Welcome to the NICE Conference Call discussing First Quarter 2024 Results. And thank you all for holding. All participants are in a listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded, May 16, 2024. I would now like to turn this call over to Mr. Marty Cohen, VP, Investor Relations at NICE. Please go ahead.

Thank you, operator. With me on the call today are Barak Eilam, Chief Executive Officer; and Beth Gaspich, Chief Financial Officer. Before we start, I'd like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please be advised that the company's actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the Company's 2023 Annual Report on Form 20-F, as filed with the Securities and Exchange Commission on March 27, 2024. During today's call, we will present a more detailed discussion of first quarter 2024 results and the company's guidance for the second quarter and full year 2024. You can find our press release as well as PDFs of our financial results on NICE's Investor Relations website. Following our comments, there will be an opportunity for questions. Let me remind you that unless otherwise noted on this call, we will be commenting on our adjusted results of operations which differ in certain respects from generally accepted accounting principles as reflected mainly in accounting for share-based compensation, amortization of acquired intangible assets, acquisition-related and other expenses, amortization of discount on debt and loss from extinguishment of debt and the tax effect of the non-GAAP adjustments. Differences between the non-GAAP adjusted results and the equivalent GAAP figures are detailed in today's press release. The information and some of our comments discussed on this call may contain forward-looking statements that are subject to risks, uncertainties and assumptions. We'd also like to remind you that we're hosting our Investor Day on June 11 in conjunction with our Interaction user conference in Las Vegas. The special program for analysts and investors will include presentations from NICE executives and access to the innovations hall where you'll see several different types of demos. If you haven't received the registration e-mail, please e-mail us at [email protected]. I'll now turn the call over to Barak.

