Earnings Call Transcript - NICE Q2 2025

Operator, Operator

Hello, and welcome to the NICE conference call discussing second quarter 2025 results. Thank you all for your patience. As a reminder, this conference is being recorded on August 14, 2025. I will now hand over the call to Mr. Marty Cohen, Vice President of Investor Relations at NICE. Please proceed.

Marty Cohen, Vice President, Investor Relations

Thank you, operator. With me on the call today are Scott Russell, 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 positions 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 titled 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 second quarter 2025 results and the company's guidance for the third quarter and 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'll 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 acquired intangible assets, acquisition-related and other expenses, amortization of discount on debt and also from extinguishment of debt and the tax effect of the non-GAAP adjustments. The differences between the non-GAAP adjusted results and 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. And I'll now turn the call over to Scott.

Scott E. Russell, Chief Executive Officer

Thank you, Marty, and welcome everyone this morning. We're proud to report another strong quarter, with total revenue exceeding our high end of our guidance range and earnings per share coming in at the high end of that range. In Q2, total revenue reached $727 million, driven by 12% year-over-year growth in our cloud business as expected with an NRR of 111%. AI is the heart of our strategy, and we are leading the AI-first transformation in the customer experience market. While others focus on consolidating legacy CCaaS platforms, we're accelerating in a different AI future-focused direction. This commitment is reflected in our exceptional 42% year-over-year growth in AI and self-service ARR which grew to $238 million in the second quarter. Our AI automation and augmentation solutions embedded in CXone Mpower are the catalysts behind this momentum. Enterprises understand that providing a seamless customer experience results in the ultimate reward, loyal and repeat customers. Our one-of-a-kind platform has reimagined this harmonious customer journey and is fueling our outstanding performance in AI, evidenced by our strong Q2 AI bookings, including a sixfold year-over-year increase in Copilot deals. And this is just the beginning. Our momentum will only accelerate as we integrate Cognigy's industry-leading CX-AI, conversational and agentic capabilities upon the closing of the transaction to deliver human-like AI-first customer experiences. Our ability to rapidly innovate and bring industry-leading CX AI quickly to market, both organically and through acquisitions is a direct result of our continued financial strength, our strong profitability and rock-solid balance sheet. The core value of CXone Mpower platform can be explained in two simple ways: First, we make customer engagement simple and intuitive with a single pane of glass that lets our customers manage all interactions across every point of engagement. Second, the platform intelligently orchestrates across agents, automation and systems of record in real time. Cognigy will act as a force multiplier to significantly advance and accelerate the capabilities of CXone Mpower. On the customer engagement side, Cognigy's AI agents will be orchestrated natively within our platform, reasoning and responding in real time to make consumer experiences faster, more human, and more personal. And on the orchestration side, Cognigy becomes a part of a fully connected platform, gaining access to richer data, more expansive workflows and shared knowledge and models. This is an environment where Cognigy's AI will thrive, growing smarter with every interaction. It is truly a compounding advantage as more organizations adopt CXone Mpower, both our platform and Cognigy's capabilities growing stronger together. With this bold step, we are clearly poised to expand our leadership in the AI-first evolution in customer experience. Some examples of our AI success in Q2 include a standout 7-digit ACV AI win, which came from a major electric utility that chose CXone Mpower replacing two incumbents. They sought a seamless customer experience and a stronger self-service need directly aligned with our strengths. With CXone Mpower, they're gaining a unified end-to-end platform and AI-powered tools like Copilot, Auto Summary and other self-service solutions which are significantly enhancing customer service. In another notable 7-digit ACV AI-driven win, a leading global medical device company is using CXone Mpower to boost cold containment, enable intelligent and enhance agent support. Already a strong advocate for a unified approach, they chose Mpower for its ability to extend AI across the customer journey, highlighting how enterprises are leveraging the platform to elevate self-service and drive measurable ROI. In another AI-driven deal, a major financial services provider, SS&C