Welcome to the NICE conference call discussing third quarter 2025 results, and thank you all for holding. As a reminder, this conference is being recorded, November 13, 2025. I would now like to turn this call over to Mr. Ryan Gilligan, VP, Investor Relations at NICE. Please go ahead.

Thank you, operator. I'm incredibly excited to join NICE as the company's new Vice President of Investor Relations, and I look forward to working closely with all of you in the investment community. With me on today's call are Scott Russell, Chief Executive Officer; and Beth Gaspich, Chief Financial Officer. Before we start, I would like to point out that some of the statements made on this call will constitute forward-looking statements. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, please be advised that the company's actual results could differ materially from these forward-looking statements. Additional information regarding the factors that could cause actual results or performance of the company to differ materially is contained in the section entitled Risk Factors in Item 3 of the company's 2024 annual report on Form 20-F as filed with the Securities and Exchange Commission on March 19, 2025. During today's call, we will present a more detailed discussion of third quarter 2025 results and the company's guidance for full year 2025. 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 expenses, amortization of discount on debt and loss from extinguishment of debt and the tax effect of the non-GAAP adjustments. The 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. I will now turn the call over to Scott.

Thank you, Ryan, and we are thrilled to welcome you on board and have you join our team. Good morning, and welcome, everyone. Well, let me start by saying the renewed strategy that we laid out for NICE at the beginning of the year is now producing clear tangible results, reflected in both our financial performance and our growing market position. We're seeing great momentum across our entire business, setting a solid foundation for sustained growth. We're pleased to report another strong quarter underlined by exceptional cloud and AI bookings, stemming from the continued expansion and execution of our AI-first strategy, our international expansion and our robust go-to-market performance. This quarter reinforced the strength of our AI solutions, driving real transformation for our customers with exceptional cloud bookings, driving a cloud backlog increase of 15% year-over-year and with our AI capabilities included in every new seven-figure CX deal. In Q3, total revenue was $732 million at the high end of our guidance range, with cloud revenue reaching $563 million, up 13% year-over-year. Our cloud revenue growth was primarily driven by our AI and self-service offerings, whose ARR accelerated to 49%, driven by sustained organic momentum and the contribution from NICE Cognigy, which closed in early September. This demand for our AI offering is reflected in strong bookings for Autopilot and Copilot deals more than tripling in Q3. We also achieved a higher win rate against our key CX competitors, underscoring the growing customer appetite for our AI-powered and domain-rich solutions. Furthermore, it reinforces our conviction that we operate in a vibrant growing market where organizations are showing robust demand for accelerating their AI transformation using our offerings. We at NICE perceive AI not only as a catalyst for our groundbreaking innovation but more importantly, as a fundamental force for reinventing how business, technology, and humans interact in each of our markets. In the world of customer experience, our leading CX AI platform, CXone, is using purpose-built AI to reshape customer journeys in exciting new ways. Our AI-powered orchestration allows us to perfectly blend human and AI agents, creating seamlessness in the end-to-end experiences that go well beyond the contact center, delivering automated workflows that move from accurately identified customer intent all the way to organizational fulfillment and resolution. We’re also seeing increased demand for our leading NICE Cognigy conversational and agentic AI solutions, available for implementation on any technology environment, allowing companies to design, run, and optimize AI agents quickly and simply with little to no code requirements and with specific CX-built functionality and vertical know-how. There’s tremendous added value that we're seeing for the powerful