursuant to an exemption from registration under the Securities Act and applicable state securities laws, and we have not registered, and do not currently intend to register, the 2020 Notes, the ADSs or such ordinary shares. Therefore, 2020 noteholders may transfer or resell the 2020 Notes only in a transaction registered under or exempt from the registration requirements of the Securities Act and applicable state securities laws.
The fundamental change and make-whole fundamental change provisions of the Notes may delay or prevent an otherwise beneficial attempt to acquire our company.
The fundamental change prepayment rights of the noteholders under the Notes, which would allow noteholders to require that we prepay all or a portion of their Note upon the occurrence of a fundamental change, and the provisions under the Notes requiring an increase to the exchange rate for exchanges in connection with a make-whole fundamental change, in certain circumstances may delay or prevent an acquisition of NICE that would otherwise be beneficial to our shareholders.
It may be difficult to enforce a U.S. judgment against us and our officers and directors in Israel or the United States, or to serve process on our officers and directors.
Service of process upon us, our Israeli subsidiaries, directors and officers, and Israeli advisors, if any, named in this annual report, may be difficult to obtain within the United States. Additionally, it may be difficult to enforce civil liabilities under U.S. federal securities law in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing these matters.
Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, establishes a high ownership threshold to squeeze out minority shareholders in a full tender offer, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions.
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Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
See Item 10, “Additional Information—Mergers and Acquisitions” in this annual report, for additional discussion regarding anti-takeover effects of Israeli law.
General Risk Factors
Conditions and changes in the local and global economic environments may adversely affect our business and financial results.
Adverse economic conditions in markets or regions in which we operate can harm our business. Our results of operations can be affected by adverse changes in local and global economic conditions, slowdowns, recessions and economic instability. To the extent that our business suffers as a result of such unfavorable economic and market conditions, including a potential downturn as a result of COVID-19 pandemic (as further described below), our operating results may be materially adversely affected. In particular, enterprises may reduce spending in connection with their contact centers, financial institutions may reduce spending in relation to trading floors and operational risk management (as IT-related capital expenditures are typically lower priority in times of economic slowdowns), and our customers may prioritize other expenditures over our solutions. In addition, enterprises’ ordering and payment patterns are influenced by market conditions and could cause fluctuations in our quarterly results. If any of the above occurs, and our customers or partners significantly reduce their spending or significantly delay or fail to make payments to us, our business, results of operations, and financial condition would be materially adversely affected.
Disruption to the global economy could also result in a number of follow-on effects in addition to a slow-down in our business, including a possible (i) negative impact on our liquidity, financial condition and share price, which may impact our ability to raise capital in the market, obtain financing and secure other sources of funding in the future on terms favorable to us, and (ii) decrease in the value of our assets that are deemed to be other than temporary, which may result in impairment losses.
We face risks relating to our global operations.
We sell our products and solutions throughout the world and intend to continue to increase our penetration of international markets. Our future results could be materially adversely affected by a variety of factors relating to international transactions, including:
governmental controls and regulations, including import or export license requirements, trade protection measures and changes in tariffs;
compliance with applicable international and local laws, regulations and practices, including those related to trade compliance, anticorruption, data privacy and protection, tax, labor, employee benefits, customs, currency restrictions and other requirements;
disruptions in business operations of our customers due to local or national restrictions implemented to combat COVID-19;

fluctuations in currency exchange rates;
longer payment cycles in certain countries in our geographic areas of operations;
potential adverse tax consequences, variations in effective income tax rates and tax policies among countries where we conduct business, including the complexities of foreign value added tax systems;
political instability, armed conflicts, terrorism and security concerns;
reduced or limited protection for intellectual property rights in some countries; and
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general difficulties in managing our global operations.
Changes in the political or economic environments, business spending, and the availability and cost of capital in the countries in which we operate, especially in Israel and the U.S., including the impact of such changes on foreign currency rates and interest rates, and the impact of economic conditions on underlying demand for our products and services, could have a material adverse effect on our financial condition, results of operations and cash flow.

As a result of our global presence, especially in emerging markets, we face increasing challenges that could adversely impact our results of operations, reputation and business.
In light of our global presence, especially in emerging markets such as those in Asia, Eastern Europe and Latin America, we face a number of challenges in certain jurisdictions that provide reduced legal protection, including poor protection of intellectual property, inadequate protection against crime (including bribery, corruption and fraud) and breaches of local laws or regulations, unstable governments and economies, governmental actions that may inhibit the flow of goods and currency, challenges relating to competition from companies that already have a local presence in such markets and difficulties in recruiting sufficient personnel with appropriate skills and experience.
Local business practices in jurisdictions in which we operate, and particularly in emerging markets, may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery laws and regulations (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act) to which we are subject. Although we implement policies and procedures designed to ensure compliance with these laws, we cannot guarantee that none of our employees, contractors, partners and agents, as well as those companies to which we outsource certain of our business operations, will not violate our policies or applicable law. Any such violation could have an adverse effect on our business and reputation and may expose us to criminal or civil enforcement actions, including penalties and fines.
Furthermore, the increased presence of our global operations in emerging markets, including outsourcing of certain operations to service providers in such markets (such as India and the Philippines), could impact the control over our operations, as well as create dependency on such external service providers. This method of operation may impact our business and adversely affect our results of operation.
Our business, facilities or operations could be adversely affected by events outside of our control, such as natural disasters or health epidemics.
Natural disasters or other unexpected events that adversely affect the business climate in any of our markets could have a material adverse effect on our business, financial condition and results of operations. Our business operations may be subject to interruption by natural disasters, fire, power shortages, telecommunications failures, pandemics and epidemics and other events beyond our control. Although we maintain disaster recovery and business continuity plans, such events could make it difficult or impossible for us to deliver our products and services to our customers, and could decrease demand for our products and services.

The novel coronavirus (COVID-19) pandemic is contributing to a general slowdown in the global economy, which may impact the mode of operation of our customers, including the possible impact on their buying decisions and the sale cycles. At this time, the extent and duration of the continued impact of the pandemic is unknown, and therefore we cannot predict how it may affect our future business, results of operations, financial condition and strategic plans. Furthermore, due to our subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods.
In addition, due to the COVID-19 pandemic, we have restricted our employee travel, shifted to work from home in most locations around the world and have changed other operating procedures. The result of such changes may impact our ability to attract and retain employees.

We depend on our ability to recruit and retain qualified personnel.

In order to compete, we must recruit and retain executives and other key employees. Hiring and retaining qualified executives and other key employees is critical to our business, and competition for highly qualified and experienced managers in our industry is intense. There is no guarantee that additional key management members will not leave the Company, or if they do, that we will be able to identify and hire qualified replacements, or that the transition of new personnel will not cause disruption in our business.
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In addition, due to our growth, or as a result of regular recruitment, we will be required to hire and integrate new employees. Recruiting and retaining qualified engineers and computer programmers to perform research and development and to commercialize our products and solutions, as well as qualified personnel to market and sell those products and solutions, are critical to our success. There can be no assurance that we will be able to successfully recruit and integrate new employees.
There is intense competition to recruit and retain highly skilled employees in the technology industry, which has increased due to the millennial workforce continuing to value multiple company experiences over long tenure. We have suffered from attrition in our workforce in previous years and we believe that such attrition will continue in the future. We may not be able to offer current and potential employees a compensation package that is satisfactory in order to keep them within our employment.
In certain locations in which we have development centers, the rate of attrition is high and could have a negative impact on our ability to retain our employees in such centers, timely develop our products and solutions and service our customers. In addition, the migration of development and other activities and functions to low-cost countries (such as India) may result in disruption to our business due to differing levels of employee knowledge, expertise and organizational and leadership skills, greater employee attrition and increased cost of retaining our most highly-skilled employees.
An inability to attract and retain highly qualified employees may have an adverse effect on our ability to develop new products and solutions and enhancements for existing products and solutions, and to successfully market such products and solutions, all of which would likely have a material adverse effect on our results of operations and financial position. Our success also depends, to a significant extent, upon the continued service of a number of key management, sales, marketing and development employees, the loss of any of whom could materially adversely affect our business, financial condition and results of operations.
Item 4.    Information on the Company.
Item 4.A    History and Development of the Company.
The story of NICE is one of continuous innovation driving strategic business transformations, consistently expanding our total addressable markets and becoming a leading provider in every segment we operate in. NICE was founded on September 28, 1986, as Neptune Intelligent Computer Engineering Ltd., with the vision to digitize unstructured data previously captured using analog means. This digitization enabled a new era of capturing, storing, securing and managing large quantities of unstructured data, such as voice calls generated in trading floors, contact centers and air traffic control. On October 14, 1991, the Company was renamed NICE-Systems Ltd., expanding its mission to the Customer Service market, becoming a leading global provider of Workforce Optimization software applications, as well as adding solutions for the Public Safety sector. With the advancement in computing power, the increased quantity of available data and the growing need to generate meaningful business insight, NICE launched Interaction Analytics solutions - allowing organizations to quickly understand and operationalize their captured unstructured interaction data. In 2007, NICE acquired Actimize, a leader in Financial Crime and Compliance analytics solutions, and added real-time transaction data analytics with leading AI-based solutions to help prevent financial fraud and money laundering, transforming the company into an enterprise software analytics leader. In 2016, NICE acquired inContact, a leading provider of cloud contact center software and agent optimization tools, enabling the industry’s first fully integrated and complete cloud contact center solution platform.

On June 6, 2016, the Company was renamed NICE Ltd., which is our legal and commercial name. Today, NICE is an enterprise software leader in cloud, analytics, digital and artificial intelligence (sometimes referred to as “AI” in this annual report) in both the Customer Engagement and Financial Crime and Compliance markets. Our solutions help organizations create extraordinary and trusted customer experiences, improve public safety and prevent financial crime. Our solutions are based on advanced cloud platforms that combine digital and omnichannel capabilities, advanced analytics, AI and smart automation.

NICE is a company limited by shares organized under the laws of the State of Israel. Our Israeli offices are located at 13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel (Tel. +972-9-775-3151). Our subsidiary, NICE Systems, Inc. has been appointed as our Agent for Service in the United States, and is located at 221 River Street, Hoboken, New Jersey 07030.
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Principal Capital Expenditures
In the last three fiscal years, our principal capital expenditures were the acquisition of other businesses and repurchases of our American Depositary Receipts (“ADR”). For information regarding our acquisitions and ADR share repurchases, please see Item 5, “Operating and Financial Review and Prospects – Recent Acquisitions,” and “Operating and Financial Review and Prospects – Liquidity and Capital Resources,” in this annual report. For additional information regarding our ADR share repurchases, please also see Item 16E, “Purchases of Equity Securities by the Issuer and Affiliated Purchasers,” in this annual report.
For a breakdown of total revenues by products and services and by geographic markets for each of the last three years, please see Item 5, “Operating and Financial Review and Prospects – Results of Operation,” in this annual report.
Item 4.B    Business Overview
About NICE
NICE is a global enterprise software leader, providing cloud platforms for AI-driven business solutions that serve two main markets: Customer Engagement and Financial Crime and Compliance. Our core mission is to transform experiences to be extraordinary and trusted. Our solutions are used by customer service organizations of enterprises of all sizes and verticals, and by compliance and fraud-prevention groups in leading financial institutions, offered in multiple delivery models, including cloud and on-premises.

We help organizations transform customer experiences with solutions aimed at understanding consumer journeys, creating smarter hyper-personalized connections, managing seamless omnichannel interactions and providing digital-centric self-service capabilities. We also help organizations transform their workforce experience with solutions aimed at engaging employees, optimizing operations and automating processes. In the Financial Crime and Compliance market, we protect financial services organizations and their customers’ accounts and transactions, with solutions that identify risks faster and earlier to prevent money laundering and fraud, as well as ensure compliance in real-time.

NICE is at the forefront of several industry technological disruptions that have greatly accelerated over the course of the recent pandemic: the adoption of cloud platforms by organizations of all sizes and verticals, the shift of consumer and organizational preferences towards digital-centric services and experiences, the growing acceptance of AI, and the need to manage, optimize and engage a diverse and remote workforce. Our suite of integrated portfolio of solutions, based on our unique domain expertise, provide customer experience, financial crime and public safety organizations with industry-leading agility and unmatched innovation that are essential for organizations’ success.

We rely on several key assets to drive our growth:
Our market-leading open native cloud platforms for Customer Engagement, Financial Crime and Compliance, and Public Safety which natively embed analytics, automation, AI, and digital capabilities, and are protected by a broad array of patents.
Our extensive portfolio of applications allows our customers to benefit from a wide range of both cloud and on-premises solutions.
Our broad array of proprietary technologies and algorithms in the domains of automation, analytics, machine learning, speech-to-text, natural language processing, personality-based routing and others.
Our access to data for improving our algorithms through machine learning and AI, which relies on a combination of our expansive customer base, cloud deployments and domain expertise.
Our solutions cover all market segments, from small to mid-sized business to large scale Fortune 100 enterprises.
Our solutions are mission critical for the operation of our customers, and our cloud platforms are essential for enabling a scalable and sustainable work-from-anywhere environment.

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Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness for our solutions in our areas of operation.
Our large partner ecosystem enables us to reach and serve a large number of customers across many countries.

Our loyal customer base: more than 25,000 organizations in over 150 countries, across many industries, and including 85 of the Fortune 100 companies, use NICE solutions.

Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and trends, which we introduce to the market through our direct sales force and distribution network.
Our skilled employees and domain expertise in our core markets allow us to bring our customers the right solutions to address key business challenges and build strong customer partnerships.
Our services, customer support and operations, which enable our customers to quickly enjoy the benefits of our solutions, with multiple deployment models in the cloud or on-premises throughout the world and support for full value realization and customer success.
Industry and Technology Trends
Following are the key cross-industry trends that we have identified as driving demand for our solutions:
Organizations prefer using open cloud platforms as the foundation for their applications to allow quick innovation cycles and business agility. Open platforms provide unified and fully-integrated solutions that are all based on a shared framework of services, allowing for fast innovation, easy deployment, flexible functionality and an enhanced ecosystem of solution providers. Third-party solutions can be easily added to extend the functionality of the platform to match a customer’s or industry specific needs.
Accelerated adoption of cloud solutions by organizations of all sizes. Cloud solutions have grown to become common, from small and mid-size to large organizations. In recent years, we are seeing acceleration in cloud deployments in large to very large organizations. The adoption of cloud solutions provides organizations with the agility they need to quickly adapt, renew and innovate, while meeting their requirements for security, scale, stability, and other enterprise grade needs. The recent pandemic has pushed many organizations to further accelerate their cloud transformation and move to an agile mode of operation to meet new business requirements, enable flexible work from anywhere and lower operational costs.
Organizations are going through accelerated digital transformation in response to consumer preferences enhanced by recent social distancing practices. In order to remain competitive, organizations need to provide customers with various digital means by which they prefer to interact with the organization. Digital transformation allows for quality, consistent and personalized experiences across channels, higher use of digital banking, more efficient end-to-end processes, faster response time and empowerment of employees and customers.

Artificial Intelligence and Automation are disrupting businesses across all industries. AI and automation are reshaping the way organizations are conducting their businesses across all organizational functions. It helps with strategic decision-making through data processing on a scale much larger and faster than any human could accomplish. Implementing AI and automation helps organizations sustain competitiveness and differentiation by proactively streamlining and automating complex business processes in smart ways, infusing real-time decisioning and predictive tools based on cognitive technologies, and generating meaningful and operationalized insight from vast data.
Customer engagement trends that are driving demand for our solutions:
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Increased use by consumers of newer digital channels as first choice for interaction with organizations. Newer Digital Channels comprise mainly messaging and social applications. The nature of these channels is different from voice and traditional digital channels (e.g., email, chat) due to the asynchronous response times and ability to carry the conversation for extended periods of time. Over the course of the recent pandemic, social distancing substantially increased the use of digital channels, and consumers of all ages and generations now show a clear preference for messaging channels when interacting with customer service. Organizations need to make sure they offer these channels as a communication alternative.

