Nice is the global leader in cloud-based contact center as a service (CCaaS) software, holding approximately 15% market share. We believe the market is overly pessimistic regarding cloud revenue growth, which has led to the stock’s valuation multiples declining to multiyear lows. However, we view this as a timing issue and anticipate a recovery in cloud revenue growth. The industry has shifted its focus from small and medium-sized businesses to large enterprises, a transition for which Nice is well-positioned. Although Nice has secured numerous large enterprise deals, the conversion from bookings to revenue has been gradual due to the complexities involved in implementing software at large enterprises and the additional delays in decision-making as companies develop their artificial intelligence strategies. We consider this a temporary challenge. We expect robust secular drivers to emerge once again, including the growing penetration of CCaaS in the market and the advantages of AI for CCaaS providers, as customers seek to reduce their largest expense: labor costs.
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