UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-27466


NICE LTD.
(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant’s name into English)

Israel
(Jurisdiction of incorporation or organization)

13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Address of principal executive offices)

Tali Mirsky
Corporate VP, General Counsel and Corporate Secretary
Tel: +972-9-7753151
E-mail: tali.mirsky@nice.com
13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol
Name of Each Exchange
On Which Registered
American Depositary Shares, each representing

one Ordinary Share, par value one

New Israeli Shekel per share
NICE
NASDAQ Global Select Market

F-1


Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
None
(Title of Class)

(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
None
(Title of Class)

(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:60,925,95462,870,669 Ordinary Shares, par value NIS 1.00 per share (which excludes 12,529,21311,904,158 treasury shares)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes    ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.
☐ Yes    ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

☒ Yes    ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such reports)files).
☒ Yes    ☐ No
☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ☒
Accelerated Filer ☐
Non-Accelerated Filer ☐
Emerging Growth Company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The term “new or revisedIndicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial accounting standard” refers to any update issuedreporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the Financial Accounting Standards Boardregistered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to its Accounting Standards Codification after April 5, 2012.Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐


Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


☒    U.S. GAAP

☐    International Financial Reporting Standards as issued by the International Accounting Standards Board
☐    Other
☐          Other

If “Other” has been checked in response to the previous question indicate by check mark which financial statementsstatement item the registrant has elected to follow:

                             ☐ Item 17  ☐Item☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐  Yes    ☒  No

F-2


☐ Yes     ☒ No
F-3

TABLE OF CONTENTS
Page
Item 16.[Reserved]

F-4

PRELIMINARY NOTE
This annual report contains historical information and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to NICE’s business, financial condition and results of operations. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “strategy,” “continue,” “goal” and “target” and similar expressions, as they relate to NICE or its management, are intended to identify forward-looking statements. Such statements reflect the current beliefs, expectations and assumptions of NICE with respect to future events and are subject to various risks and uncertainties. The forward-looking statements relate to, among other things: operating results; anticipated cash flows; gross margins; adequacy of our resources to fund operations; our ability to maintain our average selling prices despite the aggressive marketing and pricing strategies of our competitors; our ability to maintain and develop profitable relationships with our key distribution channels; the financial strength of our key distribution channels; and the market’s acceptance of our technologies, products and solutions.


In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by us; any such statement is qualified by reference to the following cautionary statements. Many factors could cause the actual results, performance or achievements of NICE to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, competition with existing or new competitors, the success and growth of our cloud Software-as-a-Service business, cyber security attackssuccessful execution of our growth strategy, difficulties in making additional acquisitions or other security breaches, privacy concerns and legislation,effectively integrating acquired operations, dependency on third-party cloud computing platform providers, hosting facilities and service partners, changes in general economic and business conditions, rapidly changing technology (including Artificial Intelligence), cyber security attacks or other security breaches, privacy concerns and legislation, our ability to recruit and retain qualified personnel, changes in currency exchange rates and interest rates, difficulties in making additional acquisitions or effectively integrating acquired operations, products, technologies and personnel, whether we are successful in executing our growth strategy, the effects of additional tax liabilities resulting from our global operations, the recent comprehensive tax reformeffect of unexpected events or geopolitical conditions, such as the conflicts in the United StatesMiddle East, that may disrupt our business and the global economy and various other factors, both referenced and not referenced in this annual report. These risks are more fully described under Item 3, “Key Information – Risk Factors” of this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. All forward-looking statements are made only as of the date hereof. NICE does not intend or assume any obligation to update these forward-looking statements. Investors should bear this in mind as they consider forward-looking statements and whether to invest or remain invested in NICE’s securities.

In this annual report, all references to “NICE,” “we,” “us,” “our” or the “Company” are to NICE Ltd., a company organized under the laws of the State of Israel, and its wholly ownedwholly-owned subsidiaries. For a list of our significant subsidiaries, please refer to page 55Item 4.C, “Organizational Structure” of this annual report.

In this annual report, unless otherwise specified or unless the context otherwise requires, all references to “$” or “dollars” are to U.S. Dollars, all references to “EUR” are to Euros, all references to “GBP” are to British Pounds, all references to “CHF” are to Swiss Francs, all references to “NIS” are to New Israeli Shekels, and all references to “INR” are to Indian Rupee.Rupees, all references to “PHP” are to Philippine peso, all references to “AUD” are to Australian Dollar, all references to “JPY” are to Japanese Yen, all references to “SGD” are to Singapore Dollar, and all references to “COP” are to Colombian Peso. Except as otherwise indicated, the financial statements of and information regarding NICE are presented in U.S. dollars.
TABLE OF CONTENTS

PART I
Page
Item 1.
Identity of Directors, Senior Management and Advisers
1
Item 2.
Offer Statistics and Expected Timetable
1
Item 3.
Key Information
1
Item 4.
Information on the Company
31
Item 4A
Unresolved Staff Comments
57
Item 5.
Operating and Financial Review and Prospects
57
Item 6.
Directors, Senior Management and Employees   
78
Item 7.
Major Shareholders and Related Party Transactions
95
Item 8.
Financial Information
96
Item 9.
The Offer and Listing
98
Item 10.
Additional Information
100
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
119
Item 12.
Description of Securities Other than Equity Securities
122
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies
124
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
124
Item 15.
Controls and Procedures
124
Item 16.[Reserved]
Item 16A.
Audit Committee Financial Expert
125
Item 16B.
Code of Ethics
125
Item 16C.
Principal Accountant Fees and Services
125
Item 16D.
Exemptions from the Listing Standards for Audit Committees
125
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
126
Item 16F.
Change in Registrant’s Certifying Accountant
126
Item 16G.
Corporate Governance
126
Item 16H.
Mine Safety Disclosure
126
PART III
Item 17.
Financial Statements
127
Item 18.
Financial Statements
127
Item 19.
Exhibits
128
Index to Financial Statements
F-1

F-5

PART I
Item 1.Identity of Directors, Senior Management and Advisers.
Not Applicable.

Item 2.Offer Statistics and Expected Timetable.
Not Applicable.
1

Item 3.Key Information.
A. [Reserved]
Selected Financial Data
B. Capitalization and Indebtedness
The following selected consolidated balance sheet data as of December 31, 2016 and 2017 and the selected consolidated statements of income data
Not applicable.

C. Reasons for the years ended December 31, 2015, 2016Offer and 2017 have been derived from our audited Consolidated Financial Statements included in this annual report. These financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and audited by Kost, Forer, Gabbay & Kasierer, a memberUse of EY Global. The selected consolidated statements of income data for the years ended December 31, 2013 and 2014 and the selected consolidated balance sheet data as of December 31, 2013, 2014 and 2015 have been derived from other Consolidated Financial Statements not included in this annual report and have also been prepared in accordance with U.S. GAAP and audited by Kost, Forer, Gabbay & Kasierer, a member of EY Global. The selected consolidated financial data set forth below should be read in conjunction with and are qualified by reference to Item 5, “Operating and Financial Review and Prospects”, the Consolidated Financial Statements and notes thereto and other financial information included elsewhere in this annual report.Proceeds

Not applicable.

  Year Ended December 31, 
  2013  2014  2015  2016  2017 
  (U.S. dollars in thousands, except per share data) 
OPERATING DATA:               
Revenues               
Products $280,140  $289,560  $317,900  $306,252  $318,946 
Services  507,636   543,548   573,033   623,783   652,040 
Cloud  33,739   38,887   35,934   85,507   361,166 
Total revenues  821,515   871,995   926,867   1,015,542   1,332,152 
Cost of revenues                    
Products  69,335   63,919   66,363   53,032   51,065 
Services  222,430   226,499   222,783   250,022   225,020 
Cloud  7,849   13,093   14,436   34,679   192,588 
Total cost of revenues  299,614   303,511   303,582   337,733   468,673 
Gross profit  521,901   568,484   623,285   677,809   863,479 
Operating expenses:                    
Research and development, net  115,431   123,141   128,485   141,528   181,107 
Selling and marketing  214,579   231,097   225,817   268,349   361,328 
General and administrative  86,467   83,360   90,349   116,569   129,071 
Amortization of acquired intangible assets  29,438   19,157   12,528   17,187   41,902 
Restructuring expenses  527   5,435   -   -   - 
Total operating expenses  446,442   462,190   457,179   543,633   713,408 
Operating income  75,459   106,294   166,106   134,176   150,071 
Financial and other income (expense), net  3,927   3,765   5,304   10,305   (20,411)
Income before taxes on income  79,386   110,059   171,410   144,481   129,660 
Taxes on income (tax benefits)  26,915   9,909   30,832   21,412   (13,631)
Net income from continuing operations  52,471   100,150   140,578   123,069   143,291 
Discontinued operations:                    
Gain on disposal and income (loss) from discontinued operations  4,294   4,965   152,459   (8,235)  - 
Taxes on income (tax benefits)  1,490   2,040   34,206   (2,086)  - 
Net income from discontinued operations  2,804   2,925   118,253   (6,149)  - 
Net income  55,275   103,075   258,831   116,920   143,291 
                     
Basic earnings per share from continuing operations $0.87  $1.69  $2.36  $2.06  $2.37 
Basic earnings per share from discontinued operations $0.05  $0.05  $1.99  $(0.10) $- 
Basic earnings per share $0.92  $1.74  $4.35  $1.96  $2.37 
Weighted average number of shares used in computing basic earnings per share (in thousands)  60,388   59,362   59,552   59,667   60,444 
Diluted earnings per share from continuing operations $0.85  $1.64  $2.29  $2.02  $2.31 
Diluted earnings per share from discontinued operations $0.04  $0.05  $1.93  $(0.10) $- 
Diluted earnings per share $0.89  $1.69  $4.22  $1.92  $2.31 
Weighted average number of shares used in computing diluted earnings per share (in thousands)  61,380   60,895   61,281   61,035   62,119 

*Including assets and liabilities that are accounted for as discontinued operations.
**Including deferred revenues and advances from customers that are classified as long-term liabilities.
2
  At December 31, 
  2013  2014  2015  2016  2017 
  (U.S. dollars in thousands) 
BALANCE SHEET DATA*:               
Working capital** $61,023  $107,090  $256,089  $13,713  $132,154 
Total assets  1,646,030   1,632,952   1,849,613   2,631,876   2,845,086 
Shareholders’ equity  1,204,796   1,213,456   1,415,149   1,511,332   1,749,561 

D. Risk Factors

Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in our other filings with the SEC,Securities and Exchange Commission (“the SEC”), including the following risk factors which we face, and which are faced by our industry. The risks and uncertainties described below are not the only ones facing us. Other events, circumstances or factors that we do not currently anticipate or that we currently do not deem to be material risks may also affect our business, results of operations and financial condition. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks.

Risks Relating to our Business, Competition and Markets

Conditions and changes in the local and global economic environments may adversely affect our business and financial results.
Adverse economic conditions in markets in which we operate can harm our business, and our results of operations can be affected by adverse changes in local and global economic conditions, slowdowns, recessions and economic instability. To the extent that our business suffers as a result of such unfavorable economic and market conditions, our operating results may be materially adversely affected. In particular, enterprises may reduce spending in connection with their contact centers, financial institutions may reduce spending in relation to trading floors and operational risk management (as IT-related capital expenditures are typically lower priority in times of economic slowdowns), and our customers may prioritize other expenditures over our solutions. In addition, enterprises’ ordering and payment patterns are influenced by market conditions and could cause fluctuations in our quarterly results. If any of the above occurs, and our customers or partners significantly reduce their spending or significantly delay or fail to make payments to us, our business, results of operations, and financial condition would be materially adversely affected.
Disruption to the global economy could also result in a number of follow-on effects on our business, including a possible (i) slow-down in our business, resulting from lower customer expenditure, inability of customers to pay for products and services, insolvency of customers or insolvency of key partners and vendors, (ii) negative impact on our liquidity, financial condition and share price, which may impact our ability to raise capital in the market, obtain financing and secure other sources of funding in the future on terms favorable to us, and (iii) decreases in the value of our assets that are deemed to be other than temporary, which may result in impairment losses.
In addition, a majority of our sales are generated from North America. If there is deterioration or a crisis in the economic and financial stability in the United States, particularly in the financial services sector (which is our main industry vertical), our top tier customers could reduce spending, delay or postpone orders or fail to make payments to us. This could have a material adverse effect on our sales in this region and our results of operations. Any such deterioration in the economic condition in the United States could also negatively impact the accuracy of our forecast of future trends and our plans for future business development.
3
We face risks relating to our global operations.
We sell our products and solutions throughout the world and intend to continue to increase our penetration of international markets. Our future results could be materially adversely affected by a variety of factors relating to international transactions, including:
governmental controls and regulations, including import or export license requirements, trade protection measures and changes in tariffs;
compliance with applicable international and local laws, regulations and practices, including those related to trade compliance, anticorruption, data privacy and protection, tax, labor, employee benefits, customs, currency restrictions and other requirements;
fluctuations in currency exchange rates;
longer payment cycles in certain countries in our geographic areas of operations;
potential adverse tax consequences, including the complexities of foreign value added tax systems;
political instability, terrorism or the threat of terrorism and general security concerns;
political unrest, armed conflicts or natural disasters around the world
reduced or differing protection for intellectual property rights in some countries; and
general difficulties in managing our global operations.
On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit”, and on March 29, 2017 the U.K. delivered to the E.U. the official separation notice in accordance with Article 50 of the Lisbon Treaty. Although it is unknown what the exact terms of separation will be and what the interactions between the U.K. and E.U. countries will be following such separation, it is likely that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and increased regulatory complexities. In addition, as a result of such separation, traditional financial centers may shift to different locations within the E.U., in which we have little or no presence. These changes may impact our business in the U.K. and E.U. and therefore may adversely affect our operations and financial results.
In addition, it remains difficult to predict the legislative and regulatory changes that will be enacted following the political changes in the U.S. administration at the beginning of 2017, including possible changes and impact on U.S. trade relationships and agreements. The U.S. administration has taken a position with respect to international trade agreements, indicating a strong interest in renegotiating existing trade agreements, which could result in the increase of our costs and decrease of our margins. Just recently, the U.S. administration made an announcement regarding a new trade policy. We do not know at this time what additional changes, if any, the U.S. administration will make, and what the impact on us of any of those changes may be. However any such changes may have a significant impact on our business and operation, which may adversely affect our financial results.
Changes in the political or economic environments, business spending, and the availability and cost of capital in the countries in which we operate, including the impact of such changes on foreign currency rates and interest rates, and the impact of economic conditions on underlying demand for our products and services, could have a material adverse effect on our financial condition, results of operations and cash flow.
4
As a result of our global presence, especially in emerging markets, we face increasing challenges that could adversely impact our results of operations, reputation and business.

In light of our global presence, especially in emerging markets such as those in Asia, Eastern Europe and Latin America, we face a number of challenges in certain jurisdictions that provide reduced legal protection, including poor protection of intellectual property, inadequate protection against crime (including bribery, corruption and fraud) and breaches of local laws or regulations, as well as challenges relating to competition from companies that already have a local presence in the market, difficulties in recruiting sufficient personnel with appropriate skills and experience, unstable governments and economies, and governmental actions that may affect the flow of goods and currency.

In addition, local business practices in jurisdictions in which we operate, and particularly in emerging markets, may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery laws and regulations (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act) to which we are subject. Although we implement policies and procedures designed to ensure compliance with these laws, we cannot guarantee that none of our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies or applicable law. Any such violation could have an adverse effect on our business and reputation, and may expose us to criminal or civil enforcement actions, including penalties and fines.

Furthermore, the increased presence of our global operations in lower-cost locations, including outsourcing of certain operations to service providers in such lower-cost locations (such as India), could impact the control over our operations, as well as create dependency on such external service providers. Such mode of operation may impact our business and adversely affect our results of operation.

The markets in which we operate are highly competitive and we may be unable to compete successfully.
The markets for our products, solutions and related services (also referred to elsewhere in this document as our “offerings”) are, in general, highly competitive. Our competitors include a number of large, established developers and distributors.software development vendors. Some of our principal competitors or potential competitors may have advantages over us, including greater resources, a broader portfolio of products, applications and services, greater brand recognition, larger patent and intellectual property portfolios and access to a larger customer bases, all of which wouldbase. These potential advantages could enable themour competitors to better adapt to new ormarket trends, emerging technologies including Artificial Intelligence ("AI"), or customer requirements, or devote more resources to the marketing and sale of their products and services. Additionally, continued price reductions by some of our competitors, particularly at times of economic difficulty, may result in our loss of sales or require that we reduce our prices in order to compete, which would adversely affect our revenues, gross margins and results of operations.
Additional competition from existing and new potential entrants to our markets, including new technology vendors competing in specific areas of our business or specific industry verticals, may lead to the widespread availability and standardization of some of the products and services we provide, which could result in the commoditization of our products and services, reduce the demand for our products and services, and drive us to lower our prices.

Additionally, prices of our offerings may decrease throughout the market due to competitive pressures, including by adoption of different approaches to pricing or different pricing models, which may be necessary in light of the potential of conversational AI-based solutions to shift the market from agent-based pricing to interaction-based pricing, or alternatively during times of economic difficulty. This could have a negative effect on our gross profit and results of operations.

In recent years some of our competitors, players in adjacent markets have increased their presence in our markets through internal development, partnerships and acquisitions. Infrastructure and/or enterprise software vendors, including suppliers of telecommunication infrastructure equipment,such as Customer Relationship Management (“CRM”) vendors, as well as Unified Communications as a Service (“UCaaS”), video collaboration providers, Platform as a Service (“PaaS”) vendors, pure digital as well as pure Conversational-AI vendors, have decidedentered or may decide in the future to enter our market space, or build or acquire contact center as a Service (“CCaaS”) solutions and compete with us by offering comprehensive solutions.solutions and/or platforms. Moreover, major enterprise softwareas the investment in, and the shift to the use of Generative AI technologies continue to grow, we may experience increased competition by vertical solutions’ players expanding their portfolios in the digital CX market. We may also experience increased competition if large horizontal analytics providers and domain specific competitors in adjacent markets enter or increase their presence in the Financial Crime and Compliance markets. Some of these vendors suchmay be well recognized by broadly known brand names, which can serve as those from the traditional enterprise business intelligence and business analytics sectoran advantage as they enter or Customer Relationship Management (or “CRM”), have entered or may decide to enterincrease their presence in our market space and compete with us, either by internal development of comprehensive solutions or through acquisition of any of our existing competitors.space. If we are not able to compete effectively with these market entrants or other competitors, we may lose market share and our business, financial condition or results of operations could be adversely affected.
5

In light of the intense competition in our markets, successful development, positioning and sales execution of our productsofferings is a critical factor in our ability to successfully compete and maintain growth. Therefore, we must continue making significant expenditures on research and development and marketing and sales activities to compete effectively. In addition,
2

our software solutions may compete with software developed internally by potential clients, customers, as well as software and other solutions offered by competitors. We cannot ensure that the market awareness or demand for our new products, applications or applicationsservices will grow as rapidly as we expect, or that the introduction of new products or technological developments or services by others will not adversely impact the demand for our products.
offerings.
Successful marketing of our products and servicesofferings to our customers and partners will be critical to our ability to maintain growth.growth and our competitive positioning. We cannot assure you that our productsofferings or existing partnerships will permitallow us to compete successfully. The market for some of our solutions is highly fragmented and includes a broad range of product offerings, features and capabilities. Consolidation through mergers and acquisitions, or alliances formed, among our competitors in this market, who may have greater resources than we have, could substantially influence our competitive position.
position, especially if they will enable our competitors to offer a competitive comprehensive platform solution.
As we expand into new markets and geographies, we are faced with new challenges, including new competition, which may be ablepossess specific assets, relationships, know-how, technologies, and/or different pricing strategies, that enable our competitors to more quickly develop or adapt to new or emerging technologies, better respond to changes inmarket trends or customer requirements or preferences, or devote greater resources to the development, promotion and sale of their products and services.