Consumer expectation for a holistic omnichannel experience that is effortless, contextual and consistent across all touchpoints has become a standard requirement. While consumers move constantly between devices and channels, their expectation is for consistent experiences that are keeping the interaction context across all communication channels and are seamlessly transitioned from one channel to another, and can also communicate in different modalities simultaneously. The number of channels is continuously growing, but consumers view them all as part of a single experience. Organizations are expected to quickly adapt to the large variety of channels as well as to view them seamlessly in the same way their consumers do and offer a reliable and consistent, contextual experience across all touch points.

Organizations rely more on analytics and AI to further improve customer experience as well as the general performance of the contact center. Organizations are increasingly adopting a customer-centric strategy to better understand each individual customer, including their needs and preferences, and to respond accordingly. Organizations are increasing the use of AI to achieve focused decisioning and real-time action solutions – being proactive and predictive. Front and back office functions seek to employ analytics to better optimize their operations. These tools include, among others, cognitive engagement solutions, like interactive communications, predictive analytics and machine learning. Furthermore, smart and self-learning machines allow the enhancement of self-service, real-time guidance and analytics-based insights (including speech and text analytics), behavioral analytics and techniques focused on profiling, trending and pattern detection. As a result, organizations increasingly use these technologies to provide faster and more efficient customer service as well as drive specific business outcomes.

Conversational bots are being deployed to contain and deflect calls and interactions into self-service. Organizations are looking for new and advanced digital means to improve customer satisfaction and reduce cost. Further development of intelligent bots will improve operational processes, ensure compliance with rules and regulations, increase flexibility in customer interactions with the contact center, as well as decrease error rate and wait time while providing a personalized experience. This technology will increase self-service channels containment and allow the human workforce to focus on more complex value-added services.

Adoption of Robotic Process Automation (RPA) solutions keep growing in the contact center in order to increase agent efficiency and productivity while reducing costs. RPA helps to significantly reduce the number of manual and time-consuming tasks agents and employees need to perform, freeing them to spend time in added-value activities. RPA can be divided into unattended and attended automation. With unattended RPA, companies are looking to fully automate back-office processes at scale with no human intervention. With attended RPA the bots can work as virtual assistants to agents dramatically improving the work-from-anywhere contact center’s workforce capabilities.
In response to the COVID-19 pandemic, organizations need to enable their employees to work from anywhere. To do that successfully, they are continually looking for ways to engage and motivate employees to ensure their productivity and satisfaction is maintained, regardless of their physical location. The new work environment creates new demands regarding planning, scheduling, evaluating, coaching and incentivizing employees. This requires organizations to manage their workforce in an agile and personalized manner that improves employees’ performance and allows the same level of visibility, transparency, and productivity as they used to have when working from the office.
Public Safety Answering Points (PSAP) are adopting next generation communication infrastructure to enable digital emergency communication. Next generation PSAPs enable people to communicate through new digital channels enhanced with capabilities such as sharing media, location and other forms of digital data.
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Public safety agencies of all types – from emergency communications centers and police departments, to prosecutors, defense attorneys and courts – are collecting vast amount of data, most of it is digital native. The vast amount of new information available to PSAPs intensifies the need for enterprise-grade, secure digital evidence management platforms for gathering, managing and ensuring compliance of public safety data to support digital evidence collection and investigation.
Financial Crime and Compliance trends that are driving demand for our solutions:

The need to embed risk management controls into digital first strategies. Financial services organizations are undergoing significant digital and analytics transformations to provide safe and seamless customer access to accounts across all channels and enable safe and secure transactions. At the forefront of these initiatives is the need to improve customer experience. The realization that risk management is a critical component to the customer experience is driving a high demand for financial crime prevention and detection solutions across the customer lifecycle from onboarding to ongoing monitoring.
Preventing financial crime and ensuring stringent compliance with evolving regulatory environments. Regulatory scrutiny of financial institutions continues to apply pressure on organizations to adopt more advanced regulatory compliance and risk management technology. Furthermore, regulators have been expanding their focus from the largest financial institutions to a broader market, including smaller banks and alternative financial service providers, all creating increased demand for risk and compliance related solutions.

An unpredictable threat landscape environment. The growing number of data breaches and cyber security incidents put increasing amounts of personally identifiable information and sensitive data at risk of exposure. This information can be used to open accounts that can be used for laundering money, terrorist financing, account fraud, market manipulation, social engineering, and more. Such potential risks threaten an organization’s reputation, as well as create large financial exposures due to both losses as well as fines. In addition, the large volumes of data, related to both internal and external threats, place an enormous operational burden on organizations. Having the ability to deploy advanced technologies such as machine learning and automation to address these threats, becomes increasingly critical to financial services organizations.

An increasing need to control cost of compliance. The regulatory pressures and increasing threat landscape have driven a sharp increase in the number of risk and compliance personnel, which in turn has dramatically increased the cost of compliance. Organizations are turning to technology to allow them to control these costs without compromising their compliance adherence and while continuing to lower their exposure to financial crime.
Financial institutions are seeking a single platform that aggregates and analyzes financial crime-related Risk in one place. The ever-expanding risk landscape and sophistication of financial criminals, as well as the need to keep costs in check, creates a growing need for a single view of different detection signals throughout the financial services organization. Such platform allows financial services organizations to analyze the data, act on it and present it in a single dashboard to both operations and executives.
Process automation and machine learning are increasingly used to automate financial investigation tasks where it may not be necessary to have human involvement. This frees up investigators from low value, high volume manual tasks so that they may better focus on more important and strategic tasks. This leads to better resource utilization, increased accuracy and productivity, and improved return on investment.
Financial institutions are being disrupted by digital players providing improved experiences and more personalized products and services. Prior to the onset of the pandemic, most banking services and many other financial service organizations were being challenged by neo-banks, fintech companies and other digital players. To improve customer experiences, and compete against these digital players, financial institutions continue to invest heavily in digital capabilities. Consumers have increased expectations for faster and frictionless processes. In terms of risk, digital banking moves the consumer away from the branch creating new risks around identity verification, customer due diligence and general monitoring of
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consumer financial behavior. The expectations for fast response times drive financial institutions to re-design their compliance processes to be able to respond in minutes or seconds rather than days or weeks, which in turn requires broader adoption of AI across the customer lifecycle.

Strategy
Our long-term strategy is to further strengthen our leadership position in both Customer Engagement and Financial Crime and Compliance market segments, as well as to further enhance our position in adjacent markets. During 2020, we continued to execute on our long-term strategy through both organic activity and acquisitions, enhancing our position as a leader in both markets.


Empowering organizations to lead by adapting to change
We intend to continue leading the market by leveraging several major industry trends and evolving our offering to meet our customers’ current and future needs while focusing on key strategic pillars:

Cloud Foundation – we provide cloud-native open platforms for our Customer Engagement and Financial Crime and Compliance offerings. This allows our customers to facilitate adoption of cloud infrastructure as a means to accelerate innovation and reduce integration, implementation and operational efforts.

Digital - we enable businesses to deliver digital-first omnichannel experiences, including the ability to service customers across multiple channels, provide secure digital banking and help public safety organizations shift to digital interaction and digital evidence environments.

AI, Analytics and Automation – our domain expertise and advanced technology in the areas of AI, machine learning and automation, as well as our unique access to data to train these algorithms via our cloud offerings, allow us to provide market leading AI-driven smarter processes to our customers, addressing numerous business use cases across all our market segments.

Strengthening our market leadership
Our brand, global reach, financial resources, extensive domain expertise and ability to deliver solutions for large, as well as small and mid-sized organizations, will further anchor our market-leading position.
We plan to continue to develop our open cloud platforms for Customer Engagement and Financial Crime markets to enable unified integrated solutions that offer fast innovation and easy implementation. These platforms allow us to deepen our direct relationships with our customers, nurture our partner ecosystem and create new growth opportunities.

In our Customer Engagement business, we will continue to expand our offering through our CXone platform. With CXone we provide the broadest suite of analytics and AI-infused integrated applications for customer service, all on an open cloud-native foundation. Alongside our existing offering, we plan to lead in new product categories, as we introduce novel solutions and enter additional market segments. We will continue to extend our leading market position for cloud contact center solutions, catering to organizations of all sizes and replacing legacy on-premises infrastructure players. We will also continue to enable our customers to extend our solutions through innovative third-party solutions via our DEVone dedicated partner ecosystem that our customers can self-select through our platform’s CXexchange application marketplace. Our Evidencentral cloud digital transformation platform allows public safety, law enforcement and criminal justice agencies to transform to the digital age, managing response, investigation and prosecution digitally and embedding analytics and AI throughout the entire criminal justice process, enabling agencies to leverage data to the fullest and work together collaboratively to enhance public safety.
In our Financial Crime and Compliance business, we will continue to expand our offerings across all market segments by providing new and enhanced solutions that protect financial services organizations and their customers earlier in the customer lifecycle and by infusing more AI across our portfolio of solutions. With our X-Sight cloud platform, we provide open, scalable and flexible solutions with the broadest financial crime and compliance coverage to the top tier of the market. We launched X-Sight DataIQ, which orchestrates the aggregation of data from hundreds of sources, delivering real-time accurate customer intelligence. Continued innovations on X-Sight will further cement our leading market position. With Xceed, we provide fully packaged anti-money laundering (AML) and fraud coverage and solutions to the mid-market,
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enabling smaller organizations to realize full protection with quick time to value. Xceed is expected to enable further growth with mid-market financial institutions. All Actimize solutions are infused with Always on AI, our multi-layered approach that injects AI, machine learning, automation, Natural Language Processing and other advanced technologies throughout the financial crime and compliance value chain. This allows financial services organizations to merge innovative and patented technologies to seamlessly connect data and apply AI to turn raw data into financial crime intelligence to fuel analytic precision and detect and prevent financial crimes. These offerings enable us to add value to our existing customers, as well as expand our reach and open-up new opportunities, considerably increasing our total addressable market.

Help our customers transform to the cloud

The majority of our customers still rely exclusively or heavily on traditional on-premise software deployment, which is slow-moving and costly to maintain. We continue to leverage our leading cloud platforms as well as our brand and relationships and domain expertise to help our customers adopt cloud solutions at the pace that matches their needs and preferences.

We intend to continue offering our solutions in a variety of delivery models, which enable us to be flexible in effectively addressing our customers’ needs.

Continuing to offer our full solutions portfolio to our existing customer base

One of our main assets is our growing customer base. We believe there are many opportunities to expand, up-sell and cross-sell within our existing customer base. This includes increasing our customers’ exposure to the full breadth of our portfolio. We continue to provide our customers with new benefits by expanding the offering they already use, adding new products and migrating our customers to the cloud.
Continuing organic innovation and development, while also pursuing acquisitions
We intend to continue investing in innovation and development and continue to augment our organic growth with additional acquisitions that will broaden our product and technology portfolio, expand our presence in selected verticals, adjacent markets and geographic areas, broaden our customer base, and increase our distribution channels.
Maximizing the synergies across our businesses
At NICE, we value and promote a synergetic approach to our platforms and solutions. We will continue leveraging the fact that many of our solutions are based on common cloud architectures as well as on methodology of capturing and analyzing massive amounts of structured and unstructured data, providing real-time insight and driving process automation. Maximizing these synergies and cooperation between our business areas is a key pillar of our corporate strategy.

We have several joint offerings across our business segments and combined go-to-market efforts. We will continue leveraging our extensive complementary domain expertise, technological know-how, capabilities and development, in order to grow our business through additional cross-sell and up-sell opportunities.
Increasing our footprint in select geographical regions
As part of our growth strategy, we are expanding our business in select regions globally, where we can further grow and establish our presence in less penetrated, growing markets. We are doing this by leveraging our existing offering and partner ecosystem, in both the Customer Engagement business as well as the Financial Crime and Compliance business. We continue to expand our international partner network.

Customer Engagement Business Strategy
Our strategy is to extend our market leading position in the Customer Engagement space, while continuing to innovate and address emerging needs of customer service organizations such as supporting different customer experience channels and touch points with multiple delivery models. We intend to achieve this by:

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Offering CXone, the global leading unified cloud customer experience platform that combines Omnichannel Routing for voice and digital channels, IVR, self-service, Customer Journey Analytics and AI, Agile Workforce Engagement Management (Agile WEM) and Automation.

Leading cloud transformation across the entire Customer Engagement portfolio for all market segments and regions to enable rapid innovation, enhance flexibility and agility, and lower TCO.

Infusing analytics, AI and automation into every element of our Customer Engagement offerings to enable predictive and proactive service, augment the workforce and operationalize insights smarter and faster.

Enabling our customers to deploy AI-driven conversational bots to provide self-service and assisted service capabilities which improve customer experience as well as reduce cost to serve.

Transforming the workforce through digital, AI-based Agile WEM platform that helps organizations dynamically forecast and schedule the complex work-from-anywhere workforce, understand the individual employee’s preferences, needs and actions. This level of agility empowers employees experience to drive motivation and reduce attrition, as well as adapt agent scheduling, monitoring, quality & performance capabilities to support the agile work environment and maintain service levels.

Enabling customer service organizations to provide omnichannel service experience across voice and all digital channels. Providing agents with unique digital functionalities and capabilities including digital collaboration, agent assist and automation.

Offering solutions for all customer touchpoints, as well as solutions that benefit back office operations, retail branches, and self-service channels with the ability to easily connect future channels.
Applying advanced interaction analytics to better understand interaction context, sentiment and customer personality, and operationalize all available data sources with Predictive Behavioral Routing (PBR) to connect customers with the most suitable contact center employee.

Managing the customer experience thorough a customer experience management platform that is able to intelligently capture customer feedback across all touch points, generate specific insights and take action to address the needs of CX professionals and other stakeholders in order to improve customer loyalty and satisfaction.

Leveraging Robotic Process Automation to automate manual tasks across our customers’ operations, while using our advanced AI based Automation Finder capabilities to identify processes suitable to automate.
Offering our customers the ability to extend our solutions through innovative third-party solutions provided by our DEVone dedicated partner ecosystem. Our customers can self-select these third-party solutions from our platform’s CXexchange application marketplace.

Extending our offering to the PSAP to support next generation digital emergency communication, ensuring compliance and enabling enhanced digital evidence collection and investigation
Offering a leading unified cloud-based Digital Evidence Management and Investigation platform, Evidencentral, that integrates and consolidates all forms of evidence information - data and media from police records and dispatch management systems.
Financial Crime and Compliance Business Strategy
We plan to continue extending our market leading position and our addressable market, while further supporting the move to the cloud by financial institutions. We also plan to leverage our capabilities to facilitate both better financial crime protection and help our customers realize significant cost reductions. We intend to achieve this by focusing on:

Delivering integrated Financial Crime and Compliance solutions that help financial services organizations identify risks faster and earlier throughout all phases of the customer lifecycle.

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Expanding our market reach within the mid-tier banks and financial institutions with Xceed. Xceed platform is a native cloud, AI- Financial Crime and Compliance platform that provides AML and Fraud solutions, enabling smaller organizations to enjoy the capabilities previously only afforded to large organizations in a fully packaged SaaS offering.

Providing X-Sight, our cloud-native AI platform for Financial Crime and Compliance solutions for the top tiers of the market to further strengthen and grow our market leadership position. X-Sight combines data and analytics agility and our ability to cross-sell solutions. Our cloud platform leverages Big Data, AI, machine learning, advanced automation and other technologies to help customers reduce the cost of operations, while increasing their adherence to compliance and preventing financial crime.

Offering X-Sight AI, a data driven, machine learning, analytics managed service (Actimize Watch) or do-it-yourself toolset (X-Sight Studio) to retain and optimize analytic models and develop new analytics by leveraging insights from our market-wide view of transactions.

Offering X-Sight DataIQ, our orchestration and aggregation engine that seamlessly connects to multiple premium and public data sources, turning raw data into the intelligence to fight financial crimes.

Expanding the X-Sight Marketplace, an ecosystem of innovative third-party partners where our customers can select complementary offerings to extend our platforms and products.

Offering our solutions to verticals outside of the traditional financial services, such as technology, gaming, energy, insurance, healthcare, industry regulators, government agencies, as well as to fintech and alternative payments providers.