combination of CXone and NICE Cognigy together. Our ownership of the point of engagement awards us a distinct understanding of customer intent, sentiment, preference, and context across literally billions of engagements. This distinct AI-ready foundational data then forms the basis for automated creation of smart agentic AI, turning this data into CX-built workflow intelligence. The symbiosis of CX engagement data dynamically informing AI agent conversations and actions, all happening as a part of a single unified platform is at the core of our differentiation and what sets us apart in our markets. Our innovation roadmap is already well ahead with many NICE Cognigy integration capabilities already completed and many more underway. NICE Cognigy drives further growth of the CXone platform and CXone accelerates the NICE Cognigy expansion in our customer base, particularly in the enterprise segment. Combining sophisticated agentic AI with engagement-based data also enables us to change the paradigm of customer engagement from a reactive to a proactive framework identifying business-initiated intents that can utilize human or AI agents to reach out to consumers, increasing sales, reducing effort, improving loyalty, and trust. Our CX AI solutions are resonating with organizations of all sizes and verticals as evidenced by some of our key deals in the quarter. In Q3, one of the leading global auto manufacturers chose CXone to transform their customer experiences as part of an eight-figure ACV deal, underscoring NICE's continued leadership in the cloud contact center transformation and reinforcing the completeness of our CX AI platform. Their decision reflects the growing enterprise shift away from fragmented legacy systems towards a unified cloud and AI platform that enables modernization, agility, and superior customer engagement. In another substantial Q3 deal, AI to Cruises chose NICE Cognigy for their FAQ automation initiative, creating accurate dynamic responses to customer requests. Our integration with their existing environment allowed AI to Cruises to capitalize on their existing data and workflows while modernizing the overall customer engagement experience. Our AI solutions are also generating strong upsell momentum. Consumer Cellular, an existing NICE customer, added AI agent augmentation using our Copilot solution in a seven-digit ACV deal, enabling real-time proactive triggering of agent guidance, injection of knowledge, and conversational suggestions, improving the ongoing customer engagement. Q3 also saw continued momentum in our international business as an increasing number of organizations across the globe look to NICE for their CX transformation. DWP, U.K.'s Department of Work and Pensions, extended their CX sovereign cloud initiative with NICE's self-service solutions in another seven-digit ACV deal, modernizing citizen engagement through automation and digital self-service. They chose NICE for our compliance with sovereign cloud standards, proven public sector standards, platform scalability, and our ability to execute on their AI and digital transformation roadmap. Our overall strong Q3 performance is further proof that our strategy is hitting the mark and that we're delivering across all our key focus areas. Our commitment to leading the AI revolution in all our markets and specifically in CX with CXone and our NICE Cognigy solutions. The emphasis on developing our ecosystem and strategic partnerships to scale our impact, leveraging our collaboration with major technology and GSI partners, and with many more to come. Our international expansion and cloud adoption acceleration in global markets, and of course, maintaining our financial strength with both operational rigor and industry-leading profitability while thoughtfully deploying capital through acquisitions and share repurchases. This is the perfect opportunity to remind everyone that our Capital Markets Day is coming up in just a few days on Monday, 17th of November in New York City. The event will feature presentations from our executive management team covering in more detail our long-term strategy and the future of the CX market, our CX innovation roadmap with NICE Cognigy, and our financial overview, including midterm outlook. If you've not registered yet and you'd like to attend, please contact our Investor Relations team at [email protected]. We look forward to seeing you all in person at this event. And with that, I will now turn the call over to Beth.