Technologies and a long-time NICE customer is adding Copilot after a successful autopilot deployment to boost efficiency and enhance agent-customer experiences. This deepening investment reflects growing trust in NICE's AI portfolio and its impact on building a more agile intelligent workforce. Partnerships have always been a cornerstone of our growth strategy. And this year, we're proud to welcome exciting new alliances with industry leaders like ServiceNow, AWS and Snowflake. We're also thrilled to extend and reinvigorate our long-standing partnership with RingCentral. Together, we'll continue to collaborate on go-to-market initiatives, leveraging the strength of RingCentral Contact Center powered by NICE CXone Mpower. We're also excited to announce our deepened strategic partnership with Salesforce to enhance integration between NICE CXone Mpower and Salesforce Service Cloud. Together, we're investing in expanding support for bring-your-own contact center, including customer-managed channels and NICE's industry-leading capabilities. This strengthened collaboration unlocks powerful new functionality and sets the stage for continued joint innovation and growth. At Interactions, the power of our ecosystems was on full display, the energy from our partners, customers and industry analysts was extremely positive. Customer and partner attendance surged 33% year-over-year. C-level engagement increased 41%, clear evidence that key decision-makers are leaning in with us. The momentum from interactions is already directly translating into pipeline impact and confirming what we already knew, interactions is a catalyst for growth and provides a clear validation of our business momentum. Another area where we see significant and accelerating growth potential is across our international markets. Enterprises are increasingly adopting end-to-end solutions with AI adoption gaining momentum, the demand for comprehensive and intelligent AI platform like CXone Mpower is growing rapidly. We're also seeing strong traction with our sovereign cloud deployment of our platform, particularly in countries like Germany and France. These dynamics play directly to NICE's strengths and are fueling continued international growth as reflected in the large-scale deals we're now closing in these regions. As we shared last quarter, together with our partner, Route 101, we secured a landmark agreement with the Department of Work and Pensions, or DWP, home to one of the European continent's largest customer service operations with a total contract value exceeding $100 million. These major wins saw us successfully displace two key competitors as the organization selects the CXone Mpower to support tens of thousands of agents. In a 7-figure plus ACV international win, with a leading German health insurer, AOK PLUS chose CXone Mpower over an incumbent citing our unified platform and sovereign cloud as the key differentiators. The deal included a fundamental for future AI adoption and marked a major competitive displacement with our seamless end-to-end solution standing out against rivals fragmented third-party approach. And we also signed a significant 7-figure ACV deal with a leading U.K.-based insurance company displacing three legacy vendors as a part of a major transformation to modernize their customer service operations. They selected CXone Mpower as the foundation for this initiative and adopted both Autopilot and Copilot as they embark on their AI journey. In summary, I joined NICE at the beginning of 2025, which I'm sure everyone remembers, and I was truly excited about the immense opportunity in the coming years. As I outlined at the beginning of this year, I've been keenly focused on specific strategic focus areas to drive NICE forward. And I'm really pleased to report we are making strong progress across the board. I'm committed to leading the AI revolution, and we've delivered both organically with 42% growth in AI and self-service revenue, or ARR, and inorganically through our acquisition of Cognigy. We emphasized the importance of strategic partnerships to scale our impact. And in a short time, we've launched collaborations with ServiceNow, AWS, Snowflake and Salesforce with more to come, while also deepening our relationship with RingCentral. International expansion was another key priority. And this year, we've signed one of the largest deals in our history, alongside accelerating cloud adoption in international markets, which Beth will iterate on shortly. Importantly, we're achieving all of this with disciplined operating rigor, maintaining industry-leading profitability while thoughtfully deploying capital through acquisitions and share repurchases. Before I hand it over to Beth, pending the closing of Cognigy, I want to remind you that we're planning our Capital Markets Day in New York in October. We're looking forward to sharing a deeper look at what lies ahead for NICE as we head into 2026 and beyond, including midterm financial targets and the latest developments surrounding the Cognigy acquisition. I'll now hand the call over to Beth.