Thank you, Marty and welcome, everyone. Earlier today, we reported strong first quarter results, starting the year on a high note. We also announced my planned transition as the CEO of NICE. This decision has not been easy for me, as leading this incredible team and serving our customers, partners and investors for the past 10 years has been one of the greatest privileges of my life. With the company poised for continued success and after 25 years at NICE, I believe it is the right time for me to step down. The Board and I have initiated a search process for my successor to ensure that NICE will continue on our journey of leadership, growth and profitability. NICE has been my home for more than half of my life and I will continue to lead the company with the same passion as I did for my entire career until the end of this year as well as to support a smooth transition to my successor. And now to our first quarter earnings. We are thrilled to start the year with a positive momentum, evidenced by a robust performance across the board while continuing to outpace the market. We reported total revenue of $659 million which reached the high end of our guidance range and represented an increase of 15% from the same quarter a year ago. Our industry-leading cloud growth remained a driving force behind our strong top-line performance showing an increase of 27% year-over-year. We also continued to deliver great profitability, as demonstrated by a 170 basis point increase in our operating margin which ended the quarter at 30.3%, marking a significant milestone in our continued delivery of profitable growth. We far exceeded the high end of our guidance for EPS finishing the quarter at $2.58 which was an increase of 27% compared to a year ago. Completing the exceptional first quarter execution, we once again demonstrated superior cash flow generation totaling a record $254 million in operating cash for the quarter, an increase of 30% year-over-year. Our continued strong performance over the past several years as well as in the first quarter are attributed to our unmatched platform strategy. Building a best-in-class platform that is as comprehensive as CXone demands years of focused effort and massive investments. It cannot be done overnight or mimicked by stitching together siloed and disconnected point solutions. This is even more pronounced in CX because it is a market that is highly specialized and that the barrier of entry is nearly insurmountable. Anticipating the future trajectory of the CX market, our proven strategy and meticulously architecting CXone from day one to excel as the Premier CX platform combined with unwavering, consistent execution is now driving our market leadership with the ultimate trifecta. The industry's highest cloud win rate, trailblazing digital convergence and fully leveraging the tremendous CX AI opportunity. Let me elaborate and provide a few examples on each. CXone's dominance as the most enterprise-ready cloud platform is fueling NICE's unmatched win rates in every evaluation or RFP. CXone stands out as the most complete, exemplified by its ease and speed of migration to its best-in-class portfolio of solutions and unparalleled scalability. In Q1, we once again continued to win the enterprise market as evidenced by the volume of portfolio deals indicating a rising trend of enterprises choosing CXone as their future cloud platform over their legacy on-premise or disparate cloud point solutions. For example, in a 7-digit deal, one of the world's largest healthcare companies is continuing to move more of its point solutions due to the scalability of CXone further displacing multiple incumbent legacy vendors. In another deal that showcases the completeness of CXone, a large pharmacy outsourcer turned to NICE to simplify CX and deliver to its customers a better experience offered by a unified platform. In the process, they eliminated point solution providers. A large retail supply company was also looking to unify their tech stack because their existing disjointed infrastructure was breaking down. In these deals, the customer selected CXone over the competition due to its proven ease of migration as provided by multiple references. For nearly three decades, there has been a clear separation in the CX space between voice solution providers and digital interaction providers. Conversely, CXone was built as the first and only customer-centric platform natively converging all touchpoints and all interactions, triggering a rapid paradigm shift in the market over the past couple of years. This shift is now removing the line between the silo subcategories resulting in enterprises consolidating the legacy Digital CX into CXone. Our digital convergence star is evidenced by a staggering 8 out of every 10 new enterprise customers selecting CXone over the last 2 years to manage all customer interactions, including multiple digital touchpoints and by the exceptional fivefold growth in the volume of digital