Continuing to cross-sell and up-sell into our existing customer base around the world.
Partnering with world-class consultancy and other firms to identify additional significant opportunities.
Increasingly selling holistic solutions, combining Financial Crime and Compliance offerings with Customer Engagement offerings.
I.Offering Overview - Customer Engagement
Creating extraordinary customer and employee experiences becomes even more critical in times of change. With contact center employees working from home, and customer service needs becoming more urgent and demanding, organizations are required to adapt new operating models to increase their flexibility and maintain agility. These dynamics are challenging organizations to differentiate themselves through efficient, effective and high-quality customer experiences that are digital, including agent-assisted and self-help channels, consistent and personalized across all touch points. In addition, organizations must find ways to generate business insights, better understand and predict customer intent and create smarter customer connections. They need to accomplish these objectives while containing operational costs and adhering to regulations.
NICE’s comprehensive portfolio of solutions empowers organizational change across major market transformations our customers are undergoing, enabling the creation of extraordinary and agile customer and employee experiences:

Our Cloud Native Open Platform, CXone, transforms contact center software to provide an exceptional agent and customer experience, every time and on every channel. It opens new possibilities for all employees to work from a single, consolidated interface –from any location onsite or at home – with a common view of operational performance and each customer’s journey. In addition, with predictive analytics and embedded artificial intelligence, it empowers teams to resolve issues faster, personalize each experience and forge deeper loyalty with each customer. CXone supports contact centers of all sizes and geographic locations – from small single sites, to distributed remote agents, to global enterprises. As a modern, cloud native platform, CXone allows organizations to compete on innovation and routinely transform experiences with speed and sophistication, overcoming expensive and lengthy innovation and product cycles, and eliminating painful integrations by having a unified modern architecture with automatic upgrades.

Our Digital-first Omnichannel Customer Service solutions, part of CXone, enable organizations to prioritize digital transformation as an urgent initiative in order to be able to adapt to the changing needs of the current environment and deliver service on a multitude of digital channels. NICE offers a complete digital-first omnichannel customer engagement platform, allowing organizations to easily add and integrate new and emerging channels. Our smart digital-first omnichannel
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routing capabilities empower organizations to interact with their customers in a seamless and effortless way by providing a fully unified environment, allowing for a single view of experiences.

Our Customer Experience Management solutions empower organizations to find new and improved ways to attend to the evolving expectations of their customers and employees, and to understand their activities and their processes. We enable this by uniquely combining customer feedback, interactions-based analytics insight and journey analytics to get a holistic view of the customer experience across all channels. Using advanced analytics engines, we analyze every aspect of the customer experience to generate automated actionable insight and create hyper-personalized experiences in real-time that are based on the customer’s personality-type, interests, preferences, behaviors, emotions and history. Organizations can also leverage these smart analytics and AI algorithms to predict customer intent, and proactively act on it in real time.

Our AI Driven Smarter Processes solutions, powered by our Enlighten AI framework that is native to CXone, leverage automation and AI to optimize internal processes and enhance digital presence across all business areas, both in and outside the contact center. It helps organizations adapt to their surroundings in smart, proactive ways by embedding AI everywhere. We use real-time decisioning engines to help uncover, identify and prioritize the top processes that should be automated to optimize workforce productivity. We offer smart and quick self-service capabilities and a full range of automation, from unattended robots to virtual attendants who guide the employee in real time on their desktop.

Our Agile Workforce Engagement solutions enable organizations to manage the multi-skilled, dynamic, ‘anywhere’ workforce, understand their employees in new ways that take into consideration their personal attributes and preferences and create an adaptive environment to meet employees’ expectations for an environment that is flexible and preference-based, promoting a better work-life balance. NICE creates accurate multi-skill multi-site forecasting to manage the complex workforce by applying advanced AI to forecast and schedule correct staffing, manage quality, lower cost and improve performance across skills, locations, channels and employee preferences.

Our Platform and Solutions’ Core Capabilities
Our platform and solutions both in the cloud as well as on-premises empower businesses to transform the experiences they provide to their customers and employees, through the following core capabilities:

Open Cloud Platform is the foundation of CXone, our complete cloud contact center offering, powering rapid innovation with an extensible enterprise-grade platform that scales securely, deploys quickly, and serves customers of all sizes globally. We offer easy customization through hundreds of RESTful APIs and our DEVone developer program, plus CXexchange marketplace with over 160 pre-built integrations from ecosystem partners. CXone enables multi-national organizations to deliver service with confidence from a single instance, backed by a guaranteed money-back SLA based on Mean Opinion Score (MOS), and including the broadest level of certifications in the industry, including PCI Level 1, HIPAA, SOC2, SOX, FedRAMP, Cybersecurity Essentials, IRAP, and others.

Smart Omnichannel Routing, Recording and Self-service enables organizations to run their contact center in the cloud, record structured and unstructured customer interaction and transaction data, and route customer interactions across over 30 inbound/outbound channels in a hyper personalized manner. All self-help, voice and digital channels are unified into a single consistent omnichannel view of the experience, enabling organizations to deliver service on any channel, ensuring interactions are seamlessly routed across all touchpoints, and consumers can move between channels, while keeping the same context and employee. Organizations gain business flexibility by quickly deploying agents anytime, anywhere, including remote or home-based agents and implementing changes to customer routing and IVR in hours, not months. Our AI-powered Predictive Behavioral Routing (PBR) transforms customer experience with hyper-personalization in the cloud, enabling an understanding of customers’ communication preferences and behavioral characteristics and connecting them to the agent best suitable to handle their request. This understanding leads to better connections between customers and employees, resulting in immediate and measurable benefits to an organization’s bottom line.

Omnichannel, Real-time Customer Experience Analytics enables organizations to uncover the valuable data and insights hidden in customer interactions and customer journeys. It uses advanced technology for analyzing speech, text, call flow, feedback, customer sentiment, employee behavior and desktop activity, in order to understand the root cause of service issues, connect the customers with the best employees to handle the interaction, and to drive business results. Analysis of the customer journey across various touchpoints, transactions and events allow organizations to have a comprehensive view of customer intents and actions throughout that journey, understand the context of each contact, uncover patterns, predict needs and personalize interactions in real time. Organizations can also leverage Big Data infrastructure and predictive analytics and AI models to objectively measure agent behaviors across time and touch points, with no bias, and transform them into objective insight and act on them in real time.
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Machine Learning, Automation and AI Capabilities are embedded everywhere to improve internal processes, from deploying AI Chatbots that are seamlessly woven into the omnichannel routing platform, allowing an effortless move from a bot to another channel, to powering more accurate staffing forecasts, to automatically categorizing interactions based on content, agent behavior and customer sentiment. NICE Enlighten, our comprehensive AI framework for customer engagement, interprets and predicts human behaviors by objectively measuring all interactions consistently and efficiently to drive business outcomes. NICE Enlighten is embedded within our entire portfolio, enhancing all aspects of our customer engagement solutions (forecasting, scheduling, coaching, analyzing, managing, reporting etc.) with specific AI measurements, insights and predictions that are unique to the world of customer service. Our Advanced Process Automation solutions provide a comprehensive range of robotic solutions, all as part of a single automation platform. It includes robotic automation of mundane and manual processes to employee desktop guidance with NICE’s Employee Virtual Attendant (NEVA), which prompts desktop guidance in the context of the live customer interaction or the process the employee is working on. These solutions enable organizations to make the right decision during individual interactions in real time and across a large number of interactions, eliminating errors and providing future next-best-action guidance.

Workforce Optimization and Employee Engagement Management uses AI and machine learning for long-term planning, workload forecasting and scheduling and leverages intelligent automation for intraday activities in an adaptive and automated manner, enabling greater flexibility for the agent to perform schedule-changes while meeting operational goals. We leverage AI to provide adaptive and customized goal-setting based on employee preferences and personal attributes, support adaptive coaching methods, and motivate each employee through advanced gamification that creates a shared sense of accomplishment. We drive organizations to improve an agent’s individual productivity, by creating an employee-adaptive environment, identifying performance gaps, delivering on targeted coaching and training, fostering performance-driven operations and culture, and embedding the voice of the customer into daily operations to engage employees. Our workforce engagement solutions are especially relevant for mastering today’s ‘anywhere’ workforce, the rise of the gig economy and the increasing number of Gen Z employees.

Addressing Business and Operational Needs
Our platform and solutions are designed to address various organizational business initiatives, both inside and outside the contact center. Below is the list of available NICE Customer Engagement solutions, grouped by these main initiatives:

1. Provide Digital-First Customer Service

Solutions and CapabilitiesDescription
Automatic Contact Distributor (ACD)
Connects customers to the best resource, either self-service or agent assisted, through an intelligent, skills-based omnichannel routing engine. It enables seamless elevation across channels – including from AI Bots – and makes it easy to create and maintain routing flows using a centralized, visual and intuitive customer contact workflow design tool.
Interactive Voice Response (IVR)
Accelerates customer contact resolution, improves routing accuracy, and cuts costs with automation. It leverages natural speech to provide self-service resolution or collect caller information to determine optimal handling for an improved customer experience.
Conversational Bot
Provides self-service through a conversational, natural language, interaction that allows to both provide customer with information as well as execute transactions.
NICE Enlighten
NICE Enlighten is the first comprehensive AI framework for customer engagement. It interprets and predicts human behaviors by objectively measuring all interactions consistently and efficiently, with no bias and no human effort, to drive business outcomes. Each model is derived from millions of real-world interactions, using the most comprehensive syndicated interaction database in the world. Organizations of any size and every industry, with or without data science expertise, can now quickly improve customer experience metrics such as CSAT, complaints, and customer retention with significantly less time and effort than ever previously possible.
Personal Connection Proactive OutboundProvides inside sales teams an easier way to attain quota by connecting with more prospects every day and provides customer service teams the ability to reduce inbound calls through personalized, low cost, and proactive outbound notifications, such as text/SMS or email.
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Customer Interaction ChannelsEnables contact centers to service customers via any channel, focusing on self-help and digital channels, with extensive routing options, consolidated reporting and a state-of-the-art agent interface. Channels include inbound and outbound voice, callback, voicemail, email, chat, text/SMS, work items, and dozens of digital messaging and social media channels.

2. Use an Open Cloud Platform for Faster Innovation
Solutions and CapabilitiesDescription
Customer Relationship Management (CRM) Integrations
Delivers pre-built integrations with leading CRM environments, including Salesforce.com, Microsoft Dynamics, Zendesk, ServiceNow, SAP, Oracle, and more. These integrations empower agents to personalize omnichannel customer service. Provides seamless, bidirectional CRM integrations with the contact center that increase agent efficiency and independence by delivering a real-time 360-degree view of the customer.
Unified Communications (UCaaS) Integrations
Delivers pre-built or partner-provided integration with Unified Communication tools, facilitating expert access through synchronized presence and instant engagement, in a unified agent interface. Pre-built integrations include Microsoft Teams, RingCentral, Zoom, LogMeIn, Atos and more.
Network and Voice Connectivity Solutions
Delivers quality optimized cloud voice and data services that enable quality connections between agents and customers, while allowing organizations to save money through a low latency, optimized, least-cost routing mix on a global scale. Customers can access global, carrier-grade, cloud-integrated voice services in more than 130 countries with confidence, backed by a guaranteed money-back SLA based on Mean Opinion Score (MOS).
Developer Tools and Marketplace
Powers rapid innovation, future-proof customization, and easy integration through hundreds of REST-ful APIs and a marketplace with over 160 pre-built integrations from ecosystem partners.

3. Adhere to Compliance and Mitigate Risk
Solutions and CapabilitiesDescription
Contact Center Omnichannel Recording
Provides comprehensive omnichannel interaction recording: voice, video, chat, email, and social media, and integrates with all telephony environments and hybrid networks. It delivers all the advantages of a thorough and robust recording platform, both on-premises and in the cloud, recording contact center interactions or work from home conversations, over a fully dedicated and operated public or private cloud designed for high availability and redundancy. Supports thousands of concurrent IP streams: capturing, forwarding in real time, and recording and archiving in a single platform while ensuring customer safety and minimizing organizational risks, with its encompassing compliance solution, certified for PCI DSS3 and HIPAA.
Communication Compliance Trade Floor Recording
Compliance trading floor recording and capture, based on the compliance policies of financial institutions, ensuring a lower total cost of ownership than traditional blanket recording methods. It enables organizations to capture, monitor and analyze interactions and transactions in real time, in order to proactively minimize risks, detect potential regulatory breaches, and improve investigative capabilities. The solution delivers comprehensive, integrated capabilities to effectively manage the complex, ongoing, high-risk exchange of interactions and transactions between traders, firms and their counterparties.
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Communication Compliance Omnichannel Recording
Proactively captures and retains all customer interactions across multiple touch points communication modalities, such as video, voice, chat, and more to help ensure compliance with government regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Security Exchange Commission Rule 17a-4, the Health Insurance Portability and Accountability Act, the Sarbanes–Oxley Act, the Payment Card Industry Data Security Standard, the Financial Services Authority and Medicare Improvements for Patients and Providers Act, the GDPR, the CCPA, as well as with internal policies. Compliance Recording is also an invaluable tool to resolve disputes, perform investigations and verify sales, as well as provide redundancy and disaster recovery capabilities to meet business continuity requirements. NICE Trading Recording (NTR) platform works with the leading UC providers and is certified by Microsoft to capture all Microsoft Teams communication types like voice, video, chat, screen sharing and more.
NTR-X, Next Generation Communication Compliance Recording
NTR-X is the world’s first and only enterprise-grade solution for financial services that combines omnichannel recording and robust compliance assurance tools, all in one cloud-ready global communication compliance platform. It enables organizations to capture all of their regulated employee communications regardless of platform (traditional, unified or mobile) and ensure compliance with all global regulations. NTR-X’s scalable, modular architecture lowers TCO and gives firms control over their own data, while providing a future path to cloud migration.
Compliance CenterEmpowering organizations to manage all interactions compliance activities in one place in a smart and automated way. Compliance Center enables detecting violations, defining policies and carrying out audits relating to regulations such as PCI DSS, HIPAA, SEC, MIFID II, and GDPR. Compliance Center includes compliance dashboards that provide an aggregated view of regulatory topics and do-it-yourself policy management hub to see, manage and automate all compliance activities as part of a single repository. It also includes a dedicated application to gain compliance insights, trigger real- time notifications to agents related to recording assurance, audio loss, and offers manual commands for PCI DSS with pause and resume.
Fraud Prevention
NICE Fraud Prevention solutions proactively detect, expose and block known and unknown fraudsters. NICE Enlighten Fraud Prevention combines NICE’s Enlighten AI capabilities with NICE’s voice biometrics Proactive Fraudster Exposure (PFE) solution to continuously detect fraudulent behavior and expose fraudsters across millions of calls over time. Verified fraudsters are added to a watchlist and are blocked when they try to make future calls to the contact center.
Communication Compliance Trade Floor Solutions
Enables organizations to capture, monitor and analyze interactions and transactions in real time, in order to proactively minimize risks, detect potential regulatory breaches, counter fraudulent activities, and improve investigative capabilities. These solutions deliver comprehensive, integrated capabilities to effectively manage the complex, ongoing, high-risk exchange of interactions and transactions between traders, firms and their counterparties. Solutions include integrations with mobile phone providers, unified communication platforms, and more.
Communication SurveillanceMonitors trading activity by analyzing conversations from trading turrets, fixed and mobile phones, email, text, instant messaging, chat and social media using speech analytics, machine-learning and natural language processing. It automatically highlights potential risks and enables compliance officers and analysts to see emerging trends so that compliance breaches and fraud can be averted while keeping false positives at a minimum. It also enables organizations to meet global regulatory requirements with fully auditable workflows and reporting functionality that fulfill the needs for a robust supervision and investigation process.
Communication Compliance Assurance Facilitates the automation of compliance assurance. NICE COMPASS reduces the risk of a regulatory violation by verifying all endpoints recording prior to the beginning of the trading day and proactively identifying unrecorded calls. It also significantly increases efficiency by automating litigation hold requests, retention periods for all regions and lines of business, and moves, adds and changes (MAC), among other items.
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Complaint ManagementEnables organizations to use analytics to identify interactions at risk and manage the process of handling the complaint.
TranscriptionFully automates the manual processes around retrieving, downloading and transcribing trade-related communications. Provides organizations with the ability to accelerate investigations, improve responsiveness to regulators and quickly search for keywords.
Managed ServicesA proactive support plan that was designed to complement our traditional support offering by adding four support options to proactively address problems before they escalate. Our four-pronged advanced services approach protects against recording loss by proactively monitoring an organization’s global recording estate around-the clock, ensuring all sites are on the latest software release, and providing a single point of contact and accountability for problem resolution, backed by a team of expertly trained support engineers.