Beth Gaspich, Chief Financial Officer

Thank you, Scott. I'm pleased to share another quarter of strong financial execution. Total revenue of $727 million increased 9% year-over-year, resulting from a combination of healthy growth in the cloud paired with strong product revenue contribution stemming from the Financial Crime and Compliance segment. Cloud revenue performed in line with our expectations with 12% year-over-year growth, contributing $541 million and representing 74% of our total revenue. Our solid cloud growth in the second quarter was driven by our CX AI and self-service ARR, which increased 42% year-over-year to $238 million and now represents 11% of our cloud revenue. This strong momentum highlights the underlying strength of the core Mpower AI offering, which we believe will be further amplified with the expected acquisition of Cognigy. The growth is primarily driven by the strong momentum seen with our key AI solutions, including Autopilot, Copilot, Knowledge Management and Proactive AI, which are predominantly built on a consumption model. Our cloud NRR for the trailing 12 months of Q2 remained at a healthy level of 111%, highlighting the durability of our customer relationships and ongoing cross-sell and up-sell momentum. Our expertise in delivering scalable enterprise-ready software continues today in both our cloud and Premise offerings demonstrated in our Q2 results. In addition to the solid performance of our cloud business, product revenue outperformed in Q2. Increased 29% year-over-year driven by successful pull-forward of term renewal activity that was originally anticipated in the third quarter and included in our third quarter expectations and successfully pulled into Q2 stemming from our Financial Crime and Compliance segment. Our services revenue, which represented 19% of our total revenue, declined 5%, in line with our expectations. From a geographic breakdown, the Americas region, which represented 84% of revenue in Q2 increased 9% year-over-year with double-digit cloud revenue growth and strong product revenue, which was partially offset by a decrease in services-related revenue. Our international business demonstrated strong revenue growth in the second quarter as our cloud business continues to drive this expansion with our demonstrated success of large enterprise scale wins. In the Asia Pacific region, one major deal signed in Q2 of last year with Services Australia has successfully ramped and is now contributing to our quarterly cloud results. Meanwhile, we're excited about a second significant win with DWP in the EMEA region where we expect revenue contribution to begin ramping in Q2 of 2026. Our international revenue contribution increased from last year, and we expect this trend to continue. EMEA revenue increased 11% and 15% on a constant currency basis year-over-year. APAC revenue increased 17% year-over-year and similarly on a constant currency basis. Together, our international revenue increased 13% year-over-year and 16% on a constant currency basis. Our international business continues to represent significant long-term growth opportunities for us. These regions remain under-penetrated in terms of cloud adoption, and now we're seeing tangible traction as investments in sovereign cloud and strategic partnerships become more meaningful in our results. Turning to our business segments. Customer Engagement revenue, which represented 82% of our total revenue in the quarter was $597 million, increasing 8% year-over-year, driven by the strong growth in our cloud business in all geographies, which offset the continued transition of our premise-based business. Revenues from Financial Crime and Compliance, which represented 18% of total revenue in Q2 and totaled $130 million performed well ahead of our expectations, growing to 19% year-over-year. This was due primarily to a significant increase in product revenue that I previously highlighted as well as continued strong cloud revenue growth. Moving to profitability. Our total gross margin was 69.3% compared to 70.7% last year, a slight decline primarily due to increased cloud spend. In tandem with the success of our international business, we are increasingly investing in our cloud infrastructure across multiple regions. Our operating income in Q2 increased 9% year-over-year to $220 million, and our best-in-class operating margin totaled 30.2%. Earnings per share for the second quarter was $3.01, a 14% increase compared to last year. Our cash flow from operations in Q2 was $61 million. The decrease year-over-year is primarily due to a nonrecurring tax expense in the quarter and timing of some large anticipated customer collections, which shifted to receipt a few days post quarter-end. Following our largest ever quarterly share repurchase in the first quarter, we repurchased shares totaling $31 million in Q2 in line with our repurchase plan for the year. Our balance sheet remains robust with total cash and investment at the end of June totaling $1.632 billion while total debt stood at $460 million, resulting in net cash and investments of $1.2 billion. We expect to repay this debt at maturity in mid-September. In summary, we are pleased with the strong first half of 2025, marked by solid execution and continued momentum across our key strategic growth catalysts, rapid AI adoption, embracing both automation and augmentation, continued cloud adoption in the large enterprise and international market segments and expansion opportunities within our large installed base. These results, along with our strong balance sheet and cash generation provide the financial flexibility to invest decisively in innovation, both organic and through acquisitions. Looking ahead, we're excited about the opportunity to share more financial details with the anticipated acquisition of Cognigy, including our general midterm outlook at our upcoming Capital Markets Day. Now I will close with guidance for total revenue and non-GAAP EPS for the third quarter and full year 2025. It's important to note that our planned acquisition of Cognigy is expected to close during the fourth quarter of 2025, subject to regulatory approval and therefore, this guidance excludes any planned impact from this proposed transaction. For the third quarter of 2025, we expect total revenue to be in the range of $722 million to $732 million, representing 5% year-over-year growth at the midpoint. We expect the third quarter 2025 fully diluted earnings per share to be in the range of $3.12 to $3.22, representing 10% year-over-year growth at the midpoint. For the full year, we are reaffirming our prior revenue guidance. Full year 2025 total revenue is expected to be in a range of $2.918 billion to $2.938 billion which represents an increase of 7% at the midpoint. We continue to expect year-over-year cloud revenue growth of 12% for the full year. We also continue to expect our non-GAAP operating margin to increase by an estimated 50 basis points year-over-year. We are raising the full year 2025 non-GAAP fully diluted earnings per share guidance, which is now expected to be in a range of $12.33 to $12.53, which represents an increase of 12% at the midpoint. I will now turn the call over to the operator for questions.