interactions managed by CXone. In Q1, we signed a 7-digit deal with a large state credit union which is a great example of the digital convergence CXone is driving. This existing customer began its journey by migrating from a legacy incumbent into CXone and is now leveraging the platform to consolidate several of its siloed digital point solutions into CXone. In another 7-digit deal, a well-known consumer loan company is consolidating its CX and forging its digital strategy on CXone through the adoption of our digital and AI portfolio to rely increasingly on self-service to help improve customer experience. While using AI and CX is undoubtedly revolutionary, its impact is quite different from commonly held perceptions. Everything considered simple in CX, such as checking your account balance, password reset, returns and refunds as well as thousands of other services and inquiries are already fully automated. Today, 50 million CX agents around the globe are dealing with the most complex and unconventional service scenarios, almost all of which are non-repetitive tasks. There is a heightened understanding among enterprises that the next level of CX automation can only be achieved by a highly specialized AI platform. This is the exact reason why CXone, with its unparalleled extensive repository of crucial data, knowledge and interaction is the platform of choice for a growing number of small and large enterprises. Accordingly, we saw a remarkable 200% year-over-year surge in the number of enlightened AI deals in Q1. We are seeing numerous examples of how the adoption of even just one use case of AI increases the customer ARPU by 40% or more, demonstrating the tremendous monetization potential as we further expand our AI leadership with both existing and new customers. Moreover, in the first quarter, every CX deal above $1 million ACV included AI. For example, in a 7-digit deal, a large agriculture manufacturing company is moving away from its disparate set of point solutions to CXone to unify its technology stack and in the process developing a CX AI strategy as evidenced by the purchase of a portfolio of our AI solutions, including enlighten autopilots and others. A similar impetus was behind a 7-digit deal with a large Canadian telecommunications company, a deal in which we won against several competitors and which the breadth and depth of CXone AI made NICE the obvious choice. We also won a 7-digit deal with a very large U.K.-based bank which selected CXone first and foremost, as the cornerstone of the CX AI strategy and we see significant expansion opportunities. In this deal, we replaced a long-standing incumbent AI pure-play point solution provider. AI innovation is flourishing on CXone as evidenced by a rapidly expanding enlightened AI portfolio including copilot for agents and supervisors, autopilot, auto summary, actions, XO and others, in addition to the thousands of CXone AI models. The speed of AI innovation on CXone is allowing us to deliver capabilities at a record pace. A good example is the recently released ENLIGHTEN XM which went from inception to general availability in 3 months. Moreover, the innovation to customer adoption curve is the shortest we've ever seen. As an example, we introduced ENLIGHTEN Copilot less than a year ago at Interactions 2023. And in just a few months, we signed dozens of new and existing enterprise customers who are already using it today. In summary, Q1 was marked by significant financial achievements, multiple large customer wins and rapid innovation, all of which were sourced from the platform power of CXone. Our years of massive investments, building CXone as the leading platform in the CX market continues to drive our success for 2024 and beyond. We are operating in a market that is still nascent in the areas of cloud, digital and AI. Given that these areas still hold considerable growth potential and coupled with the power of the CXone platform, we see significant long-term opportunities for sustained growth and profitability. Before I finish, I would like to share that we are very excited for our annual user conference, the largest in the CX industry taking place in Las Vegas which is only a few weeks away. It is a perfect opportunity for all of us indeed to witness the platform power of CXone from our own experts as well as from an impressive list of leading enterprises. Our agenda features marquee customers that adopted CXone as they migrated to the cloud, converged all CX assets and are already seeing the benefits of NICE CX AI, including Sony, HunterDouglas, the Standard, Henry Schein, Hyatt, Bank LexisNexis, Hyundai Capital, Consumer Cellular, realtor.com, KeyBank, Banco do Brasil, United Way, Google, Concentrix, PayPal and many others. I would like to take this opportunity and invite all of you to our Annual Investor Day on June 11 which is taking place in conjunction with Interactions. We look forward to seeing you there. I will now turn the call over to Beth.