4. Increase Operational Efficiency
Solutions and CapabilitiesDescription
Performance Management
Maps enterprise business objectives to group and individual goals, and tracks and reports on performance, wherever they may be located. It also automates critical managerial activities, including data analysis, identification of improvement areas, employee coaching, recognition, and performance improvement, allowing front-line managers to become more effective and efficient in developing their teams. Performance Management also includes unique capabilities, such as gamification and SMART programs, to engage, motivate, facilitate coaching and align employees around common and personalized business goals.
Workforce Management
Forecasts an organization’s interactions load, using sophisticated AI algorithms, and schedules agent shifts across multiple sites with appropriate skills to manage and optimize the level of customer service resources in multi-skilled environments. It measures agent and team performance and provides real-time change management to proactively respond to changing conditions. Supports today’s complex needs for forecasting and scheduling multi-skilled agents, an ‘anywhere’ workforce and frequent intra-day volume changes.
Employee Engagement Management
Real-time analysis and management of understaffing and overstaffing which provides adaptive and proactive intra-day scheduling that supports agent needs and preferences while also ensuring that a company’s operational goals and KPIs are achieved. The application also allows self-management of schedules through an intuitive mobile application and an intelligent automation engine anytime, anywhere and on-the-go, allowing employees to perform sophisticated transactions like shift bidding and shift swaps, setting preferences, reporting absences, and receiving immediate confirmations.
Quality Central
Automates contact center quality assurance processes and selection of interactions for evaluation based on performance data. Leveraging NICE’s innovative and leading AI and machine learning engines to measure agent behavior and performance, the solution facilitates root-cause evaluation, with easy drill down to agents and interactions missing their key performance indicator targets. Quality programs can improve agent performance results across voice, email, chat, and digital social media channels, and can help identify areas for improvement for remote agents working from home.
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Nexidia Analytics
Analyzes large to massive quantities of customer interactions across multiple channels to identify hot topics and root causes quickly, and to produce actionable insights. Driven by NICE Enlighten, the first comprehensive AI framework for customer engagement, Nexidia Analytics can interpret and predict consumer and agent behaviors by objectively measuring all customer interactions, consistently, efficiently, and without bias. With this information, businesses are able to uncover the insights they need to improve processes, enhance customer experience, increase sales, increase employee engagement, reduce attrition, optimize marketing campaigns and reduce operational costs. Nexidia Analytics can also process live customer voice interactions in real-time, identifying opportunities to improve the Customer Experience, increase sales, and ensure compliance – all while the agent is still speaking with the customer.
Back Office Proficiency Essentials
Automates manual processes of the Back Office employees by integrating data from employees’ desktops, improving forecast accuracy by using actual processing data, enabling managers to view and manage productivity and mastery, and empowers back office employees to improve and take charge of their own performance. It also provides tools to ensure regulatory compliance and accuracy, elevating the level of service customers receive across the entire enterprise.
Real-time Authentication (RTA)Provides end-to-end authentication for contact centers. Based on voice biometrics, it automatically verifies the caller’s claimed identity within the first few seconds of a call through natural conversation with an agent. Leveraging its unique Single Voiceprint capability, RTA uses the same voiceprint across channels, allowing effortless authentication on the IVR or mobile application. Combining voice biometrics with additional authentication factors, RTA offers risk-based authentication across multiple channels. It improves the level of security and reduces operational costs.
NEVA (NICE Employee Virtual Attendant)
NEVA is an avatar interface, addressing attended processes taking place on the employee’s desktop. NEVA is triggered automatically by the employee’s desktop actions, providing relevant, contextual guidance for efficiency, sales and compliance, in real-time. Leveraging external integrations, the employee can alternatively activate NEVA using chat or voice. NEVA overlooks an agent’s desktop activities and pops up with guidance in the context of the live customer interaction or the process the employee is working on. This solution will automate desktop activities when appropriate or will trigger an unattended bot to complete a task and free the employee to deal with higher value activities. It is especially relevant for today’s remote workforce, where supervisor’s help may not be readily (or physically) available. NEVA includes a process discovery tool, named Automation Finder, to identify additional process optimization candidates using unsupervised machine learning algorithms. Once a process for optimization is identified, it can be built in a click, using the Automation Finder ‘Click-to -Automate’ capability. The automation flow is transferred and built automatically in NICE’s design tool - Automation Studio. NEVA comes built-in with Automation Studio and a control room for overseeing the robots’ activities and performance.
Robotic Automation
Robotic solution for automating routine back office, and Contact Center processes. Operated on virtual machines and monitored centrally, these robots handle unattended end-to-end processes, essentially performing any routine task which the human user would otherwise do manually. These processes are typically the repetitive, mundane, error-prone processes which do not require human intervention. We also provide a unique, intelligent, AI-infused diagnostic tool that accurately pinpoints which processes should be automated for an immediate and long term optimization. NICE RPA includes an embedded OCR engine for using scanned documents and unstructured data in the automated flow. NICE’s RPA suite of solutions includes an unattended RPA solution, as well as an attended automation solution, named NEVA. NEVA is installed on users’ desktops, providing desktop automation and process guidance to support employees in real-time, as they work through their daily activities.
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Desktop Analytics
Identifies desktop productivity gaps and process best practices by monitoring and collecting data about employee daily activities: for any applications used (including specific pages within the application), web sites visited, computer idle/locked mode, as well as the time the employee spent in each application/state. Applications can be classified as productive/non-productive or non-work related. For work-from-home employees, Desktop Analytics can provide visibility into their daily activities for managers and supervisors alike.
Interactive Voice Response (IVR) AnalyticsEnables organizations to reduce customer effort by increasing IVR containment rate, reducing IVR repeat calls, agent transfers, drop-offs and deflections and dramatically improving Contact Center efficiency.
Sales Performance ManagementProvides the end-to-end ability to create, manage and distribute all aspects of a commissions program. It automates the process of sales territories, quotas, commission, bonus and incentive administration, in support of any type of variable pay system that rewards employees for achieving targets aligned with the business strategy.

5. Improve Customer Experience
Solutions and CapabilitiesDescription
Predictive Behavioral Routing (PBR)
Predictive Behavioral Routing is AI-driven routing that predicts the best match between customers and agents for smarter connections and immediate business results. Using all available data sources, including the industry’s largest proprietary consumer behavioral database, Predictive Behavioral Routing uses AI to predict the best customer-agent match in real-time. The results are immediate improvements to key contact center metrics that measurably benefit an organization’s bottom line.
Satmetrix Voice of the CustomerCollects, combines and analyzes comprehensive customer feedback data from multiple interaction touch points and channels across customer life-cycle at enterprise scale; proactively solicits direct customer feedback from any touch point, including text message, email, IVR, mobile app, and online forms in scheduled cadences or immediately following an interaction through their channel of choice; and leverages indirect and inferred feedback. Delivers analytics that allow organizations to understand and operationalize business practices and behaviors that drive customer loyalty, using metrics including Net Promoter Score® (NPS®), customer satisfaction, Customer Effort Score, or custom metrics. Drives strategic and operational improvements to increase retention and revenue opportunities. Delivers insights across departments with role-specific analytics, reporting, and alerts.
Customer Journey AnalyticsHelps organizations optimize their overall customer interactions process across multiple touch points. The solution automatically constructs and visualizes a cross-channel map of the customer journey, providing insights into trends and focus areas for improvement. Based on NICE’s innovative and leading AI and machine learning engine, NICE Journey Excellence Score (JES) uses predictive models to measure customer experience at the journey level, identifying successful outcomes and highlighting journey events that cause failure and customer dissatisfaction. JES’s models automatically assign contact reasons to every interaction, revealing customer behavior patterns, predicting customer’s next action and the ideal response for achieving the desired goal. The solution highlights opportunities for self-service channel containment and offers real-time guidance for an improved customer experience.
Customer Churn
Based on NICE’s comprehensive AI framework for customer engagement, NICE Enlighten for Customer Retention analyzes historic consumer defection data to identify the patterns in consumer behavior and create models for predicting future customer churn. The solution understands causes and effects of customer churn and how to design procedures to reduce the defection rate. The solution prioritizes at-risk customers based on search results combined with customer data and collects information to refine retention marketing offers that are better tailored to customer types and demographics.
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6. Increase Sales
Solutions and CapabilitiesDescription
Real Time Web PersonalizationUses customer intelligence, predictive models and machine learning to make insightful, real-time personalization decisions during customer interactions over the Web. The solution helps organizations improve customer retention, increase online conversion rates, and deliver better service by taking the next-best-action.
Contact Center Sales Effectiveness
Helps organizations optimize their Contact Center sales campaigns. Based on NICE’s comprehensive AI framework for customer engagement, NICE Enlighten for sales effectiveness locates and quantifies sales improvements by identifying the optimal agent behaviors that drive Contact Center sales in each environment. The solution builds metrics to align with corporate objectives such as offers made versus up-sell opportunities. It correlates data points such as customer spend and purchase history to build predictive models, prioritizing customers with a propensity to buy and creating the next-best offer. It also helps identify high-performing agents and generate sales best practices based on their behavior.

7. Improve Public Safety Emergency Response and Manage Data Throughout the Criminal Justice Process
Solutions and CapabilitiesDescription
NICE InvestigateStreamlines the entire investigation process by automating the collection, analysis and sharing of all digital case evidence – from Records Management Systems, CAD, interview room and emergency call audio recordings, documents, photos, private and public CCTV, body-worn and in-car video, social media and more. It transforms the investigative process so detectives can build and close cases faster.
NICE InformEnables emergency centers and public safety agencies and organizations across various industries to capture, consolidate, synchronize and manage growing multimedia incident information and evidence efficiently and effectively. NICE Inform captures and synchronizes event information from a variety of sources including: radio and call audio, video, text, screens, Computer-Aided Dispatch (CAD) systems, Geographic Information Systems, and others, enabling investigators and other stakeholders to more easily and completely visualize and understand what happened during each incident response. NICE Inform also supports investigations through rapid assembly and sharing of case evidence. Helps optimize emergency response by evaluating quality and compliance of incident communications – saving time, money and resources, while continuously fine-tuning and improving performance to provide better service to first responders and the public.
NICE Inform Intelligence CenterAutomatically collects and consolidates information from emergency call taking, radio, dispatch, quality assurance and other systems, and delivers critical metrics in actionable dashboards and reports. It helps emergency communication centers understand what happened during an incident, how it happened, what is happening now in the center, and what is performing or not. With this new insight into operations, decision makers can address the key challenges to improve their centers’ effectiveness during an incident, service to citizens and work more efficiently with the agencies for which they dispatch.
NICE Multimedia RecordingReliably records and synchronizes emergency calls, including digital, analog, and VoIP calls, conventional and P25 radio transmissions, text interactions, video, images, console screens, locations from geographic information systems, and integrated feeds from other sources such as CCTV video. NICE multimedia recording also spans all forms of next generation emergency communications in a unified solution, including inbound and outbound text messages agnostic to text aggregation solutions or delivery methods. NICE Inform also synchronizes this information into a complete timeline enabling stakeholders to more easily and completely visualize, understand and improve incident response.
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II.Offering Overview - Financial Crime and Compliance
Financial services organizations are regularly challenged with prevention of fraud and money laundering, and capital markets compliance adherence. They have a common need for risk management solutions that will help them stay ahead of the evolving landscape of threats and effectively adapt to changes in business and regulatory requirements to protect their organization, safeguard their customers and ensure the integrity of the financial services industry.

Furthermore, many organizations that are not traditional financial institutions, including alternative payment platforms, cryptocurrency exchanges, gaming, fintech companies and others, find themselves under similar threats and under increasing regulatory scrutiny and need to quickly adjust and ensure adherence with those requirements.
We are a global leader in AI-based applications for fighting financial crime and ensuring compliance. We provide organizations with proven capabilities for real-time and cross-channel fraud prevention, anti-money laundering, capital markets compliance and enterprise-wide case management. With this set of solutions, financial institutions can tighten risk controls, lower operational and information technology costs, enhance investigation efficiency and improve their customers' experience.

We serve the Financial Crime and Compliance needs of hundreds of organizations, including many of the world’s top financial institutions, regulatory authorities and emerging fintech companies. Our solutions monitor billions of financial transactions daily, enabling organizations to mitigate the risk of financial crime, improve compliance and reduce operational costs.
Our open, AI- cloud platform serves as an end-to-end Financial Crime and Compliance solution. This allows our customers to use a unified platform instead of integrating multiple solutions, whether home-grown or from third-party vendors. The NICE Actimize platform handles the entire process, including detection, investigation, remediation and reporting, which allows our customers to improve detection, lower costs, keep tight controls over their process and automate regulatory reporting.

In 2018, we introduced X-Sight, the market’s first cloud-based Financial Crime Risk Management Platform-as-a-Service (PaaS) that enables financial services organizations to transition to the cloud. X-Sight incorporates AI, advanced analytics, automation and natural language processing capabilities into our platform, allowing organizations to improve detection, reduce false positives and automate many previously manual routine tasks. In addition, our ActOne offering introduces analytics and automation to financial crime investigation processes.

Our X-Sight AI solution, Actimize Watch, allows us to better protect financial institutions from criminal threats by leveraging the cloud and machine learning technologies. Organizations that subscribe to the cloud delivered service benefit from our data scientists optimizing their analytics and creating new machine learning models that can be seamlessly deployed in their production environment. Actimize Watch customers further benefit from the collective intelligence of Actimize and peer organizations, as new threats that are detected are shared with all other customers of the service. As such, Actimize Watch serves as an inoculation, protecting all organizations from an attack perpetrated against a specific organization. We also introduced X-Sight AI Studio to the market in 2019, which is a feature-rich development environment for machine learning analytics that includes data science workflows from data preparation through analytics containerization and deployment into the Open AI engine with in all Actimize solutions. It is the same environment Actimize data scientists leverage in Actimize Watch provided as a self-service tool for our customers.
Mid-size financial institutions are finding themselves under increased pressure to adopt compliance best practices. Our Xceed platform is a native cloud, AI- Financial Crime and Compliance platform that provides AML and Fraud coverage, enabling smaller organizations to enjoy the capabilities previously only afforded to large organizations in a fully packaged SaaS offering.

We plan to continue to expand our addressable market by providing cloud solutions to non-traditional financial institutions. We also expand our value to our customers by leveraging AI, the cloud and robotic automation which facilitate both better protection and significant cost reductions.
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Our Platforms’ and Solutions’ Core Capabilities
X-Sight: open, flexible and scalable, AI- cloud platform for Financial Crime and Compliance that enables top tier financial services organizations to expand the use of NICE Actimize solutions over time. The flexibility of X-Sight allows organizations to choose the solutions and services that meet their unique needs while easing implementation and lowering total cost of ownership. X-Sight solutions provide hundreds of out-of-the-box analytical models as well as flexible tools that can be used to develop and customize analytical models, data sources, and business processes at both the business and IT levels.

Xceed: Cloud-native platform that brings together AI, data intelligence, analytics, machine learning and insights for AML and fraud coverage for the mid-market. The solutions on Xceed provide all the protection that larger organizations receive but are fully packaged for smaller firms to realize immediate value.

Always on AI: NICE Actimize’s multi-layered approach injects AI and other advanced technologies throughout the financial crime and compliance value chain. Actimize solutions are infused with AI, machine learning, automation, Natural Language Processing and more, from the data layer, through insights, through decisioning to investigation and reporting to detect and prevent financial crimes. By leveraging AI and merging data, analytics and automation technologies, financial services organizations can increase detection, improve their operational efficiencies, and reduce costs. Raw data becomes actionable intelligence by applying machine learning, advanced analytics and automation. This innovative process creates a unique environment that more effectively addresses the challenges and pain points that financial services organizations face and allows them to lower costs and drive greater profitability, all while improving accuracy and throughput. NICE Actimize solutions also allow organizations to configure which decisions to direct to human experts, supporting semi-autonomous to fully autonomous operations.