Thank you, Scott. I'm pleased to share another quarter of strong financial execution underscored by robust cloud revenue growth and continued positive momentum from our AI and self-service business. Our acquisition of Cognigy, the global leader in AI-driven customer service solutions, closed in early September, earlier than originally anticipated, and Cognigy's performance is included in our third quarter financial results. Total revenue of $732 million came in at the high end of our guidance range, increasing 6% year-over-year for the third quarter. Cloud revenue increased 13% year-over-year, contributing $563 million, representing a record 77% of our total revenue. Excluding Cognigy, cloud revenue increased 12% year-over-year, in line with our expectations. Our cloud revenue growth in the third quarter continued to be driven by the strong performance of our CX AI and self-service ARR, which totaled $268 million in Q3, increasing 49% year-over-year and 43% year-over-year, excluding Cognigy. This key growth driver in our business continues to expand, and next-generation CX AI now represents 12% of our overall cloud revenue. Our fast-growing CX AI is expected to become more meaningful in the coming years, especially with the addition of Cognigy, which we expect will further augment our AI and self-service growth trajectory. Our cloud NRR for the trailing 12 months of Q3 was 109%, reflecting continued strength in customer loyalty and expansion activity as we scale across a larger base. Our NRR is reported on a last 12 months basis and naturally lags current trends as demonstrated by our consistent cloud revenue growth year-to-date and the strong 15% year-over-year growth in our cloud backlog, as highlighted by Scott. We're seeing positive underlying indicators that our healthy NRR can inflect upward over the next few quarters. Our on-premises business performed in line with expectations as services revenue of $139 million represented 19% of total revenue, and product revenue of $30 million represented the remaining 4% of total revenue. From a geographic breakdown, the Americas region, which represented 84% of revenue in Q3, increased 5% year-over-year with double-digit cloud revenue growth and strong product revenue, which was partially offset by a decrease in services-related revenue as our customers continue to migrate their maintenance to our cloud. Our international business demonstrated strong revenue growth in the third quarter as our cloud business continues to drive momentum with our continued success of large enterprise scale wins in the international markets. Our international revenue contribution increased from last year, and we expect this trend to continue. EMEA revenue increased 7% year-over-year, and APAC revenue increased 19% year-over-year. Together, our international revenue increased 11% year-over-year. Our international markets represent one of our most compelling growth opportunities. These regions remain relatively underpenetrated in terms of cloud adoption, creating a significant runway for expansion. We're seeing tangible traction with large enterprise wins in both EMEA and APAC now going live and contributing to our revenue results. Our ongoing investments in sovereign cloud infrastructure are proving instrumental in securing these opportunities, offering local compliance, data residency, and trust advantages that customers increasingly prioritize. In addition, Cognigy's strong presence and brand recognition in EMEA, coupled with their growing presence in the Americas, further enhance our reach in the region, serving as a powerful catalyst for growth and enabling cross-selling of our complementary AI and self-service solutions. Turning to our business segments, Customer engagement revenue, which represented 84% of our total revenue in the quarter was $613 million, increasing 6% year-over-year, driven by the continued strength of our CXone AI cloud platform across all geographies, which more than offset the continued transition from our on-prem business. Revenues from financial crime and compliance, which represented 16% of our total revenue in Q3 and totaled $119 million, increased 7% year-over-year. This was due primarily to strong cloud and product revenue growth. Moving to profitability, our total gross margin was 69.9% compared to 71.7% last year, reflecting our deliberate investments to scale international operations and to continue to expand our global cloud footprint, where we are already seeing dividends as highlighted in our strong international revenue growth. Our operating income in Q3 increased 5% year-over-year to $231 million, and our operating margin totaled 31.5%. The impact of Cognigy on our profitability was immaterial on our gross margin and operating margin in the third quarter. Looking forward to the fourth quarter and beyond, we expect no significant impact to the gross margin from Cognigy. However, we do expect dilution to the operating margin, which we previously communicated and is factored into our updated guidance that I'll touch on in a moment. Earnings per share for the third quarter were $3.18, a 10% increase compared to last year. Our cash flow from operations in Q3 was $191 million, up 20% year-over-year, underscoring strong operational execution and profitability. During the quarter, we deployed significant capital to advance our strategic priorities, repurchasing $41 million of shares, fully repaying $460 million of outstanding debt, and funding the acquisition of Cognigy. We ended the quarter debt-free with total cash and short-term investments of $456 million, demonstrating both the strength of our balance sheet and our capacity to invest decisively in durable, profitable growth and create long-term shareholder value. In summary, we delivered another quarter of strong execution, driven by sustained cloud growth, accelerating AI and self-service adoption, and disciplined financial management. Our recent momentum, together with Cognigy now part of our portfolio and a debt-free balance sheet, we are entering the next phase of growth from a position of exceptional financial and operational strength focused on driving innovation, scale, and long-term shareholder value. We're excited to share more financial details at our upcoming Capital Markets Day, including a 2026 and midterm outlook. Now I'll close with our guidance for total revenue and non-GAAP EPS for the full year 2025. Our updated guidance includes the expected results of Cognigy from the date of acquisition through year-end. We are increasing our full year 2025 total revenue guidance, which is now expected to be in the range of $2.932 billion to $2.946 billion, which represents a year-over-year increase of 7% at the midpoint. We are increasing our expected year-over-year cloud revenue growth to be in the range of 12% to 13% for the full year. Previously, we shared an expected year-over-year increase of 50 basis points to our operating margin. Our expectation for our organic operating margin, excluding the impact of Cognigy, remains unchanged. As a result of the acquisition of Cognigy, we now expect our operating margin to slightly contract. Previously, we shared an expected year-over-year growth in non-GAAP earnings per share of 12% at the midpoint. Our expectations for our organic non-GAAP earnings per share, excluding the impact of Cognigy, remain unchanged. As a result of the acquisition of Cognigy, we now expect the full year 2025 non-GAAP fully diluted earnings per share to be in the range of $12.18 to $12.32, which represents an increase of 10% at the midpoint. I will now turn the call over to the operator for questions.