Operator, Operator

Your first question comes from Meta Marshall with Morgan Stanley.

Meta A. Marshall, Analyst

Great. I have a couple of questions. How are you approaching your investment levels right now? You've mentioned several promising partnerships and exciting developments with AI, so I would like to hear more about your thoughts on operating margins and the factors influencing them in the near term. Additionally, what gives you confidence in the 12% growth target for cloud this year considering what you observed in the first half?

Beth Gaspich, Chief Financial Officer

Thanks, Meta. So I'll start kind of addressing your question. In terms of the level of investment, you can see the level of investment we've made around the cost of cloud that we've highlighted now and that you see in our gross margin in the first half of this year. And we're really pleased with how that's paying off. We're already seeing the international revenue expansion there, where much of that additional investment was made to really invest in that international business that we have. And so we're seeing great momentum there. With respect to what it means in terms of operating margins in the near term, as I shared, we still expect to see a 50 basis point year-over-year increase over last year's results in the current year of 2025. And of course, as we step into 2026, that's part of what we plan and look forward to sharing more in terms of level of investment at our Capital Markets Day that we're looking forward to. With respect to your other question around the cloud revenue expectation, we came into the year saying we see a comfort to deliver on the 12%. We have successfully done that. Solid performance with 12% in both Q1 and Q2. And I’ll add that we expect that 12% to continue to be delivered in the third quarter as well. We have a good line of sight on our business in Q3, and so as we look on the fourth quarter, and I’ve highlighted in prior calls, we had a higher level of seasonality than what we've typically seen in the quarter of last year. So we're keeping that in mind that we have this higher baseline for comparison. But overall, we're very pleased. I think you can also see the great growth that we're experiencing in the AI with the increase to the 42% year-over-year growth in our AI and self-service ARR. And so that we expect to continue to contribute as well. There are other areas of our business where we have not seen the same level of strong performance this year. One of those that we would just call out is around LiveVox. During the course of 2024, LiveVox was performing in line with our expectations as we stepped into this year, we are seeing some softness in that business. We’re still very excited about it as an asset, but it is creating a bit more kind of a weight on the 12% expectation for the year, which is why we're maintaining again, full confidence around it and optimism looking toward to 2026, but that does create a little more uncertainty in terms of the fourth quarter.

Scott E. Russell, Chief Executive Officer

I would like to mention the cloud revenue growth. Our core platform, CXone Mpower, is performing very well, along with our AI capabilities, as reflected in the ARR numbers. So, when considering the backlog and the pipeline, we feel confident moving forward. There are certainly some short-term challenges related to the situation with LiveVox, as Beth pointed out, but this does not alter our overall outlook.