Domain-specific AI: Comprehensive, domain-specific solutions detect anomalous customer or employee behavior in real time, leveraging industry-proven supervised and unsupervised machine learning analytics.
Real-time decisioning and enforcement: A real-time decisioning engine draws on analyzed data to trigger alerts that enable optimal enforcement and resolution. Built-in capabilities for comprehensive workflow and investigation allow effective alert management.
Solutions are available individually or as an integrated whole.
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Addressing Business Needs
Our X-Sight platform and solutions are designed to address various organizational business initiatives. Below is a list of the currently available NICE Financial Crime and Compliance X-Sight solutions that support the high end of the market, grouped by these main initiatives:

1. Investigations and Case Management
Solutions and CapabilitiesDescription
ActOneEnables organizations to better manage and mitigate organizational risk by providing a single view across the business. It serves as a central platform for managing alerts, cases, investigations, and regulatory reporting, across multiple lines of business, channels, products, and regions, turning them into actionable insights.
ActOne Extend
Extends the capabilities of ActOne to be the centralized location of investigation management across the Financial Crimes Risk and Compliance domains and provides a unified view of risk that enables analysts to make efficient decisioning. Includes workflow customization and the ability to ingest third-party alerts and cases via APIs, the plug-in SDK, and the Email Ingest tool.
ActOne Automate
Comprehensive Financial Crimes automation suite of tools that are embedded directly on the ActOne case management platform. It includes tools to identify process bottlenecks, intelligently allocate work, and develop automation. Contains both attended robots and unattended robots. Attended robots are digital assistants that live in the case manager on analyst desktops and collaborate with them as needed during the day. Unattended robots are a digital workforce, working 24/7 without human intervention. The solution also includes Automation Finder, a data driven analytics based tool that enables organizations to quickly identify activities that would benefit from automation, thereby reducing the time and effort.
ActOne Design
Visual analytics capability to design real-time, interactive reports and dashboards on top of the centralized dataset directly in ActOne. ActOne Design allows organizations to examine linkages and entities throughout the investigation, monitor operational performance, and analyze financial crime trends within their unique alerting activity.
Quality Assurance (QA)
Helps risk and compliance teams create a truly closed-loop, end-to-end investigation process. With it, compliance and quality teams can collaborate in order to reduce re-opens, work more efficiently and lower risk. The QA solution enables QA analysts to conduct fully integrated quality reviews at any point within an investigation. Business logic and workflow guide the QA analyst and a questionnaire enables them to assess quality and provide feedback to investigative teams - all on the same platform, fostering a culture of continuous improvement.
Productivity StudioAllows organizations to increase speed and efficiency, without compromising on accuracy. Teams are empowered to understand their productivity by seeing gaps and bottlenecks in their workflows, as well as patterns and trends in their activities.
Notifications and AttestationsWith Actimize Notifications and Attestations, management and internal audit can gain oversight of their teams, ensuring everyone is aligned; teams can mitigate risk by lowering organizational and personal accountability risk; and teams can improve their efficiency with quick access to all past and present notifications without leaving the case management platform.
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2. Detect and Prevent Money Laundering
Solutions and CapabilitiesDescription
Suspicious Activity MonitoringLeverages AI and transaction analytics to offer end-to-end coverage for detection, scoring, alerting, workflow processing and reporting of suspicious activity to make sure nothing 'slips through the cracks'. It supports the full investigation life cycle and, with NICE’s integrated case management platform, improves staff productivity, allowing for compliance with regulatory obligations in a cost-effective manner.
Watch List Filtering
Provides enterprise-wide party and payment screening against global sanctions, and PEP (Politically Exposed People) lists as well as adverse media for real-time screening coverage. It leverages AI, including machine learning analytics, facial biometrics and advanced automation to identify and manages sanctioned or high-risk individuals and entities, enabling organizations to provide superior risk management and prevent non-compliance occurrences.
Customer Due DiligenceProvides integrated customer risk-based rating and continuous monitoring of accounts throughout the entire customer life-cycle, from initial applicant onboarding to periodic reviews of existing customers. It is an open, flexible solution infused with AI to adapt to unique requirements across business segments, regions, and jurisdictions.
CTR Processing and AutomationProvides seamless automated Currency Transaction Reporting (CTR) processing to ensure compliance with U.S. Bank Secrecy Act standards, and to optimize CTR processes for efficiency and cost-effectiveness. This allows for the reduction in manual intervention and errors. Built-in validation tools and flexible capabilities enhance the quality and timeliness of completed reports while letting organizations adapt to changing regulatory and business needs.
Suspicious Transaction Activity ReportingGlobal regulatory reporting forms. Provides operational efficiency needed to handle the increase in form filing requirements, including e-filing where applicable.
ActimizeWatch for AML
A managed analytics service to address FSOs’ challenges in keeping their Anti-Money Laundering (AML) analytics optimized so organizations can adapt to changing environments. This service brings data scientists to organizations that may find it restrictive to build out their own data science teams and pair them with AML expertise. Managed analytics provides cost-predictability that continuously optimizes the system, whereas existing tuning practices are costly and therefore infrequent and commonly avoided. This service also provides FSOs the ability to benchmark their AML performance against similar institutions, enabling them to self-improve, be more prepared for, and have more confidence around regulatory audits.

3. Prevent Fraud
Solutions and CapabilitiesDescription
ActimizeWatch for FraudA cloud-based managed services solution to optimize analytics. ActimizeWatch continuously monitors the transactional data for individual FSOs to assess when analytics must be tuned, and leverages insights from a market-wide view to proactively optimize analytics for members of the service. ActimizeWatch uses machine learning analytics to assess cross-market transactional data and identify fraud patterns within individual organizations and across the market. ActimizeWatch proactively optimizes analytics using automation for quick delivery of implementation-ready models and features.
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IFM-X Card Fraud
Enables card issuers, acquirers and processors to detect fraudulent transactions, whether ATM, PIN, signature point-of-sale, or without a physical card. Market leading profile based behavioral analytics take into account all available transaction, reference and location data to provide holistic coverage of card and account takeover. Solution includes the Actimize Digital & Mobile Wallet Fraud, which protects customers from digital account takeover and organizations from fraud liability and negative brand reputation. Monitors and protects a full range of wallet activity, including card/account provisioning, card present and not present purchases, person-to-person transfers, bill payments, and account-service events.
The Actimize Pre-Paid Card Fraud solution identifies and prevents fraud in the pre-paid sector. From ATM to point-of-sale (POS) and Card-Not-Present (CNP), all transactions can be identified, interdicted on and alerted in real time.
IFM-X Digital Payments Fraud Solutions
Provides end-to-end protection against third-party fraud on any type of payment (like ACH, Wire, P2P, SEPA, TCH/RTP and more) tailored for the specific needs of retail and commercial banks. The Actimize Digital Payments Fraud solutions protect the full lifecycle of the transaction, both at the customer accessing channels – online portal, mobile app, APIs, IVR, Contact Center – and at the backend, at the payment hub level. Using our unique expert-infused machine learning analytic we calculate a real-time risk score for every transaction and provide customers with a turnkey solution to resolve alerts and investigate fraud cases. Our solutions serve as a central “risk hub” that enables the sharing of internal and third-party data from multiple channels for fraud and cyber detection, operations, and investigations. By accurately and efficiently coordinating customer lifetime value, transaction amounts and service history, the solution optimizes fraud prevention by offering greater insight into cross-channel authentication and facilitates interdiction strategies.
X-Sight StudioEnables customers to expand their Actimize Fraud solutions with their own models and analytics. The DIY studio also enables our customers to develop a fraud solution for use cases which go beyond the available packaged Actimize fraud solutions.
IFM-X Employee Fraud
Offers advanced analytic monitoring capabilities and flexible configuration options to detect fraudulent employee activity and violation of corporate policy across the enterprise, business lines, and channels. Comprehensive investigation tools are supported by multichannel data ingest, multi-country data and policy requirement configurations, secure and auditable user access levels, and automated configurable workflows, enabling banks to efficiently sift through employee audit reports and build cases to support fraudulent employee activity.
IFM-X Check Fraud
Helps financial institutions minimize deposit fraud losses by providing comprehensive account activity monitoring. The solution analyzes risk across silos of data and lines of business, consolidates suspicious activity notifications into account and customer level alerts, and allows real-time decisioning to safely accelerate fund availability and enhance customer satisfaction.
IFM-X Authentication-IQ
Manages multiple authentication methods and risk-based decisions by creating a complete customer profile, based on historical authentication activity, account servicing, and transactional behavior which is then used to identify suspicious behavior at log-in or throughout a session, producing real-time actionable risk scores. In addition, the solution manages the process of step up authentication, choosing the appropriate method, producing alerts and enabling real-time interdiction. Finally, it provides alert and case management in a unified context to prioritize investigations and optimize workflow across the enterprise.
IFM-X New Account Fraud
New Account Fraud offering provides a multi-layered approach to detect stolen and synthetic identities during account origination and new account phases through. This is a multilayered solution, that provided Identity Proofing, Early Account Monitoring, and Enhance Ongoing Monitoring.


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4. Adhere to Financial Markets Compliance
Solutions and CapabilitiesDescription
Holistic SurveillanceProvides a holistic view across trade, voice and eCommunications data, proactively analyzing all trading interactions, while monitoring the full trade life cycle in conjunction with relevant news events. SURVEIL-X’s AI-powered multi-dimensional analytics go far beyond looking at one-time events, calculations and thresholds to analyze and correlate communications, trade and related data streams. Deeper analysis and correlation enable the identification of true risks and understanding of intent behind actions taken. Uncovers connected activities and actions, and pieces them together without manual intervention, delivering a single compliance alert and view of what occurred with intuitive visualizations showing events together with market data.
Communications Surveillance Monitors trading activities and behaviors by analyzing conversations from trading turrets, fixed and mobile phones, email, text, instant messaging, chat and social media using speech analytics, machine-learning and natural language processing. It automatically extracts details of financial transactions and highlights potential risks, enabling compliance officers and analysts to see emerging trends so that compliance breaches and fraud can be averted while keeping false positives at a minimum. It also enables organizations to meet global regulatory requirements with fully auditable workflows and reporting functionality that fulfill the needs for a robust supervision and investigation process. Additionally, the technology learns and adapts to customer data and allows more accuracy over time.
Markets SurveillanceHelps financial organizations meet global regulatory requirements and protects from reputational damage and financial losses by searching for abusive trading patterns. The solution provides Full Asset Class coverage to address the global regulatory requirements including both exchange traded products and OTC (over-the-counter) trades. Specialized analytics are designed to process today's HFT (high frequency trading) volume and detect different types of risks, including Spoofing, Layering, Fictitious Orders and more. The solution also addresses the complex requirements around Insider Dealing news based, Cross Market/Cross Product and Frontrunning. Our patented correlation engine automates the reconstruction process and helps the Compliance Analyst understand the intent behind a suspicious trade by creating the full life cycle of a trade, including communication events.
Enterprise Conflicts Management
Offers a unified approach to maintain controls and detect conflicts of interest before they occur on a global, enterprise-wide scale. Enables organizations to effectively manage employee requests for personal trades by evaluating details of the proposed trade in real time and automatically determining whether the request should be approved, rejected, or escalated to a supervisor for approval. The solution includes detection models that compare executions with the employee’s trade request history to determine if the trade was pre-cleared and approved, and to reconcile the trade details with the terms and conditions of the approved trade request.
Suitability SurveillanceProvides coverage for a broad range of sales practices and suitability issues, including Regulation Best Interest (RegBI) compliance, helping organizations meet current and future global regulatory requirements and ensure investment recommendations are consistent with each customer’s suitability profiles. It also includes a comprehensive toolset that allows organizations to automate sales practice compliance processes, extend out-of-the-box analytics and visualize overall risks. By automating oversight and supervision, organizations can ensure consistency and maintain a consolidated audit trail, lowering regulatory risk while improving productivity and efficiency.
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Behavioral Surveillance
Unique end-to-end managed analytics service designed to improve organization's agility to detect risky employee behavior across multiple streams of data and potential alerts. NICE Actimize’s behavioral surveillance approach helps organizations continuously monitor employee behavior by leveraging advanced profiling and machine learning techniques. Our team conducts a thorough analysis of a client’s data, NICE Actimize Alerts, third party alerts, and other sources to help assess and identify risky behavior of the employee, organization and overall firm.
Trade ReconstructionDramatically reduces time and effort spent identifying and collecting needed data related to trading activity. Trade Reconstruction simplifies the reconstruction of a trade by aggregating, normalizing, analyzing, indexing and correlating data across structured and unstructured data sources. Natural language processing is used to extract financial data out of voice and electronic communications in order to correlate to trade events, enabling organizations to quickly react to regulatory or legal inquiries.
Analytics Studio
SURVEIL-X Studio closes regulatory and internal business surveillance coverage gaps by enabling financial services firms to rapidly create, test and deploy custom analytical risk detection models. With SURVEIL-X Studio, business analysts no longer need technical expertise to build models.
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Our Xceed platform and solutions are designed to address various organizational business initiatives. Below is a list of the currently available NICE Financial Crime and Compliance Xceed solutions that support the small and mid-segment of the market:

5. Provide AML & Fraud for the Mid-Market and SMB’s

Solutions and CapabilitiesDescription
Xceed Online Retail BankingIdentifies anomalous behavior related to the use of retail accounts. The primary model entity is an individual customer accessing one or more retail accounts through an online retail banking application.
Xceed Online Business Banking
Focuses on detecting fraud in multi-user business banking where a company’s employees have different levels of entitlements and access privileges. The model includes support for complex transaction lifecycle management. The primary model entities are a company and its employees managing banking activities and payments through an online business banking application.
Xceed Mobile Retail BankingFocuses on identifying fraudulent activity by an individual originating from one or more mobile devices. The primary model entity is a retail customer accessing one or more personal accounts through a mobile banking application.
Xceed Mobile Business BankingFocuses on detecting fraud in a multi-user business banking environment where a company’s employees are accessing commercial accounts through a business mobile banking application.
Xceed ACH ODFIDetects fraud in transactions processed through the Automated Clearing House (ACH) network. The primary model entity is an ACH originator. The model is designed to detect anomalies related to NACHA-formatted files, ACH batches, and batch entries. This solution provides protection for online and offline channels of ACH origination.
Xceed ACH RDFI
Detects fraud for received ACH transactions. The primary model entity is an ACH recipient. The model is designed to detect anomalies related to NACHA-formatted files, ACH batches, and batch entries. This solution provides protection for online and offline channels for received ACH transactions.
Xceed Wire
Detects fraud for outbound, inbound, or book wire transfers. The primary model entities are originators or beneficiaries. The model is designed to detect anomalies related to funds transfers. This solution provides protection for online and offline channels of wire transfers.
Xceed Check
Detects anomalous transactions for both check deposits and withdrawals. The Xceed Check model does not rely on static fraud rules and can evaluate specific check kiting scenarios, calculate risk to flag a potential check fraud, provided that the necessary data requirement is met by the financial institution or its check processing vendor.
Xceed Evidence Lake Customer Due Diligence
Real-time customer due diligence (CDD) including a configurable KYC template, CDD risk factors and alert thresholds. Xceed Evidence Lake CDD can be used for onboarding and ongoing risks, as well as real-time CDD alert generation.
Xceed Evidence Lake Sanctions Screening
Monitors customers for sanction violations by validating an individual or organization against the specially designated nationals list administered by OFAC.
Strategic Alliances
We sell our Customer Engagement and Financial Crime and Compliance platforms and solutions worldwide, both directly to customers and indirectly through selected partners to better serve our global customers. We partner with companies in a variety of sales channels, including service providers, system integrators, consulting firms, distributors, value-added resellers and complimentary technology vendors. These partners form a vital network for selling and supporting our solutions and platforms. We have established a cross-organization business partner program to support our ever-growing eco-system even better in these times of change, providing a full range of tools and benefits to help promote the NICE offerings and drive mutual revenue growth and success.