Thank you, Barak. At NICE, we stand out as an industry leader that repeatedly demonstrates sustained balanced growth. Our strong start to 2024 displays our continued success with exceptional Q1 results in all key financial measures: revenue growth, increasing profitability and healthy cash flow generation. Total revenue was a record $650 million, up 15% year-over-year. Non-GAAP EPS of $2.58 exceeded the high end of our guidance range and we generated more than $620 million of operating cash over the last 12 months. Cloud revenue, which now represents a record 71% of our total revenue compared to 64% last year, increased 27% year-over-year, in line with expectations to a record $468 million. The growth was driven by the ongoing strength of our organic cloud business as well as the inclusion of LiveVox, a leader in outbound engagement. This new addition to CXone further enhances the breadth of our platform which particularly attracts large enterprises and is consistent with the trends we are seeing where customers are moving to NICE to eliminate siloed niche vendors and converge on CXone for all their complex CX specific needs. Our existing installed base continues to migrate to the cloud which is one of the drivers of our cloud revenue growth. As expected, this migration results in a shift from maintenance revenue which is included in our services revenue to cloud revenue. In this transition, we generally see an uplift ranging from 2 to 10x in a customer's ARR. Accordingly, services revenue was $149 million, represented 23% of total revenue and decreased 7% year-over-year. Product revenue from on-premise sales, which represented 6% of total revenue in the quarter compared to 8% of total revenue last year was reduced, however, it exceeded our expectations, resulting mostly from several customers electing to purchase some of our on-premise offerings. With the ongoing expansion of our cloud business across both our segments, our recurring revenue further increased to 88% of total revenue in the first quarter compared to 85% last year. Recurring revenue is comprised primarily of a combination of cloud revenue and maintenance revenue which is a component of our services revenue. From a geographic breakdown, the Americas region, which represented 85% of total revenue in Q1 grew 18% year-over-year. The Americas region has continued to excel primarily from the success of CXone sales in the region. Outside of the Americas, we continue to see an accelerated shift from selling on-premise solutions to our cloud platforms. This transition to the cloud masked the underlying strength of the cloud growth we are experiencing in our international regions. The EMEA region, which represented 10% of our total revenue, increased 7% year-over-year. The APAC region, which represented 5% of total revenue, decreased slightly year-over-year. The year-over-year changes for both our international regions resulted from healthy growth in cloud revenue which offset a decline in on-premise related revenue. The foreign exchange headwinds in APAC and tailwinds in EMEA offset each other such that the net currency exchange impact on total revenue was negligible. Both our business segments started the year on a high note, customer engagement revenues, which represented 84% of our total revenue in Q1 were a record $551 million, a 17% increase. CXone, the most comprehensive enterprise-grade CX cloud platform is the growth driver in customer engagement, increasingly led by the growing contribution from our digital and AI offerings. Revenues from Financial Crime and Compliance, which represented 16% of our total revenue in Q1 and totaled a record $108 million, increased 8% year-over-year, driven by the increase in cloud revenue and strong on-premise product contribution. From the close of the LiveVox acquisition in late December last year, our teams have been laser-focused on our planned integration activities. This purposeful attention resulted in an immediate positive healthy contribution to our profitability from the start of 2024. Our cloud gross margin totaled 69.8% in Q1, a slight decrease compared to last year as we continue to invest in global expansion of our cloud platforms. Thanks to our scalable cloud architecture, we continue to expect to reach our target of 75% cloud gross margin in the next 3 to 5 years as a result of the increasing enterprise cloud adoption which is correlated with an increase in the attach rates of our digital and AI solutions. In Q1, operating income increased 22% year-over-year to an all-time high of $200 million and our healthy operating margin increased 170 basis points to 30.3% compared to 28.6% last year. The strong profitability was driven by our continued best-in-class growth of cloud revenue, coupled with cost synergies from our recent acquisitions and a strong muscle in driving operating leverage. Earnings per share for the first quarter far exceeded our expectations, totaling $2.58, a 27% increase compared to Q1 last year. Cash flow from operations in Q1 was a record $254 million, an increase of 30% compared to last year. Our last 12 months operating cash flow totaled $621 million, yielding an exceptional 25.2% cash flow margin. The strength of our cash flow generation and outstanding balance sheet enables us to capitalize on M&A opportunities like our recent acquisition of LiveVox and to execute on our $300 million share buyback program to return capital to our shareholders. In Q1, we repurchased shares totaling $42 million. We plan to complete our $300 million share buyback program by the end of this year. In Q1, we also used $87 million to pay the last portion of our 2017 convertible notes. In the last 2 quarters alone, we completed the acquisition of LiveVox, repaid the remaining principal on our 2017 convertible notes and repurchased a healthy number of shares. We made all these significant cash interactions while simultaneously generating our best-ever infusion of cash from operations and ultimately increasing our cash balance from last quarter. With total cash and investments at the end of March totaling $1.503 billion, our net cash and investments exceeded $1.045 billion. In conclusion, our first quarter performance exhibited the continuous strong financial health of our business, driven by the growing demand for our CX AI offerings, successful integration of LiveVox and strategic execution of delivering consistent, profitable growth along with outstanding cash generation. We are pleased with our strong first quarter opening for the year. And looking forward, we expect to continue delivering on an industry-best financial performance throughout 2024. Now, I'll close with our total revenue and non-GAAP EPS guidance for the second quarter and full year 2024. For the second quarter of 2024, we expect total revenue to be in the range of $657 million to $667 million, representing 14% year-over-year growth at the midpoint. We expect the second quarter 2024 fully diluted earnings per share to be in a range of $2.53 to $2.63, representing 21% year-over-year growth at the midpoint. For the full year 2024, we are maintaining our previous revenue guidance and raising our EPS guidance. We reiterate our full year 2024 total revenue which is expected to be in a range of $2.715 billion to $2.735 billion, an increase of 15% at the midpoint. We now expect full year 2024 fully diluted earnings per share to increase to a range of $10.53 to $10.73 which represents an increase of 21% at the midpoint. I will now turn the call over to the operator for questions.