Our inability to respond to the rapid technological changes and frequent new products, services and business models introductions in the markets in which we operate and address the related risks, may have a material adverse effect on our results from operations and/or competitive position.
We operate in several markets, each characterized by rapidly changing technology, new product, services, business models introductions and evolving industry standards. These changes might exert price pressures on our offerings or render them obsolete. Our markets are also characterized by consistent demand for state-of-the-art technology and products. Additionally, prices of mostExisting and potential competitors might introduce new and enhanced products and services that could adversely affect the competitive position of our solutions have decreased throughoutofferings.
We are making investments in AI based capabilities to enhance our offerings. AI technologies are rapidly evolving and may present several risks, including factual errors or inaccuracies in the work product developed with AI, ethical risks related to biases in the algorithm or programming, privacy and security concerns as well as risks related to confidentiality and intellectual property rights. The use of AI tools or any failure to address the responsible use of AI technology may result in potential financial or reputational harm.

We believe that our ability to anticipate changes in technology and industry standards and to successfully develop and introduce new, enhanced and differentiated products and services, on a timely basis, in each of the markets in which we operate, is a critical factor in our ability to grow our business. As a result, we expect to continue to make significant expenditures on research and development, particularly with respect to new software applications which are continuously required in all our business areas, as well as investments in AI and Generative AI related initiatives. In the event that we do not anticipate changes in technology or industry practices or fail to timely address market needs or not be able to develop new products and services that are in demand, or should customer adoption of new technologies be slower than we anticipate, or should our competitors introduce new and enhanced products incorporating AI more rapidly and/or successfully than us, the competitive position of our offerings may be adversely affected and we may lose market share and our results of operations may be materially adversely affected.

In addition, some of our offerings must readily integrate with customers' systems of record and data sources, consumer facing front-office applications and back-office business operations systems. Any changes to these third-party systems could require us to redesign our products, and any such redesign might not be possible on a timely basis or achieve market acceptance.
We cannot assure that the market or demand for our offerings will be sustained or grow as rapidly, that we will be successful in recent years, primarily due to competitive pressures,the development, adoption, and may continue to decrease. Further,implementation of new technologies, products and applications, including in relation to products incorporating AI, that such new products and applications will achieve market acceptance and be competitive in technology and price and responsive to customer needs, or that the introduction of new products, services or technological developments by others, including AI based technologies, will not render our cloud offering, weproducts and services obsolete or require adjustments in our products and services and/or business model in order to address the impact of such technological developments in relevant markets. Moreover, the market acceptance of AI-based products and services may be affected byexpedite certain AI related trends in those markets. Such trends, if adopted on a large scale, may reduce the pricingdemand for certain solutions and
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limit the revenues generated from our offerings. If any of certain infrastructure services, such as in the area of Platform as a Service and network connectivity, which would in turn affect the rates we offer to customers. This could have a negative effect onabove occurs, our gross profitbusiness, financial condition and results of operations.operations could be materially adversely affected.

Our Cloud Software-as-a-Service business modelWe may not be successful able to maintain and further expand the growth and/or profitable.
profitability of our cloud business.
Our cloud-basedSoftware-as-a-Service (“SaaS”, also referred to as “cloud”) business, in both our Customer Engagement and Financial Crime and Compliance markets, has grown significantly, as a result of the acquisition of inContact and our internal development efforts, and therefore we are more dependent now on the success and profitability of this area of our business. If we are not able to compete effectively, generate significant revenues or maintain the profitability of our cloud offerings,business or if we do not successfully execute our cloud strategy or anticipate the cloud needs of our customers, including in relation to the pace of adoption of cloud solutions as well as AI-based offerings by large enterprises, our revenues could decline and our reputation asmay be adversely affected.

Our cloud offering is generally purchased by customers on a cloudsubscription basis. Failure by our customers to renew their subscriptions for our services provider could be harmed andor reduction in the number or volume of subscriptions, can impact our revenues, profitability and profitabilityresults of operations.

We rely on cloud computing platforms provided by third parties, including PaaS provided by strategic partners, such as Amazon and Microsoft. These cloud computing platforms may not continue to provide competitive features and functionality, or may not be available on commercially reasonable terms. We may be affected by the pricing of certain infrastructure services, such as in the area of PaaS and network connectivity, which could decline.in turn affect the rates we offer to our customers.

In addition, some of our customers may not accept the increasing prevalenceuse of such services or particular platform. The inability to use any of these hardware, software or cloud computing platforms could have a material adverse impact on our business, increase our expenses and SaaS delivery models offeredotherwise result in delays in providing our services until equivalent technology is either developed by us, or obtained through purchase or license and integrated into our competitorsservices. In addition, to the extent that we suffer periods of unavailability of our service for reasons related to PaaS providers, we may unfavorably impact pricingbe contractually obligated to provide our customers with credits for future services, and in some cases refunds, or be liable for penalties. Any such extended service outages could harm our reputation, revenue and operating results.

Some of our products and solutions utilize the cloud services of AI accelerators which, due to growing market demand for AI-based offerings, may become difficult to get access to or to obtain on commercially reasonable terms. The inability to obtain access to the required capacity for AI processing could limit our ability to deliver and expand growth in our AI-based offerings. This limitation could also result in deterioration of our cloud profitability.
As we grow our cloud business, we will continue to depend on both our on-premise enterprise software businessexisting and new strategic relationships with such vendors. Our inability to establish and foster these relationships could adversely affect the development of our cloud business, as well as overall demand for our on-premise software productgrowth, reputation and service offerings, which could reduce our revenues and profitability. With our move to cloud-based solutions, we cannot guarantee that revenues generated from our cloud offerings will compensate for a lossresults of business in our on-premise enterprise software business.
operations.
Further, cloud computing may make it easier for new competitors to enter our markets due to the lower up-front technology costs and easier implementation and for existing market participants to compete with us on a greater scale. Such increased competition is likely to heighten the pressure on us to decrease our pricing, which could have a negative effect on our revenues, profitability and results of operations.
The business model of our cloud offerings differs from the business model for the sale of products and services. Our cloud offerings are generally purchased by customers on a subscription basis and revenues from these offerings are generally recognized ratably over the term of the subscriptions (based on actual usage). Therefore, a significant shift to SaaS-based sales could result in a delay in revenue recognition and materially adversely affect our results of operations and our rate of growth and profitability.
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Moreover, the deferred revenue that results from sales of our cloud offerings may prevent any deterioration in sales activity associated with our cloud offerings from becoming immediately observable in our consolidated statement of operations. This is in contrast to revenues associated with our software licenses arrangements, in which new software licenses revenues are generally recognized in full at the time of delivery of the related software licenses. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription period.
The stability and growth of our cloud related revenues depends on our ability to attract and retain on-going customers.
The revenue model for companies selling software services under the cloud model is to attract customers, retain such customers through the renewal of their periodic subscription contracts and encourage such customers to add additional agent seats and functionality.
Although the majority of our sales are generated through large enterprise customers, our cloud offerings are targeted also at small to medium businesses, which requires us to invest more sales efforts in that market segment, diverting our sales resources to a greater number of smaller transactions. In this market segment, we may also encounter greater unpredictability, resulting from the financial stability of customers that may be more vulnerable at times of economic downturn, all of which could negatively impact our results of operation.
As our industry matures, if our clients experience seasonal trends in their businesses or our competitors introduce lower costs and/or differentiated products or services that are perceived to compete favorably with our services, our ability to add new clients and renew, maintain or up-sell existing clients based on pricing, technology and functionality could be impaired.
We also have relationships with third-party channel partners to attract new customers. Such third-party channel partner relationships may be terminated by either party, and as a result reduce the number of new customers we can attract to our product offering and cause disruptions with existing customer relationships, which could adversely impact our results of operations. The termination of a reseller partner relationship may cause existing customers of that third-party reseller to become more likely to discontinue their services, which could have a significant adverse effect on our results of operations. In addition, acquisitions of our customers or of our third-party channel partners could lead to cancellation of our contracts with those customers or by the acquiring companies.
We are dependent on third-party cloud computing platform providers, hosting facilities and service partners that may be difficult to replace.

We rely on computer hardware leased and software licensed from, as well as cloud computing platforms provided by, third parties in order to offer our services, including Platform as a Service provided by strategic partners, such as Amazon. These hardware, software and cloud computing platforms may not continue to provide competitive features and functionality, or may not be available at reasonable prices, on commercially reasonable terms or at all. Anyable to compensate for loss of on-premises business with the rightcontinued shift to use anycloud based offerings.
The increasing prevalence of these hardware, software or cloud computing platforms could significantly impact our business, increase our expenses and otherwise result in delays in providing our services until equivalent technology is either developedSaaS delivery models offered by us or, if available, is identified, obtained through purchase or license and integrated into our services. As we grow our business, we will continue to depend on both existing and new strategic relationships with such vendors. Our inability to establish and foster these relationships could adversely affect the development of our business, our growth and our results of operations.

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If our security measures or those of our third party hosting facility providers, cloud computing platform providers, or third-party service partners are breachedcompetitors may unfavorably impact pricing and unauthorized access is obtained to customers’ data, our data or our IT systems, our services may be perceived as not being secure, customers may stop using our services, and we may incur significant legal and financial exposure and liabilities.

Our services involve the storage and transmission of customers’ and their end users’ proprietary and other sensitive information, including financial information and other personally identifiable information. Security breaches could expose us to a risk of loss of this information, litigation and possible liability. While we have security measures in place, they may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our IT systems, our customers’ data or our data, including our intellectual property and other confidential business information.
In addition, some of our customers use our products to compile and analyze highly sensitive or confidential information. We may come into contact with such information or data when we perform service or maintenance functions for our customers. While we have internal policies and procedures for employees in connection with performing these functions, the perception or fact that any of our employees has improperly handled sensitive information of a customer or a customer’s end user could negatively affect our business.
Cyber security attacks are becoming increasingly sophisticated and in many cases may not be identified until a security breach actually occurs. If we fail to recognize and deal with such security attacks and threats and if we fail to update our products and solutions and prevent such threatened attacks in real time to protect our customers’ or other parties’ sensitive information, whether retained in our systems or by our customers using our products and services, our business and reputation will be harmed.
Third parties may attempt to breach our security measures or inappropriately take advantage of our solutions, including our SaaS and hosting services, through computer viruses, electronic break-ins and other disruptions. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers’ data, our data or our systems. Furthermore, our customers may authorize third party technology providers to access their customer data, and some of our customers may not have adequate security measures in place to protect their data that is stored on our services. Because we do not control our customers or third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the integrity or security of such transmissions or processing. Malicious third parties may also conduct attacks designed to temporarily deny customers access to our services. Any security breach could result in a loss of confidence in the security of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability.
While we maintain insurance coverage to protect us against a broad range of risks, including in relation to security breaches and cyber security attacks, we could still be subject to risks of losses that might be beyond the limits, or outside the scope, of coverage of our insurance and that may limit or prevent indemnification under our insurance policies. This potential insufficiency of insurance coverage could result in an adverse effect on our business, financial position, profit, and cash flows.


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Defects or disruptions in our cloud-based services could impact demand for our services and subject us to substantial liability.

Cloud-based services may have errors or defects that could result in unanticipated downtime for our subscribers and harm to our reputation and our business. We have from time to time found defects in, and experienced disruptions to, our services, and new defects or disruptions may occur in the future. In addition, our customers may use our services in unanticipated ways that may cause a disruption in services for other customers attempting to access their data. As our customers use our services for important aspects of their business, any errors, defects, disruptions in service or other performance problems could harm our reputation and may damage our customers’ businesses. As a result, customers could elect to not renew our services or delay or withhold payment to us. We could also lose future sales or customers may make warranty or other claims against us, which may harm our business and adversely affect our results.

We currently serve our customers from third-party data center hosting facilities and cloud computing platform providers. Any damage to, or failure of, our systems generally could result in interruptions in our services. We have from time to time experienced interruptions in our services and such interruptions may occur again in the future. While we have security measures in place, they may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our or our third party vendors’ systems and infrastructure. This could result in interruptions in our services, which may cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenues. Also, we may not be entitled to indemnification or to recuperate any such loss or damage from third party service providers, which may result in us bearing alone the burden of any such liability or losses.

Facilities at which customer data is stored or through which we render our services may be vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, as well as local administrative actions, changes to legal or permitting requirements and litigation to stop, limit or delay operation. Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our services. Even with disaster recovery and business continuity arrangements in place, our services could be interrupted.

We are also dependent on our computer databases, billing systems and accounting computer programs, network and computer hardware that houses these systems to effectively operate our business and market our services. Our clients may become dissatisfied by any system failures that interrupt our ability to provide our service to them. Substantial or repeated system failures would significantly reduce the attractiveness of our services. Significant disruption in the operation of these systems would adversely affect our business and results of operations.

Privacy concerns and legislation, evolving regulation of cloud computing, cross-border data transfer restrictions and other regulations may limit the use and adoption of our services and adversely affect our business.

Governments are adopting new laws and regulations addressing data privacy and the collection, processing, storage and use of personal information. In some cases, foreign data privacy laws and regulations, such as the European Union’s Data Protection Directive, and the country-specific laws and regulations that implement that directive, also govern the processing of personal information. These and other requirements could reduce demand for our services or restrict our ability to store and process data or, in some cases, impact our ability to offer some of our solutions and services in certain locations or our customers’ ability to deploy our solutions globally.
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In addition, regulatory issues relating to the Internet, in general, could affect our ability to provide our services. In the United States, legislation has been adopted that regulates certain aspects of the Internet, including online content, user privacy, taxation, liability for third-party activities and jurisdiction.

Furthermore, our customers expect us to meet voluntary certification or other standards established by third parties. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions.

Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.

Our customers and potential customers conduct business in a variety of industries, including financial services and telecommunications. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require uson-premises software products and related services, which could reduce our revenues and profitability. With the continued shift to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelinescloud-based offerings, we cannot guarantee that revenues generated from our cloud business will compensate for usea loss of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or ifbusiness in our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. If in the future we are unable to achieve or maintain industry specific certifications or other requirements or standards relevant to our customers, it may harm our business and adversely affect our results.

In some cases, industry-specific laws, regulations or interpretive positions may also apply directly to us as a service provider. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on ouron-premises enterprise software business.

We may not be able to successfully execute our growth strategy.
Our strategy is to continue investing in, enhancing and securing our business and operations and growing our business, both organically and through acquisitions. Investments in, among other things, new markets, products, solutions, and technologies, research and development, infrastructure and systems, geographic expansion, and additional qualified and experienced personnel, are critical to achieving our growth strategy. Growth of our revenue depends on the success of all these factors, including our ability to capture market share, maintain and grow revenues from existing customers, attract new clients,
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customers, develop our strategic partnerships, introduce our solutions and servicesofferings to new global markets, strengthen and improve our solutionsofferings through significant investments in research and developments and successfully consummate and integrate acquisitions. However, such investments and efforts may not be successful, and, even if successful, may negatively impact our short-term profitability. Furthermore, in the event of an acquisition, our profits may be reduced over the short-term with the objective of achieving long-term expansion or growth, which may involve risks. Additionally, the terms of the credit agreement (the “Credit Agreement”) that we entered into in connection with our senior secured credit facility (the “Credit Facility”) contains restrictions that could restrict our ability to make strategic acquisitions or investments.
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Our success depends on our ability to execute our growth strategy effectively and efficiently.efficiently in order to meet our customers' and market needs. We cannot guarantee that we will be able to sustain our growth in future years. If we are unable to execute our growth strategy successfully and properly manage our investments and expenditures, our results of operations and stock price may be materially adversely affected. In addition, as a result of
Customers’ move to communication channels other than voice could materially and adversely affect the executionsuccess of our growth strategy,voice solutions.

Our voice solutions currently generate, and in recent years have generated, a significant portion of our short term profitability may be negatively impacted, including as a result of an acquisition.
We cannot guarantee thatrevenues, and we will be ablecontinue to sustainrely on the sales of our voice solutions and recurring revenues, such as subscription and maintenance services, in the next several years. The trend of enterprise customers moving from voice to other means of communication with the enterprise (such as self-service, e-mail, messaging applications, social media and chat) may result in a reduction in the demand for our voice platform and applications. Although our product portfolio caters to the changing demands in alternative communication channels and we have experienced growth in future years. The increasing proportion of advanced software applications in our overall sales mix might notdigital channel solutions, there can be no assurance that customers will adopt our solution for other communication channels to compensate for such possible decline in demand for our voice solutions. Therefore, a significant decline in the slowing growth rates ofvoice solutions market may have a material adverse effect on revenues generated from our recordingvoice solutions, and other more mature products. In addition,which may have a material adverse effect on our new solutions might not achieve wide market acceptance, and therefore might fail to support revenue growth. The failure to implement our growth strategy successfully could affect our ability to sustain growth and could materially adversely affect ourbusiness, financial condition or results of operations.

Our business could be materially adversely affected as a result of the risks associated with acquisitions and investments. In particular, we may not succeed in making additional acquisitions or be effective in integrating such acquisitions.
As part of our growth strategy, we have made a significant number of acquisitions over the last several years (see Item 5, “Operating and Financial Review and Prospects—Prospects - Recent Acquisitions” in this annual report for a description of certain of theserecent acquisitions). We, and expect to continue to makecomplete acquisitions and investments in the future as part of our growth strategy. We frequentlyfuture. As we continue to evaluate the tactical or strategic opportunity available related to complementary businesses, products or technologies. Thereopportunities, there can be no assurance that we will be successful in makingclosing additional acquisitions. EvenEven if we are successful in making additional acquisitions, integrating an acquired company’s business into our operations or investing in new technologies maymay: (1) result in unforeseen operating difficulties and large expendituresexpenditures; and (2) absorb significant management attention that would otherwise be available for the ongoing development of our business, both of which may result in the loss of key customers or personnel and expose us to unanticipated liabilities.
Other risks commonly encountered with acquisitions include the effect of acquisitions on our financial and strategic position, the inability to integrate successfully or commercialize acquired technologies and achieve expected synergies or economies of scale on a timely basis and the potential impairment of acquired assets. Further, we may not be able to retain the key employees that may be necessary to operate the businessbusinesses we acquire and we may not be able to attract, in a timely manner, new skilled employees and management to replace them.
In recent years, several of our competitors have also completed acquisitions of companies in our markets or in complementary markets. As a result, it may be more difficult for us to identify suitable acquisitions or investment targets or to consummate acquisitions or investments once identified on acceptable terms or at all. If we are not able to execute on our acquisition strategy, we may not be able to achieve our growth strategy, may lose market share, or may lose our leadership position in one or more of our markets.
We often compete with others to acquire companies, and such competition may result in decreased availability of, or an increase in price for, suitable acquisition candidates. We also may not be able to consummate acquisitions or investments that we have identified as crucial to the implementation of our strategy for other commercial or economic reasons. Further, we may not be able to obtain the necessary regulatory approvals, including those of competition authorities and foreign investment authorities, in countries where we seek to consummate acquisitions or make investments. For those and other reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition.
Also, even if we do consummate acquisitions, we may do so on less favorable terms and/or may be subject to certain conditions or commitments imposed by such authorities and agencies that may impact post-acquisition integration or have an adverse effect on our business.
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We may require significant financing to complete an acquisition or investment, whether through bank loans, raising of debt or otherwise. In connection with our November 2016 acquisition of inContact, we incurred additional indebtedness pursuant to the Credit Facility and, through our wholly owned subsidiary Nice Systems, Inc. (“Nice Systems”), through the issuance of exchangeable senior notes (the “Notes”). In the future, weWe cannot assure you that such financing options will be available to us or on reasonable terms or at all. If we are not able to obtain the necessary financing, we may not be able to consummate a substantial acquisition or investment and execute our growth strategy.find reasonable. In addition, if we consummate one or more significant acquisitions in which the consideration consists, in whole or in part, of our ordinary shares or American Depositary Shares (“ADSs”) representing our ordinary shares, our shareholders may suffer immediate dilution of their interests in us or the value of their interests in us. Our shareholdersus, or may also suffer substantialfuture dilution if we issue ADSs upon the conversion of the Notes.exchangeable or convertible debt to finance a significant acquisition.