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Our strategic technology partnerships ensure full integration with the NICE offerings, delivering value added capabilities that enable them to provide our customers with an improved set of solutions and services.

Our DEVone program, comprising more than 160 partners, allows third-party software providers to integrate with our CXone platform and extend its functionality, while our newly established Actimize X-Sight Marketplace platform hosts market leading vendors in the AML and Fraud domains that complement the Actimize solution suite.

Professional Service and Support
The NICE Professional Services and Support organization enables our customers to derive sustainable business value from our solutions.
The Professional Service and Support offerings include a variety of services - both standalone and bundled with our products - to enable our customers to create sustained business value. We address all stages of the technology lifecycle, including defining requirements, planning, design, implementation, customization, optimization, proactive maintenance and ongoing support.

Enabling Value
Solution Delivery optimizes solution delivery and enables our customers to achieve their specific business and organizational goals, on time and on budget. NICE solutions are delivered by certified project managers, technical experts, and application specialists. We follow a proven methodology that includes business discovery to map solutions to business processes.
Value Realization Services (VRS) ensure quick, deep and sustained adoption of the NICE solutions. These services enable our customers to leverage the features and functionalities of our solutions to drive immediate & long-term results, aligned to their specific business case, accelerating their return on investment. The services are specifically designed to address the top short and long-term business concerns we heard through working with hundreds of customers across the globe. VRS teams work with customers during all phases of solution implementation – before, during and after go-live. We begin working with customer teams as soon as the project is kicked off, when the solution goes live, and for months after the solution is implemented. Our experience has shown that our customers benefit greatly from access to NICE VRS resources once they begin using the solution. This post-implementation engagement allows us to build skill and ownership within customer teams, embed changes within the customer organization and determine ROI from the solution.

Managed Services empowers organizations to meet short term objectives, such as lowering handle time or improving sales rates, along with achieving long term goals such as customer retention. Our team of experienced practitioners work with customers, guiding the process of collecting interactions, prioritizing subjects to study, conducting analysis and most importantly, developing plans that put the results of the analysis into action.
Customer Education Services provide users with the necessary knowledge and skills to operate NICE solutions and to leverage their capabilities to meet customer needs. These services are offered both before and after the deployment of NICE solutions.
Sustaining Value
Customer Success means working hand-in-hand with our customers to identify areas where they can maximize business value and minimize complications, ensuring continued delivery of business benefits.
Cloud Operations ensure that solutions deployed on the NICE cloud run optimally and allow seamless software upgrades, maximizing availability, performance and quality, while ensuring the security of customer information. This is delivered by using sophisticated proprietary utilities and automations that operate in a proactive manner, providing the means to avoid impacting customer and business operations. This includes: Cloud architecture teams that design cloud service delivery and operation architectures; Cloud Security teams that ensure that we set and meet the required Security certifications; Cloud Infrastructure teams that manage both virtual and physical infrastructure requirements; Cloud DevOps teams that implement the utilities and automations while working with our product development teams to optimize our solutions for the cloud environment; and the 7X24 Cloud Application Support teams that monitor and manage the solutions for our customers, ensuring world class up-time, performance, scalability and security. The NICE Cloud utilizes multiple
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underlying technologies to give our customers many paths to the cloud – these include: Physical Data Centers and Public Cloud providers such as AWS and Azure. NICE maintains multiple Cloud Certifications including SOC 2 Type II – Applications; HITRUST; ISO:27001 and PCI.

Customer Support and Maintenance responds to customer requests for support on a 24/7 basis, using advanced tools and methodologies. NICE offers flexible service level agreements to meet our customers’ needs. Our solutions are generally sold with a warranty for repairs of software defects or malfunctions. Software maintenance includes an enhancement program with (in the majority of cases) an ongoing delivery of “like-for-like” upgrade releases, service packs and hot fixes. NICE also offers a Technical Account Management service or TAM. The TAM is a designated manager responsible for escalation management and overall customer care services.
Proactive Maintenance addresses issues before they can significantly impact our customers’ businesses. These offerings include:
Advanced Services – Technical experts perform system-level audits to ensure ongoing compliance with operational specifications as well as specific product customizations tailored to the requirements of the customer.
Application Performance Services – A 24/7 function that proactively monitors NICE-hosted and customer-premises environments with triage, resolution and escalation of system alarms.
Managed Technical Services (Technical and Operation) – NICE offers a suite of managed technical and operation services that enable the customer to fully outsource all necessary responsibilities and functions required in order to manage the NICE solutions. This service includes: dedicated onsite and remote support engineers, system management, system operation, updates and upgrades.
Manufacturing and Source of Supplies
The vast majority of our solutions is software-based and is deployed by open cloud platform and standard commercial servers.
There is a small portion of our products that have certain hardware elements that are based primarily on standard commercial off-the-shelf components and utilize proprietary in-house developed circuit cards and algorithms, digital processing techniques and software. These products are IT-grade compatible.
We manufacture those of our products that contain hardware elements through subcontractors. Our manufacturers provide us with turnkey manufacturing solutions including order receipt, purchasing, manufacturing, testing, configuration, inventory management and delivery to customers for all of our product lines. NICE is entitled to, and exercises, various control mechanisms and supervision over the entire production process. In addition, the manufacturer of a significant portion of such products, which is a subsidiary of a global electronics manufacturing service provider, is obligated to ensure the readiness of a back-up site in the event that the main production site is unable to operate as required. We believe these outsourcing agreements provide us with a number of cost advantages due to such manufacturer’s large-scale purchasing power and greater supply chain flexibility.
Some of the components we use have a single approved manufacturer while others have two or more alternatives for supply. In addition, we maintain an inventory for some of the components and subassemblies in order to limit the potential for interruption. We also maintain relationships directly with some of the more significant manufacturers of our components. Although certain components and subassemblies we use in our existing products are purchased from a limited number of suppliers, we believe that we can obtain alternative sources of supply in the event that such suppliers are unable to meet our requirements in a timely manner.
We have qualified for and received the ISO-9001:2015 quality management, as well as the ISO 27001:2013 information security management and ISO 14001:2015 environmental management certifications.
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Research and Development
We believe that the development of new products and solutions and the enhancement of existing products and solutions are essential to our future success. Therefore, we intend to continue to devote substantial resources to research and new product development, and to continuously improve our systems and design processes in order to reduce the cost of our products. Our research and development efforts have been financed through our internal funds and through some programs sponsored through the government of Israel.
We believe our research and development effort has been an important factor in establishing and maintaining our competitive position
We participate in programs funded by the IIA to develop generic technology relevant to the development of our products. Such programs are approved pursuant to the Law for the Encouragement of Industrial Research and Development, 1984 (the “Research and Development Law”), and the regulations promulgated thereunder. We were eligible to receive grants constituting between 40% and 50% of certain research and development expenses relating to these programs. Some of these programs were approved as programs for companies with large research and development activities and some of these programs are in the form of membership in certain Magnet consortiums. Accordingly, the grants under these programs are not required to be repaid by way of royalties. However, the restrictions of the Research and Development Law described below apply to these programs.
The Research and Development Law generally requires that the product incorporating know-how developed under an IIA-funded program be manufactured in Israel. However, upon the approval of the IIA (or notification in the event set forth below, as the case may be), some of the manufacturing volume may be performed outside of Israel, provided that the grant recipient pays royalties at an increased rate, which may be substantial, and the aggregate repayment amount is increased). Following notification to the IIA (and provided the IIA did not object), up to 10% of the grant recipient’s approved Israeli manufacturing volume, measured on an aggregate basis, may be transferred out of Israel, subject to payment of the increased royalties referenced above.
The Research and Development Law also provides that know-how developed under an approved research and development program may not be transferred to third parties without the approval of the IIA. Such approval is not required for the sale or export of any products resulting from such research or development. The IIA, under special circumstances, may approve the transfer of IIA-funded know-how outside Israel, including, in the event of a sale of the know how or sale of the grant recipient, provided that the grant recipient pays to the IIA a portion of the sale price, which portion will not exceed six times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the R&D activities of the grant recipient in Israel after the transfer).
The Research and Development Law imposes reporting requirements with respect to certain changes in the ownership of a grant recipient. The law requires the grant recipient, to notify the IIA of any change in control of the recipient, or a change in the holdings of the means of control of the recipient that results in becoming an interested party (including a 5% shareholder) directly in the recipient. Further, if the interested party is non-Israeli, it requires the party to undertake to the IIA to comply with the Research and Development Law.
Intellectual Property
We currently rely on a combination of trade secret, patent, copyright and trademark law, together with non-disclosure and non-compete agreements, to establish and/or protect the technology used in our systems.
We currently hold 381 U.S. patents and 64 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have 130 patent applications pending in the United States and other countries. We believe that the improvement of existing products and the development of new products are important in establishing and maintaining a competitive advantage. We believe that the value of our products is dependent upon our proprietary software and hardware continuing to be “trade secrets” or subject to copyright or patent protection. We generally enter into non-disclosure and non-compete agreements with our employees and subcontractors. However, there can be no assurance that such measures will protect our technology, or that others will not develop a similar technology or use technology in products competitive with those offered by us. In most of the areas in which we operate, third parties also have patents which could be found applicable to our technology and products. Such third parties may include competitors, as well as large companies, which invest millions
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of dollars in their patent portfolios, regardless of their actual field of business. Although we believe that our products do not infringe upon the proprietary rights of third parties, there can be no assurance that one or more third parties will not make a claim or that we will be successful in defending such claim.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which may not be available on reasonable terms.
We own the following trademarks and/or registered trademarks in different countries: Actimize, Actimize logo, NICE Adaptive WFO, NICE WFM, NICE Voice of the Customer, NICE Work Force Management, NICE Incentive Compensation, NICE Real Time Solutions, NICE Trading Recording, NICE Uptivity, NICE Air, NICE Communication Surveillance, Customer Engagement Analytics, Decisive Moment, Fizzback, IEX, inContact, inContact Logo, NICE inContact, Insight from Interactions, Intent. Insight. Impact., Last Message Replay, Mirra, NICE, NICE Analyzer, NICE Engage, NICE Engage Platform, NICE Interaction Management, NICE Sentinel, NICE Inform, NICE Inform Lite, NICE Performance Compliance, NICE Inform Media Player, NICE Inform Verify, NICE Logo, NICE Perform, NICE Incentive Compensation Management, NICE Real Time Solutions, NICE Trading Recording, NICE Proactive Compliance, NICE Seamless, NICE Security Recording, NICE SmartCenter, NICE, NiceLog, Nexidia, Nexidia ((!)) Logo, Nexidia Interaction Analytics, Nexidia Advanced Interaction Analytics, Nexidia Search Grid, Neural Phonetic Speech Analytics, Own the Decisive Moment, Scenario Replay, Syfact, Syfact Investigator, TotalView, inContact Cloud Center Solutions, Supervisor on-the-go, VAAS, Voice as a Service, Personal Connection, InTouch, Echo, inCloud, CXone, CXone Logo, NICE inContact CXone, NICE Perform Compliance, NICE Performance Management, inContact Automatic Contact Distributor, inContact Personal Connection, inContact Interactive Voice Response, inContact Work Force Management, Mattersight, Mattersight Logo, Mattersight See What Matters and Chemistry of Conversation, Net Promoter, Satmetrix, NPX, NPS, Fraudmap, Guardian Analytics, Evidence Lake, Alacra, Free your business, Resolve, Brand Embassy and Hiperos.

Seasonality
In previous years the majority of our business operated under an enterprise software model, which was characterized, in part, by uneven business cycles throughout the year, with a significant portion of customer orders received in the fourth quarter of each calendar year. This was due primarily to year-end capital purchases by customers and holiday season spending. In recent years, our business has been shifting more and more to the cloud, which is characterized by more evenly distributed business, which balances the impact of being heavily weighted towards the fourth quarter. We believe that this trend will continue in the near future. While seasonal factors such as these are common in the software and technology industry, this pattern should not be considered a reliable indicator of our future revenue or financial performance. Many other factors, including general economic conditions, also have an impact on our business and financial results. See “Risk Factors” under Item 3, “Key Information” of this annual report for a more detailed discussion of factors which may affect our business and financial results.
Regulation
Data Privacy and Cyber-Related Security Restrictions
We are subject to applicable data privacy and cyber-related security restrictions in countries in which our customers and their end-users are located, including the United States, Israel and the EU, mostly in relation to our SaaS, hosting and cloud-based services, as well as other outsourced services. For example, on April 14, 2016, the European Parliament formally adopted the GDPR, which became effective on May 25, 2018. In the event we do not comply with such data privacy and cyber-related security restrictions, we may be subject to significant financial penalties.
We are also subject to domestic data privacy laws, such as the Israeli Privacy Law, CCPA and the United Kingdom Data Protection Act 2018. We are evaluating the business impact of compliance with the constantly changing data privacy laws and regulations.

As part of our effort to comply with such regulations and mitigate any future risks related to data privacy and cyber-security, we have adopted certain internal policies and procedures such as our Information Security Policies, Cyber & Information Security Incident Response Policies, Business Continuity Plans, Risk Assessment Procedures and Vendor Management Policies. In addition, we received the ISO 27001:2013 information security management certification and SOC2 Type II, PCI, Hitrust and FedRamp certifications were provided to the relevant business lines (as required).

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Export Restrictions
We are subject to applicable export control regulations in countries from which we export goods and services, including the United States, Israel and the United Kingdom. Such regulations may apply with respect to product components that are developed or manufactured in, or shipped from, the United States, Israel and the United Kingdom (including as a result of Brexit), or with respect to certain content contained in our products. There are restrictions that apply to software products that contain encryption functionality. In the event that our products and services are subject to such controls and restrictions, we may be required to obtain an export license or authorization and comply with other applicable requirements pursuant to such regulations.

European Environmental Regulations
Our European activities require us to comply with the Directive 2011/65/EU of the European Parliament and of the Council on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment and the Commission Delegated Directive (EU) 2015/863 (together “RoHS”). RoHS provides, among other things, that producers of electrical and electronic equipment may not place new equipment containing certain materials, in amounts exceeding certain maximum concentration values, on the market in the EU. We are also required to comply with Regulation (EC) 1907/2006 of the European Parliament and of the Council Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”, SVHC-205), which requires producers to manage the risks from chemicals used in their products and to provide safety information on the substances found in their products.

Our products meet the requirements of the RoHS and REACH directives and we are making every effort in order to maintain compliance, without adversely affecting the quality and functionalities of our products. If we fail to maintain compliance, including by reason of failure of our suppliers to comply, we may be restricted from conducting certain business in the EU, which could adversely affect our results of operations.
Our European activities also require us to comply with Directive 2012/19/EU of the European Parliament on Waste Electrical and Electronic Equipment (“WEEE”). The WEEE directive covers the labeling, recovery and recycling of IT/Telecommunications equipment, electrical and electronic tools, monitoring and control instruments and other types of equipment, devices and items, and we have set up the operational and financial infrastructure required for collection and recycling of WEEE, as stipulated in the WEEE directive, including product labeling, registration and the joining of compliance schemes. We are taking and will continue to take all requisite steps to ensure compliance with this directive. If we fail to maintain compliance, we may be restricted from conducting certain business in the EU, which could adversely affect our results of operations.
Similar regulations have been, or are being, formulated in other parts of the world. We may be required to comply with other similar programs that are enacted outside Europe in the future.
Competition
We believe that our solutions have several competitive advantages (as set forth above in “Our Solutions” section in this Item 4, “Information on the Company – Business Overview”) as well as their scale, performance and accuracy, comprehensiveness of solutions and broad functionality.
We are leaders in the Customer Engagement space. We compete against WFO players such as Aspect, Calabrio, Genesys and Verint. In the CCaaS market, which is a part of the Contact Center Infrastructure market that is still mainly held by traditional on-premises players, we compete against Avaya, Cisco, Five9, Genesys and TalkDesk, as well as other niche vendors. We also compete against certain Unified Cloud Communications vendors (UCaaS), such as 8x8 and Vonage, which offer basic CCaaS capabilities, and certain digital engagement vendors, such as LivePerson, which offer digital engagement and self-service capabilities for contact centers. In addition, we are seeing some CRM companies that provide a subset functionality of our broader offerings.
We are leaders in the Financial Crime and Compliance space. We compete against niche vendors that provide one subset of functionality to protect against a specific risk and against vendors that provide a more comprehensive offering. Such vendors include BAE Systems, FICO, NASDAQ Smarts, Oracle and SAS Institute.