Our first question comes from the line of Samad Samana with Jefferies.

Barak, sad to hear that you will be leaving us in a little bit less than a year but maybe let's start there. I know the press release gave some details that it was a planned transition. But can you give us any sense of how long you have been considering this? And maybe why now? And then kind of in conjunction with that, what characteristics are you looking for in the next CEO? Is it somebody who's scaled a cloud software business? Is it a different type of skill set? What would the ideal future CEO look like? Operator, can you hear the management team?

Samad, I apologize, in the middle of your question, the line dropped on our end. Can you please repeat the last part of your question?

Yes. No problem. So I was basically asking how long you've been contemplating the transition? And then just asking the question about looking forward, are you looking for in the next CEO, somebody who's scaled a software business to certain levels? Are you looking for somebody with a different type of skill set, just as you envision what the next CEO of NICE should look like, what are the characteristics that the company is looking for?

Thanks, Samad. I appreciate the question. Again, I apologize, everyone, the line on our end dropped. So as you read in the press release, we always believe in full transparency and this is exactly what you saw today. We're very transparent about how we are conducting this transition in a very organized way with no rush. And I believe that after 10 years as CEO and 25 years at the company, the right way for me to transition is doing it in such a way from a very strong position of the company. NICE has outstanding foundations both operationally and financially, a leadership position in the market and business momentum. My plan is to stay as the CEO until the end of the year and use this time together with the Board to conduct a proper search for my successor, both internally and externally. I also plan to stay engaged with the company for at least part or a big part of 2025 to consult on anything needed from a strategic perspective and support the company. I love NICE. This is my home and I'll continue to support the company and I'm not rushing to any other place at the moment. In terms of who we are looking for, we're looking for the right person to take the company to the next level, someone that has experience at the scale of NICE and in enterprise software. We believe that we can have a very good list of candidates, both internally and externally and eventually the Board and our support team will make the decision to make sure that there is a right fit, both in terms of the ability to execute moving forward but not less important, we'll continue the great culture we have at NICE and support and work together with the 8,500 NICERS around the globe.

Appreciate that. And then, Beth, maybe just a follow-up for you. If I think about the first quarter, the cloud revenue was a little bit better than expected. Can you just remind us, are we still tracking to that 18% organic cloud revenue growth for the year? And any update on maybe whether that's tracking ahead of plan and how we should think about organic cloud revenue for the rest of 2024?

Yes. Thanks for the question, Samad. So yes, we're highly pleased with the start of the year and the cloud growth that we're seeing. As we look forward throughout the course of this year, our cloud revenue expectations haven't changed.

Our next question comes from the line of Meta Marshall with Morgan Stanley.

Maybe first question for me. Just any commentary on LiveVox integration and just how that's proceeding both from how you guys are seeing kind of revenue opportunities as well as opportunities to kind of optimize costs? And then just as a second question, just in terms of any commentary around kind of macro understanding it hasn't had much impact on the portfolio but just with smaller customers. I think we've seen a pickup in headwinds this quarter if you've seen anything worth noting?

Thanks for the question, Meta. I think, first of all, we'd say we're extremely proud that we have started off really on a great note this year with the integration of LiveVox. It's going seamlessly right according to our plans. You can see that in our financial results. The overall financial results are very consistent with our expectations. We spoke about the synergy opportunities last year in advance of the close of the deal and we've delivered on that right out of the gate this year. So that's already reaping the benefits from the synergies we've been able to realize. And on the revenue side, we knew that coming into this year, there would be some initial overlap of some of the customers and that really the revenue opportunity is looking forward. We are integrating the sales organization and looking ahead to 2025 and beyond and that's the point when we really expect to put more emphasis on driving the top line. But as I said, we're really pleased. The execution is going exactly as we planned and we are really happy to see the results of that in our first quarter results.

And I'll take the second question just to follow up. Just to add first on LiveVox, besides the financials, obviously, on the product side, we see great excitement from customers, both NICE's customers, very happy with the opportunity to adopt the LiveVox solutions and vice versa and the joint pipeline is looking extremely promising. About the second question on macro, I don't have any kind of breaking news to share. I think we see the exact same trends that we've seen before in all segments of the market. We believe that on all of those aspects, winning the cloud, expanding into digital, and of course, the big opportunity in AI remains central to investment for large enterprises and our prime focus, obviously, the big win is all of those very large enterprises that are expanding and standardizing on us.

Our next question comes from the line of Tyler Radke with Citi.

Yes. And Barak, congratulations on 25 years. I guess I wanted to follow up on Samad's question. I mean, obviously, 25 years is an incredible run but arguably the company is at one of the more interesting times in the market here with generative AI taking off. So I guess I'm curious, personally, like what are you hoping to get out of the next 3 to 5 years? What are you going to do next in probably what was a difficult decision but clearly, there's a lot of opportunity ahead of the company. So I'm just curious personally what you're looking to do next?