Future acquisitions or investments may also require us to incur contingent liabilities, amortization expenses related to intangible assets and impairment of goodwill, any of which could have a material adverse effect on our operating results and financial condition. In addition, we may knowingly enter into an acquisition that will have a dilutive impact on our earnings per share.
We depend on a small number of significant customers.
We have a number of significant customers in each sector of our business, each of which could be material to a particular area of our business, including one customer that accounts for approximately five percent of our aggregate revenues in 2017.
There can be no assurance that we will be able to retain these key customers or that such customers will not cancel purchase orders, reschedule, or decrease their level of purchases. Loss, cancellation or deferral of business to such customers could have a material adverse effect on our business and operating results.
We depend on the stability of the financial services sector.
The financial services sector is our main industry vertical. If there is deterioration or a crisis in the economic and financial stability of financial institutions, as well as any change in rules and regulations that apply to this sector (such as deregulation in the area of compliance), customers in this sector, including our top tier customers, could fail to make payments to us, reduce spending or delay or postpone orders. This could have a material adverse effect on our sales to this sector and our results of operations.
If we are unable to develop or maintain our relationships with existing and new distributors and strategic partners, our business and financial results could be materially adversely affected.
An important element of our market strategy involves developing our indirect sales, implementation and support channels, which includes our global network of partners, distributors, resellers and other strategic partners. We have agreements in place with many distributors, dealers and resellers to market and sell our productsofferings across the business lines and services in addition to our direct sales force across all geographies in which we operate. In certain regions, such as Asia and Eastern Europe, we predominantly work through such partners. Our financial results could be materially adversely affected if our contractsagreements with distribution channel partners or our other strategic partners were terminated, if our relationship with our distribution channel partners or our other strategic partners were to deteriorate, or if the financial condition of our distribution channel partners or our othersuch partners were to weaken.
We believeIn addition, we depend on our channel partners globally to comply with applicable regulatory requirements. To the extent that developing partnerships and strategic alliances, including through the implementation of our partnership programs, is an important factor in the successful marketing of our products and execution of our growth strategy. In some markets we have only recently startedthey fail to develop a number of partnerships and strategic alliances. We may not be able to develop such partnerships or strategic alliances on termsdo so, that are favorable to us, if at all. Failure to develop such arrangements that are satisfactory to us may limit our ability to successfully market and sell products and maycould have a material adverse effect on our business, operating results, and resultsfinancial condition.
The execution of operations.
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We leverageour growth strategy also depends on our ability to create new alliances and enter into strategic relationshipspartnerships with third parties suchcertain market players, including technology providers. Additionally, as system integrators and technology and telephony providers. We also license technology from certain third parties. Certain of these license agreements permit either party to terminate all or a portion of the agreement without cause at any time.
As our market opportunities change and as we grow our business and expand in certain markets and territories, our dependency on particular distribution channels and strategic partners may increase or we may need to create new strategic partnerships and alliances to address changing market needs. We may not be successful in maintaining, creating or expanding these channels and partnerships, which may negatively impact the development of our business, our growth, gross margins and results of operations.
We may also develop dependency on certain strategic partners, and vendors, and shouldto the extent that we have to find alternatives in the market, our development efforts and business may be negatively impacted.
In addition, the execution Also, these partnerships and alliances are typically not exclusive and our partners may also offer products and services of our growth strategy also depends on our ability to create new alliances and enter into strategic partnershipscompetitors or may compete with certain market players and maintain those relationships. Even if we are able to enter into such alliances, it may be under terms that are not favorable to us or we may not be able to realize the benefits that are anticipated through such alliances.directly. If we are not successful at these efforts,creating and maintaining strategic partnerships under favorable terms, we may lose sales opportunities, customers and market share, which may have a material adverse effect on our business and results of operations.

The markets in which we operate are characterized by rapid technological changesRisks Relating to Our Offerings and frequent new products and service introductions.
We operate in several markets, each characterized by rapidly changing technology, new product introductions and evolving industry standards. The introduction of products embodying new technology and the emergence of new industry standards might exert price pressures on our existing products or render them obsolete. Our markets are also characterized by consistent demand for state of the art technology and products. Existing and potential competitors might introduce new and enhanced products that could adversely affect the competitive position of our products. Our markets are dominated by a group of highly competitive vendors that are introducing dynamic competitive offerings around evolving industry standards.
We believe that our ability to anticipate changes in technology and industry standards and to successfully develop and introduce new, enhanced and differentiated products, on a timely basis, in each of the markets in which we operate, is a critical factor in our ability to grow our business. As a result, we expect to continue to make significant expenditures on research and development, particularly with respect to new software applications, which are continuously required in all our business areas. Moreover, in the event that we do not anticipate changes in technology or industry practices or fail to timely address market needs or not be able to provide the products that are in demand, we may lose market share and our results of operations may be materially adversely affected.
The growth of new communication channels could require substantial modification and customization of our current cross-channel products, as well as the introduction of new multi-channel products. Also, new products and technologies are being used by our customers to communicate with their customers, e.g., use of chatbots. Such introduction of new products and technologies may change the usage patterns of our products and applications by our customers, which may result in some of our products and applications becoming obsolete. We may not be able to timely and effectively address such market trends and needs.
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Further, customer adoption of these new technologies may be slower than we anticipate. We cannot assure you that the market or demand for our products and solutions will be sustained or grow as rapidly as we expect (if at all), that we will successfully develop new products or introduce new applications for existing products, that such new products and applications will achieve market acceptance, or that the introduction of new products or technological developments by others will not render our products obsolete. In addition, our products must readily integrate with major third party telephone, security, front-office and back-office systems. Any changes to these third party systems could require us to redesign our products, and any such redesign might not be possible on a timely basis or achieve market acceptance. Our inability to develop products that are competitive in technology and price and responsive to customer needs could have a material adverse effect on our business, financial condition and results of operations.
Therefore, some of the factors that could have a material adverse effect on our business, financial condition and results of operations include industry-specific factors; our ability to continuously develop, introduce, deliver and support commercially viable products, solutions and technologies; the market’s rate of acceptance of the product solutions and technologies we offer; our ability to keep pace with market and technology changes; and our ability to compete successfully.
We depend on certain infrastructure vendors’ installation base for a portion of our new and recurring sales.
We sell some of our products, either directly or through our other distribution channels, to customers who use infrastructure of our distributors or of other vendors, or operate in their environment. To the extent that certain infrastructure vendors do not allow or support the integration of our products with their infrastructure or products, or use other means to prevent us from selling our products to such customers, we may experience a reduction in sales to these customers, which is broader than such infrastructure vendors’ direct business with us. This could impact our ability to attract new customers that use such infrastructure products or continue rendering maintenance services and other services and generate recurring sales to existing customers. As a result, we could lose customers and market share, which could have a material adverse effect on our business, financial condition, or results of operation.
Operations
Some of our enhanced services are dependent on leased network connectivity lines, and a significant disruption or change in these services could adversely affect our business.
A significant portion of our cloud software solutions areoffering is provided to customers through a dedicated network of equipment we own that is connected through leased network connectivity lines based on Internet protocol with capacity dedicated to us. We also move a portion of our voice long distance service over this dedicated network.
We lease network connectivity lines and space at co-location facilities for our equipment from third-party suppliers. These co-location facilities represent the backbone of our dedicated network. If any of these suppliers is unable or unwilling to provide or, if we desire, expand their current levels of service to us, the services we offer to customers may be adversely affected. We may not be able to obtain substitute services from other providers at reasonable or comparable prices or in a timely fashion. Any resulting disruptions in the services we offer that are provided over our dedicated network would likely result in customer dissatisfaction and adversely affect our operations. Furthermore, pricing increases by any of the suppliers we rely on for our dedicated network could adversely affect our results of operations if we are unable to pass throughpass-through such pricing increases.

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We rely on multiple internet service providers to provide our customers and their clients with connectivity to our cloud contact center software. While we have multiple redundancies and backups, a failure by these service providers to provide reliable services could cause us to lose customers and subject us to claims for credits or damages.
We depend on internet service providers to provide uninterrupted and error-free service through their telecommunications networks. We exercise little control over these third-party providers, which increases our vulnerability to problems with the services they provide, including failures relating to internet accessibility in general. When problems occur, it may be difficult to identify the source of the problem. Service disruption or outages, even if not caused by our products or services, may result in loss of market acceptance of our offerings and any necessary remedial actions may force us to incur significant costs and expenses, such as payments of credits or damages to affected customers.
We rely on third partythird-party network service providers to originate and terminate public switched telephone network calls, and thus significant failures in these networks could harm our operations.
For our business in the unified communications market, we leverage the infrastructure of third partythird-party network service providers to provide telephone numbers, public switched telephone network call termination and origination services, and local number portability for our customers rather than deploying our own network throughout the United States.network. If any of these network service providers ceases operations or otherwise terminate the services that we depend on, the delay in switching our technology to another network service provider, if available, could have an adverse effect on our business, financial condition or operating results.
Interruptions or delays in our services through third-party error, our own error or the occurrence of unforeseeable events, could harm our ability to deliver our services, which could harm our relationships with customers and subject us to liability.
We provide some of our services through computer hardware that we own and that is currently located in third-party web hosting co-location facilities maintained and operated in various locations globally. Our hosting providers do not guarantee that our customers’ access to our solutions will be uninterrupted, error-free or secure. Our operations depend on our providers’ ability to protect their and our systems in their facilities against damage or interruption from natural disasters, power or network connectivity failures, criminal acts and similar events. Our back-up computer hardware and systems may not have sufficient capacity to recover all data and services in the event of an outage occurring simultaneously at all facilities. In the event that our hosting facility arrangements were terminated, or there was a lapse of service or accidental or willful damage to such facilities, we could experience lengthy interruptions in our service as well as delays and/or additional expense in arranging new facilities and services. Any or all of these events could cause our customers to lose access to the services they are purchasing from us. In addition, the failure by our third-party hosting facilities to meet our capacity requirements could result in interruptions in our service or impede our ability to scale our operations.
Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause our systems to fail, resulting in interruptions in our customers’ service to their customers. Any interruptions or delays in our services, whether as a result of third-party error, our own error, natural disasters or security breaches, and whether accidental or willful, could harm our relationships with customers and our reputation. This in turn could cause a reduction in our revenue, subject us to liability, and cause us to issue credits or pay penalties or cause customers to fail to continue service, any of which could adversely affect our business, financial condition and results of operations. In the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
We provide certain service level commitments to our customers, which could cause us to provide credits for future services if the stated service levels are not met for a given period and could adversely impact our revenue.
Our customer agreements for cloud offerings provide service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our service, we may be contractually obligated to provide these customers with credits for future services. Our revenue could be adversely impacted if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers. Any such extended service outages could harm our reputation, revenue and operating results.

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General Risks Relating to Our Offerings and Operations
We depend on the success of our recording solutions.
We are dependent on the success of our recording solutions to maintain profitability and sustain growth. Our recording solutions currently generate, and in recent years have generated, a significant portion of our revenues, and we will continue to be dependent on the sales of our recording solutions and recurring revenues, such as maintenance services, in the next several years. However, there can be no assurance that the recording market will not decline significantly or that revenues generated from our recording solutions will not be significantly impacted. Also, certain switch manufacturers offer various types of recording solutions, which could result in a significant decline in sales of our recording solutions and in sales of related applications, or a significant decrease in the profit margin on such solutions, any of which could have a material adverse effect on our business, financial condition or results of operations.
The trend of enterprise customers moving from voice to other means of communication with the enterprise (such as self-service, e-mail, instant messaging, social media and chat), may result in a reduction in the demand for our voice recording platform and applications. If such trend continues, and to the extent not mandated under applicable regulations, our customers may cease to record voice and switch to recording other means of communication. In addition, changes in regulations could reduce the need for recording, which would reduce the demand for our recording and platform. Any of the above may have a material adverse effect on our business, financial condition or results of operations.
The sale of advanced software applications and a multi-product offering requires significant resources and may also delay our recognition of revenues.
The sale of advanced software applications and multi-product offering is complex, and requires, among other things, customization and implementation, and is subject to a prolonged sale process. Therefore, the sale of advanced software applications and multi-product offering may impact the time we recognize the revenue from such orders. These factors could result in a delay in revenue recognition and materially adversely affect our results of operations.
A significant portion of our business relies on software applications. We cannot guarantee that our customers’ adoption of advance software applications will meet our expectation and planning. As a result, certain applications may not reach the critical mass in sales and revenues necessary to offset the high cost of developing and maintaining such advanced applications, which could negatively affect our results of operation.
Our seasonal sales patterns could significantly impact our revenues and earnings.
We encounter quarter-to-quarter seasonality, especially given the increasing proportion of advanced software applications in our overall sales mix. The sales cycle for our products and services ranges between a few weeks to several months from initial contact with the potential client to the signing of a contract. Frequently, sales orders accumulate towards the latter part of a given quarter. In addition, our revenues are typically highest in the fourth quarter. As a result, transactions that do not meet all the recognition criteria of that quarter may only be recognized in the following quarter or subsequent quarters, which may have an adverse impact on the booking and revenues in the quarter in which such transactions were entered into. In addition, the timing in which transactions are entered into may shift from one quarter to another. Customers often shift their buying decision towards the end of their budgetary year, which could result in the shifting of booking and revenues from one quarter to another and in many cases to the last quarter of a calendar year.
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We believe this seasonality is typical for many software companies and that it may become more pronounced as the proportion of advanced software applications in our overall sales mix continues to increase. Additionally, as a high percentage of our expenses, particularly employee compensation and other overhead costs, are relatively fixed, a variation in the level of sales, especially at or near the end of any quarter, may have a material adverse impact on our quarterly operating results.
Fluctuations in our results of operations may result from our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements, the timing and success of new product introductions and enhancements or product initiation by our competitors, the purchasing and budgeting cycles of our customers and general economic, industry and market conditions, amongst other factors.
In addition, our quarterly operating results may be subject to significant fluctuations due to additional factors, including the timing and size of orders and shipments to customers (including delays in execution of customer orders), variations in distribution channels, mix of products and services, new product introductions, competitive pressures and general economic conditions. It is difficult to predict the exact mix of products and services for any period between hardware, software and services as well as within the product category between interaction-related platforms and related applications and transactional related platforms and applications. Changes in the mix of products and services across our different business lines may significantly impact our revenues. Further, the period of time from order to delivery of our platforms and applications is short, and therefore our backlog for such products is currently, and is expected to continue to be, small and substantially unrelated to the level of sales in subsequent periods. As a result, our results of operations for any quarter may not necessarily be indicative of results for any future period, and may be below our forecasts.
Our quarterly results may be volatile at times, which could cause us to miss our forecasts.
We generally provide forecasts as to expected future revenues in the coming fiscal quarters and fiscal year. These forecasts are based on management estimation and expectations, our then-existing backlog and an analysis of assumptions and assessments that may not materialize or end up being inaccurate. We may not meet our expectations or those of industry analysts in a particular future quarter, including as a result of the factors described in this Item 3.
In addition, as described above, our revenues reflect seasonal fluctuations related to slower spending activities in the first quarter, and the increased activity related to the year-end purchasing cycles of many users of our products.
We derive a substantial portion of our sales through indirect channels, making it more difficult for us to predict revenues because we depend partially on estimates of future sales provided by third parties. In addition, changes in our arrangements with our network of channel partners or in the products they offer, such as the introduction of new support programs for our customers, which combines support from our channel partners with back-end support from us, could affect the timing and volume of orders. Furthermore, our expense levels are based, in part, on our expectations as to future revenues. If our revenue levels are below expectations, our operating results are likely to be adversely affected, as most of our expenses are not variable in the short term.
We depend on our ability to recruit and retain key personnel.
In order to compete, we must recruit and retain executives and other key employees. Hiring and retaining qualified executives and other key employees is critical to our business, and competition for highly qualified and experienced managers in our industry is intense. There is no guarantee that additional key management members will not leave the Company, or if they do, that we will be able to identify and hire qualified replacements, or that the transition of new personnel will not cause disruption in our business.
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In addition, due to our growth, or as a result of regular recruitment, we will be required to hire and integrate new employees. Recruiting and retaining qualified engineers and computer programmers to perform research and development and to commercialize our products, as well as qualified personnel to market and sell those products, are critical to our success. As of December 31, 2017, approximately 27% of our employees were devoted to research and product development and approximately 22% were devoted to marketing and sales. There can be no assurance that we will be able to successfully recruit and integrate new employees.
There is intense competition to recruit highly skilled employees in the technology industry. We have suffered from attrition in our workforce in previous years and we believe that such attrition will continue in the future. We may not be able to offer current and potential employees a compensation package that is satisfactory in order to keep them within our employment.
In certain locations in which we have development centers, the rate of attrition is high and could have a negative impact on our ability to retain our employees in such centers, timely develop our products and service our customers. In addition, the migration of development and other activities and functions to low-cost countries (such as India) may result in disruption to our business due to differing levels of employee knowledge, expertise and organizational and leadership skills, greater employee attrition and increased cost of retaining our most highly-skilled employees.
An inability to attract and retain highly qualified employees may have an adverse effect on our ability to develop new products and enhancements for existing products and to successfully market such products, all of which would likely have a material adverse effect on our results of operations and financial position. Our success also depends, to a significant extent, upon the continued service of a number of key management, sales, marketing and development employees, the loss of any of whom could materially adversely affect our business, financial condition and results of operations.
We rely on software from third parties. If we lose the right to use that software, we wouldwill have to spend additional capital to redesign our existing software to adhere to new third partythird-party providers or develop new software.
We integrate and utilize various third partythird-party software products, which may include Large Language Models (LLMs) or other AI based-offerings as components of and/ or integration with our products and solutions to enhance their functionality. Our business could be disrupted if functional versions of these software products were either no longer available to us or no longer made available to us on commercially reasonable terms. Also, in the event that any of these third partythird-party vendors is unable to meet our requirements in a timely manner or that our relationship with any such vendor is terminated, we may experience disruption in our business until an alternative source of supply can be obtained. Any disruption, or any other interruption in a vendor’s ability to provide components to us, could result in delays in making product deliveries or inability to deliver, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, some of our third partythird-party vendors use proprietary technology and software code that could require significant redesign of our products in the case of a change in vendor. If we lost the right to use such third partythird-party software, we would be required to spend additional capital to either redesign our software to function with alternate third partythird-party software or develop these components ourselves. As a result, we might be forced to limit the features available in our current or future products and solutions offerings and the commercial release of our products and solutions could be delayed.
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Incorrect or improper use of our products and solutions or failure to properly provide professional services and maintenance services could result in negative publicity and legal liability.
Our products and solutions are complex and are deployed in a wide variety of network environments. The proper use of our software requires training and, if our software products are not used correctly or as intended, there may be inaccurate results. Our products may also be intentionally misused or abused by clients who use our products. The incorrect or improper use of our products and solutions or our failure to properly provide professional services and maintenance services, including installation, training, project management, product customizations and consulting to our clients may result in losses suffered by our clients, which could result in negative publicity and product liability or other legal claims against us.
Undetected errors or malfunctions in our products or services could directly impairimpact demand for our financial resultsproducts and services, and we could face potential product liability claims.claims directly impairing our financial results.
Our software products and services are highly complex. Despite extensive testing by us and by our clients,customers, our products and services may include errors, failures, bugs or other weaknesses. Such errors,inaccuracies, defects, failures, bugs or other weaknesses in our products and servicesthat could result in unanticipated downtime for our customers, product returns, loss of or delay in market acceptance of our products and services, loss of competitive position, or claims by clientscustomers or others,others. In addition, ethical issues, inaccurate content, or unintentional bias may derive from the use of our AI incorporated products or unauthorized use of AI technologies and may also result in potential legal or reputational harm. In addition, our customers may inadvertently use our services in ways that may cause a disruption in services for other customers attempting to use our services. Moreover, our customers could incorrectly implement or misuse our products or services, which would seriouslycould result in client dissatisfaction and harm our revenues, financial conditionreputation and results of operations.brand. Correcting and repairing such errors, inaccuracies, failures, misleading content or bugs could also requireentail significant expenditures of our capital and other resourcescosts and could cause interruptions, delays or cessation of our product licensing.products and services.

In addition, the identification of errors in our software applications and services or the detection of bugs by our clients may damage our reputation in the market as well as our relationships with existing clients, which may result in our inability to attract or retain clients.
Further, as our products are used byAs our customers use our offerings for important aspects of their business, such as compliance recording and operational risk management functions that are often critical to our clients and must adhere to certain rules and regulations, any errors, or defects, disruptions in service or other performance problems with, our products and services could hurt our reputation and maysignificantly damage our customers’ business. If that occurs, we could lose future sales,businesses and ultimately harm our existingreputation. As a result, customers could elect not to renew our services or delay or withhold payment to us. We could also lose future sales or customers may make warranty or other liability claims against us, which may harm our business and we could potentially be subject to product liability claims.adversely affect our results. In particular, some of our customers, including financial institutions, may suffer significant damages as a result of a failure of our solutions to perform their functions. The occurrence of any of these events could result in our inability to attract or retain customers, and adversely affect our revenues, financial condition and results of operations.
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Although we attempt to limit any potential exposure through quality assurance programs, validation of content, insurance and contractual terms, we cannot assure you that we will be able to eliminate or successfully limit our liability for any failure of, or inaccuracies in, our solutions.solutions, including with respect to responsible use of products and services incorporating AI capabilities. Any product liability insurance we carry may not be sufficient to cover our losses resulting from any such product liability claims. The successful assertion of one or more large product liability claims against us could have a material adverse effect on our results of operations and financial condition.