Operator, Operator

The next question comes from Siti Panigrahi with Mizuho.

Sitikantha Panigrahi, Analyst

Congrats on a good quarter. Just wanted to dig into the margin side, mainly your cloud gross margin has come down below 70%. I assume that's the AI investment. How should we think about the gross margin going forward for cloud? And in the same context, could you help us understand the 50 bps margin expansion, where do you see most of the leverage this year?

Beth Gaspich, Chief Financial Officer

Yes, thank you for the question, Siti. In terms of margin, we were slightly below 70% in both Q1 and Q2 this year, which was expected and intentional. We are investing to drive accelerated growth, particularly focusing on reducing our go-live time frames and enhancing our international business by establishing necessary infrastructure for growth in those regions. Looking at the second half of the year, we did have some significant marketing expenses in the first half, including costs related to our annual interactions conference and our re-branding efforts. In the latter half, we expect to leverage those investments by reducing operational expenses due to higher spending in the first half. Regarding gross margin, we don't anticipate dramatic changes, but you can expect a relatively flat gross margin profile for cloud in the coming quarters. However, we believe there is potential for some elevation that could result in a higher operating margin in the second half. Additionally, if we review our historical performance, we have a strong capability in driving operating leverage. These investments were made with the expectation that we will utilize this strength to enhance gross margin over time.

Operator, Operator

The next question comes from Tyler Radke with Citi.

Tyler Maverick Radke, Analyst

First question for you, Beth. I wanted to follow up on some of the LiveVox commentary, specifically regarding the challenges affecting the business in Q3 and Q4. I understand there has been some unexpected churn impacting the model. Are you saying that the 12% target may not be achievable by Q4, or are there potential offsets to that? AI revenue did accelerate this quarter, so can you help us understand if you believe the 12% target is no longer realistic for each quarter for the full year, or are you able to balance that churn with strength in other areas of the business?

Beth Gaspich, Chief Financial Officer

Yes. I want to start by reiterating our expectation. We are fully confident that we will achieve 12% year-over-year growth for the entire year. As you've seen, we delivered that in Q1, Q2, and we expect to do the same in Q3. We are very confident in our ability to reach that target. Looking at the fourth quarter, considering our 12.4% growth in Q1, 12.3% in Q2, and the expected 12% in Q3, we anticipate a slightly lower growth rate in Q4. The remarks I made about LiveVox are not limited to Q3 and Q4; they reflect something already integrated into the current quarter's growth. The key point is that we remain completely confident in achieving the 12% growth for the full year. We initially came into the year expecting to potentially exceed 12%, and we highlight LiveVox as a factor contributing to the pressure on overall cloud growth.

Scott E. Russell, Chief Executive Officer

Yes, that's a great question. We see larger deals in our pipeline moving forward not only in the second half of this year but also into 2026. Regarding buying behavior, there are two important points. The market is definitely changing. There has been considerable discussion about the shift from on-premises to the cloud in both the CX and CCaaS markets, with some vendors focusing solely on that transition. It's clear that large organizations need to understand that when they make this shift, they are enabling AI capabilities. They require self-service, augmented service, and a combination of capabilities that deliver enterprise scale and reliability, similar to what large contact centers offer in substantial deals. Additionally, they need the ability to coexist seamlessly with an AI platform, which we uniquely provide. The buying shift increasingly involves insights related to the AI capabilities of their core platform and how they can utilize those during their transition, driven by rising consumer expectations for immediate responses and resolutions during interactions with brands. This consideration is important in the deal mix. It’s not a delaying cycle, but rather a significant aspect of the evaluation as they assess their entire CX platform. We have a robust pipeline of large deals with major customers that align with our strengths in the enterprise segment, both internationally and in North America.

Operator, Operator

The next question comes from Arjun Bhatia with William Blair.

Unidentified Analyst, Analyst

As your AI portfolio evolves, have you noticed a change in the pace of migrating on-premises contact solutions to the cloud? In other words, are you seeing increased demand for cloud solutions and preparation for AI and agentic AI?