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Item 4.C     Organizational Structure
The following is a list of our significant subsidiaries and other subsidiaries, including the name and country of incorporation or residence. Each of our subsidiaries listed below is wholly-owned by us.
Name of SubsidiaryCountry of Incorporation or Residence
Nice Systems Australia PTY Ltd.Australia
NICE Systems Technologies Brasil LTDABrazil
NICE Systems Canada Ltd.Canada
Nice Systems China Ltd.China
Nice France S.A.R.L.France
NICE Systems GmbHGermany
NICE APAC Ltd.Hong Kong
NICE Systems KftHungary
Nice Interactive Solutions India Private Ltd.India
Nice Technologies Ltd.Ireland
Actimize Ltd.Israel
Nice Japan Ltd.Japan
NICE Technologies Mexico S.R.L.Mexico
NICE Netherlands B.V.Netherlands
Nice Systems (Singapore) Pte. Ltd.Singapore
Nice Switzerland AGSwitzerland
Actimize UK LimitedUnited Kingdom
NICE Systems Technologies UK LimitedUnited Kingdom
NICE Systems UK Ltd.United Kingdom
Brand Embassy Ltd.United Kingdom
Actimize Inc.United States
Alacra LLCUnited States
Guardian Analytics Inc.United States
NICE Systems Inc.United States
Nice Systems Latin America, Inc.United States
Nice Systems Technologies Inc.United States
Mattersight CorporationUnited States
Nexidia Inc.United States
inContact Inc.United States
inContact Bolivia S.R.L.Bolivia
Nice inContact Philippines Inc.Philippines
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Item 4.D    Property, Plants and Equipment
Our executive offices and engineering, research and development operations are located in North Ra’anana, Israel. The offices occupy approximately 250,627 square feet, with an annual rent and maintenance fee of approximately $9.8 million in 2020 and thereafter, paid in NIS and linked to the Israeli consumer price index. The lease for these offices in our Northern Ra’anana facilities will expire in October 2022.
We have leased various other offices and facilities in several other countries. Our headquarters in each region consist of the following facilities:
Our North American headquarters in Hoboken, New Jersey, occupies approximately 60,000 square feet. We consolidated our North American locations into this one office location in November 2016, and we sub-leased our two former facilities in New Jersey and New York for the remainder of their respective lease terms through 2023 and 2021, respectively;
Our EMEA headquarters in London, occupies approximately 22,500 square feet (of which 5,543 square feet are sub-leased for a term ending in 2023); and
Our APAC headquarters in Singapore occupies approximately 8,000 square feet.
We also have additional material leased facilities, consisting of the following:
Americas facilities located in –
Salt Lake City, Utah – an office that occupies approximately 128,000 square feet;
Atlanta, Georgia – two offices that occupy together approximately 43,000 square feet; and
Additional offices are located in Colorado, Texas, Ohio and California.
APAC facilities include an office space located in Pune, India, which occupies approximately 135,000 square feet and includes a research and development and service center. There are also additional APAC offices located in Manila, Hong Kong and Tokyo.

We believe that our existing facilities are adequate to meet our current needs and substantially adequate to meet our foreseeable future needs.
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Item 4A.    Unresolved Staff Comments.
None.
Item 5.    Operating and Financial Review and Prospects.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this annual report. This discussion contains certain forward-looking statements that involve risks, uncertainties and assumptions. As a result of many factors, including those set forth under Item 3, “Key Information - Risk Factors” and elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements. For more information about forward-looking statements, see the “Preliminary Note” that precedes the Table of Contents of this annual report.
Overview
NICE is a global enterprise software leader, providing cloud platforms for AI-driven business solutions that serve two main markets: Customer Engagement and Financial Crime and Compliance. Our core mission is to transform experiences to be extraordinary and trusted. Our solutions are used by customer service organizations of enterprises of all sizes and verticals, and by compliance and fraud-prevention groups in leading financial institutions, offered in multiple delivery models, including cloud and on-premises.
We help organizations transform customer experiences by understanding consumer journeys, creating smarter hyper-personalized connections, managing seamless omnichannel interactions and providing digital-centric self-service capabilities. We also help organizations transform their workforce experience by engaging employees, optimizing operations and automating processes. In the Financial Crime and Compliance markets, we protect financial services organizations and their customers’ accounts and transactions with solutions that identify risks faster and earlier to prevent money laundering and fraud, as well as ensure compliance in real-time.
NICE is at the forefront of several industry technological disruptions that have greatly accelerated over the course of the recent pandemic: the growing maturity of analytics and AI, the adoption of cloud platforms by enterprises, the expansion of use of digital channels to communicate with customers, and the shift by financial institutions to integrated risk management solutions for end-to-end financial crime prevention. Our solutions form a comprehensive and unified portfolio based on our unique domain expertise for driving customer experience transformation and preventing financial crime as well as enhancing public safety. These solutions are built on innovative cloud platforms that are digital-first, integrating advanced analytics, AI and automation in a wide range of business applications.
We rely on several key assets to drive our growth:
Our market-leading open cloud platforms for Customer Engagement and Financial Crime and Compliance, which natively embed analytics, automation, AI, and digital capabilities, and are protected by a broad array of patents.
Our extensive portfolio of applications allows NICE’s customers to benefit from a wide range of both cloud and on-premises solutions.
Our broad array of proprietary technologies and algorithms in the domains of automation, analytics, machine learning, speech-to-text, natural language processing, personality-based routing and others.
Our access to data for improving our algorithms through machine learning and AI, which relies on a combination of our expansive customer base, cloud deployments and domain expertise.
Our solutions cover all market segments, from small to mid-sized business to large scale Fortune 100 enterprises.
Our solutions are mission critical for the operation of our customers, and our cloud platforms are essential for enabling a scalable and sustainable work-from-anywhere environment.
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Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness for our solutions in our areas of operation.
Our large partner ecosystem enables us to reach and serve a large number of customers across many countries.

Our loyal customer base: more than 25,000 organizations in over 150 countries, across many industries, and including 85 of the Fortune 100 companies, use NICE solutions.
Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and trends, which we introduce to the market through our direct sales force and distribution network.
Our skilled employees and domain expertise in our core markets allows us to bring our customers the right solutions to address key business challenges and build strong customer partnerships.
Our services, customer support and operations, which enable our customers to quickly enjoy the benefits of our solutions, with multiple deployment models in the cloud or on-premises throughout the world and support for full value realization and customer success.
COVID-19 Update

Due to the COVID-19 pandemic, we have restricted our employee travel, shifted to work from home in locations around the world and have changed other operating procedures. We continue to actively monitor the situation and have taken and will continue to take certain precautionary and preemptive actions to minimize impact to our business and our employees. In addition, we have and will continue to monitor and take actions to abide with all federal, state and local regulatory requirements. Neither the duration nor the spread of the COVID-19 virus can be predicted. In this respect, see also the discussion under Item 3.D. “Risk Factors – Risks Relating to the Global Environment – Our business, facilities or operations could be adversely affected by events outside of our control, such as natural disasters or health epidemics.” We will continue to drive uninterrupted business continuity in our operations while we closely track developments and may take further actions based on regulatory mandates, or that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders.

Recent Acquisitions
The following acquisitions were accounted for by the acquisition method of accounting, and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, or as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The results of operations related to each acquisition are included in our consolidated statements of income from the date of acquisition.


On August 20, 2018, we completed the acquisition of Mattersight Corporation (“Mattersight”), a leading provider of cloud-based analytics for customer service organizations. We acquired Mattersight for total consideration of approximately $105.1 million. This acquisition brings together the market’s leading behavioral analytics and NICE’s advanced cloud innovation capabilities, empowering organizations to improve customer experience through deep understanding of the customer persona. The acquisition enables organizations to benefit from an enhanced analytics solutions portfolio in the cloud, while driving personalization and efficiently creating real-time connections between customers and service.
In addition, from time to time we complete acquisitions and investments that are not considered material to our business and operations. During 2020, we completed three additional acquisitions for a total consideration of approximately $164.6 million, and during 2019 we completed two acquisitions for a total consideration of approximately $26.7 million in cash. For additional information see Note 1b to our Consolidated Financial Statements included elsewhere in this annual report.

Off-Balance Sheet Transactions
We have not engaged in nor been a party to any off-balance sheet transactions, as defined in Item 5 of Form 20-F.
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Critical Accounting Policies
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. 
Management believes that the significant accounting policies, which affect its more significant judgments and estimates used in the preparation of the consolidated financial statements, and those that are the most critical to aid in fully understanding and evaluating our reported results, include the following:
Revenue recognition;
Costs to obtain contracts;
Impairment of long-lived assets;
Income taxes;
Legal contingencies
Business combination;
Stock-based compensation;
Marketable securities;
Fair value of financial instruments; and
Exchangeable senior notes.
Revenue Recognition. We generate revenues from sales of cloud, service and software products, which include software license, SaaS, network connectivity, hosting, support and maintenance, implementation, configuration, project management, consulting and training, and software licenses. We sell our cloud, products and services directly through our sales force and indirectly through a global network of distributors, system integrators and strategic partners, all of whom are considered end-users.

We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers” (“ASC 606”). Under this standard, we recognize revenues when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To determine revenue recognition for contracts that are within the scope of this standard, we perform the following five steps:

1) Identify the contract(s) with a customer

A contract with a customer exists when (i) there is an enforceable contract with the customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance; and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is likely based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer's historical payment experience.

2) Identify the performance obligations of the contract

We enter into contracts that may include multiple performance obligations. We account for individual products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

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3) Determine the transaction price

The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.

Payment terms and conditions vary by contract type. In instances where the timing of revenue recognition differs from the timing of invoicing, we generally do not include a significant financing component in our contracts since our sale prices are not subject to billing terms and the purpose of our contracts is not to receive financing from, or provide financing to, customers.

Revenue is measured based on the consideration specified in a contract with a customer, excluding taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

4) Allocate the transaction price to the performance obligations of the contract

We allocate the transaction price to each performance obligation identified based on its relative standalone selling price (“SSP”) out of the total consideration of the contract.

We use judgment in determining the SSP. If the SSP is not observable through standalone transactions, we estimate the SSP by taking into account available information such as geographic or regional specific factors, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligations.

We typically establish a SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change. SSP for products and services can evolve over time due to changes in Nice pricing practices that are influenced by intense competition, changes in demand for products and services, and economic factors, among others.

For products for which the SSP cannot be determined based on observable prices given that the same products are sold for a broad range of amounts (i.e., the selling price is highly variable), the SSP included in a contract with multiple performance obligations is determined by applying a residual approach whereby all other performance obligations within a contract are first allocated a portion of the transaction price based upon their respective SSP’s, with any residual amount of transaction price allocated to these product revenues.

5) Recognize revenue when (or as) the entity satisfies a performance obligation

We derive our cloud revenues from subscription services, which are comprised of subscription fees from granting customers access to the our cloud platforms, network connectivity and services fees for deployment of certain cloud platforms.

Revenue from subscription services is recognized either ratably over the contract period or based on usage, and revenue from network connectivity is based on customer call usage and is recognized in the period the call is initiated and services fees for deployment are amortized over average customer life.

Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer.

Software license revenues are recognized at the point in time when the software license is delivered and the customer obtains control of the asset.

Support and maintenance service revenues are recognized ratably over the term of the underlying maintenance contract term. Renewals of maintenance contracts create new performance obligations that are satisfied over the term with the revenues recognized ratably over the period of the renewal.

Professional services revenues, except fees for deployment of certain cloud platforms, are recognized as services are performed. We derive our cloud revenues from subscription services, which are comprised of subscription fees from granting customers access to our cloud computing services and from network connectivity.

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Costs to Obtain Contracts. We capitalize sales commission as costs of obtaining a contract when they are incremental and if they are expected to be recovered. We apply judgment in estimating the amortization period, by taking into consideration customer contract terms, history of renewals, expected length of customer relationship, as well as the useful life of the underlying technology and products. Amortization of sales commission expense is included in selling and marketing expenses in the accompanying consolidated statements of income. For costs that we would have capitalized and amortized over a period of one year or less, we elected to apply the practical expedient and expense these contract costs as incurred.
Impairment of Long-Lived Assets. Our long-lived assets include goodwill, property and equipment and identifiable other intangible assets that are subject to amortization.
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, “Intangible - Goodwill and Other” (“ASC 350”), goodwill is not amortized, but rather is subject to an annual impairment test. ASC 350 requires goodwill to be tested for impairment at the reporting unit level at least annually or between annual tests in certain circumstances and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the reporting unit with its carrying value.
In 2020 we adopted ASU 2017-04. Therefore, if we determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the we prepares a quantitative analysis to determine whether the carrying value of reporting unit exceeds its estimated fair value. If the carrying value of a reporting unit exceeds its estimated fair value, we recognizes an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB Accounting Standards Update (“ASU”) No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment, which the company adopted as of January 1, 2020.

During the fourth quarter of each of the fiscal years ended December 31, 2018, 2019 and 2020, we performed a qualitative assessment for our reporting units and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required. Accordingly, no impairment charge was recognized during any of such fiscal years.
Income Taxes. To prepare our consolidated financial statements, we estimate our income taxes in each of the jurisdictions in which we operate, and in certain of these jurisdictions, our income taxes are calculated based on our assumptions as to our entitlement to various benefits under the applicable tax laws in the jurisdiction. The entitlement to such benefits depends upon our compliance with the terms and conditions set out in these laws.

We account for income taxes in accordance with ASC 740, “Income Taxes.” This topic prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred tax assets and deferred tax liabilities are presented under long-term assets and long-term liabilities, respectively.

We implement a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative basis) likely to be realized upon ultimate settlement.
We classify interest and penalties on income taxes (which includes uncertain tax positions) as taxes on income.
Legal Contingencies. We are currently involved in various claims and legal proceedings. We review the status of each matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss.
Business Combination. We apply the provisions of ASC 805, “Business Combination,” and we allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable
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assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

We account for a transaction as an asset acquisition pursuant to the provisions of ASU 2017-01, “Clarifying the Definition of a Business,” when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.
Stock-based Compensation. We account for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”), which requires the measurement and recognition of stock base compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model and account for forfeitures as they occur.

We recognize compensation expenses for the value of our awards, which have graded vesting, based on the accelerated attribution method over the requisite service period of each of the awards.
We estimate the fair value of stock options granted using the Black-Scholes-Merton option-pricing model, which requires a number of assumptions: the expected volatility is based upon actual historical stock price movements; the expected term of options granted is based upon historical experience and represents the period of time that options granted are expected to be outstanding; the risk-free interest rate is based on the yield from U.S. Federal Reserve zero-coupon bonds with an equivalent term; and the expected dividend rate (an annualized dividend yield) is based on the per share dividend declared by our Board of Directors.
We measure the fair value of restricted stock based on the market value of the underlying shares at the date of grant. The fair value of certain performance share units with market-based performance conditions granted under the employee equity plan was estimated on the grant date using the Monte Carlo valuation methodology.
Marketable Securities. We account for investments in debt securities in accordance with ASC 320, “Investments - Debt and Equity Securities” and ASC No. 326, “Financial Instruments - Credit Losses”. Management determines the appropriate classification of our investments in debt securities at the time of purchase and re-evaluates such determinations at each balance sheet date.

Marketable securities classified as “available-for-sale” (“AFS”) are carried at fair value, based on quoted market prices. Unrealized gains and losses are reported in a separate component of shareholders’ equity in accumulated other comprehensive income, net of taxes. Gains and losses are recognized when realized, on a specific identification basis, in our consolidated statements of income.

For each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326. Allowance for credit losses on AFS debt securities are recognized as a charge in financial expenses (income), net, on the consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss). In 2019 and 2018, no other than temporary impairment were recorded and in 2020 no credit losses were recorded.