Your first question comes from the line of Siti Panigrahi with Mizuho.

I just wanted to ask about Cognigy. You closed in September. So what's your expectation of Q4 revenue contribution from Cognigy? And specifically, how are you planning to position Cognigy in terms of go-to-market? And any changes to the partnership they have with other CCaaS vendors?

Yes. Thank you, Siti, for the question. So I'll start off with the financial aspect of the question. First, we are very pleased that we were able to close the acquisition of Cognigy earlier than originally anticipated. We originally anticipated a Q4 close, and we were very excited that we received the regulatory approvals earlier than originally anticipated. What it means for our revenue contribution is that in the third quarter, it contributed roughly about 50 basis points to our cloud revenue growth from the inclusion of Cognigy. And what we've anticipated, and that's included in our updated guidance for the full year, is that it should include an increase of about 150 basis points impact and increase to our cloud revenue growth during the fourth quarter. So those are the assumptions we've made on the financial inclusion and as a result of the Cognigy acquisition.

On the go-to-market front, it is clear that Cognigy is a leading conversational AI platform. We will actively expand into the CX market, regardless of whether NICE is the underlying CCaaS platform. It's crucial to target this market because companies operating on other platforms lack an integrated solution. They require a robust AI platform, and Cognigy is well-equipped to meet that demand. We are enthusiastic about the opportunities this presents. The Cognigy team is also thrilled to have NICE's support as we pursue this market.

And Scott, just a quick follow-up to that. We keep hearing from a lot of customers who are not yet in cloud or CCaaS. They use Cognigy for AI. Do you see this as an opportunity now for you to even accelerate or reach out to those customers and move them to cloud as well?

Yes, for sure. I mean if you think about it, we have 3 growth vectors for our Cognigy business that we're really excited about. First, a customer that is in the cloud that has already done the CCaaS migration, but they're looking to do their AI transformation, Cognigy is the market leader. They are fantastic at being able to provide that automation, that customer service experience. And so secondly, is the NICE installed base and the tremendous opportunity in the enterprise customer base that we have, bringing Cognigy into that installed base. And then third, to your point, is we are the only company that has the combined world-leading AI platform and the world-leading CCaaS platform that we combine together. And if they want to start with their on-premise, they want to start with AI transformation, they lead the way with NICE Cognigy. If they want to do their cloud migration on CXone, they start there. But either way, we can give them the end-to-end journey on a unified platform. So it does give us real optionality for our customers in terms of their transformation journey from their on-prem. And that's obviously very exciting.