Great question. You described it correctly; it was a difficult decision. I find myself with mixed emotions because I see tremendous opportunity for NICE. Few companies share such a strong position, an exciting market, and an exceptional team. It doesn't get much better than that. After being a CEO for 10 years, I believe it's important for a leader to eventually transition and pass the torch to someone else. This should be done thoughtfully and carefully to ensure strong continuity. There’s never a perfect time for this, but I’ve chosen to do it now. My immediate priority is executing our 2024 plan, finding a successor, and supporting the transition. What I will do next is something I need to consider. At 49, and not very skilled at golf, I will likely need to find a different path.

All right. Well, hope you can get your golf score down. But a follow-up for Beth. So on the cloud guide, I appreciate the reiteration of that for the full year. But I guess, in the quarter, you talked about on-prem strength surprising you to the upside and the full year revenue target wasn't raised. So I guess, how should we square the lack of a raise on the full year revenue target with stronger on-prem mix in the quarter? And if I look at the calculated organic growth in cloud this quarter, I think it was around 18.5% depending on the assumptions. So that doesn't leave a whole lot of room for slowing organic growth throughout the full year. So just help us understand your confidence in that 18% organic growth for the rest of the year.

Yes, thank you. I think you asked a few different questions, and I'll try to make sure I've addressed them all. Let's start with the full year. As we look at the full year revenue guidance, we're stepping out of the first quarter with an expectation of $2.7 billion in total revenue this year. So it's a substantial amount of revenue. We continue to grow. As we looked at the first quarter results, we had a near $4 million beat coming in at the high end of our guidance. We said that less than $4 million on such a large number of $2.7 billion really doesn't feel consequential in the grand scheme of things. That was the decision we made to hold still early in the year. As you said, we're really pleased that we've stepped into the year with a strong performance and that's our expectation as we look forward as well across all aspects of our business. You can see in the cloud growth that we continue to really excel as a leader in our market.

Our next question comes from the line of Siti Panigrahi with Mizuho Securities.

And Barak, congratulations on a remarkable career at NICE. My question is on AI monetization. You talked about one example of how customer ARPU went up by 40% in monetization. So I'm wondering what kind of pricing model is evolving? I know you started with agent pricing and you were talking about usage based. What kind of pricing model are you seeing? And do you think that will become the most prevalent with this AI-powered contact center? Also, if you could talk about how quickly this AI bookings can translate into revenue?

Yes, thanks. I appreciate the question. I think you characterized it correctly and I was trying to provide indications and examples on how this is evolving. First, I'll say the speed of innovation is tremendous. I've never seen anything like it on the CXone platform because it has all data and knowledge. It's kind of the natural habitat for AI, how fast we can release capabilities and then how fast customers are adopting it, both existing and new. In terms of the monetization, most of the contact center industry historically has been very much agent-based. Most of the pricing is per user. But you characterized it correctly. Today, we are monetizing AI predominantly based on its volumes or interactions and less about users. The right way to think about it is that if you have an organization that adopts CXone with digital channels and AI, there's a certain user base price for agents depending on which bundle or package they buy and our complete with many capabilities without the cost of integrated solutions since they're all natively there. For the AI, as they start either to augment agents with AI capabilities or other elements, usually, the monetization is by daily number of interactions which are expected and we're seeing it continue to grow exponentially. So that's how we envision it moving forward. It opens up a tremendous opportunity because we're not just converting agent capacity to AI; we're expanding into channels and touchpoints that were not a part of our business. When it comes to how fast it will impact revenue, it will grow, and at some point, we may provide more information about it as it becomes a more significant part of our bookings.

That's great color. And Beth, very impressive profitability and cash flow. But my question is on the SMB segment. You cited some weakness in that SMB segment last year. So has it been fairly stable in Q1? Or are you seeing any kind of incremental pressure on the small business side? And remind us what percentage is SMB for us?