Scott E. Russell, Chief Executive Officer

Great question. It ties into what I mentioned earlier, but let me elaborate a bit. Customers who are using legacy on-prem platforms are now considering moving to the cloud, and we've pointed out that a portion of the market, potentially 35% to 40%, is transitioning from on-prem to cloud. Despite this, there remains a significant number of customers still using on-prem platforms. What stands out is that they are now assessing the AI capabilities of those platforms as part of their migration. This marks a shift from 12 to 18 months ago when their focus was primarily on the cloud transition itself. Now, they are looking for a move that not only utilizes cloud capabilities but also incorporates vital AI functionalities within the platform. This emphasizes the importance of our investments in CXone Mpower, our foundational data models, the extensive labeled data, and the assets that support our Copilot and Autopilot solutions, contributing to the 42% year-on-year growth we experienced in ARR in the second quarter. Additionally, the move towards self-service through conversational AI and agentic AI, especially with our anticipated integration with Cognigy, is crucial for what customers are seeking. The buying behavior is definitely becoming more focused on AI capabilities alongside traditional CCaaS functionalities. This reinforces our confidence in leading the market with the most comprehensive AI platform paired with our established strengths in CCaaS. Customers are looking for cohesive solutions, not fragmented ones; they prefer a unified platform.

Operator, Operator

The next question comes from Jim Fish with Piper Sandler.

James Edward Fish, Analyst

What are you guys hearing from customers on net agent growth versus deployment of AI, particularly given the recently introduced U.S. regulation that's being discussed about mandating sort of AI versus human disclosure at the beginning of an interaction and within the United States itself? And I've got a follow-up to that.

Scott E. Russell, Chief Executive Officer

Our customers are clearly working to utilize AI capabilities like Autopilot for self-service and Copilot for enhanced service and summarization. The transition of agents to AI is going according to our expectations, without any significant acceleration or deceleration. What stands out to me is that contact centers and human agents are managing to handle an increasing volume of interactions effectively. This is often overlooked when discussing the balance between AI agents and human agents. The volume of interactions brands are experiencing is growing at a double-digit rate, indicating rising demand from customers. They need to ensure seamless integration between AI and human agents to address this growth. Additionally, a growing number of our customers are focusing on revenue-generating activities while providing customer service. For instance, the outbound capability we offer through LiveVox exemplifies how we can assist our customers in both service fulfillment and capturing sales opportunities within the same platform. While there hasn't been a significant change in the number of human agents, we anticipate that self-service will increasingly drive this trend over time.

Beth Gaspich, Chief Financial Officer

Yes. Thanks for the question, Jim. I would say you've seen that our NRR has remained healthy at 111%, and it really reinforces the health of our existing customer base. I mean, we're on a more than $2 billion plus cloud ARR. And so a large portion of our revenue is continuing to come from our cross-sell and up-sell efforts. So the AI is really a key growth driver for us, and I highlighted earlier, it's already 11% of our cloud revenue when you look at the CX AI and self-service contribution. So that is certainly a key growth driver as we look to our customers and what we're selling to our customers, both with our existing installed base as well as the new logos that we’re bringing on. So we're continuing to focus on a combination of all of those with the largest portion coming from the existing installed base. And as I said, I think what we're also seeing around that is the opportunity of international expansion. So the combination of the healthy NRR at the 111%, which is already embedding the effectiveness we're seeing in the cross-sell, up-sell and bringing on the new logos like some of the big deals that we've just recently announced, including the one with DWP in the international region.

Operator, Operator

The next question comes from Pat Walravens with Citizens.

Patrick D. Walravens, Analyst

Great. Scott, for you first, I love the willingness and focus on a mature approach around partnerships. And I would like to get a little more of the detail and background on the expansion of the partnership with Salesforce. This is an area where investors have a ton of questions, which is when both Salesforce and NICE are in the same account, and they have Agentforce and you have your AI solutions that are growing so fast. Who has the right to deliver which parts of AI where? How do you guys figure that out?