Great and look forward to hearing more on Monday.

Look forward to it.

Your next question comes from the line of Patrick Walravens with Citizens.

Great. Congratulations to you guys on all the momentum in the business. It's great to see. So Scott, with Cognigy, as you're getting deeper into all these sales cycles, can I ask if you're seeing Sierra? And I bring it, I'm sure you're getting this question a lot, but for anyone who doesn't know, they just raised $350 million in September at a $10 billion valuation. So it would be great to hear your thoughts in terms of what the competition looks like.

Yes. Great question. So let me first say, the growth and the expansion of AI in the CX market is clearly evident. And we've been talking about this for a period of time. But with the introduction of new players, it's a validation of the attractiveness of the growth potential that this market brings. And I guess you can see our move of acquiring a proven market leader. Cognigy is a proven market leader in conversational and agentic AI. They're already there. They're proven with some of the world's leading brands, and it's a testament of our leadership and our ability to capitalize on the opportunity. And just as a reminder and why we feel really strongly about our competitive positioning, Cognigy was specifically targeted because of its enterprise scale. It is already delivering at the enterprise, the top end of what organizations need of scale. It's easy to adopt. There's no need for forward-deployed engineers by our Cognigy team. We don't need services surrounding it. It's easy to adopt, and it's proven customer value that we can scale with both CXone and non-CXone customers. So yes, we see new entrants in the market. It's a validation of the potential that market brings, but it also gives us renewed confidence about our ability to lead on an AI-only play, a CCaaS, and then the combination of the two together. And I think we'll be able to share much more details, Patrick, in our Capital Markets Day on Monday, where we can really showcase that capability.

Your next question comes from the line of Elizabeth Porter with Morgan Stanley.

Now that we're a few months out from the renewed and expanded RingCentral partnership, are there any changes that you're seeing in pipeline velocity or average deal size through this channel? And understanding we're probably going to get a little bit more next week, but any context for how we should think about this as an incremental driver to fiscal '26 bookings?

Yes. Look, it's a great question. So first of all, Vlad and I and our teams have been in really tight collaboration with the renewed partnership. We've got an updated go-to-market. We’ve got the real potential to have an expansion. I'll give you two key levers. One is RingCentral were already an existing partner of Cognigy and a proven scalable partner of Cognigy. So not only in the combined installed base that we have with RingCentral together, but as their go-to-market, as their agentic and conversational AI platform supporting their solutions, it is a great collaboration. We're doubling down on that super. And then secondly, as you rightly point out, with our renewed partnership commitment, we're able to give confidence to our customers across all segments around combining a world-leading UCaaS platform with the best-in-class CCaaS and now agentic AI platform as a unified offering. So yes, identified leads, clear go-to-market momentum and collaboration between our two go-to-market organizations means that we do expect renewed growth, and I know that the RingCentral team feel the same way.

Your next question comes from the line of Samad Samana with Jefferies.

Maybe one, just Beth as a housekeeping question. If I think about the guidance increase for the year, was any of that on the cloud side an organic increase as well? Or was it largely due to Cognigy? And then I have a follow-up.

Yes. Thank you. We still expect 12% growth in the cloud, excluding Cognigy, for 2025, which remains unchanged. The increase you see in the range, with the midpoint rising to 12.5%, is primarily due to the inclusion of Cognigy.

Great. And then maybe just zooming out from that very specific question, Scott, and I don't want to front run the Capital Markets Day on Monday, where I'm sure you'll dig into this in detail. But as you think about the early days of Cognigy being folded in, and what they brought in the NICE team. How are you thinking about the joint go-to-market effort right now? What have the early observations been? Is it better together? And are customers appreciating that better together story? Or is it still today CXone and Cognigy maybe going a bit separately, but you'll fill that in over time?