We provide certain service level commitments to our customers, which could cause us to provide credits for future services if the stated service levels are not met for a given period and could adversely impact our revenue.
Our customer agreements for cloud services provide service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our service, including for reasons related to PaaS providers or other third parties, we may be contractually obligated to provide these customers with credits for future services, and in some cases refunds, or be liable for penalties. Our revenue could be adversely impacted if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers. Any such extended service outages could harm our reputation, revenue and operating results.

Risks Relating to Information and Product Security and Intellectual Property
If our security and cybersecurity measures or those of our third-party hosting facility providers, cloud computing platform providers, or third-party service partners are compromised, and unauthorized access is obtained to customers’ data, our data or our IT systems, our reputation may be harmed, and we may incur significant legal and financial exposure and liabilities.
Our products and services involve the storage and transmission of customers’ and their end users’ proprietary and other sensitive or confidential information, including financial information and other personally identifiable information. In addition, some of our customers use our products and services to compile and analyze highly sensitive or confidential information, and we may encounter or store such information or data, including when we perform service or maintenance functions for our customers. Security incidents could expose us to a risk of loss or unauthorized use of this information, investigations and enforcement actions, litigation and possible liability. Additionally, we may have contractual and other legal obligations to notify customers or other relevant parties of security incidents. While we have security measures in place, we are regularly subject to probes by hackers and from time to time we may be subject to security incidents, including as a result of intentional misconduct, or fraud by computer hackers, employee error, malfeasance or otherwise which may result in someone obtaining unauthorized access to, or use of, our systems, products and services, our customers’ data or our data, including our intellectual property and other confidential business information, in order to derive a financial benefit or for other purposes. In addition, while we have internal policies and procedures in connection with the performance of services involving our customers’ confidential information, the perception or fact that any of our employees has improperly handled sensitive information of a customer or a customer’s end user could negatively affect our business.

Cyber security attacks are becoming increasingly sophisticated, including by way of frequent changes in the techniques used to obtain unauthorized access, and, in many cases, may not be identified until after a security incident occurs. If we fail to recognize and deal with such security attacks and threats, or if we fail to update our systems, products and services and prevent such threatened attacks in real time to protect our customers’ or other parties’ sensitive information, whether retained in our systems or by our customers using our products and services, our business and reputation will be harmed. The costs of recognizing and addressing security attacks and threats and updating our systems, products and services, may be significant.

Our offerings, including our cloud services, may be vulnerable to cyber-attacks, even if they do not contain defects. Such vulnerability may further increase as a result of the use of products and services incorporating AI capabilities. If there is a successful cyber-attack on one of our products or services, even absent a defect or error, it may also result in questions regarding the integrity of our offerings generally, which could cause adverse publicity and impair their market acceptance and could have a material adverse effect on our results or financial condition.

Third parties may attempt to attack our security measures or inappropriately take advantage of our solutions, including our cloud services, through computer viruses, electronic break-ins and other disruptions. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information to gain access to our customers’ data, our data or our systems. Furthermore, our customers
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may authorize third-party technology providers to access their customer data, and some of our customers may not have adequate security measures in place to protect their data that is stored on our services. Because we do not control our customers or third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the integrity or security of such transmissions or processing. Malicious third parties may also conduct attacks designed to temporarily deny customers access to our services. Any security incident could result in a loss of confidence in the security of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability.

While we maintain insurance coverage to protect us against a broad range of risks, including in relation to security incidents and cyber security attacks, we could still be subject to risks of losses that might be beyond the limits, or outside the scope, of coverage of our insurance and that may limit or prevent indemnification under our insurance policies. This potential insufficiency of insurance coverage could result in an adverse effect on our business, financial position, profit, and cash flows.
Interruptions or delays in our services through security incidents, failures, or disruptions could impede on our ability to deliver services, harm our reputation and our relationships with customers and partners, adversely affect our results of operation and subject us to liability.

Any interruptions or delays to our services, whether as a result of error or security incidents, and whether accidental or willful, could harm our reputation and our relationships with customers and partners, subject us to liability, and adversely affect our business and results of operations. In the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.

We currently serve our customers using third-party data center hosting facilities and cloud computing platform providers. While we have security measures in place that are aligned with applicable industry standards, they may be breached due to third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise, and result in someone obtaining unauthorized access to our or our third-party vendors’ systems and infrastructure. Moreover, such facilities and platforms may be vulnerable to interruptions resulting from power or network connectivity issues, criminal acts and other misconduct. Occurrence of such damage or interruptions could result in disruptions in our services. Despite precautions such vendors are required to take, the occurrence of such damage or interruption or other unanticipated problems at these facilities, could result in lengthy interruptions in our services, subject us to liability and require the issuance of credits or payment of penalties pursuant to our customer agreements, and/or cause customers to terminate their subscriptions and adversely affect our attrition rates and our ability to attract new customers, all of which would reduce our revenues. Also, we may not be entitled to indemnification or to recoup any such loss or damage from such service providers, which may result in us bearing the burden of any such liability or losses.

In addition, we are also dependent on our computer databases, billing systems and accounting computer programs, network and computer hardware that houses these systems to effectively operate our business and market our services. Our customers may become dissatisfied by any failures of such systems that interrupt our ability to deliver our services. Therefore, significant disruption or failure in the operation of these systems could adversely affect our business and results of operations.

Furthermore, we provide some of our services through computer hardware that we own and that is currently located in third-party web hosting co-location facilities and data centers maintained and operated in various locations globally. Our hosting providers do not guarantee that our customers’ access to our solutions will be uninterrupted, error-free or secure. Our operations depend on our providers’ ability to protect their and our systems in their facilities against such damage or interruption. Our back-up computer hardware and systems may not have sufficient capacity to recover all data and services in the event of an outage occurring simultaneously at all facilities. In the event that our hosting arrangements are terminated, or there is a lapse of service or accidental or willful damage to such facilities, we could experience lengthy interruptions in our service as well as delays and/or additional expense in arranging new facilities and services. Any or all of these events could cause interruptions in our services.

We may face risks relating to inadequate intellectual property protection and liability resulting from infringement by our products or solutions of third-party proprietary rights.
Our success is dependent, to a significant extent, upon our proprietary technology. We currently hold 529 U.S. patents and 40 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have 206 patent applications pending in the United States and other countries. We rely on a combination of patent, trade secret, copyright and trademark law, together with non-disclosure and non-competition agreements, as well as third-party licenses to establish and protect the technology used in our offerings. However, we cannot assure that such measures will be adequate to protect our proprietary technology, that competitors will not develop products with features based upon, or otherwise similar to our products, that intellectual property ownership and third-party licenses, including copyrights of AI output, will be
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available to us or that we will prevail in any proceeding instituted by us in order to enjoin competitors from selling similar products. In most of the areas in which we operate, third parties also have patents which could be found applicable to our technology and products. Such third parties may include competitors, as well as large companies, which heavily invest in their patent portfolios, regardless of their actual field of business. Although we believe that our products and solutions do not infringe upon the proprietary rights of third parties, we cannot assure that one or more third parties will not make a claim or that we will be successful in defending such claim.
We generally distribute our software products and services under license terms that restrict the use of our products and services by terms and conditions prohibiting unauthorized reproduction or transfer of the software products or proprietary technology or data. However, effective copyrights and other intellectual property rights protection may be inadequate or unavailable to us in every country in which our software products are available, and the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our technology. Policing the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.
From time to time third parties allege or claim patent infringements. In defending ourselves against any such claims or actions we may be subject to substantial costs and diversion of management resources.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which may not be available on reasonable terms. Any of these may have a material adverse impact on our business or financial condition.
We face risks relating to our use of certain “open source” software tools.
Certain of our software products contain open source code and we may use more open source code in the future. In addition, certain third-party software that we embed in our products contains open source code. Open source code is code that is covered by a license agreement that permits the user to liberally use, copy, modify and distribute the software without cost, provided that users and modifiers abide by certain licensing requirements. The original developers of the open source code provide no warranties on such code.
As a result of our use of open source software, we could be subject to suits by parties claiming ownership of what we believe to be open source code and we may incur expenses in defending claims that we did not abide by the open source code license. In addition, third-party licensors do not provide intellectual property protection with respect to the open source components of their products, and therefore we may not be indemnified by such third-party licensors in the event that we or our customers are held liable in respect of the open source software contained in such third-party software. If we are not successful in defending against any such claims that may arise, we may be subject to injunctions and/or monetary damages or be required to remove the open source code from our products. Such events could disrupt our operations and the sales of our offerings, which would negatively impact our revenues and cash flow.
Moreover, under certain conditions, the use of open source code to create derivative code may obligate us to make the resulting derivative code available to others at no cost. The circumstances under which our use of open source code would compel us to offer derivative code at no cost are subject to varying interpretations. If we are required to publicly disclose the source code for such derivative products or to license our derivative products that use an open source license, our previously proprietary software products may be available to others without charge. If this happens, our customers and our competitors may have access to our products without cost to them, which could harm our business.
We monitor our use of such open source code to avoid subjecting our products to conditions we do not intend. The use of such open source code, however, may ultimately subject some of our products to unintended conditions so that we are required to take remedial action that may divert resources away from our development efforts.
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Risks Relating to Regulatory Environment
Privacy and data protection concerns, legislation and other regulations may limit the use and adoption of our offerings, adversely affect our business, increase compliance costs and expose us to increased liability.
Governments and other international organizations in various jurisdictions around the world (such as the legislative and regulatory institutions of the European Union) have enacted and are continuing to adopt new laws, regulations and guidelines addressing data privacy and protection, including the processing (collection, storage, use, etc.) of personal information, cyber security, breach notification, risk management and reporting. These laws, regulations and guidelines may be inconsistent across jurisdictions and are subject to evolving and differing (sometimes conflicting) interpretations. In some cases, different sets of data privacy laws and regulations, such as the European Union’s General Data Protection Directive (“GDPR”), local laws and regulations and certain state laws in the U.S. on privacy and data protection, such as the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act ("CPRA"), the Colorado Privacy Act, the Connecticut Data Privacy Act, the Utah Consumer Privacy Act, and the Virginia Consumer Data Protection Act, as well as the Israeli Privacy Law and the regulations promulgated thereunder (the “Israeli Privacy Law”), also govern the processing of personal information. Additionally, new state privacy laws may also apply. While we invest in ensuring our compliance with applicable data privacy and protection laws, rules and regulations, these and other regulatory requirements may slow the pace at which we close sales or procurement transactions, restrict our ability to store, transfer and process data or, in some cases, impact our ability to offer some of our solutions and services for use in relation to data subjects that reside in certain locations or our customers’ ability to deploy our solutions globally. Compliance with these regulatory requirements may be onerous, time consuming and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction or where the jurisdictional reach of certain requirements is not clearly defined or seeks to reach across national borders.

Should we, or any party on our behalf, fail to comply with privacy legislation or procedures or other required or agreed security measures, we may incur substantive civil liability to government agencies, customers, shareholders and individuals whose privacy may have been compromised. As privacy legislation is increasing globally, and more government agencies are granted with authority to fine organizations for non-compliance with applicable data privacy laws and regulations, and require companies to take certain steps to remediate such non-compliance, we may find ourselves forced to pay damages penalties, fines, remediation costs, reimbursement of customer costs and other significant expenses due to our (or our subcontractors' or vendors’) non-compliance with data privacy laws and regulations. Moreover, even the perception that the privacy of personal information that we process or control is not adequately protected or does not meet regulatory requirements could damage our reputation, inhibit sales of our products or services and could limit adoption of our offerings.

In addition to legal and regulatory requirements, we are contractually obligated to certain customers, and may in the future be expected by prospective customers, to meet certain information security certifications or other standards established by third parties, such as the ISO 27001:2013 on information security management certification. If we are unable to obtain or maintain these certifications or meet these standards, it could harm our business and subject us to liability.

Industry-specific regulation and other requirements and standards are evolving and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.
Our customers and potential customers conduct business in a variety of industries, including financial, insurance, telecommunications and healthcare services. We also serve customers in the public safety and other government entities. Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand for our services. Compliance with these regulations may also require us to devote greater resources to support certain customers, which may increase costs and lengthen sales cycles. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. Other example may include customers’ requirements with respect to sovereign cloud platform. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our services where required, our business may be harmed. If in the future we are unable to achieve or maintain industry specific certifications or other requirements or standards relevant to our customers, it may harm our business and adversely affect our results.

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Our revenues would be adversely affected if we fail to adapt our offerings to changes in rules and regulations applicable to the business of certain customers, such as rules and regulations regarding securities trading, broker sales compliance and anti-money laundering, which could have an impact on their need for our products and services.
In certain industries in which we operate, there may be regulations or guidelines for use of SaaS, hosting and cloud-based services that mandate specific controls or require enterprises to obtain certain approvals prior to outsourcing certain functions. In addition, we may be limited in our ability to transfer or outsource business to certain jurisdictions and may be limited in our ability to undertake development activity in certain jurisdictions, which may impede on our efficiency and adversely affect our business results of operations.

Changes in the legal and regulatory environment could materially and adversely affect our business, results of operations and financial condition.
Our business, results of operations and financial condition could be materially and adversely affected if laws, regulations or standards relating to our business, products and services, our operation or our employees (including labor laws and regulations) are changed or new ones are implemented. Such implemented laws and regulations include requirements in the United States, Europe, U.K. and other territories in relation to data privacy and protection, AI, anti-bribery and anti-corruption, foreign investment, import and export, sanctions, labor, tax and environmental and social issues. For information on the market risks relating to data privacy and protection, please see Item 3, “Risks Relating to Regulatory Environment" in this annual report.

Certain states and countries have already taken steps towards, proposed, or implemented, laws and regulations relating to AI, including in the United States and the upcoming regulations of the European Parliament. As the regulatory landscape continues to evolve, our investment in products and services incorporating AI may result in enhanced governmental or regulatory scrutiny. Compliance with the regulatory requirements, as well as with related requirements by our customers, may be onerous, time consuming and expensive and may require adjustments in our products and services. Any failure to comply with such requirements may result in reputation or financial harm and may affect our business, financial condition or results of operations.

While we attempt to prepare in advance for such new or changed requirements and standards, we cannot assure that we will be successful in our efforts, that such changes will not negatively affect the demand for our products and services, or that our competitors will not be more successful or prepared than us.
Alternatively, any substantial changes resulting in a reduction in the implementation or elimination of rules and regulations that apply to a certain sector of our business, such as deregulation in the area of compliance, could result in a decrease in demand by customers, which could materially and adversely affect our business and results of operations.
Risks Relating to Our Financial Condition

Our quarterly results may be volatile at times, which could cause us to miss our forecasts.
We generally provide forecasts as to expected future revenues and profitability in the coming fiscal quarters and fiscal year. Our revenue and operating results can vary and have varied in the past, sometimes substantially, from one quarter to another. These forecasts are based on management estimation and expectations, our then-existing pipeline and backlog, and an analysis of assumptions and assessments that may not materialize or end up being inaccurate. We may not meet our expectations or those of industry analysts in a particular future quarter. Our quarterly operating results may be subject to significant fluctuations due to the following factors: the timing and size of customer orders, delays in issuance or shifting of customer orders (as often happens when customers postpone their buying decisions to the end of the budgetary year), variations in distribution channels, mix of products and services, new product introductions and competitive pressures.

Our debtcloud offering is generally purchased by customers on a subscription basis and revenues from these offerings are generally recognized ratably over the term of the subscriptions. In cases where our cloud offering is purchased on a usage-based model, there may be seasonality in the usage of our offering, including macroeconomic factors that may impact customer usage of our solutions, which would impact our ability to predict and forecast revenues and result in fluctuations in our quarterly results. Therefore, the continued growth of our cloud business could adversely affect our financial conditionresults of operations and prevent us from fulfilling our obligations underability to forecast our financing arrangements.quarterly results.

Our revenue and operating profit growth depends on the continued growth of demand for our products and services, and our business is affected by general economic, business, and geopolitical conditions worldwide, including inflation and
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rising interest rates. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global economies, may result in decreased revenue or growth.

In connection withaddition, we derive a substantial portion of our November 2016 acquisition of inContact, we incurred indebtedness pursuant to the Credit Facility available to us under the Credit Agreement andsales through the issuance of the Notes. The debt incurred could have adverse consequences to our financial condition and business. For example, it could:
increase our vulnerability to general adverse economic and industry conditions;
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makeindirect channels, making it more difficult for us to satisfypredict revenues because we depend partially on estimates of future sales provided by third parties. Changes in our other financial obligations;
make it more difficultarrangements with our network of channel partners or in the products they offer, such as the introduction of new support programs for our customers, which combines support from our channel partners with back-end support from us, to make strategic acquisitions;
require us to dedicate a substantial portioncould affect the timing and volume of orders. Furthermore, our cash flow from operations to paymentsexpense levels are based, in part, on our debt, thereby reducing the availability ofexpectations as to future revenues. If our cash flow to fund working capital, capital expenditures and other general corporate purposes;
revenue levels are below expectations, our operating results could be adversely affected.
expose us to interest rate fluctuations since the interest on the Credit Agreement is imposed at variable rates;
make it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such debt;
limit our flexibility in planning for, or reacting to, changesFluctuations in our business and the industry in which we operate;
place us at a competitive disadvantage compared to our competitors that have less debt;
limit our ability to borrow additional funds as needed;
restrict our ability to prepay the Notes or to pay cash upon exchanges of the Notes; and
limit our ability to pay dividends, redeem stock or make other distributions.
Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, business, regulatory and other factors that may be beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the Credit Agreement or from other sources in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. If our cash flow and capital resources are insufficient to allow us to make scheduled payments on our debt, we may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of our debt on or before the maturity thereof, any of which could have a material adverse effect on our business, financial condition or results of operations. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all, or that the terms of that debt will allow any of the above alternative measures or that these measures would satisfy our scheduled debt service obligations. If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates andoperations may require us to comply with more onerous covenants, which could further restrict our business operations.

A failure to comply with the covenants and other provisions of our outstanding debt could result in events of default under such instruments, which could permit acceleration of our Notes and borrowings under our Credit Agreement. Any required prepayment or exchange of our Notes or Credit Facility as a result of an event of default or fundamental change triggering such right would lower our current cash on hand such that we would not have those funds available for use in our business, which could adversely affect our operating results.

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We are subject to a number of restrictive covenants under the Credit Agreement, which restrict our business and financing activities.

The Credit Agreement imposes, and the terms of any future debt may impose, operating and other restrictions on us. Such restrictions limit or prohibit,from, among other things, our and our subsidiaries’ ability to incurretain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements, the timing and success of new product and solution introductions and enhancements or guarantee additional debt, pay dividends, repurchase or retireproduct initiation by our equity interests or subordinated debt, transfer or sellcompetitors, the purchasing and budgeting cycles of our assets, make certain payments or investmentscustomers and capital expenditures, create liens, engage in certain transactions with our affiliatesgeneral economic, industry and merge or consolidate withmarket conditions.

While seasonality and other companies.

The restrictions under the Credit Agreement may, in certain circumstances, prevent us from taking actions that management believes would befactors mentioned above are common in the best interestssoftware and technology industry, this pattern should not be considered a reliable indicator of our future revenue or financial performance. Many other factors, including general economic conditions, may also have an impact on our business and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that do not have similar restrictions. In the event of any event of default under the Credit Agreement, the lenders under the Credit Agreement could elect to terminate their commitments or cease making further loans and accelerate the outstanding loans, and, in any such case, we could ultimately be forced into bankruptcy or liquidation. Because the indenture governing the Notes and the Credit Agreement has customary cross-default provisions, if our obligations under the Credit Agreement are accelerated we may be unable to repay or refinance the amounts due under the Credit Agreement or the Notes.

The conditional exchange feature of the Notes, if triggered, may adversely affect our financial condition and operating results.