Yes, Siti. First of all, we don't actually segment the customer base. We've never broken down the segmentation of our revenue between the customer side. So we can say that, of course, enterprise customers are driving more and more of our revenue growth as we move up market and take additional market share. Regarding the SMB customer base and some of the compression that we were seeing last year, I mentioned last quarter that we had seen kind of a stabilization around that compression. We have seen it heavier throughout the course of 2023. Towards the end of the year and coming into this year, we've seen that the compression has really stabilized. So now we see that we are at a kind of a business as usual, stabilization on the SMB side. As we've always had, we continue to add new business, both in that installed base and via large enterprise customers, adding new logos and selling more to existing customers.

Our next question comes from the line of Pat Walravens with Citizens JMP.

Great. Congratulations on the quarter. And Barak, congratulations to you on your 25 years. I hope that David and the Board are able to find a successor who is as good a fit for NICE today as you were over the last 10 years. So Beth, my question is for you. Are you having any thoughts about retiring because with the CEO transition coming, I'm pretty sure all your investors would agree with me that it would be great to have continuity in the CFO role.

Pat, you're trying to age me here. I don't.

I'm not trying to age. We just want to keep you around.

No, no. Of course, we're all going to horribly miss Barak and we're a great team that works together. But no, I don't have any plans for retirement. I enjoy working with Barak but I enjoy working really with all the team here at NICE and love NICE the same way that we all do. So there will be no change in plans for me.

Our next question comes from the line of Arjun Bhatia with William Blair.

Barak, maybe one for you to start off with. When you think about where you're seeing bookings growth from ENLIGHTEN and on the AI side? How much of that is going to be focused more on existing customers that want to add AI capabilities versus perhaps new customers that are making a replatforming decision and are saying, "hey, maybe this is the right time to really switch our contact center synergy and go deeper into AI now that we are going through this significant rearchitecture?"

Great question. First of all, every conversation today, either because the customer asked to start this way or we initiated it starts with AI. The reason for that is that automation and the desire to have automation in contact centers is not new. I've been in this space for 25 years and from day one, it was all about automation. All the things that were simple in the contact center are already fully automated. I gave you an example in my earlier remarks. Automation got stuck until now there's an opportunity with AI. Our customers understand the complexity of this business and that it's not easy to automate. It's not simply integrating some large language model or generative AI into the mix. They understand issues such as privacy, security and having the right data integrated. Generally, they recognize that you need a highly specialized AI to work in this context. We see many customers that initially adopted AI have learned about the power of a complete platform over the last years. So existing customers with our solutions realize the value, and we're also seeing a strong interest from new customers.

Very helpful. And then, Beth, one for you. Just when we're thinking about cloud growth, I know you're reiterating the 18% organic target. How should we think about how much your own on-prem to cloud migrations are driving cloud revenue growth for you? And when you look out throughout '24, should we expect that to increase given some of the dynamics we've discussed with customers wanting to invest more in cloud and AI? Also, give us a sense of how we should think about the shape of the contribution from your own on-prem migrations.

Yes, sure. In terms of our existing installed base, I would say we see a relatively steady state there that each and every quarter, we have a certain number of our legacy customers continuing to move onto our cloud platforms, primarily CXone. It's something we continue to expect to see. As I mentioned, indications for this year look like it's generally business as usual. However, with the introduction of AI and our digital offerings, we're seeing a pipeline that adds incremental deal value and that could also motivate customers to migrate sooner than later. As we look into the following quarters and year, I do believe we will start to see some acceleration of our existing installed base as those large enterprise customers begin to plan their moves. When we see those customers migrate, I mentioned earlier, we generally see a very nice and steady significant uplift in their ARR, anywhere from 2 to 3x and some customers experience uplifts of 10x or higher. It certainly remains a growth driver for us.

Our next question comes from the line of Jim Fish with Piper Sandler.

This is Quinton on for Jim Fish. Barak, maybe first for you. Underneath the cloud business, can you talk about the drivers of growth here between how much is coming from expansion of your existing base versus the conversion of the large enterprise pipeline that you guys have driving new revenue. Any color you can provide on the net retention rates you saw this quarter relative to prior quarters?