Thank you, Samad. I have a few observations to share. First, I’m very pleased with the growth of our cloud backlog, and I mentioned NICE Cognigy has already contributed positively. It operates as a standalone business with an impressive pipeline and strong brand recognition. Its presence has strengthened rather than diluted our efforts. This is exciting because it shows the market recognizes it as a leading conversational AI platform, effectively competing with others in that space. We've been proactive in ensuring the NICE teams are well-prepared. The unexpected closing in September actually allowed us to advance our go-to-market strategies, including leveraging our extensive partner network, which is crucial for our market execution. Throughout September, we increased our efforts, allowing us to start Q4 and look into 2026 with the NICE team ready to lead discussions around the AI and automation capabilities that Cognigy offers. The feedback from NICE's customer base is also very encouraging. Additionally, I want to reiterate a point I made earlier regarding the substantial market both internationally and in the U.S. where many companies are assessing their transformation journey. They often have an on-premises suite with fragmented solutions and are figuring out their transformation roadmap. Instead of mandating a CCaaS transition to the cloud prior to implementing AI, they appreciate the flexibility to start with AI, realizing immediate productivity and automation benefits, while the unified platform offers even greater potential. Our win rates have already improved, and we anticipate even higher rates thanks to NICE Cognigy. So, Samad, you're correct that we’ll share more on Monday, but the early indicators show that the benefits we anticipated from the acquisition are very promising, significantly contributing to our growth potential in Q4 and beyond into 2026.

And one additional point that I would add to what Scott just said as well is when we think about the cloud backlog, of course, we're excited about the momentum Cognigy is bringing and what that means for us. But when we looked at the cloud backlog at the end of the third quarter, it's important to highlight that the growth, excluding Cognigy, also was increasing to 13%. So when we look ahead to our expectations stepping into 2026, we see the positive sign there of the ability to inflect and see further growth in the cloud revenue, which is exactly what we'd like to see and we expect to see going forward.

Yes. We've got the organic, the inorganic, and then the better together, so really positive effect.

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

Scott, you mentioned a 15% growth in cloud backlog. While we don’t receive this statistic every quarter, this figure is notably higher than our current cloud revenue. Can you elaborate on whether there’s any impact from Cognigy or any changes in duration? Also, does this indicate the potential direction for cloud revenue growth as we move into next year?

Yes. So Tyler, I'll take that question, and it's actually what I was trying to clarify after Scott made his comments in the prior question from Samad. With the cloud backlog that we referenced, so the 15% year-over-year growth, we did have inclusion of Cognigy. If you exclude the backlog of Cognigy, we had cloud growth of 13% year-over-year. So the 13% year-over-year backlog growth compares to our 12% growth expectation this year. So of course, that builds a lot of confidence for us as we look forward into 2026 in our ability to further accelerate our growth.

Which we'll share more details on Monday.

Yes. Okay. So no duration impact, but 13% is what we should be thinking about. Okay. Perfect. And then just on the margin side, I mean, I know there's some moving pieces with the international expansion and bringing on Cognigy. But maybe just help us understand, are there additional sort of investments you're making that should pressure margins on a go-forward basis? Obviously, we can kind of see where margins are with the first full quarter of Cognigy here in Q4. But should we expect kind of additional pressure, additional kind of costs that are going to lead revenue, whether that's international expansion or AI beyond Q4?

Yes. So it's a great question, Tyler. And we'll talk a lot more deeply about this specifically on Monday as well as we start to talk more around what you should expect to see in 2026 and the midterm outlook, '27, '28. But in general, I think what you should expect is that this is an area of investment for us. When we think about this area, we've had great success internationally. And often, that requires some sovereign cloud infrastructure. So you're building that infrastructure, putting it in place internationally ahead of the impact of the positive accretion that you get from natural growth in the cloud. So we still haven't seen all of the benefit from the great business we've been signing internationally that will continue to drive leverage in that margin. But in the short term, we are going to continue to make those investments. We see tremendous opportunities internationally. We've been very successful there. And so yes, you should expect that you'll see in the near term a slight pressure that you're seeing during the course of Q4, and we'll talk more again about expectations for 2026 and beyond on this coming Monday.

