Nice NICE shares have lost 25.6% in the trailing twelve month period against the Zacks Internet-Software industry’s rise of 17.8%. The broader Zacks Computer & Technology sector surge of 13.7% in the same time.

The underperformance can be attributed to strong competition from other industry players like Five9, Salesforce CRM and 8X8 EGHT, which are expanding their portfolios in the CX market. CRM and EGHT shares have increased 7.5% and 12.8%, respectively, in the trailing twelve month period.

However, NICE’s growing client base and increased demand for its solutions will help the company fend off competition from other industry players who are also fortifying its presence in the CX market.

In the fourth quarter of 2024, revenues of $721.6 million rose 16% year over year. The uptick was primarily driven by the continued strength of its cloud business and the ongoing expansion of its customer base.

NICE Underperforms Sector, Industry

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NICE Boosts Cloud Growth With CXone Mpower

NICE’s diverse portfolio, featuring solutions like Actimize, Evidencentral, CXone, and Inform Elite, has been gaining popularity. The company’s focus on its cloud offerings, particularly its CXone platform, has been a major growth driver. 

NICE saw impressive growth in cloud revenues, with a 24% year-over-year increase, amounting to $534 million in the fourth quarter of 2024. Cloud revenues represented a record 74% of total revenues. The growth was driven by the continued success of the company’s CXone Mpower platform and the increasing shift of large enterprise customers to cloud solutions.

The company saw an increase in the number of large enterprise customers, with over 400 clients now generating more than $1 million in annual recurring revenue in the fourth quarter of 2024. This growth reflects strong demand for its CXone Mpower platform, especially in large enterprises.

Expanding on NICE’s AI-driven approach, in February 2025, the company announced a surge in AI-driven customer service interactions, with CXone Mpower enabling automation and workforce augmentation, benefiting companies like Sony, Carnival UK, TD Bank Group, Lowe’s, Realtor.com, and CVS Caremark.

NICE Benefits From Expanding Clientele

The company’s diverse portfolio is helping it attract new customers. Its partnerships with AT&T and Microsoft MSFT have been a key catalyst.

A deepening partnership with Microsoft is noteworthy. The collaboration has led to the integration of its NTR-X Compliance Recording and Assurance Solution into the Microsoft Azure Marketplace, providing a robust, cloud-ready compliance platform within the NICE Compliancentral suite.

NICE Provides Strong Q1 & 2025 Guidance

Nice’s efforts to enhance its client’s customer experience with its robust cloud solutions are expected to drive top-line growth. In 2025, the company anticipates 12% year-over-year growth in cloud revenue.

For the first quarter of 2025, the company expects non-GAAP revenues of $693-$703 million, indicating 6% year-over-year growth at the mid-point.

Non-GAAP earnings are estimated to be $2.78-$2.88 per share, suggesting 10% year-over-year growth at the mid-point.

For 2025, NICE projects non-GAAP revenues between $2.92 billion and $2.94 billion, implying 7% year-over-year growth at the midpoint.

Non-GAAP earnings are estimated to be $12.13-12.33 per share, suggesting 10% year-over-year growth at the midpoint.

NICE’s Earnings & Sales Estimates Trend Upward

For the first quarter of fiscal 2025, the Zacks Consensus Estimate for earnings is pegged at $2.84 per share, which has decreased 1.39% over the past 30 days. This indicates year-over-year growth of 10.08%.

The Zacks Consensus Estimate for first-quarter fiscal 2025 revenues is pegged at $699.39 million, suggesting a 6.08% increase from the prior-year quarter’s actual.

NICE earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 4.28%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

NICE Suffers From Stiff Competition

Despite a strong pipeline of its solutions, NICE has been suffering from stiff competition, which is expected to hurt the company’s top-line growth.

The increasing adoption of Five9’s AI-driven solutions on Google Cloud Marketplace is further intensifying the competitive pressure on NICE. As businesses increasingly seek advanced solutions, Five9’s offerings are gaining traction, posing a direct challenge to NICE’s market position.

In February 2025, Five9 announced the global availability of its AI-driven CX solutions on Google Cloud Marketplace, including the release of Five9 AI Agents. These enable businesses to seamlessly deploy, manage, and integrate personalized virtual agent experiences with Google Cloud infrastructure.

NICE Shares Trading Cheap

NICE shares are cheap, as suggested by a Value Score of B.

The NICE stock is trading at a significant discount with a forward 12-month P/S of 3.07X compared with the industry’s 4.52X.

Price/Sales (F12M)

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Here’s What Investors Should do With NICE Stock

NICE’s continued growth in the cloud business and AI domain, driven by platform innovation and a growing client base, makes the stock attractive for long-term investors. Hence, investors who already own the stock may expect the company’s growth prospects to be rewarding over the long term.

However, NICE’s shift toward cloud-based services has resulted in a steady decline in service revenue in recent quarters, highlighting the challenges the company faces in adapting to evolving market dynamics. Additionally, intense competition remains a concern.

Nice currently carries Zacks Rank #3 (Hold), which suggests that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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