Nice Ltd. ((NICE)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Nice Ltd.’s latest earnings call struck a confident tone, as management highlighted another quarter of revenue and EPS outperformance alongside accelerating cloud and AI demand. Leaders acknowledged some near-term noise from the timing of AI rollouts and the shift away from legacy services, but framed these as transitional effects against a backdrop of strong bookings, expanding backlog and rising profitability.

Revenue Beat and EPS at the High End

Nice reported Q2 revenue of $782 million, up 8% year over year and above the high end of its guidance range, underscoring robust demand across its portfolio. Non‑GAAP EPS came in at $2.70, also at the high end, showing that the company is balancing growth investments with disciplined cost control and operating leverage.

Cloud Growth Anchors the Business Mix

Cloud revenue reached $609 million, now 78% of total sales, and grew 12.6% year over year, including about 250 basis points from the Cognigy acquisition. Management reiterated expectations for full‑year cloud growth in the 13%–15% range, reinforcing the view that the recurring, cloud‑based model is now the clear engine of the business.

AI and ARR Momentum Builds

Customer experience AI and self‑service ARR climbed to $362 million, up 52% from a year ago and now representing 15% of cloud revenue, signaling rapid adoption of AI‑driven capabilities. The company logged record Q2 AI bookings and reported that AI backlog expanded 72% year over year, providing strong visibility into future growth despite some quarterly ARR lumpiness.

Backlog and Bookings Signal Durable Demand

Cloud backlog grew 19% year over year, reflecting the accumulation of multi‑year contractual commitments that have yet to fully flow into revenue. Nice also posted a record quarter for new cloud ACV bookings, including another record in AI bookings, with roughly 75% of Cognigy bookings attached to CXone, showing tight integration between AI and the core platform.

Large Enterprise Wins Validate Strategy

Management spotlighted several large strategic deals, including the largest CXone and Cognigy contract ever with HMRC, a nine‑digit TCV engagement that underscores the platform’s scale. Another eight‑digit win with a major U.S. health‑care organization, often via partners like Capgemini and Accenture, illustrates Nice’s growing traction with complex, high‑value enterprise customers.

International Markets Accelerate

International revenue surged, with the CEO citing 22% year‑over‑year growth overall and the CFO noting EMEA up 30% and APAC up 8%, though from smaller bases of 13% and 5% of total revenue. International cloud revenue grew about 34% year over year on a constant‑currency basis, showing that the company’s global go‑to‑market strategy is gaining meaningful momentum.

Margins and Cash Generation Remain Strong

Gross margin stood at 68.4%, with cloud gross margin improving to 69%, up 40 basis points year over year, highlighting the scalability of the cloud model. Operating income reached $198 million for a 25.3% operating margin, while operating cash flow of $123 million and free cash flow of $93 million provided ample funding for both investment and shareholder returns.

Capital Return and Balance Sheet Discipline

Nice continued to return capital, repurchasing $58 million of shares in Q2 and $311 million year to date, roughly 5% of its market capitalization. Shares outstanding fell about 6% year over year to 58.1 million, while the company maintained a cash and short‑term investment balance of $355 million, leaving room for further strategic flexibility.

Product and Platform Innovation Advances

The company completed the full native integration of Cognigy into CXone ahead of plan and launched NICE Labs to accelerate experimentation and innovation. It also introduced new “agentic” analytics and engagement capabilities while keeping the platform model‑agnostic, allowing customers to choose preferred AI models and avoid future lock‑in.

Customer Outcomes Showcase AI Impact

Management highlighted case studies to quantify value, including TripAdvisor’s AI agents achieving a customer sentiment score of 90 versus 71 for human agents. GXBank reported 95% customer satisfaction, 95% first‑contact resolution and 70% autonomous chat resolution, suggesting AI can drive both better experiences and lower operating costs.

Timing Lag Between Bookings and Revenue

Executives stressed that many customers are still preparing data, governance and operating models before deploying AI at scale, creating a lag between strong bookings and realized revenue. This means certain AI and cloud wins may take time to fully show up in ARR and top‑line growth, leading to quarter‑to‑quarter variability even as long‑term indicators stay positive.

Services Revenue Decline from Cloud Migration

Services revenue fell 11% year over year to $125 million, now about 16% of total revenue, as customers continue migrating from on‑premise solutions to cloud. While this weighs on near‑term service sales, management framed it as a natural by‑product of the shift to more scalable cloud offerings, which carry higher margins and better visibility over time.

Near‑Term ARR Variability and Renewals Impact

Analysts noted that net new AI ARR additions in Q2 were below the prior‑year quarter, underscoring that bookings strength is not yet fully mirrored in ARR every period. Management also pointed to targeted strategic renewals and discounts with marquee customers, tied to multi‑year commitments, which modestly pressured near‑term net retention metrics but are intended to support long‑term value.

On‑Premise Demand and Revenue Mix Fluctuations

Product revenue remained relatively small at $49 million, just 6% of total sales, but certain large financial institutions showed stronger than expected on‑premise demand. The timing of migrations for these customers could influence the mix between cloud and product revenue in the short run, adding another source of variability in quarterly cadence without changing the cloud‑first direction.

Operating Margin Variability and FX Effects

The quarter included heavier spending on marketing and conferences as Nice invests behind its AI roadmap, go‑to‑market execution and partner ecosystem, causing some intra‑year margin fluctuations within its target range. Foreign exchange provided only a modest 40‑basis‑point tailwind to growth, lower than roughly 1 percentage point in Q1, suggesting results were driven mainly by underlying demand.

Guidance and Forward‑Looking Outlook

Nice reiterated full‑year 2026 revenue guidance of $3.170–$3.190 billion, implying about 8% growth at the midpoint, and raised full‑year non‑GAAP EPS to $11.06–$11.26, signaling rising confidence in profitability. The company expects cloud revenue to grow 13%–15% with operating margin at the high end of the 25%–26% range, and guided Q3 revenue to $780–$790 million with EPS of $2.73–$2.83, backing its outlook with strong cloud and AI backlogs and a target to finish 2026 near the top of an 18%–19% free cash flow margin.

Nice’s earnings call painted a picture of a business in transition toward higher‑growth, AI‑driven cloud revenues, with large strategic wins and strong backlogs offsetting short‑term variability in services and ARR metrics. For investors, the combination of sustained cloud momentum, expanding AI adoption, disciplined margins and ongoing buybacks suggests a company leaning confidently into its next phase of growth while managing the inevitable bumps along the way.