Yes, thanks for the question. For us, it's always a combination of the two between expansion and new. The beauty of the markets we operate in is that it's roughly just 20% in the cloud, indicating a very healthy runway, predominantly in the enterprise market. Our focus is a lot of our existing cloud customers, the many thousands that we have but also on winning new customers. We constantly see that new customers adopt us in different ways. Some go all in day one, buying everything and deploying everything, while others do so department by department, and we continue to see their ARR growing. There's no change on trends that we've seen on either ARR or the mix between new and existing customers.

Understood. That's helpful. And then, Beth, maybe for you, could you provide how much revenue LiveVox actually contributed here in Q1? And then with the full quarter of wrapping your hands around the business, are you still expecting that $142 million of contribution for the full year? Or any change to that?

So thanks for the question. To be clear, last year we provided direction of the cloud revenue split expectation between LiveVox and cloud revenue that was not coming from LiveVox. Just to provide clarity to stakeholders to understand the expectations of our cloud revenue this year. With every acquisition, we've always done at NICE, once we close the deal, we don't actually separately disclose the financial results beyond the business segments which is how we have always conducted our business. We won't be providing a specific breakdown. As I commented earlier, we are quite pleased with our revenue in cloud this quarter and believe LiveVox is very much aligned with what we aimed to achieve with that acquisition. We are very pleased, and beyond that, we won't be providing further segmentation. Our expectation for cloud revenue for the year is unchanged.

Our next question comes from the line of Mike Latimore with Northland Capital Markets.

Great. Barak, you mentioned that AI gets you into some touchpoints that NICE has not addressed in the past. Can you just elaborate on what those touchpoints are? And also, is there any quantification of cloud bookings growth in the quarter?

Thanks, Mike. So I described in my remarks the different drivers of our business: the shift to the cloud of CX environment, the digital convergence and the expansion into AI. They are separate but they also impact each other. With our AI capabilities, customers recognize that to have what is the ultimate goal, the seamless journey for customers, you cannot treat different touchpoints or interactions separately. This breaks the silos between the different subcategories of voice channels, chat, email and social engagement. The understanding is that the core of the interaction is what you need to consolidate on. We manage voice, which historically has been the most complicated channel. If you solve AI for that, you can solve AI and automation for all the other things. The trend we see is that customers consolidate into CXone, bringing knowledge and data in one place, providing a holistic view of the customer which allows AI to flourish. With respect to bookings, we don't provide comments on bookings, we share anecdotes about deals, highlighting many, many deals, particularly large ones, showcasing a strong adoption of our products.

Our next question comes from the line of Catharine Trebnick with Rosenblatt Securities.

You introduced a UCaaS solution recently. Can you provide some insights into the decision to do that? Does it impact or not impact the relationship with RingCentral?

Yes. Thanks for the question. I don't think I'm going to surprise you by saying that the UCaaS market has been commoditized and is no longer a premium capability. It's also easy to deliver. We have capabilities and we've had some requests from customers. Our relationship with RingCentral is strong, and we operate in certain segments of the market together while in other segments of the market we operate differently. So, there's no change to that.

Our next question comes from the line of Rishi Jaluria with RBC Capital Markets.

This is Richard Poland on for Rishi Jaluria today. So obviously, AI can play a role across the entire call center lifecycle. Are you seeing any particular use cases that are standing out, especially early days?

Yes. It's a great question. We see various use cases and I'm very encouraged by the pace of adoption because, as I mentioned before, when we think of AI, we translate it to Augmented Intelligence and Artificial Intelligence. So there is the part when it can work side by side with the CX professional and there is the full automation of certain tasks or journeys. I mentioned several of our solutions related to AI, including copilot for agents and supervisors, auto summary, XO for various CSA capabilities and a growing list of others. This list will continue to grow. When you have a platform with those assets together, it's easy to start using more and more use cases.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Eilam for any final comments.

Thank you, everyone, for joining us. Beth, Marty and I and the rest of the management team are looking forward to seeing you at our Investor Day in Vegas on June 11. Have a great day. Thank you so much.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.