The Notes will mature on January 15, 2024, unless earlier prepaid, redeemed or exchanged. In the event certain conditions are met during set periods, the conditional exchange feature of the Notes will be triggered, meaning that holders of Notes will be entitled at their option to exchange the Notes at any time during such specified periods. If one or more holders elect to exchange their Notes, we may elect to settle all or a portion of our exchange obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect tochanges in non-core business factors including taxes and foreign exchange their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would resultmay also cause variation in a material reduction of our net working capital and adversely affect covenants under the Credit Agreement.quarterly results.


We face foreign exchange currency risks.
Exchange rate fluctuations affect our operations. We experience risks from fluctuations in the value of the NIS, EUR, GBP, INR, PHP and other currencies compared to the U.S. dollar, the functional currency in our financial statements. A significant portion of the expenses associated with our Israeli ,Indian and IndianPhilippines operations, including personnel and facilities related expenses, are incurred in NIS, INR and INR,PHP, respectively, whereas most of our business and revenues are generated in dollars, and to a certain extent, in GBP, EUR and other currencies. If the value of the dollar decreases against these foreign currencies, our earnings may be negatively affected. As a result, we may experience an increase in the costs of our operations, as expressed in dollars, which could adversely affect our earnings. In addition, certain balance sheet items are denominated in currencies other than U.S. dollar. Fluctuations in the value of the U.S. dollar exchange rate compared to these currencies, can result in unfavorable balance sheet revaluation at the reporting period.

We monitor foreign currency exposure and may use various instruments to preserve the value of sales transactions, expenses and commitments;commitments, however this cannot assure our full protection against risks of currency fluctuations that could affect our financial results. As part of our efforts to mitigate these risks, we use foreign currency hedging mechanisms, which may be ineffective in protecting us against adverse currency fluctuations and can also limit opportunities to profit from exchange rate fluctuations that would otherwise be favorable. For information on the market risks relating to foreign exchange, please see Item 11, “Quantitative and Qualitative Disclosures about Market Risk” in this annual report.
We currently benefit from local government programs as well as international programs and local tax benefits that may be discontinued or reduced, or may result in liabilities if underlying conditions are not met.
We derive and expect to continue to derive benefits from various programs, including Israeli tax benefits relating to our “Preferred Technology Enterprise” programs, and certain other grants and tax benefits, including grants from the Israel Innovation Authority (formerly known as the Office of the Chief Scientist of the Ministry of Economy) of the State of Israel (the “IIA”), for research and development.
To be eligible for tax benefits as a Preferred Technology Enterprise, we must continue to meet certain conditions. While we believe that we have met and continue to meet the conditions that entitle us to previously obtained Israeli tax benefits, there can be no assurance that we will in the future or that the Israeli Tax Authorities will agree.
To be eligible for IIA-related grants and benefits, we must continue to meet certain conditions, including conducting the research, development, manufacturing of products developed with such IIA grants in Israel, and providing the IIA with an undertaking that the know-how to be funded, and any derivatives thereof, is wholly-owned by us, upon its creation. In addition, we are prohibited from transferring to third parties the know-how developed with these grants without the prior
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approval of a governmental committee and, possibly, paying a fee. See Item 4, “Information on the Company—Research and Development” in this annual report, for additional information about IIA programs.
If the local and international grants, programs and benefits available to us or the laws, rules and regulations under which they were granted are eliminated or their scope is further reduced, or if we fail to meet the conditions of existing grants, programs or benefits and are required to refund grants or tax benefits already received (together with interest and certain inflation adjustments) or fail to meet the criteria for future Israeli Preferred Technology Enterprises, our business, financial condition and results of operations could be adversely affected.
Additional tax liabilities resulting from our global operations could materially adversely affect our results of operations and financial condition.
As a global corporation, we are subject to income, non-income and other taxestransactional tax regimes in Israel, the United States, Israel, India and various foreign jurisdictions. Our domesticother jurisdictions, which are unsettled and international tax liabilities aremay be subject to significant change. Our effective tax rate could be materially affected by changes in tax rulings, tax laws, regulations, administrative practices, principles, applicability of special tax regimes, or changes in interpretations of existing tax laws, including changes to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid or accrued is subject to our interpretation of applicable lawsglobal tax framework, in the jurisdictions in which we do business. Such changes could come about as a result of economic, political, and other conditions. Additionally, our effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuations of our deferred tax assets and liabilities, tax implications of acquisitions, expansion into new territories, intercompany transactions, changes in foreign currency exchange rates, changes in our stock price and uncertain tax positions.Although we believe that our provision for income taxes and our tax estimates are reasonable, tax authorities may disagree with certain positions we have taken. From time to time, we are subject to income and other tax audits in various jurisdictions, the timing of which is unpredictable. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our tax accruals. While we believe we comply with applicable tax laws and have adequate balance sheet reserves related to tax positions, there can be no assurance that a governing tax authority will not have a different interpretation of the law and assess us with additional taxes.taxes, which we may dispute and litigate. If we are assessed additional taxes itor if additional taxes are imposed on us, such additional taxes could have a material adverse effect on our results of operations and financial condition.
In recent years we have seen changes in tax laws resulting in an increase in effective tax rates, especially increased liabilities of corporations and limitations on the ability to benefit from strategic tax planning, with these laws particularly focused on international corporations. Such legislative changes in one or more jurisdictions in which we operate may have implications on our tax liability and have a material adverse effect on our results of operations and financial condition.

The Organization for Economic CooperationCo-operation and Development, (“OECD”) introducedan international association of 38 countries including the base erosion and profit shifting project in 2013, which set out a plan to address international taxation principles in a globalized, digitized business world. In November 2015, the G20 adopted the OECD’s published guidance on domestic legislation and administrativeUnited States, has proposed changes to addressnumerous long-standing tax principles, namely, its Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. In December 2022, the plan’s action points. AsEU member states adopted a resultdirective that complements the Pillar Two framework. Certain countries in which we operate have enacted legislation to adopt the Pillar Two framework (e.g., United Kingdom), and several other countries are also considering changes to their tax laws to implement this framework. The first component of participant countries adopting the international tax policies set out under the plan, changes have been and continuePillar Two framework is expected to be madeeffective for us in calendar year 2024 with a second component expected to numerous internationalbe effective in fiscal year 2025. When and how this framework is adopted or enacted by the various countries in which we do business could increase tax principles, as well as national tax incentives, which couldcomplexity and uncertainty and may adversely affect our provision for income taxes.
The recent comprehensive tax reformtaxes in the United States could adversely affect our results of operations and financial condition.other non-U.S. jurisdictions.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), a comprehensive tax legislation that includes significant changesFurther, there are proposals to introduce further amendments to the taxationU.S. federal tax regime, applicable to corporations. As of business entities. These changes include, among others, (i) a permanent reduction to the corporate federaldate of filing, it remains unclear what legislation, if any, would be enacted. If the draft legislation currently being discussed is enacted, it could create the potential for added volatility in our provision for income taxes and might have an adverse impact on our future income tax rate, (ii) a partial limitation on the deductibility of business interest expense, (iii) a shift of the U.S. taxation of multinational corporations from aprovision and tax on worldwide income to a territorial system (along with certain rules designed to prevent erosion of the U.S. income tax base) and (iv) a one-time tax on accumulated offshore earnings held in cash and illiquid assets, with the latter taxed at a lower rate. We are in the process of assessing the overall impact of the U.S. Tax Reform on our business and financial condition. Currently such impact is not entirely clear, and it is possible that our assessment of our business, effective income tax rate and our profitability may be adversely affected as a result of tax regulations and guidance to this new legislation, which are anticipated to be provided by the regulators during the coming year.


We might recognize a loss with respect to our financial investments.
We invest most of our cash through a variety of financial investments. If the obligor of any of our financial investments defaults or undergoes reorganization in bankruptcy, we may lose a portion of such investment and our assets and income may decrease. In addition, a downturn in the credit markets or the downgrading of the credit rating of our investments could result in a reduction in the market value of our holdings and reduce the liquidity of our investments, which could require us to recognize a loss at the time of liquidationcredit impairment and would adversely affect our assets and income.
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ChangesOur debt could adversely affect our financial condition and impact our business needs and plans.
We incurred indebtedness pursuant to the issuance of the 2020 Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture”). The debt incurred could have adverse consequences to our financial condition and business.
Our ability to fund planned capital expenditures and to maintain sufficient working capital will depend on our ability to continue to generate cash in the future. This is subject to general economic, financial, competitive, business, regulatory and other factors that may be beyond our control. We cannot assure that our business will continue to generate sufficient cash flow from operations or that future financing will be available to us in an amount sufficient to enable us to service our debt, or to fund our other liquidity needs or execute on our strategic plans.
Any required prepayment or exchange of our 2020 Notes, including as a result of an optional redemption, event of default or fundamental change triggering such right, would lower our current cash on hand such that we would not have those funds available for use in our business, which could adversely affect our operating results.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a material effect on our reported financial results.
For our 2020 Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture”), on December 31, 2021, we irrevocably elected that all conversions occurring on or after December 31, 2021 will be settled pursuant to Combination Settlement (as defined in the 2020 Indenture) with a Specified Dollar Amount (as defined in the 2020 Indenture) no less than $1,000 per $1,000 principal amount of 2020 Notes. Generally, under this settlement method, the conversion value corresponding to the principal amount will be converted in cash, and the conversion value over the principal amount will be settled, at the Company’s election, in cash or shares or a combination thereof. Given the adoption of ASU No. 2020-06 on January 1, 2022, there will be an impact to earnings per share as a result of the adoption based on the if-converted method if the Company's average share price will exceed the conversion price of the 2020 Notes. In addition, if such cash is not available, we may be required to sell other assets or enter into alternate financing arrangements at terms that may or may not be desirable.
If we fail to maintain effective internal controls over financial reporting and operations, it could have a material adverse effect on our business, operating results, and the price of our ordinary shares and ADSs.
Effective internal controls are necessary for us to provide reliable financial reports and prepare consolidated financial statements for external reporting purposes in accordance with U.S. GAAP and U.S. securities laws, as well as to effectively prevent material fraud. Because of inherent limitations, even effective internal control over financial reporting may not prevent or detect every misstatement. In addition, if we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting and operations. Furthermore, as we grow our business or acquire businesses, our internal controls may become more complex and we may require significantly more resources to ensure they remain effective. In addition, we may identify material weaknesses or significant deficiencies in our internal control over financial reporting. Failure to maintain effective internal control over financial reporting and operations could result in investigation or sanctions by regulatory authorities and could have a material adverse effect on our business and operating results, investor confidence in our reported financial information, and the market price of our ordinary shares and ADSs.
Current and future accounting pronouncements and other financial reporting standards and principles or interpretations thereof, couldmight have a significant impact on our financial position and results of operations.negatively impact our financial results.

We prepare our Consolidated Financial Statementsconsolidated financial statements in accordance with U.S. GAAP. These principles are subject to interpretation by the Securities and Exchange Commission (the “SEC”)SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls. Changes resulting from these new standards may result in materially different financial results and may require that we change how we process, analyze and report financial information and that we change financial reporting controls.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a material effect on our reported financial results.

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components of convertible or exchangeable debt instruments (such as the Notes) that may be settled entirely or partially in cash upon exchange in a manner that reflects our economic interest cost. The effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be included in the additional paid-in capital section of shareholders’ equity on our consolidated balance sheet, and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to their principal amount over the term of the Notes. We will report lower net income (or greater net loss) in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results.

In addition, convertible or exchangeable debt instruments (such as the Notes) that may be settled entirely or partly in cash are not required to be included in our diluted share count if we have the ability and intent to settle exchanges in cash. If we elect to settle such excess in ADSs, according to the treasury stock method, the transaction is accounted for in the diluted share count, as if the number of ADSs that would be necessary to settle such excess are deemed issued. We cannot be sure that we will be able to continue to demonstrate the ability or intent to settle exchanges in cash or that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the ADSs deliverable upon exchange of the Notes, our diluted earnings per share would be adversely affected.

If we fail to maintain effective internal controls over financial reporting, it could have a material adverse effect on our business, operating results, and the price of our ordinary shares and ADSs.
Effective internal controls are necessary for us to provide reliable financial reports and prepare consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles and U.S. securities laws, as well as to effectively prevent material fraud. Because of inherent limitations, even effective internal control over financial reporting may not prevent or detect every misstatement. In addition, if we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting. Furthermore, as we grow our business or acquire businesses, our internal controls may become more complex and we may require significantly more resources to ensure they remain effective. In addition, we may identify material weaknesses or significant deficiencies in our internal control over financial reporting. Failure to maintain effective internal control over financial reporting could result in investigation or sanctions by regulatory authorities, and could have a material adverse effect on our business and operating results, investor confidence in our reported financial information, and the market price of our ordinary shares and ADSs.
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Current and future accounting pronouncements and other financial reporting standards, might negatively impact our financial results.

We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies.

This could lead to risks in the following areas, among others: not being ableassociated with our ability to react in a timely manner to new accounting pronouncements and financial reporting standards concerning revenue recognition (including the new ASC 606 guidance on revenue from contracts with customers that we will need to adopt in 2018) and unpredictable changes in interpretation of standards. Any one or more of these events could have an adverse effect on our business, financial position, and profit.

Risks Relating to Intellectual Property, Data Protection and Regulatory Environment
We may face risks relating to inadequate intellectual property protection and liability resulting from infringement by our products or solutions of third party proprietary rights.
Our success is dependent, to a significant extent, upon our proprietary technology. We currently hold 225 U.S. patents and 49 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have over 64 patent applications pending in the United States and other countries. We rely on a combination of patent, trade secret, copyright and trademark law, together with non-disclosure and non-competition agreements, as well as third party licenses to establish and protect the technology used in our systems. However, we cannot assure you that such measures will be adequate to protect our proprietary technology, that competitors will not develop products with features based upon, or otherwise similar to our systems, that third party licenses will be available to us or that we will prevail in any proceeding instituted by us in order to enjoin competitors from selling similar products. In most of the areas in which we operate, third parties also have patents which could be found applicable to our technology and products. Such third parties may include competitors, as well as large companies, which invest millions of dollars in their patent portfolios, regardless of their actual field of business. Although we believe that our products and solutions do not infringe upon the proprietary rights of third parties, we cannot assure you that one or more third parties will not make a contrary claim or that we will be successful in defending such claim.
We generally distribute our software products under software license agreements that restrict the use of our products by terms and conditions prohibiting unauthorized reproduction or transfer of the software products. However, effective copyrights and other intellectual property rights protection may be inadequate or unavailable to us in every country in which our software products are available, and the laws of some foreign countries may not be as protective of intellectual property rights as those in Israel and the United States. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our technology. Policing the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.
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In the past we received, from time to time, “cease and desist” letters alleging patent infringements. Although there are currently no formal infringement claims or other actions pending against us, in the event that we are required to defend ourselves against any such claims or actions we could be subject to substantial costs and diversion of management resources.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which may not be available on reasonable terms. Any of these may have a material adverse impact on our business or financial condition.
We face risks relating to our use of certain “open source” software tools.
Certain of our software products contain a limited amount of open source code and we may use more open source code in the future. In addition, certain third party software that we embed in our products contains open source code. Open source code is code that is covered by a license agreement that permits the user to liberally use, copy, modify and distribute the software without cost, provided that users and modifiers abide by certain licensing requirements. The original developers of the open source code provide no warranties on such code.
As a result of our use of open source software, we could be subject to suits by parties claiming ownership of what we believe to be open source code and we may incur expenses in defending claims that we did not abide by the open source code license. In addition, third party licensors do not provide intellectual property protection with respect to the open source components of their products, and therefore we may not be indemnified by such third party licensors in the event that we or our customers are held liable in respect of the open source software contained in such third party software. If we are not successful in defending against any such claims that may arise, we may be subject to injunctions and/or monetary damages or be required to remove the open source code from our products. Such events could disrupt our operations and the sales of our products, which would negatively impact our revenues and cash flow.
Moreover, under certain conditions, the use of open source code to create derivative code may obligate us to make the resulting derivative code available to others at no cost. The circumstances under which our use of open source code would compel us to offer derivative code at no cost are subject to varying interpretations. If we are required to publicly disclose the source code for such derivative products or to license our derivative products that use an open source license, our previously proprietary software products may be available to others without charge. If this happens, our customers and our competitors may have access to our products without cost to them, which could harm our business.
We monitor our use of such open source code to avoid subjecting our products to conditions we do not intend. The use of such open source code, however, may ultimately subject some of our products to unintended conditions so that we are required to take remedial action that may divert resources away from our development efforts.
Changes in the legal and regulatory environment could materially and adversely affect our business, results of operations and financial condition.
Our business, results of operations and financial condition could be materially and adversely affected if laws, regulations or standards relating to our business and products, us or our employees (including labor laws and regulations) are constantly implemented or changed. Such implemented laws and regulations include requirements in the United States, Europe and other territories in relation to, data privacy and protection, anti-bribery and anti-corruption, import and export, labor, tax and environmental and social issues. It is expected that the current U.S. administration will promulgate new or amended or abolish regulations that may impact our customers’ business or our operations, such as the Dodd –Frank Act or consumer protection laws, and which may reduce the demand for our products and services and may adversely affect our results of operations.
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From time to time, we may also operate pursuant to specific authorizations of, and commitments towards, U.S., Israeli, E.U. or other governmental authorities and agencies. While we make every effort to comply with such requirements, we cannot assure you that we will be fully successful in our efforts, and that our business will not be harmed. Failure to comply with such laws, regulations, authorizations and commitments could results in fines, damages, civil liability and criminal sanctions against us, our officers and our employees, prohibitions on the conduct of our business and damage to our reputation.
We believe there is a global trend toward adoption and enforcement of data privacy, information security and cyber related legislation and procedures. For example, on April 14, 2016, the European Parliament formally adopted the General Data Protection Regulation (the “GDPR”), which formally go into effect on May 25, 2018. The GDPR provides that companies must comply with certain standards regarding the protection of the personal data of their customers or risk significant financial penalties. Regulations or interpretive positions may be enforced specifically with respect to the use of SaaS, hosting and cloud-based services, as well as other outsourced services. Adoption of such legislation and regulations may require that we invest in the modification of our solutions to comply with such legislation and regulations, cause a reduction in the use of our solutions and services or subject ourselves or our customers to liability resulting from a breach of such regulations. If we are unable to comply with these specific requirements or guidelines, or privacy and information security legislation in general, it could materially adversely affect our business and results of operations.
Failure to comply with privacy legislation or procedures may cause us to incur civil liability to government agencies, customers, shareholders and individuals whose privacy may have been compromised.
In addition, our revenues would be adversely affected if we fail to adapt our products and services to changes in rules and regulations applicable to the business of certain clients, such as rules and regulations regarding securities trading, broker sales compliance and anti-money laundering, which could have an impact on their need for our products and services. There are growing compliance and regulatory initiatives and changes for corporations and public organizations around the world that are driven by events and concerns such as accounting scandals, security threats and economic conditions.
While we attempt to prepare in advance for these new initiatives and standards, we cannot assure you that we will be successful in our efforts, that such changes will not negatively affect the demand for our products and services, or that our competitors will not be more successful or prepared than us. Alternatively, a reduction in the implementation of compliance and regulatory requirements in the industries in which we operate could result in a decrease in demand, which could materially and adversely affect our business and results of operations.
In certain industries in which we operate, there may be regulations or guidelines for use of SaaS, hosting and cloud-based services that mandate specific controls or require enterprises to obtain certain approvals prior to outsourcing certain functions. In addition, we may be limited in our ability to transfer or outsource business to certain jurisdictions, and may be limited in our ability to undertake development activity in certain jurisdictions, which may impede on our efficiency and adversely affect our business results of operations.
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Risks Relating to our Presence in Israel
We are subject to the political, economic and security conditions in Israel.
Our headquarters, primary research and development facilities, and a substantial percentage of our manufacturing capabilities, are located in Israel. Political, economic and military conditions in Israel directly affect our operations. Since the establishment of the State of Israel, a number of armed conflicts have taken place, varying in degree and intensity. There have been ongoing hostilities between Israel and the Palestinians, including continuous rocket and missile attacks on certain areas of the country over the last couple of years. There can be no assurance that such attacks will not have an impact on our premises or major infrastructure and transport facilities in the country, which may have a material adverse effect on our ability to conduct business.
Israel also faces threats from Hezbollah militants in Lebanon, from ISIS and rebel forces in Syria, and from Iran. Moreover, some of Israel’s neighboring countries have recently undergone or are undergoing significant political changes. Any of these situations could escalate in the future and turn violent, which could affect the Israeli economy generally and us in particular, and have a negative impact on our ability to operate. Furthermore, several countries restrict doing business with Israel and Israeli companies, and additional companies may restrict doing business with Israel and Israeli companies or boycott Israel as a result of an increase in hostilities or due to disagreement with Israel’s policies and agenda. This may also seriously harm our operating results, financial condition and the ability to expand our business.
Some of our officers and employees are obligated to perform up to 36 days of annual military reserve duty, and in the event of a military conflict, these persons could be called to active duty at any time, for extended periods of time and on very short notice. The absence of a number of our officers and employees for significant periods could disrupt our operations and impact our business. We cannot assess the full impact of these obligations on our workforce or business if conditions should change.
It may be difficult to enforce a U.S. judgment against us and our officers and directors in Israel or the United States, or to serve process on our officers and directors.
Service of process upon us, our Israeli subsidiaries, our directors and officers, and the Israeli experts, if any, named in this annual report, most of whom reside outside the United States, may be difficult to obtain within the United States. Additionally, it may be difficult to enforce civil liabilities under U.S. federal securities law in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing these matters.
Subject to specific time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter, including a judgment based upon the civil liability provisions of the U.S. securities laws, as well as a monetary or compensatory judgment in a non-civil matter, provided that the following conditions are met:
·subject to limited exceptions, the judgment is final and non-appealable;
·the judgment was given by a court competent under the laws of the state in which the court is located and is otherwise enforceable in such state;
·the judgment was rendered by a court competent under the rules of private international law applicable in Israel; 
·the laws of the state in which the judgment was given provides for the enforcement of judgments of Israeli courts; 
·adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence; 
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·the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;
·the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and
·
an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court.
We currently benefit from local government programs as well as international programs and local tax benefits that may be discontinued or reduced.
We derive and expect to continue to derive significant benefits from various programs including Israeli tax benefits relating to our “Preferred Technology Enterprise” programs and certain grants from the National Association for Technology and Innovation (formerly known as the Office of the Chief Scientist of the Ministry of Economy) of the State of Israel (the “NATI”), for research and development.
To be eligible for tax benefits as a Preferred Technology Enterprise, we must continue to meet certain conditions. While we believe that we have met and continue to meet the conditions that entitle us to previously obtained Israeli tax benefits, there can be no assurance that the Israeli Tax Authorities will agree.
To be eligible for NATI-related grants and benefits, we must continue to meet certain conditions, including conducting the research, development, manufacturing of products developed with such NATI grants in Israel, and providing the NATI with an undertaking that the know-how to be funded, and any derivatives thereof, is wholly owned by us, upon its creation. In addition, we are prohibited from transferring to third parties the know-how developed with these grants without the prior approval of a governmental committee and, possibly, paying a fee. See Item 4, “Information on the Company—Research and Development” in this annual report, for additional information about NATI programs.
Moreover, we participated in the European Community Framework Program for Research, Technological Development and Demonstration, which funds and promotes research. Under these programs we had to comply with certain conditions. If it is apparent we failed to comply with these conditions, the benefits received could be canceled and we could be required to refund any payments previously received under these programs or pay additional amounts with respect to the grants received under these programs. Our last program under this Framework ended in August 2015. 
If grants, programs and benefits available to us or the laws, rules and regulations under which they were granted are eliminated or their scope is further reduced, or if we fail to meet the conditions of existing grants, programs or benefits and are required to refund grants or tax benefits already received (together with interest and certain inflation adjustments) or fail to meet the criteria for future Preferred Technology Enterprises, our business, financial condition and results of operations could be materially adversely affected.
Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions.
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
See Item 10, “Additional Information—Mergers and Acquisitions” in this annual report, for additional discussion regarding anti-takeover effects of Israeli law.
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Risks Relating to our Securities
The market price of each of our ADSs, ordinary shares and the Notes is volatile and may decline.