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

Thank you for the insights on Cognigy and its separate figures. Beth, a 1.5% impact for Q4 translates to about $8 million. However, some quick calculations suggest a significant ramp needed to reach the $85 million ARR by the end of next year. How do you plan to achieve that? Additionally, how should we interpret the impact on the expansion rate moving forward? Last quarter, we noted a 111% cloud net retention rate, but now it's down to 109%. While there's potential for cross-selling into the existing base, this indicates a noticeable sequential decline. So, my two questions are: what are your plans for the ramp-up and what’s affecting the net retention rate, and how can Cognigy help address that?

Yes. Thank you, Jim. I'll try to break it down. Let's start with the $85 million because it's really important that we clarify that, first of all. The $85 million, we expect as our exit ARR for Cognigy at the end of December 2026 as we exit the year. That means that's the run rate coming out of the year. It does not mean that it represents the revenue contribution we expect from Cognigy during the course of 2026. So of course, the revenue is going to be distributed and ramping up through the course of that year. And so that is the exit point. So that's the first thing that I would clarify there. I think that as you think about Q4 and what we're predicting for the fourth quarter, in particular, first, I would say it's a little bit of early days with this acquisition. So we are factoring that into our expectation in the near term, but we have already seen the positive momentum that's really exciting even out of the gate from the Cognigy business. So we do expect to see that inflection continuing to happen throughout the course of 2026. And so I think that's built into everything that I've described.

I want to reaffirm our expectation for the exit 2026 ARR at $85 million, and we are confident that we are on track to achieve this. The early indicators are very positive, not just in revenue as noted for Q4, but also in the momentum surrounding backlog, bookings, and pipeline, which will contribute to revenue and, more importantly, to ARR by the end of next year.

Your next question comes from the line of Arjun Bhatia with William Blair & Company.

I'm Willow Miller on for Arjun Bhatia. Can we get an update on LiveVox? Are you seeing stability in the business after seeing some elevated churn earlier this year?

Yes. Thank you for the question. First of all, our cloud revenue growth during the quarter met our expectations, achieving 12%. LiveVox contributes to this, highlighting that our core cloud business is growing even better than what appears externally. Specifically regarding LiveVox, it has a positive outlook and is forecasting continued growth in cloud revenue. Overall, we are seeing positive and healthy signs in that part of the business.

Your next question comes from the line of Michael Funk with Bank of America.

Beth, earlier in the prepared remarks, you mentioned the NRR trends. And I think you commented some expectation or hope of positive inflection in NRR. So can you just talk through the NRR trends intra-quarter? I know your metric is a trailing 12 month. And then related, can you talk about your pipeline, the strength of the pipeline and quality of pipeline and overall feedback you're hearing from customers about their appetite for spending?

Thank you for the question. Regarding NRR, I want to clarify that it reflects a trailing 12-month period and is not specific to the current quarter. It captures some of the changes we experienced in our cloud growth during 2024. For this quarter, the NRR aligns with our expectations, showing stabilization that corresponds to the 12% growth we've observed this year. We're optimistic about seeing a positive inflection in the future. We're monitoring our cloud backlog and other favorable trends, which give us confidence in growth and enhance our cross-sell and upsell efforts with our existing customer base.