In 2020, we classified all our securities with maturities beyond 12 months as current assets under the caption marketable securities on the consolidated balance sheet. These securities are available to support current operations and we may sell these debt securities prior to their stated maturities.

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Fair Value of Financial Instruments. We apply ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. We measure our investments in money market funds classified as cash equivalents, marketable securities and our foreign currency derivative contracts at fair value.
In determining fair value, we use various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical assets that we have the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.
Our marketable securities, exchangeable senior notes and foreign currency derivative contracts are classified within Level 2. For more information, see Note 3, Note 10 and Note 15 to our consolidated financial statements included elsewhere in this annual report.
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables and trade payables, approximate their fair value due to the immediate or short-term maturities of these financial instruments. 
Exchangeable Senior Notes. We apply ASC 815 “Derivative and Hedging” (“ASC 815”) and ASC 470 “Debt” (“ASC 470”). Under these standards, we separately account for the liability and equity components of convertible debt instruments that may be settled in cash in a manner that reflects our nonconvertible debt borrowing rate. The liability component at issuance is recognized at fair value, based on the fair value of a similar instrument that does not have a conversion feature. The equity component is based on the excess of the principal amount of the debentures over the fair value of the liability component, after adjusting for an allocation of debt issuance costs, and is recorded as additional paid in capital in excess of par. Debt discounts are amortized as additional non-cash interest expense over the expected life of the debt. We allocated the total issuance costs incurred to the liability and equity components of the convertible senior notes based on the same proportions as the proceeds from the notes.

Recently Adopted Accounting Standards
On January 1, 2020, we adopted Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. Upon adoption, we changed our impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost, including our accounts receivable. In addition, we modified our impairment model to the CECL model for available for sale (“AFS”) debt securities and discontinued using the concept of “other than temporary” impairment on AFS debt securities. CECL estimates on accounts receivable are recorded as general and administrative expenses on our consolidated statements of income. CECL estimates on AFS debt securities are recognized in interest and other income (expense), net on our consolidated statements of
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income. The cumulative effect adjustment from adoption was immaterial to our consolidated financial statements. We continue to monitor the financial implications of the COVID-19 pandemic on expected credit losses.

In January 2017, the FASB issued ASU 2017-04 “Intangibles - Goodwill and Other (ASC 350): Simplifying the Accounting for Goodwill Impairment “ADR” (“ASU 2017-04”). ASU 2017-04 eliminates step 2 of the goodwill impairment test, which requires the calculation of the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We adopted ASU 2017-04 effective January 1, 2020 with no material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The new standard requires capitalization of the implementation costs incurred in a cloud computing arrangement that is a service contract, with the requirements for capitalization costs incurred to develop or obtain internal-use software. The new standard also requires presenting the capitalized implementation costs and their related amortization and cash flows on the financial statements in consistent with the prepaid amounts and fees related to the associated cloud computing arrangement. Capitalized implementation costs will be required to be amortized over the term of the arrangement, beginning when the module or component of the cloud computing arrangement that is a service contract is ready for its intended use. We adopted ASU 2018-15 effective January 1, 2020 on a prospective basis without a material impact to the Consolidated Financial Statements.

Recently Issued Accounting Standards Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. ASU 2019-12 is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The adoption of ASU 2019-12 is not expected to have a significant impact on our consolidated financial statements.



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Results of Operations
The following table sets forth our selected consolidated statements of income for the years ended December 31, 2019 and 2020, expressed as a percentage of total revenues (totals may not add up due to rounding).

20192020
Revenue
Cloud37.9 %47.2 %
Services45.1 41.7 
Product17.0 11.1 
100.0 100.0 
Cost of revenue
Cloud18.4 20.6 
Services13.9 12.1 
Product1.5 1.3 
33.8 34.0 
Gross profit66.2 66.0 
Operating expenses
Research and development, net12.3 13.2 
Selling and marketing28.1 27.0 
General and administrative10.6 11.0 
Total operating expenses51.0 51.2 
Operating income15.2 14.8 
Financial expenses and other, net0.3 0.3 
Income before taxes14.9 14.4 
Taxes on income3.1 2.5 
Net income11.8 11.9 

Comparison of Years Ended December 31, 2019 and 2020
For a comparison of our results for the years ended December 31, 2018 and 2019, please refer to Item 5 in our annual report on Form 20-F for the year ended December 31, 2019, filed with the SEC on April 6, 2020
Our revenues increased by approximately $74.1 million, or 5%, from $1,573.9 million in the year ended December 31, 2019 to $1,648 million in the year ended December 31, 2020. The increase consisted of a $82.4 million increase in Customer Engagement revenue which was partly offset by an $8.3 million decrease in Financial Crime and Compliance revenue.

The revenue growth of our Customer Engagement business segment in 2020 is mainly attributed to the increased demand for our cloud platform CXone including the ongoing expansion of our customer base and further penetration into both large organizations and the mid-market as well as expanded usage by our existing customer base.


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The revenue decrease in our Financial Crime and Compliance business segment in 2020 is primarily attributed to the increased adoption of our cloud platforms X-Sight and Xceed by our customers which results in revenue recognition over longer periods compared to revenue recognition of on-premise solutions recognized immediately, as well as decreases in product and professional service revenues primarily resulting from COVID.

Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
Cloud revenue595.7 777.3 30.5 %
Service revenue709.1 687.5 (3.0)
Product revenue269.1 183.2 (31.9)
Total revenue$1,573.9 $1,648.0 4.7 %

Our cloud revenue in 2020 increased by 30.5%, or $181.6 million, to $777.3 million compared to $595.7 million in 2019, mainly due to growing demand for our cloud platforms, including new customers buying cloud-based solutions as part of our expansion in the mid-market.

Our service revenue in 2020 decreased by 3.0%, or $21.6 million, to $687.5 million compared to $709.1 million in 2019, mainly due to a decrease in professional services revenue from on-premise implementations resulting primarily from increased cloud adoption of our solutions.

Our product revenue in 2020 decreased by 31.9%, or $85.9, to $183.2 million compared to $269.1 million in 2019, primarily due to increased adoption of our cloud solutions and the slowdown of on-premise purchases during COVID.

Revenue by Region
Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
United States, Canada and Central and South America (“Americas”)
$1,234.5 $1,353.3 9.6 %
Europe, the Middle East and Africa (“EMEA”)216.2 184.5 (14.6)
Asia-Pacific (“APAC”)123.2 110.2 (10.6)
Total revenues$1,573.9 $1,648.0 4.7 %

Revenue in Americas increased in 2020 by 9.6%, or $118.8 million, to $1,353.3 million compared to $1,234.5 million in 2019, mainly due to increased demand for our solutions delivered via our cloud platforms, primarily CXone.

Revenue in EMEA decreased in 2020 by 14.6%, or $31.7 million, to $184.5 million compared to $216.2 million in 2019, primarily attributed to the increased adoption of our cloud platforms by our customers which results in revenue recognition over longer periods, compared to revenue recognition of on-premise solutions recognized immediately, as well as decreases in product and service revenues.
Revenue in APAC decreased in 2020 by 10.6%, or $13.0 million, to $110.2 million compared to $123.2 million in 2019. Decrease in revenue in 2020 is primarily attributed to the increased adoption of our cloud platforms by our customers which results in revenue recognition over longer periods, compared to revenue recognition of on-premise solutions recognized immediately, as well as decreases in product and service revenues.
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Cost of Revenue
Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
Cost of cloud revenue$289.9 $340.0 17.3 %
Cost of service revenue219.0 199.8 (8.8)
Cost of product revenue22.9 22.2 (3.3)
Total cost of revenue$531.8 $562.0 5.7 %

Our cost of cloud revenue in 2020 increased by $50.1 million, or 17.3% compared to 2019, and decreased as a percentage of cloud revenue. The increase is primarily due to an increase in our cloud sales.The decrease as percentage of revenue is primarily due to increased scale in our cloud business.
Our cost of service revenue in 2020 decreased by $19.2 million, or 8.8%, compared to 2019 and decreased as a percentage of service revenue. The decrease as a percentage of service revenue in 2020 is primarily attributed to increased efficiency in our services organization.
Our cost of product revenue in 2020 decreased by $0.7 million, or 3.3%, compared to 2019 and increased as a percentage of product revenue compared to 2019, mainly due to a different mix of product solutions sold during 2020.

Gross Profit
Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
Gross profit on cloud revenue$305.9 $437.3 43.0 %
as a percentage of cloud revenue51.3 %56.3 %
Gross profit on service revenue490.1 487.7 (0.5)
as a percentage of service revenue69.0 70.9 
Gross profit on product revenue246.2 161.0 (34.6)
as a percentage of product revenue0.9 0.9 
Total gross profit$1,042.2 $1,086.1 4.2 %
as a percentage of total revenue66.2 %65.9 %

Our gross profit on cloud revenue was $437.3 in 2020 compared to $305.9 in 2019, representing an increase of $131.4 million, or 43.0%. Our gross profit of cloud revenue as percentage of cloud revenue increased to 56.3% in 2020 compared to 51.3% in 2019. Increase in cloud gross profit and margin is mainly attributed to scaling in our cloud business and efficiencies in our internal operations.
Our gross profit on service revenue was $487.7 in 2020 compared to $490.1 in 2019, representing a decrease of $2.4 million, or 0.5%, which is mainly attributed to decrease in professional services revenue from fewer on-premise implementations resulting primarily from our transition to increased cloud delivery of our solutions. As a percentage of service revenue, our gross profit of service revenue increased to 70.9% in 2020 compared to 69.0% in 2019, mainly due to increased efficiency in our services organization, and to a decrease in professional services revenue from fewer on-premise implementations resulting primarily from our transition to increased cloud delivery of our solutions.

Our gross profit on product revenue was $161.0 in 2020 compared to $246.2 in 2019, representing a decrease of $85.2 million, or 34.6%, which is mainly attributed to the decrease demand for our product based solutions as part of the transition to cloud adoption solutions. Our gross profit of product revenue as percentage of product revenue decreased to 87.9% in 2020 compared to 91.5% in 2019, mainly due to a different mix of product solution sold during 2020.
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Operating Expenses
Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
Research and development, net$193.7 $218.2 12.6 %
Selling and marketing441.7 445.1 0.8 %
General and administrative168.0 180.7 7.6 %
Total operating expenses$803.4 844.0 5.1 %

Research and Development, Net. Net research and development expenses increased by $24.5 million to $218.2 million in 2020 compared to $193.7 million in 2019, and represented 13.2% and 12.3% of revenues in 2020 and 2019, respectively. The increase in research and development expenses is attributed mainly to an increase in headcount to further drive innovation in our solutions, to support the transition to cloud platforms.

Selling and Marketing Expenses. Selling and marketing expenses increased by $3.4 million to $445.1 million in 2020 compared to $441.7 million in 2019, which represented 27.0% and 28.1% of total revenues in 2020 and in 2019, respectively. The increase in selling and marketing expenses is attributed primarily to increase in marketing costs related to lead generation, driving ongoing expansion in brand recognition and increases in sales commissions, which was partly offset by a decrease in amortization of intangible assets.

General and Administrative Expenses. General and administrative expenses in 2020 were $180.7 million compared to $168.0 million in 2019, which represented 11.0% of total revenues in 2020, as compared to 10.7% of total revenues in 2019. The increase in general and administrative expenses is attributed primarily to increased headcount which is corresponding to the increased scale of our business and to stock-based compensation costs, driven mainly by a higher fair value of employee equity awards correlating with our increased stock price.


Financial Expenses and Other, net
Years Ended December 31,Percentage
(In millions)Change
201920202019-2020
Financial expenses and other, net$4.4 $4.9 11.4 %

Financial Expense and Other, net. Financial expenses and other, net, increased by $0.5 million to $4.9 million in 2020 compared to $4.4 million in 2019. The slight increase in financial expenses and other, net is attributable primarily to increasing interest expenses due to amortization of premium-discount on purchased bonds and the prepayment of our outstanding indebtedness under our term loan agreement which resulted in acceleration of amortization of issuance cost.

Taxes on Income. Total tax expenses were $40.8 million in 2020 and $48.4 million in 2019. Our effective tax rate was 17.2% in 2020 and 20.6% in 2019.
The decrease in 2020 of $7.6 million in tax expenses and the decrease in our effective tax rate from 20.6% in 2019 to 17.2% in 2020 is mainly due to increased profitability in lower tax jurisdictions as compared to the prior year.

The majority of our income in Israel continues to benefit from reduced tax rates, which was 12% in 2020 and 2019, pursuant to our Preferred Technology Enterprise programs, which is discussed in Note 13 of our consolidated financial statements under the caption “Taxes on Income”.
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Net Income. Net income increased by $10.4 million to $196.3 million in 2020 compared to $185.9 million in 2019. The increase in 2020 resulted primarily from an increase in our revenue and gross profit and a decrease in our tax expenses, partially offset by higher operating expenses.
Liquidity and Capital Resources
In recent years, the cash generated from our operating activities has financed our operations as well as the repurchase of our ordinary shares. Generally, we invest our excess cash in highly liquid investment grade securities. As of December 31, 2020, we had $1,463.9 million of cash and cash equivalents and short-term investments, as compared to $981.5 million at December 31, 2019.
Cash provided by operating activities was $480.3 million and $374.2 million in 2020 and 2019, respectively. Net cash from operations in 2020 consisted primarily of net income of $196.3 million, adjusted for non-cash activities such as depreciation and amortization of $182.0 million, stock-based compensation of $101.7 million as well as working capital changes derived from an increase in deferred revenues of $63.2 million, an increase in accrued expenses and other liabilities of $14.9 million, a decrease in deferred taxes of $33.2 million and an increase in trade receivables of $22.2 million. Net cash from operations in 2019 consisted primarily of net income of $185.9 million, adjusted for non-cash activities such as depreciation and amortization of $173.2 million, stock-based compensation of $80.9 million as well as working capital changes derived from an increase in deferred revenues of $13.8 million, an increase in accrued expenses and other liabilities of $31.7 million, a decrease in deferred taxes of $12.2 million and a decrease in trade receivables of $29.9 million.
Net cash used in investing activities was $465.1 million and $344.3 million in 2020 and 2019, respectively. In 2020, net cash used in investing activities consisted primarily of payments for the three additional acquisitions of companies in the amount of $147.3 million, net investment in marketable securities and short-term bank deposits of $254.5 million and purchase of property, equipment of $24.2 million and capitalization of internal use software costs of $39.1 million. In 2019, net cash used in investing activities consisted primarily of payment for the acquisitions of additional companies in the amount of $26.0 million, net investment in marketable securities and short-term bank deposits of $256.3 million and purchase of property, equipment of $27.3 million and capitalization of internal use software costs of $34.7 million.
Net cash provided by (used in) financing activities was $196.8 million and $(42.7) million in 2020 and 2019, respectively.
In 2020, net cash provided by financing activities was attributed primarily to proceeds from issuance of exchangeable notes in the amount of $451.4 million and proceeds from the issuance of shares upon the exercise of options of $8.9 million, which were partly offset by repayment of long term debt in the amount of $215.0 million and the repurchase of our ordinary shares of $48.3 million. In 2019, net cash used in financing activities was attributed primarily to the repurchase of our ordinary shares of $47.3 million which were partly offset by proceeds from issuance of shares upon exercise of options of $5.4 million.
Research and Development and Intellectual Property
For information on our research and development policies and intellectual property, please see “Research and Development” and “Intellectual Property” under Item 4, “Information on the Company” in this annual report.
Trend Information
For information on trends in our industry, please see Item 4, “Information on the Company—Business Overview—Industry and Technology Trends” in this annual report.
For more information on trends, uncertainties, demands, commitments or events that may have a material effect on revenue, please see Item 3, “Key Information—Risk Factors” in this annual report.
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Contractual Obligations
Set forth below are our contractual obligations and other commercial commitments as of December 31, 2020 (in thousands).
Payments Due by Period
Contractual ObligationsTotalLess than 1 year1- 3 years3-5 yearsMore than 5 years
Long-term debt obligations, including estimated interest *
$760,073 $3,594 $7,187