Numerous factors, some of which are beyond our control, may cause the market price of our ADSs, ordinary shares and the Notes to fluctuate significantly. These factors include, among other things:

•Quarterly variations in our operating results;
·Quarterly variations in our operating results;
•Changes in expectations as to our future financial performance, including financial estimates by securities;
•Perceptions of our company held by analysts and investors;
·Changes in expectations as to our future financial performance, including financial estimates by securities
•Additions or departures of key personnel;
•Announcements related to dividends and share repurchase plans;
·Perceptions of our company held by analysts and investors;
•Development of or disputes concerning our intellectual property rights;
•Announcements of technological innovations;
·Additions or departures of key personnel;
•Material orders of our products or services by customers and business partners;
•New products and services by us or our competitors;
·Announcements related to dividends;
•Acquisitions or investments by us or by our competitors and partners;
•Security breaches or other incidents impacting our customers’ or their end users’ data and security breaches of companies that provide solutions or services similar to ours;
·Development of or disputes concerning our intellectual property rights;

•The exchangeability of the 2020 Notes for ADSs;
·Announcements of technological innovations;
•Hedging or arbitrage trading activity involving ADSs by holders of the 2020 Notes;
•Currency exchange rate fluctuations;
·Customer orders or new products by us or our competitors;
•Earnings releases by us, our partners or our competitors;
•General financial, economic and market conditions;
·Acquisitions or investments by us or by our competitors and partners;
•Political changes, unrest in regions (including the ongoing war in Israel), natural catastrophes;
•Market conditions in the industry and the general state of the securities markets, with particular emphasis on the technology and Israeli sectors of the securities markets; and
·The exchangeability of the Notes for ADSs;
·Hedging or arbitrage trading activity involving ADSs by holders of the Notes;
·Modification of hedge positions by counterparties to the hedge transactions we entered into simultaneously with the issuance of the Notes, including the possible entry into or unwinding of derivative transactions with respect to the ADSs or the purchase or sale of the ADSs or other NICE securities in secondary market transactions;
·Currency exchange rate fluctuations;
·Earnings releases by us, our partners or our competitors;
·General financial, economic and market conditions;
·Political changes and unrest in regions, natural catastrophes;
·Market conditions in the industry and the general state of the securities markets, with particular emphasis on the technology and Israeli sectors of the securities markets; and
·General stock market volatility.
•General stock market volatility.
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Our ADSs and ordinary shares are traded on different markets and this may result in price variations.

Our ADSs have been listed on The NASDAQ Stock Market since 1996 and our ordinary shares have been traded on the Tel Aviv Stock Exchange, or the “TASE”,“TASE,” since 1991. Trading in our securities on these markets takes place in different currencies (our ADSs are traded in U.S. dollars and our ordinary shares are traded in New Israeli Shekels), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Israel). As a result, the trading prices of our securities on these two markets may differ due to these factors. In addition, any decrease in the price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.

Substantial future sales or the perception of sales of our ADSs or ordinary shares, or the exchange, or conversion of a substantial amount of 2020 Notes, or perception thereof, could cause the price of our ADSs or ordinary shares to decline.

Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the price of our ADSs and ordinary shares and could impair our ability to raise capital through the sale of additional shares. Such sales may also make it more difficult for us to sell equity or equity-related securities in the future at a time and at a desirable price.

Additionally, the issuance of ADSs upon future exchanges or conversions of the 2020 Notes for ADSs, or the perception that these exchanges or conversions may occur, could dilute shareholders and reduce the market price of the ordinary shares or ADSs. This could also impair NICE’s abilities to raise additional capital through the sale of its securities.

The market pricesprice of the ordinary shares and the ADSs, which may fluctuate significantly, will directly affect the market price for the 2020 Notes.

We expect that the market price of the ordinary shares and the ADSs will affect the market price of the 2020 Notes. This may result in greater volatility in the market price of the 2020 Notes than would be expected for non-exchangeable notes. The market price of the ordinary shares and the ADSs will likely fluctuate in response to a number of factors, many of which are beyond our control. Holders who receive ADSs upon exchange of the 2020 Notes will therefore be subject to the risk of volatility and depressed prices of ADSs. In addition, we expect that the market price of the 2020 Notes will be influenced by yield and interest rates in the capital markets, our creditworthiness and the occurrence of certain events affecting us that do not require an adjustment to the exchange rate. Fluctuations in yield rates in particular may give rise to arbitrage opportunities based upon changes in the relative values of the Notes and ADSs. Any such arbitrage could, in turn, affect the market prices of ADSs and the Notes.

Holders of our ADSs are not treated as shareholders of our company.

Holders of our ADSs are not treated as shareholders of our company unless they withdraw the ordinary shares underlying the ADSs from the depositary, which holds the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as shareholders of our company, other than the rights that they have pursuant to the deposit agreement with the depositary.


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We have not registered, and do not currently intend to register, the Notes, the ADSs into which the Notes are exchanged or exchangeable or the ordinary shares represented thereby. There are restrictions on Noteholders’ ability to transfer or resell the Notes, ADSs and the underlying ordinary shares.

The Notes, the ADSs deliverable upon exchange of the Notes and the ordinary shares represented thereby were offered and sold pursuant to an exemption from registration under the Securities Act and applicable state securities laws, and we have not registered, and do not currently intend to register, the Notes, the ADSs or such ordinary shares. Therefore, Noteholders may transfer or resell the Notes only in a transaction registered under or exempt from the registration requirements of the Securities Act and applicable state securities laws, and may be required to bear the risk of their investment for an indefinite period of time.

The fundamental change and make-whole fundamental change provisions of the 2020 Notes may delay or prevent an otherwise beneficial attempt to acquire our company.

The fundamental change prepayment rights of the Noteholdersnoteholders under the 2020 Notes, which would allow Noteholdersnoteholders to require that we prepay all or a portion of their Note2020 Notes upon the occurrence of a fundamental change, and the provisions under the 2020 Notes requiring an increase to the exchange rate for exchanges in connection with a make-whole fundamental change, in certain circumstances may delay or prevent an acquisition of NICE that would otherwise be beneficial to our shareholders.
It may be difficult to enforce a U.S. judgment against us and our officers and directors in Israel or the United States, or to serve process on our officers and directors.
Service of process upon us, our Israeli subsidiaries, directors and officers, and Israeli advisors, if any, named in this annual report, may be difficult to obtain within the United States. Additionally, it may be difficult to enforce civil liabilities under U.S. federal securities law in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing these matters.
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Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, establishes a high ownership threshold to squeeze out minority shareholders in a full tender offer, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions.
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
See Item 10, “Additional Information—Mergers and Acquisitions” in this annual report, for additional discussion regarding anti-takeover effects of Israeli law.
General Risk Factors
Conditions and changes in the local and global economic environments may adversely affect our business and financial results.
Adverse economic conditions in markets or regions in which we operate can harm our business. Our results of operations can be affected by adverse changes in local and global economic conditions, slowdowns, inflation, recessions and economic instability. To the extent that our business suffers as a result of such unfavorable economic and market conditions, our operating results may be materially adversely affected.
In particular, enterprises may reduce spending in connection with their contact centers, financial institutions may reduce spending in relation to trading floors, compliance and operational risk management (as IT-related capital expenditures are typically lower priority in times of economic slowdowns), and generally our customers may prioritize other expenditures over our solution, including a possible slowdown resulting from a shift or reduction in expenditures driven by AI and Generative AI solutions. If any of the above occurs, and our customers or partners do not adopt our solutions, significantly reduce their spending, or significantly delay or fail to make payments to us, our business, results of operations, and financial condition could be materially adversely affected.

In addition, our operations may be subject to the effects of the rising rate of inflation. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Some of our customers, and in particular customers in the banking sector, may suffer from liquidity concerns and possibly go out of business due to disruption to the global economy, which may adversely impact our business and results of operations.

Disruption to the global economy could also result in a number of follow-on effects in addition to a slow-down in our business and increased costs, including a possible (i) negative impact on our liquidity, financial condition and share price, which may impact our ability to raise capital in the market, obtain financing and secure other sources of funding in the future on terms favorable to us, and (ii) decrease in the value of our assets that are deemed to be other than temporary, which may result in impairment losses.

We face risks relating to our global operations.
We sell our offerings throughout the world and intend to continue to increase our penetration of international markets. Our future results could be materially adversely affected by a variety of factors relating to international transactions, including:
•governmental controls and regulations, including import or export license requirements, trade protection measures, sanctions, telecommunication authorization and licenses and changes in tariffs;
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•compliance with applicable international and local laws, regulations and practices, including those related to trade compliance, anticorruption, data privacy and protection, tax, labor, employee benefits, customs, currency restrictions and other requirements;
•fluctuations in currency exchange rates;
•longer payment cycles in certain countries in our geographic areas of operations;
•potential adverse tax consequences, variations in effective income tax rates and tax policies among countries where we conduct business, including the complexities of foreign value added tax systems;
•political instability, armed conflicts, terrorism and security concerns, including instability and disruption resulting from the war in Israel and related conflicts in the Middle East and restrictions related to the conflict between Russia and Ukraine;
•reduced or limited protection for intellectual property rights in some countries; and
•general difficulties in managing our global operations.
Geopolitical risks, including those arising from political tension, terrorist activity or acts of civil or international hostility, are increasing. Conflicts, including the war in Israel and related conflicts in the Middle East and the conflict between Russia and Ukraine, could result in geopolitical instability and adversely affect the global economy or specific markets. The intensity and duration of these conflicts are difficult to predict.

Changes in the political or economic environments, credit rating and the availability and cost of capital in the countries in which we operate, especially in Israel and the U.S., including the impact of such changes on foreign currency rates and interest rates, could have a material adverse effect on our financial condition, results of operations and cash flow.

As a result of our global presence, especially in emerging markets, we face increasing challenges that could adversely impact our results of operations, reputation and business.
In light of our global presence, especially in emerging markets such as those in Asia, Eastern Europe and Latin America, we face a number of challenges in certain jurisdictions that provide reduced legal protection, including poor protection of intellectual property, inadequate protection against crime (including bribery, corruption and fraud) and breaches of local laws or regulations, unstable governments and economies, governmental actions that may inhibit the flow of goods and currency, challenges relating to competition from companies that already have a local presence in such markets and difficulties in recruiting sufficient personnel with appropriate skills and experience.
Local business practices in jurisdictions in which we operate, and particularly in emerging markets, may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery laws and regulations (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act) to which we are subject. Although we implement policies and procedures designed to ensure compliance with these laws, we cannot guarantee that none of our employees, contractors, partners and agents, as well as those companies to which we outsource certain of our business operations, will not violate our policies or applicable law. Any such violation could have an adverse effect on our business and reputation and may expose us to criminal or civil enforcement actions, including penalties and fines.
Furthermore, the increased presence of our global operations in emerging markets, including outsourcing of certain operations to service providers in such markets (such as India and the Philippines), could impact the control over our operations, as well as create dependency on such external service providers. This method of operation may impact our business and adversely affect our results of operation.
Our business, facilities or operations could be adversely affected by events outside of our control, such as natural disasters or health epidemics.
Natural disasters or other unexpected events that adversely affect the business climate in any of our markets could have a material adverse effect on our business, financial condition and results of operations. Our business operations may be subject to a disruption or failure of our systems or operations because of a natural disaster, such as a major earthquake, weather event, fire, power shortages, telecommunications failures, pandemics and epidemics, cyberattack, terrorist attack or
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other catastrophic event or event beyond our control, which could cause delays in completing sales, providing services, or performing other critical functions. Although we maintain disaster recovery and business continuity plans, such events could make it difficult or impossible for us to deliver our products and services to our customers, and could decrease the demand for our offerings.

The occurrence of regional epidemics or a global pandemic, such as COVID-19, may adversely affect our operations, financial condition, and results of operations. The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability.

We depend on our ability to recruit and retain qualified personnel.

In order to compete, we must recruit and retain executives and other key employees. Hiring and retaining qualified executives and other key employees is critical to our business, and competition for highly qualified and experienced managers in our industry is intense. There is no guarantee that key management members will not leave the Company, or if they do, that we will be able to identify and hire qualified replacements, or that the transition of new personnel will not cause disruption in our business.

In addition, due to our growth, or as a result of regular recruitment, we will be required to hire and integrate new employees. Recruiting and retaining qualified engineers and computer programmers to perform research and development and to commercialize our offerings, as well as qualified personnel to market and sell the offerings, are critical to our success.
There is competition to recruit and retain highly skilled employees in the technology industry due to market conditions and the millennial workforce continuing to value multiple company experiences over long tenure. As a result, we may be required to offer exclusive compensation packages in order to retain and recruit certain key employees with particular expertise.

In certain locations in which we have development centers, including low-cost countries such as India, the rate of attrition is typically higher than other locations and could have a negative impact on our ability to retain our employees in such centers, timely develop our products and solutions, and/or service our customers.
An inability to attract and retain highly qualified employees may have an adverse effect on our ability to develop new products and solutions and enhancements for our offerings and to successfully market such offerings, all of which would likely have a material adverse effect on our results of operations and financial position. Our success also depends, to a significant extent, upon the continued service of key management, sales, marketing and development employees, the loss of any of whom could materially adversely affect our business, financial condition and results of operations.
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Item 4.Information on the Company.
Company Background
Item 4.A    History and Development of the Company.
NICE was founded on September 28, 1986, as NICE NeptunNeptune Intelligent Computer Engineering Ltd., and onwith the vision to digitize unstructured data previously captured using analog means. On October 14, 1991, the Company was renamed NICE-Systems Ltd., expanding its mission to the Customer Service market, becoming a leading global provider of Workforce Optimization software applications, as well as adding solutions for the Public Safety and Justice sector. With the increased quantity of available data and the growing need to generate meaningful business insight, NICE launched Interaction Analytics solutions - allowing organizations to quickly understand and operationalize their interaction data. In 2007, NICE acquired Actimize, a leader in Financial Crime and Compliance analytics solutions, aimed to help prevent market abuse, financial fraud and money laundering, transforming the company into an enterprise software analytics leader. Since 2014, NICE has emerged as a leader in cloud, analytics, digital and AI through innovations and strategic acquisitions. In 2016, NICE acquired inContact, a leading provider of cloud contact center software and agent optimization tools, enabling the industry’s first fully integrated and complete cloud contact center solution platform. Subsequently, NICE became an industry leader, helping organizations innovate with AI-powered cloud platforms, designed to unify all data and capabilities for ultimate business results. Since 2019, as consumer expectations dramatically shifted to digital CX, NICE vastly extended the reach of its offering with a series of acquisitions of leading Digital & AI Customer Experience solutions, expanding its business reach beyond the contact center, providing organizations with AI-powered digital and self-service solutions to address customers’ evolving needs.

On June 6, 2016, we werethe Company was renamed NICE Ltd., which is ourits legal and commercial name. Today, NICE is an enterprise software leader in cloud, analytics, digital and AI in both the Customer Engagement and Financial Crime and Compliance markets. We possess the complete set of must-have AI assets necessary to command our markets: largest collection of unique historical and current data, most relevant knowledge elements and unmatched domain expertise. Our solutions help organizations of all sizes create extraordinary and trusted customer experiences, prevent financial crime, and improve criminal justice evidence management.

NICE is a company limited by shares organized under the laws of the State of Israel. Our headquartersIsraeli offices are located at 13 Zarchin Street, P.O. Box 690, Ra’anana 4310602, Israel (Tel. +972-9-775-3151). InOur subsidiary, NICE Systems, Inc. has been appointed as our Agent for Service in the United States, our subsidiary, NICE Systems, Inc.and is located at 221 River Street, Hoboken, New Jersey 07030.

The Securities and Exchange Commission ("SEC") maintains an Internet site that contains reports, proxy and information statements, and other information that is filed electronically with the SEC at http://www.sec.gov. Our website address is at https://www.nice.com/company/investors/. Information contained, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein, and we have included our website address in this annual report solely for informational purposes.
Principal Capital Expenditures
In the last three fiscal years, our principal capital expenditures were the acquisition of other businesses and repurchases of our ADRs and distributions of dividends.American Depositary Receipts (“ADR”). For information regarding our acquisitions and ordinaryADR share repurchases, please see Item 5, “Operating and Financial Review and Prospects—Prospects – Recent Acquisitions,” and “Liquidity“Operating and Financial Review and Prospects – Liquidity and Capital Resources,” in this annual report. For additional information regarding our ordinaryADR share repurchases, please also see Item 16E, “Purchases of Equity Securities by the Issuer and Affiliated Purchasers,” in this annual report.
Item 4.B    Business Overview
Breakdown of Revenues

For a breakdown of total revenues by business model (cloud, products and servicesservices) and by geographic markets for each of the last three years, please see Item 5, “Operating and Financial Review and Prospects – Results of Operation,Operations,” in this annual report.