Scott E. Russell, Chief Executive Officer

I appreciate the feedback regarding our strategic partnerships. As previously noted, enterprises are assessing major organizations to partner with in order to achieve business outcomes for their employees, partners, and customers. These partnerships are crucial as they require not only the capabilities that NICE provides, such as our leading AI features and the strength of the CCaaS platform, but also an in-depth understanding of consumer interactions and nuances. It’s vital that these capabilities integrate smoothly with CRM platforms like Salesforce, as well as other mid-office and back office systems. To navigate this landscape, we uphold some key principles. Firstly, we strongly believe, a belief that is supported by market responses, that customer service requires an integrated view. Companies prefer a unified approach rather than experiencing fragmentation. While AI presents great opportunities, it also raises risks of fragmentation. Clients do not want disjointed services from various vendors in their customer service operations; everything needs to be well coordinated. This involves utilizing the strengths of our comprehensive system to manage high volumes of interactions, while also ensuring interoperability with enterprise platforms like Service Cloud Voice from Salesforce, which enhances capabilities and maintains system records. Our focus is on product engineering to create new capabilities that facilitate a more seamless experience for our clients, thereby eliminating friction points. Although overlaps in our portfolios exist, it's important for us to acknowledge this candidly to all our partners. We remain committed to being the best CX AI platform, delivering a unified engagement system for our clients. We also recognize the need for co-existence with other companies in the enterprise tech space. This proactive approach instills confidence in our customers, assuring them that when they select NICE along with Salesforce, they benefit from a seamlessly integrated platform. Moreover, they retain flexibility in choosing other options like ServiceNow or Amazon. This strategy aims to minimize uncertainty for our clients, and I am confident that it will lead to enhanced sales and better collaboration between our companies, ultimately providing significant value to our joint customers.

Beth Gaspich, Chief Financial Officer

So Pat, I believe the performance last year met our expectations, and we were satisfied with our efforts in the business. As we entered this year, we began to notice some signs of weakness, which has become evident. We are taking this into account as we reaffirm our revenue expectations and cloud growth. Yes, we have noticed some softness, and we are implementing various measures to address this because we genuinely believe in the opportunity and potential for recovery. There is a chance to change this trend. However, it has been apparent over the past few months.

Operator, Operator

The next question comes from Michael Funk with Bank of America.

Michael J. Funk, Analyst

So Beth, one of your competitors has mentioned that they are hearing from their customers that the customers expected less strength in Q4. So softer seasonality than in previous years. Wondering if you're hearing similar comments then I have one follow-up, please.

Beth Gaspich, Chief Financial Officer

Thank you for the question. We're not seeing that. I mentioned the high expectations we had last year, which we've taken into account. However, as we examine our customer base, we’re not hearing any concerns. In fact, we know that some of our competitors have concentrated positions in specific industry verticals, which we do not. One of our strengths at NICE is our diversification across multiple verticals. This diversification reduces our exposure to any potential macro impacts. Therefore, we do not anticipate any issues, and we are not seeing any signs of softness in seasonality.

Scott E. Russell, Chief Executive Officer

Yes. I think to reiterate, we don't see that softness.

Beth Gaspich, Chief Financial Officer

Yes. Let me start by saying we are fully confident that we will achieve 12% year-over-year growth for the full year. As you have seen, we delivered that in Q1, we delivered on that in Q2, and we also delivered on that in Q3. We are very confident in our ability to achieve that benchmark as well.

Scott E. Russell, Chief Executive Officer

Thank you, everyone, for joining this morning. I just wanted to reiterate our confidence in not only our performance in Q2, but our outlook for the full year, as we had stated at the beginning of the call, reiterating our full year guidance, reiterating the strength of our business that is powered by AI, but also no matter what the puts and takes are, we're in a position of strength, and you can expect that going forward. And last but not least, I want to thank Marty and the team for an incredible tenure in leading out of the Investor Relations for NICE. I've been the beneficiary of his leadership in over the last 6 months and wishing him the very best in the future. I know he's been a strong allied friend for many of you. So congrats, Marty, and we wish you the very best.

Marty Cohen, Vice President, Investor Relations

Thank you, Scott.

Operator, Operator

This concludes today's conference call. Thank you for joining. You now disconnect.