Yes. I'll address the pipeline question. The pipeline is strong, and my sentiment is based on our execution in Q3 and our strategy, as well as current market observations. First, there are many questions about AI in the market, which is understandable. However, this isn't the case for customer experience (CX). With a world-class AI platform that enhances automation, delivers excellent experiences, reduces costs, boosts loyalty, and facilitates upselling, we can demonstrate proven benefits through real customer references. The demand for improving customer experiences as part of an AI transformation initiative is gaining positive momentum here. In contrast to other AI sectors, there's no room for doubt in this area. I also want to highlight our growth drivers, which we'll discuss further on Monday. We still have a significant market opportunity as we transition from on-prem to cloud solutions, and our win rates are improving, supported by increased pipeline activity. Our international expansion, aided by our investments, is generating more opportunities, as reflected in our pipeline. I'm optimistic about the benefits of NICE Cognigy in our business, whether in untapped markets or through our existing customer base, and the accelerated prospects in these transition scenarios. Much of this pipeline hasn't yet been fully integrated into our business, and we're just beginning to harness these opportunities. It's encouraging to see our predictions aligning with the positive trends we're experiencing.

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

I have one for Scott. Most of your Cognigy customers are using speech to text to LLM and back to speech. OpenAI and others have recently released direct real-time voice APIs. And are you seeing competition from these APIs? And why or why not? Sorry, that was more technical, but I had to ask...

I'm happy to answer your question, Catharine. We need to take a moment to understand this market realistically. Anyone can create a basic bot, including myself in just a few minutes. However, developing an AI agent that offers a superior customer experience, one that performs better than what humans provide today, requires much more than just a simple bot. We don't view the large language model providers as competitors; instead, we see them as partners in our ecosystem. Their models are impressive and general-purpose, equipped with extensive capabilities. In contrast, with NICE and specifically with our Cognigy, we offer AI that’s tailored for contextual customer experience, built on deep customer interaction data. This involves understanding sentiments, context, and intents. Moreover, integrating this knowledge with enterprise regulations and legacy systems is crucial for meeting enterprise needs—something that simple bots cannot achieve. A comprehensive platform is necessary for this level of service. Customers often start by attempting to build solutions with platforms like OpenAI or Anthropic because they seem appealing. However, once they realize the depth of richness required to deliver a great consumer experience with an AI agent, they quickly turn to us. We make use of those large language models, which are valuable, but our complementary contextual intelligence significantly drives demand for us. This illustrates the need for our domain-specific capabilities, which are vital for enhancing consumer experiences. No company wants to provide an inferior customer experience.

Your next question comes from the line of Tavy Rosner with Barclays.

Most of my questions have been asked. I just wanted to touch on Actimize for a second. What is the competitive dynamic? It seems like more players are trying to disrupt the market. Do you feel anything on your end?

I would like to highlight a few points. We've placed significant focus on the CX business, which is at an exciting turning point due to the potential of AI, as we've mentioned. We're actively positioning ourselves as leaders in this space, and our efforts are paying off. However, our Actimize business is also strong and remains the market leader with sustained demand. The regulatory landscape surrounding compliance and the prevention of financial crime continues to be crucial for financial institutions, placing Actimize in a favorable position. There's considerable growth potential in the cloud for this business as well. What I particularly appreciate about Actimize is its high retention rates; once clients implement it, they realize ongoing value that resonates with the largest financial institutions globally. The industry's focus on compliance and financial crime serves as a significant growth driver for us, and we remain optimistic about the future of this business.

That concludes our question-and-answer session. I will now turn the call back over to Scott Russell for closing remarks.

Thank you. Look, so first of all, I appreciate the time for everyone today. As you can clearly see, we're excited. We're excited about our ability to be able to execute on the strategy that we laid out, the renewed strategy that I've talked about on many times on these calls and seeing the results. And frankly, the expectations is Q3 is a part of a proof point of a long journey in front of us to really lead and win in this market and be excited about it. We're also excited to be with you next Monday to join us. I think it's really important that you can understand and see really the NICE Cognigy platform, how it then benefits with the CXone platform and how bringing the two together, the one plus one equals way more than two, it's five, it's ten and the potential that brings, but also from Beth and I, the updated strategy, the midterm outlook and how that plays out. So I appreciate the time and look forward to seeing you all on Monday.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.