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About NICE
NICE is a global enterprise software leader, providing solutions for theAI-powered cloud platforms that serve two main markets: Customer Engagement and Financial Crime and Compliance markets. NICE’s solutions use advanced omnichannel analytics and automation based on an open cloud platform to improve customer experience as well as prevent financial crime.
NICE’sCompliance. Our core mission is to empower organizationstransform experiences to act smarterbe extraordinary and respond faster, both to provide superior customer servicetrusted and to prevent financial crime.create a frictionless and safe digital-first consumer reality where every interaction is intelligent, meaningful and effortless. Our software issolutions are used by customer service organizations of enterprises of all sizes and verticalsare offered in multiple delivery models, including cloud and on-premises.
Our strategy is based on serving rapidly expanding, specialized markets that require feature-rich solutions, with robust, comprehensive cloud platforms that are spearheaded by complianceAI as an overarching catalyst, propelling our unique AI-driven vectors of growth: using AI differentiation to expand our cloud win rates, positioning AI as the bedrock for driving rapid expansion into digital, utilizing AI to fuel massive platform-adoption and leveraging AI as a lucrative source for new domain-specific use-cases.

In the Customer Engagement market, we enable organizations to transform experiences with specialized AI-powered solutions aimed at augmenting employee activities with smart copiloting capabilities, delivering seamless automated customer self-service using conversational AI, orchestrating journeys across multiple channels and intents, meeting consumers wherever they choose to begin their journey, providing them with the knowledge element they need, and creating smarter personalized customer interactions. We help organizations transform their workforce experience with AI-powered solutions aimed at guiding and engaging employees, optimizing operations and automating processes to deliver seamless transition between automated service and human-assisted interactions. We are also digitally transforming the evidence process from police investigators and district attorneys to court and correction facilities, providing a single, streamlined view of the truth as the core of our Public Safety and Justice business, which is part of our Customer Engagement segment.

In the Financial Crime and Compliance market, we protect financial services organizations, with solutions that identify risks and help prevent money laundering and fraud, prevention groupsas well as help ensure financial markets compliance in financial institutions.
real-time. With an integrated cloud platformour holistic, data and advanced analytics solutionsentity-centric approach, we help financial services organizations understand their customers, engage their employees and improve their processes. Additionally, we help them predict needs and identify risks to create an excellent customer experience, prevent fraud and ensure compliance. These capabilitiesaddress the new dynamic of financial crime threats, which are enhanced throughsignificantly growing in the utilization of advanced automation and artificial intelligence capabilities. Our most advanced solutions constantly improve by applying machine learning to cross-industry and cross-organizations data and by offering collective insights.digital era.

NICE is at the forefront of twoseveral industry transformations;technological disruptions that have greatly accelerated in the last several years: the growing acceptance and adoption of specialized AI-powered solutions combining domain-specific use-cases, Generative AI and LLMs, the adoption of cloud platforms by enterprisesorganizations of all sizes and verticals, the shift of consumer and organizational preferences towards digital-centric services and experiences, an increase in consumer cross channel, self-service usage and the shift by financial institutionsneed to manage, optimize and engage a diverse workforce while retaining and attracting top talent. Our suite of integrated risk management solutions, for end-to-endbased on our unique domain expertise, enables customer service, financial crime prevention.prevention and criminal justice organizations to innovate and thrive with industry-leading cloud platforms that use domain-specific data and AI powered solutions.
In both cases, our ability to deeply integrate analytics and automation and apply it across multiple data sources and workflows enables customers to achieve greater effectiveness and efficiency.

We rely on severalmultiple key assets to drive our growth:
·•Our market-leading integrated open cloud platformplatforms which natively embed AI, analytics and solutions for omnichannel routing, data capture, analytics, automation, and artificial intelligence, many of whichare purpose-built for our specific domains, scale up to any sized organization, offer a comprehensive application suite for complete functionality, and are protected by a broad array of patents.
·Our ability to provide solutions that cover all market segments, from small to mid-sized business to large scale Fortune 100 enterprises.
· ��        •Our extensive portfolio of applications as well as a large partner ecosystem allow NICE’sthat address organizational needs across all our areas of domain expertise.
•Our broad array of proprietary technologies and algorithms in the domains of Generative AI, LLMs, automation, analytics, machine learning, speech-to-text, natural language processing, personality-based routing and others. Our native AI models are based on years of industry-specific data and domain expertise, consistently using machine learning for generating actionable insights.
•Our access to vast amount of CX data, derived from billions of domain-specific interactions of all types, enriching our applications and enabling us to build hundreds of CX purpose-built AI models.

•Our unique digital capabilities that are critical for organizations of all sizes and across all industries in dealing with the exponential adoption of digital in consumer preferences, banking transactions and justice agencies operations.
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•Our advanced data security and compliance capabilities that deliver trusted enterprise software across all our markets, including FedRAMP authorization to the relevant business lines, with 30 authorized applications, native PCI, supported by the most advanced SOC in the industry.
•Our flexible delivery model that allows our customers to benefit from a wide range of both cloud and on-premises solutions.
•Our solutions' market coverage of all segments, from small and mid-sized businesses to large scale Fortune 100 enterprises.
·•The mission critical nature of our solutions to the operations of our customers and our cloud platforms that are essential for enabling a scalable and sustainable work-from-anywhere environment.
•Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness for our solutions in our areas of operation.
•Our broad partner ecosystem that enables us to reach and serve a large number of customers across many countries.
·•Our loyal customer base. Today,base of more than 25,000 organizations in over 150 countries, across many industries, including 85 of the Fortune 100 companies, use NICE solutions.companies.
•Our strong profitability and free cash flow that allows us to invest in innovative solutions and product development and fuels strategic acquisitions.
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•Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and trends, which we introduce to the market through our direct sales force and distribution network.
·•Our skilled employees and domain expertise in our core markets allowsallow us to bring our customers the right solutions to address key business challenges and build strong customer partnerships.
·•Our access to data for improving our algorithms through machine learning and artificial intelligence, which relies on a combination of our extensive customer base, cloud-base deployments and domain expertise.
·Our services, customer support and operations, which enable our customers to quickly enjoy the benefits of our solutions, with multiple deployment models in the cloud or on-premiseon-premises throughout the world and support for full value realization and customer success.

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We have established a leadership position in many of our areas of operation by offering comprehensive and innovative enterprise-grade platforms, solutions and technologies. •Our customers, across multiple sizes and verticals, including banking, telecommunications, healthcare, insurance, retail, travel, gaming, public safety, state and local government, are benefiting from the tangible and practical business valueoutcome-oriented white-glove services that our solutions provide.

Business Overview
NICE is an industry leader operating in two main markets: Customer Engagement and Financial Crime and Compliance. NICE’s long-term strategy is to further strengthen its leadership position in these two market segments and further enhance its position in adjacent markets. During 2017, NICE continued to execute its long-term strategy through both innovation and acquisitions, enhancing our position as a leader in both markets.
 Customer Engagement
Organizations that serve consumers are challenged to provide high quality service that is responsive to consumers’ ever-changing needs across all touch points, and to differentiate themselves through efficient and effective customer experience. In addition, they have to find ways to leverage customer interactions and generate upsell opportunities. They need to accomplish these objectives while containing operational costs and adhering to regulations. NICE’s customer experience platform helps organizations address these challenges.
NICE is a global leader in the Customer Engagement market. Our platform and solutions serve thousands of organizations worldwide, providing a powerful combination of omnichannel routing in the cloud with workforce optimization (including recording and workforce management), analytics, automation and artificial intelligence capabilities. Our platform and solutions empower businesses to deliver consistent and personalized experience across the customer journey, optimize business performance and ensure compliance and are delivered both in the cloud as well as on-premise.
NICE serves contact centers, back office operations and retail branches, spanning multiple industries, including, banking, telecommunications, insurance, healthcare, business process outsourcing, government, utilities, travel, entertainment and e-commerce.
Our unified, enterprise-grade open cloud foundation supports contact centers of all sizes and geographic locations – from small single sites, to distributed remote agents, to global enterprises. The foundation is open and extensible, with over 250 Application Program Interfaces (APIs) and over 100 development partners.
Our smart omnichannel routing capabilities empower organizations to connect customer journeys across any channel to the right employee, provide a superior experience in the customer’s preferred channel, offer Interactive Voice Response (IVR) together with different channels consumers use today and be ready for future channels the organization wants to add.
Our advanced analytics solutions help organizations understand their customers, their employees and their processes to improve customer experience. Our solutions analyze both unstructured and structured data, coming from all touchpoints of the customer journey and data systems, allowing organizations to deliver the consistent and personalized experience that customers today expect, as well as improving operational efficiency, ensuring regulatory compliance and increasing revenues.
Our adaptive persona-based and analytics-driven approach for agent engagement and improvement allows organization to drive employee productivity and motivation. Our workforce optimizations solutions enable organizations to ensure that their employees are engaged, properly trained and in a position to provide the highest quality of service.
Our automation and artificial intelligence solutions streamline service delivery by releasing employees from the manual execution of repetitive processes and employing software robots to handle them, leading to reduced handle time and costs, improved response times and happier customers and employees. 
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Financial Crime and Compliance
Financial institutions are regularly challenged with prevention of fraud and money laundering, and compliance adherence. They have a common need for risk management solutions that will help them stay ahead of the evolving landscape of threats and efficiently adapt to changes in business and regulatory requirements.
Furthermore, many organizations that are not traditional financial institutions, including alternative payment platforms, cryptocurrency exchanges, gaming, fintech, etc. find themselves under similar threats and under increasing regulatory scrutiny and need to quickly adjust and ensure they adhere with those requirements.
NICE is a global leader in advanced analytics based applications to fight financial crime and ensure compliance. NICE provides organizations with proven capabilities for real-time and cross-channel fraud prevention, anti-money laundering, brokerage compliance and enterprise-wide case management. With this set of solutions, financial institutions can tighten risk controls, lower operational and information technology costs, enhance investigation efficiency and improve customer experience.
NICE serves the financial crime and compliance needs of hundreds of organizations, including many of the world’s top financial institutions, regulatory authorities and emerging fintech companies. Our solutions monitor millions of financial transactions daily, enabling organizations to mitigate the risk of financial crime, improve compliance and reduce operational costs.
Our open platform serves as an end-to-end financial crime and compliance solution, this allows our customers to use a unified platform instead of integrating multiple solutions, whether home-grown or from third party vendors. The NICE platform handles the entire process, including detection, investigation, remediationachieve greater efficiency, higher revenue, and reporting. Such integrated open platform allowslower operating costs with our customers to improve detection, lower costs, keep tight control over their process and automate regulatory reporting.solutions.
Our recently introduced Autonomous Financial Crime capabilities, that incorporate artificial intelligence and robotic automation into our platform allows to further increase detection, reduce noise and automate many previously manual routine tasks.
Our Actimize Watch solution allows us to better protect financial institutions from criminal threats by leveraging the cloud and machine learning technologies. Each customer that subscribes to the cloud delivered service can tune their data, and any new threat pattern that is detected is shared with all other customers of the service. As such, Actimize Watch serves as an inoculation – protecting all organizations from an attack perpetrated against a specific organization.
Mid-size financial institutions are finding themselves under increased pressure to adopt compliance best practices. Our Essentials platform is a cloud-based financial crime and compliance solution that enables smaller organizations to enjoy the capabilities previously only afforded to large organizations.
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We plan to continue to expand our addressable market by providing cloud solutions to smaller institutions and by expanding to non-traditional financial institutions. We also expand our value to our customers by leveraging artificial intelligence, the cloud and robotic automation which facilitate both better protection and significant cost reductions.
Industry and Technology Trends
Following are the key cross-industry trends that we have identified as driving demand for our solutions:
•AI is disrupting businesses across all industries. AI is reshaping the way organizations are conducting their businesses across all functions, allowing them to increase the velocity of strategic decision-making to overcome complexity. Recent advancements in AI technology, have made AI a strategic imperative for organizations of all sizes. Those advancements include conversational AI that enables intelligent human-friendly communication, fully aligned with brand values and knowledge, and Generative AI that is forging new frontiers in content and code creation while democratizing once highly specialized skills across the organization. AI is also turbo-charging employee capabilities to amplify skilled labor, and creating personalized, humanized connections, infusing real-time decisioning and predictive tools.
•Large Language Models are transforming interfaces and interactions, changing the way knowledge is accessed and used by consumers and impacting how employees conduct day to day tasks. Generative AI enables new use-cases helping create smart, personalized, and timely consumer and employee experiences.

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•Consumers and organizations are embracing digital transformation at an accelerated pace. To remain competitive, organizations need to provide digital solutions to address consumers' digital interactions and self-service needs, digital banking compliance challenges, and digitalization of evidence management. Digital transformation is driving a convergence of siloed systems and disjointed technology stacks, replacing them with a single infrastructure based on an open foundational platform that provides complete functionality and seamlessly integrated workflows.

•Organizations of all sizes are adopting open cloud platforms as the foundation for their applications to allow faster innovation cycles and better business agility. In recent years, we are seeing acceleration in cloud transformation while organizations are moving to an agile mode of operation to enable flexibility and lower operational costs.
•Organizations are replacing complex, siloed legacy point solutions with cloud platforms that offer a complete suite of applications. An underlying cloud native platform at scale as the foundation for a comprehensive suite of integrated applications opens up opportunities for creating innovative process workflows and gain centralized, valuable business insights from the efficient sharing of their own data among different suite functions.
Customer Engagement trends that are driving demand for our solutions:
•Growing demand for domain-specific AI-infused solutions that create better customer experiences, while maintaining enterprise-grade security and scalability standards. AI solutions purpose-built for CX use-cases, while also incorporating Generative AI technology and LLMs, play a pivotal role in revolutionizing the CX domain, particularly in elevating the efficiency of customer service agents, and delivering smarter, more engaging self-service experiences. By incorporating AI-powered products, organizations empower their agents with tools that automate routine tasks, allowing them to allocate more time and attention to complex customer issues. Generative AI enables agents and customers to access dynamic and context-aware information, enabling quicker and more accurate responses. AI-driven intelligent conversational bots provide self-service capabilities, which improve customer experience as well as reduce the cost to service consumers.
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Organizations are looking for open software platforms to be the foundation for their applications. Open platforms provide unified fully-integrated solutions that are all based on a shared framework of service, allowing for fast innovation, easy deployment, flexible functionality and an enhanced ecosystem of solution providers. Third party solutions can be easily added to extend the functionality of the platform to match a customer’s or industry specific needs.

•Customer service organizations are looking for AI-powered solutions that automate work processes in order to increase efficiency and productivity while reducing costs. These solutions significantly reduce the number of manual and time-consuming tasks agents and employees need to perform, freeing them to spend time in added-value activities. Organizations are looking for smart ways to identify opportunities to fully automate both human-assisted and autonomous processes at scale.
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Cloud adoption is accelerating and demand is expanding across segments. Cloud solutions have become the most popular way to achieve flexible and cost-effective deployment models for enterprise systems. These include SaaS, Contact Center as a Service (“CCaaS”), Infrastructure as a Service, Platform as a Service, and other cloud-based solutions. By using cloud solutions, customers of all sizes can scale their operation quickly and easily while paying only for the amount of resources they use. There are several market needs driving this trend, including the desire for business agility, the pressure to continually improve operational efficiency and innovate to reduce total cost of ownership (“TCO”) and to ease implementation complexity.

•Knowledge Management (KM) is becoming increasingly critical in AI management, serving as a foundational element that ensures AI systems are effectively guided and aligned with an organization's brand identity and values. By integrating KM practices, organizations can establish robust guardrails for AI, ensuring that these technologies operate within predefined parameters that reflect the brand's ethos and customer engagement strategies. KM enables organizations to continuously refine and update AI models with relevant, accurate information, ensuring AI solutions remain responsive to evolving customer needs and market trends.
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Consumers demand a holistic omnichannel experience that is effortless and consistent across all touchpoints. Consumers demand immediate, effortless, consistent and personalized experiences across all communication channels, including mobile apps, web, chat, SMS, social, and over the phone, with the least amount of effort. They easily and often traverse these channels, depending on their task, location, time-of-day or even progress within a certain process. They view all these channels as one, and organizations are expected to quickly adapt to the large variety of channels as well to view them in the same way their consumers do, offering a consistent experience across all touch points.

•Increased use of advanced digital channels, especially self-service, as first choice by consumers for interaction with organizations. The nature of these advanced digital channels such as chats, web, mobile engagement and social media applications, is different from voice and traditional digital channels due to the asynchronous response times and ability to carry the conversation for extended periods of time. Organizations need to make sure they offer seamless, effective and human-like self-service capabilities leveraging conversational intelligent virtual agents (IVAs) that deliver an integrated and high-quality experience, while maintaining the appropriate levels of staffing, quality management and internal efficiencies.
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Analytics has become the main driver for improving customer experience. Organizations are increasingly adopting a customer-centric strategy to get better understanding of customer behaviors and gain insight into the omnichannel customer journey. Organizations are increasing the use of artificial intelligence empowered tools in order to achieve focused decisioning and real-time action solutions – being proactive instead of reactive and predictive/prescriptive instead of descriptive. Front and back office functions seek to employ analytics to better optimize their operations. These tools include, among others, cognitive engagement solutions, like interactive communications, predictive analytics and machine learning.

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Process automation and machine learning are increasingly being used to automate financial investigation tasks where it may not be necessary to have human involvement. This frees up investigators from low value, high volume manual tasks so that they may better focus on more important and strategic tasks. This leads to better resource utilization, increased accuracy and productivity, and improved return on investment.
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Companies are looking for ways to engage their employees in personalized and adaptive ways to improve workforce productivity and satisfaction. Contact center employees are heterogenic with different needs and requirement. These employees, especially those that belong to the “millennial” generation, expect organizations to hear their voice and engage them individually. Successfully engaging and motivating these employees in a personalized manner reduces attrition levels, hiring and on boarding efforts and improves the experience level of the team, resulting in an improved experience for the end customers.
•Organizations need to enable their employees the flexibility to work from anywhere and keep them highly engaged, while enabling supervisors to monitor the performance of their agents. To do that successfully, organizations are continually looking for ways to simplify daily employee activities, engage
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Organizations look at Big Data technologies to analyze a wealth of information, derive new business insights and act in real time. Structured and unstructured data, from millions of omnichannel interactions and transactions, open up an opportunity to gain deep insight and human understanding, regarding customer and employee intentions and behavioral patterns. Organizations keep looking for ways to elevate their usage of Big Data and advance from glimpses of interactions and transactions to a meaningful understanding of behaviors, and to identify a customer’s underlying concerns. Furthermore, they strive to ensure compliance in real time, which is then translated into action and into providing the best solution and an accurate response.
and motivate them to ensure their productivity and satisfaction is maintained, while supervisors gain visibility and are able to plan, evaluate, coach and drive performance, in ways that allow transparency and increase productivity.

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Automation and machine learning are increasingly used to enhance customer experience and efficiency. Smart and self-learning machines allow for the automated enhancement of real-time guidance and analytics-based insights (including speech and text analytics), behavior analytics and technique focused on profiling, trending and pattern detection. As a result, organizations increasingly use these technologies to provide faster and more efficient customer service.
•Proactive (outbound) customer engagement interactions are growing relative to reactive (inbound) customer engagement interactions. Amid rising consumer expectations and growing economic changes, there exists a point of inflection when customer experience becomes proactive. This need for proactivity is a key element in an overarching customer engagement strategy for many organizations. AI-driven customer service enables organizations to proactively engage with consumers, solving issues before they occur or to solve basic service problems for contact centers.

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Chat and conversational bots to contain and deflect calls and interactions into self-service. Companies are looking for new and advanced digital means to improve customer satisfaction. Further development of intelligent bots will improve operational processes, increase flexibility in customer interactions with the contact center, as well as decrease wait time while providing a personalized experience. This technology will allow the human workforce to focus on more complex added value services.
•CX markets remain focused on reducing labor costs. Service organizations are burdened by soaring labor-driven costs, often exceeding 90% of total expenditures, and are therefore ripe for a massive shift of spend from labor to technology, replacing manual labor with specialized AI automation solutions.

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Preventing financial crime and ensuring stringent compliance and evolving regulatory environments. Financial services regulators are calling for a fundamental change in the underlying culture of the entities that they regulate, in order to send a strong message from the executive suite on down that protecting an institution, its customers and its assets, is of primary importance. The need to ensure compliance with requirements for advanced technological solutions can be seen across customer interactions and financial services markets. Financial services organizations are increasingly being asked to document and prove to their regulators that the controls that are in place are working and effective. This is evidenced by substantial fines that have recently been levied against such institutions. Furthermore, the regulatory requirements are constantly evolving, requiring financial institutions to respond with solutions that are up to date with the latest modifications.
•Growing volume of digital evidence, contained in multiple disjointed systems, labor intensive processes and staffing challenges are all impacting the ability of government agencies to deliver on the promise of timely justice. Government agencies of all types - from police and first responders to prosecutors, defense attorneys and courts - are looking to digital transformation as a way to overcome the challenges of digital evidence silos and disjointed work processes. Through digital transformation, stakeholders can work smarter and more efficiently within their own agency, and effectively share digital evidence throughout the criminal justice system.

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An unpredictable threat landscape environment. The growing number of data breaches and cyber security incidents puts increasing amounts of personally identifiable information and sensitive data at risk of exposure. This information can be used to open accounts that can be used for laundering money, terrorist financing, account fraud, market manipulation, social engineering, and more. Such potential risks threaten an organization’s reputation, as well as create large financial exposures due to both losses as well as fines. In addition, the large volumes of data, having to do with both internal and external threats, place an enormous operational burden on organizations dealing with threats. Having the ability to aggregate, analyze, compare, and decision those incidents and cases increasingly points to the need for a robust and comprehensive way in which cases are handled by large financial services organizations.
•With Emergency Communications becoming more complex, and staff turnover at an all-time high, digital transformation is becoming critical. Emergency communications managers spend much of their time handling manual, time-consuming tasks related to daily operations, quality assurance, reporting, training, development, hiring, staff supervision and fulfilling emergency incident evidence reproduction requests. Training new staff to handle the wide range of emergency calls is a significant cost burden. Digitally transforming and automating quality assurance, incident reconstruction and performance metrics tracking frees up managers to spend more time engaging with and coaching staff. This helps improve and retain employees, resulting in more effective emergency incident handling, higher staff retention, and lower turnover-related costs.

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An increasing need to control cost of compliance. The regulatory pressures and increasing threat landscape have driven a sharp increase in the number of risk and compliance personnel, which in turn have dramatically increased the cost of compliance. Customers are turning to technology to allow them to control these costs without compromising their compliance adherence and while continuing to lower their exposure to financial crime.
Financial Crime and Compliance trends that are driving demand for our solutions:
•Growing demand for embedded AI across all fraud, financial crime and risk management controls. Financial services organizations are transforming to ensure safer and more unhindered customer access to accounts across all channels and enable safe and secure transactions. At the forefront of these initiatives is the need to leverage purpose-built advanced AI to ensure regulatory compliance and provide exceptional customer experiences while stopping financial fraud and preventing the laundering of illicit funds.
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An integrated risk management platform is becoming more prevalent. The ever-expanding risk landscape and sophistication of financial criminals, as well as the need to keep costs in check, creates a growing need for a single view of financial crime-related risk, thereby allowing organizations to aggregate and analyze the different detection signals coming from throughout the financial services organization. Financial institutions are seeking a single platform that aggregates all such information from across the organization, with the capabilities to analyze it, act on it and present it in a single dashboard to both operations and executives.

•Generative AI and LLMs are being sought out and tested to streamline and further automate financial crime investigation processes and tasks where it may not be necessary to have as much human involvement. This frees up investigators from low value, high volume manual tasks so that they may better focus on more important and strategic work. This leads to better resource utilization, increased accuracy and productivity, and improved return on investment.
•Preventing financial crime and ensuring stringent compliance with evolving regulatory environments. Regulatory scrutiny of financial institutions continues to apply pressure on organizations to adopt more advanced regulatory compliance and risk management technology. Furthermore, regulators have been expanding their focus from the largest financial institutions to a broader market, including smaller banks and alternative financial service providers, and are creating increased demand for risk and compliance related solutions.
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•An unpredictable threat landscape environment. The growing number of data breaches and cyber security incidents put increasing amounts of personally identifiable information and sensitive data at risk of exposure. This information can be used to open accounts that can be used for laundering money, terrorist financing, account fraud, market manipulation, social engineering, and more. In addition, the surge in consumer scams that lead to account takeover and authorized fraud threaten an organization’s reputation and their customer satisfaction, as well as create large financial exposures due to both losses as well as fines. In addition, the large volumes of data, related to both internal and external threats, place an enormous operational burden on organizations. Financial institutions are seeking advanced AI solutions to help address these threats, and ultimately protect their firm and their customers.

•An increasing need to control cost of compliance. The regulatory pressures and increasing threat landscape have driven an increase in the number of risk and compliance personnel, which in turn has dramatically increased the cost of compliance. Organizations are turning to technology to allow them to help control these costs without compromising their compliance adherence while continuing to lower their exposure to financial crime.
•Financial institutions seek a single AI platform that aggregates and analyzes financial crime-related risk in one place. The ever-expanding risk landscape and sophistication of financial criminals, as well as the need to keep costs in check, creates a growing need for a single view of different detection signals throughout the financial services organization. A single platform allows financial services organizations to analyze the data, act on it and present it in one dashboard to both operations and executives.
•Financial institutions are adopting cloud platforms for financial crime and compliance solutions. Top tier financial institutions have been slow to adopt cloud delivery driven by the sensitive nature of their data, but are now realizing the value of the cloud, and are increasingly choosing to deploy solutions on their own private cloud or on public cloud infrastructure.
•AI and Machine learning is being adopted in the fight against financial crime. Traditional methods of financial crime detection, such as rule-based systems, are limited in their ability to adapt and detect new types of financial crime or changes in criminal behavior and patterns. AI and Machine learning algorithms can be trained on historical data and continue to improve their performance as they encounter new behaviors. This enables them to detect patterns and anomalies that may be indicative of financial crime.
•Financial institutions are being disrupted by digital players providing improved experiences and more personalized products and services. Banking services and many other financial service organizations are being challenged by neo-banks, fintech companies and other digital players. To improve customer experiences, and compete against these digital players, financial institutions continue to invest heavily in digital capabilities. Consumers have increased expectations for faster and frictionless processes. In terms of risk, digital banking moves the consumer away from the branch creating new risks around identity verification, customer due diligence and general monitoring of consumer financial behavior. The expectations for fast response times drive financial institutions to re-design their compliance processes to be able to respond in minutes rather than days or weeks, which in turn requires broader adoption of AI across the customer lifecycle.
Strategy
Our long-term strategy is to further broaden our industry leadership in both the Customer Engagement and Financial Crime and Compliance market segments using NICE’s unique domain-specific AI capabilities and our foundational platform, applications and data assets.

We continue to lead fast-growing vast markets that also manifest unique favorable attributes: they require constant problem solving that typically transcends economic fluctuations; they present complex challenges that require feature-rich solutions, preventing commoditization and giving rise to high barriers of entry that keep potential competitors at bay; they provide an abundance of opportunities fueled by the distinctive lag of technology adoption; and they are burdened by soaring labor-driven costs, often exceeding 90% of total expenditures, ripe for the massive shift of spend from labor to automation.

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NICE is well-positioned across all markets, given our unique set of assets: we are categorically recognized as one of the top leaders in every market we operate in; we offer complete, robust and dominant platforms; we deliver a wide-ranging portfolio; we own the most critical data elements that form the foundation for AI; and we established wide-reaching global ecosystem. On top of it all, we are a highly profitable company, with strong balance sheet, acting as a springboard for our organic and inorganic growth.

In the Customer Engagement business, we intend to continue to leverage CXone to further grow our leadership in the CX market. We plan to achieve this through strategic AI-powered product launches fueled by organic developments and acquisitions. Furthermore, we intend to continue to evolve as the global leader in all major markets and segments for managing customer service interactions – hold the largest market share for CCaaS and WEM solutions; provide a significant share of next gen digital engagements; be the most adopted self-service conversational AI provider in the CX market, providing purpose-built AI for CX solutions; become the leading provider of AI copilot capabilities for augmenting CX employees at all levels, offer the most extensive customer-experience marketplace platform and data; and continue to expand into international markets in both the high-end and the mid to low end of the markets we serve. In Public Safety and Justice, we intend to cement and increase our leadership in the digital transformation of the US Justice System, becoming the de facto platform for workflow management across the Criminal Justice system. We will do so by leveraging our Evidencentral platform for handling massive amount of digital evidence and cases with streamlined workflows; using AI to further uncover insights and automate Justice processes; and delivering effective justice from the overwhelming amounts of evidence for every stakeholder in the Criminal Justice eco-system.

In our Financial Crime and Compliance business, we intend to expand to be the largest and leading cloud provider of financial crime and compliance solutions in all segments and across all major markets – further embedding AI across our portfolio while leveraging the X-Sight platform to cloudify the high end of the market; enhancing Xceed to be the cloud platform of choice in the mid-market; leveraging our unparalleled collective intelligence to provide a more holistic view of digital identity risk; and better monetizing data, based on advanced AI capabilities.


Leading our markets with domain-specific AI solutions
We intend to continue augmenting our AI leadership across all our markets, as AI establishes itself an overarching catalyst, propelling NICE’s four vectors of AI growth strategy:

•AI fuels our cloud win rate - We are witnessing an enterprise cloud inflection point, where the lion’s share of large-scale cloud transitions is about to take place. AI is enhancing our differentiation, substantially expanding our cloud win rates and displacements.

•AI as the bedrock of rapid expansion into digital - NICE's digital solutions encompass the range of digital channels. AI is a strong contributing factor for migration from legacy digital vendors to NICE, contributing to the growth in volume of digital engagements managed by our platforms.

•AI fusion powers our platform adoption – Enterprises are pivoting from multiple point solutions to building and simplifying their tech stack by standardizing on a single platform. This trend is now gaining a significant boost because it is the only viable way to implement AI that works and requires well designed AI-embedded platforms that were built with specific domains and use-cases in mind.
•AI as endless source for lucrative new use-cases – Organizations are coming to a clear realization that generic Generative AI and LLM solutions are not providing the expected results. NICE’s specialized AI, with its thousands of constantly evolving and expanding models, based on billions of interactions, is fast becoming a true viable option for addressing the complex use-cases of our markets.


Empowering organizations to lead by adapting to change
We intend to continue leading the market by leveraging several major industry trends and evolving our offering to meet our customers’ current and future needs while focusing on key strategic pillars:

•Cloud Foundation – we provide cloud-native open platforms for our Customer Engagement and Financial Crime and Compliance offerings. This allows our customers to facilitate adoption of cloud infrastructure to accelerate innovation and reduce integration, implementation and operational efforts.

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•Complete Platform Suite – across all markets, we provide one of the industry’s most comprehensive set of integrated, scalable, world class applications. Our ability to provide our customers with a full range of capabilities, for organizations of various sizes that can provide for their various needs using a single vendor unified suite, gives us a strong market differentiation in today’s drive for simplicity, cost savings and elimination of legacy silos.

•Digital Engagement - we enable organizations to deliver experiences in every possible digital way across the full customer journey, keeping them engaged and informed, leveraging smart self-service, conversational AI and knowledge across multiple channels to solve for service needs, as well as providing secure digital banking, and helping public safety organizations shift to digital interaction and digital evidence environments.

•AI – we accelerate business transformation with purpose-built AI-embedded natively across our platforms, making our applications and business processes smarter. Our domain expertise, proprietary data, advanced technology, and pre-built AI models create industry-leading solutions for all our market segments.

•Large Language Models and Generative AI – we leverage LLMs and Generative AI to help consumers and employees access knowledge and interact with each other effortlessly and safely, while improving employee productivity and customer experience.

•Data - recognizing the power of data, we consider data as a key component and a strategic asset across our portfolio and leverage it as a basis for our purpose-built AI solutions. We manage our customer data with security and compliance measures while leveraging it to equip our customers with a data-driven approach to manage their business, reduce cost, improve performance and identify customer insights.

Strengthening our market leadership
We intend to solidify and increase our market-leading position by continuing to offer and expand our comprehensive portfolio of solutions and by leveraging several major industry trends:
·The shift to the cloud – we provide a cloud offering for both Customer Engagement as well as for Financial Crime and Compliance. This allows us to provide a broader set of functionalities with the strength of our integrated offering.
·Expanding our market share in the mid-market - our cloud platforms as well as our expanded partner network and our marketing and sales organizations allow us to reach and to serve smaller organizations in a more cost effective way than in the past, significantly enhancing our market opportunity
·Adoption of artificial intelligence and automation – NICE expertise and technology in the domains of Machine Learning, Artificial Intelligence and Automation as well as our unique access to data to train these algorithms via our cloud offering, allows us to provide market leading solutions in these domains.
Our brand, global reach, financial resources, extensive domain expertise and ability to deliver a wide array of solutions for large, organizations, as well as small and mid-sized companies,organizations, will also contribute to increasingfurther anchor our market-leading position.
In 2017 we considerably enhanced our cloud offering through NICE inContact CXone™, the global leading cloud customer experience platform as well as NICE Actimize Essentials, our financial crime and compliance cloud offering. These offerings enable us to grow our value to our existing customers, as well as expand NICE’s reach to the mid-market and open up new opportunities in large enterprises, considerably increasing our addressable market size.
We plan to continue to develop our open cloud platforms and advanced purpose-built AI capabilities for both the Customer Engagement and Financial Crime and Compliance markets to enable unified integrated solutions that offer fast innovation and easy implementation. We also planquick time to continuevalue. These platforms allow us to develop DevOne, our partners and developers ecosystem, and our advanced applications marketplace, CXExchange. These allow our customers to expand the functionality of CXOne™ to cover even more business needs.
In 2017 we also introduced Autonomous Financial Crime and Compliance – a platform that leverages big data, artificial intelligence and advanced automation. Autonomous Financial Crime and Compliance allows financial institutions that have been burdened by significant increases in compliance demands as well as an ever increasing rate of fraud attempts to automate many remedial tasks and to increase their detection rate, all leading to significant savings in operational cost.
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We intend to drive additional growth by continuing to developdeepen our direct relationships with our customers, nurturingnurture our partner ecosystem and creatingcreate new growth in each ofopportunities. AI serves as a strong differentiator and catalyst for cloud migration and our platform adoption.

In our Customer Engagement business, areas. Additionally, we intend to continue being a leader in the CCaaS market with CXone, one of the industry's most comprehensive suite of integrated, scalable, world-class CX applications with embedded purpose-built AI delivered on a single open cloud platform. CXone enables rapid innovation, agility and scalability, and continue to extend our offering around the goal of providing high-quality, proactive, personalized experiences for consumers, organizations and service agents based on our leading cloud native CX platform, CXone, digital capabilities and NICE Enlighten AI, our purpose-built AI for the customer engagement market. With CXone, organizations can meet their customers wherever they choose to begin their journeys, and provide the right attended or unattended service, based on their profile, preferences and needs. This includes a broad suite of digital, analytics and purpose-built AI-powered integrated applications, used for understanding consumers, employees and business needs and preferences, and leveraging that information to create orchestrated journeys that cover every interaction. We intend to continue enhancing our NICE Enlighten AI solutions with the latest advancements in LLM, incorporating Generative AI capabilities to deliver purpose-built copilot, self-service and management capabilities. Alongside our existing offering, we plan to lead in new product categories, as we introduce novel solutions and enter additional market segments.
We will continue to extend our leading market position for AI-powered cloud solutions, aimed for providing frictionless experiences in and outside the contact center, catering to organizations of all sizes and replacing legacy on-premises infrastructure players. We will also continue to enable our customers to extend our solutions through innovative third-party applications via our DEVone dedicated partner ecosystem that our customers can self-select through our platform’s CXexchange application marketplace.

Our Evidencentral cloud digital evidence management platform enables public safety, law enforcement and criminal justice agencies to transform to unified digital evidence workflows by managing incident response, investigation and prosecution digitally and embedding analytics and AI throughout the entire criminal justice process, enabling agencies to
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Our productsleverage data to the fullest and work together collaboratively to enhance public safety and deliver faster, fairer justice processes.
In our Financial Crime and Compliance business, we will continue to expand our offerings across market segments by providing new and enhanced solutions that protect financial services organizations and their customers earlier in the customer lifecycle and by further embedding AI across our portfolio of solutions. With our X-Sight cloud platform, we provide open, scalable and flexible solutions with broad financial crime and compliance coverage to the top tier of the market. Continued innovations on X-Sight will further cement our leading market position. With our Xceed platform, we provide packaged anti-money laundering (AML) and fraud coverage solutions to the mid-market, enabling smaller organizations to realize greater protection with quick time to value. In the Financial Crime and Compliance business, our solutions are infused with Always on AI, our multi-layered approach that injects AI, machine learning, automation, natural language processing, LLMs, and other advanced technologies can providethroughout the financial crime and compliance value in marketschain. This allows financial services organizations to merge innovative and patented technologies to effortlessly connect data and apply AI to turn raw data into financial crime intelligence that are adjacentfuels analytic precision to detect and prevent financial crimes. These offerings enable us to add value to our existing markets, such as back office operations, alternative payment service providers, fintech, gaming and others. We plan to expand our market reach into such adjacencies, by adapting our products and leveraging technologycustomers, as well as our customer relationships and brand to expand our reach and open-up new opportunities, considerably increasing our total addressable market.

Helping our on-premises customers and new customers migrate to the cloud

Our leading cloud platforms and domain expertise, along with our flexible migration models, enable our customers to adopt cloud solutions and migrate to the cloud at the pace that matches their needs and preferences.

To support all of our customers and the different pace of their cloud migrations, we intend to continue offering our solutions in a variety of delivery models, which enable us to be flexible in effectively addressing our customers’ needs.

We are the trusted advisor for our on-premises customers as we support their migration from legacy infrastructure to the cloud. We provide deep cloud expertise and migration tools to simplify configuration, reporting and data collection from legacy systems. Further, we offer holistic transformation consulting services, provided exclusively by our skilled employees, delivering a smooth transition for our customers.

Continuing to deliver more comprehensivecross-sell and upsell our full solutions portfolio to our existing customerscustomer base

One of our main assets is our growing customer base. We believe there are many opportunities to expand, up-sell and cross-sell within our existing cloud customer base. This includes increasing our customers’ exposure to the full breadth of our portfolio that weportfolio. We continue to enhance to provide our customers with new benefits by expanding the offering they already use, and adding new products.
products and solutions.
Continuing organic innovation and development, while also pursuing acquisitions
We intend to continue investing in innovation across our portfolio and development,platforms and continue to augment our organic growth with additional acquisitions that will broaden our product and technology portfolio, expand our presence in selected verticals, adjacent markets and geographic areas, broaden our customer base, and increase our distribution channels.

Maximizing the synergetic potentialsynergies across some of our businesses
A lot ofAt NICE, we value and promote a synergetic approach to our platforms and solutions are based on the same methodology(e.g., sharing information, knowhow, and design practices in transitioning to native cloud platforms across Customer Engagement and Financial Crime and Compliance). We will continue leveraging our solutions' common cloud architectures as well as methodologies of capturing and analyzing massive amounts of structured and unstructured data, providing real-time insight and driving process automation. Thus, an important pillar of our corporate strategy is to maximize theMaximizing these synergies and cooperation between our business areas where possible.is a key pillar of our corporate strategy.

We have already introduced several joint offerings across our business segments and combined go-to-market efforts. We will continue leveraging our extensive complementary domain expertise, technological know-how, capabilities and development, in order to grow our business through additional cross-sell and up-sell opportunities. Moreover, this synergetic approach reflects a core NICE value of nurturing a corporate culture focused on delivering high-quality customer service.
Increasing our footprint in select geographical regions
Providing innovative, real-time analytics and machine learning and cross-channel solutions with significant impact for our customers’ businesses
Our solutions address the growing, unmet need to more accurately analyze and extract meaningful information from structured and unstructured data in real time, and to do so across multiple channels, in a wide variety of businesses and operational environments. We enable our customers to embed both real-time and offline analytics into their business processes, positively impacting these processes as they occur, which in turn has a positive impact on their businesses.
We plan to continue enhancing our capabilities in operationalizing Big Data with analytics, behavior prediction, decisioning and guidance. We also plan to continue enabling organizations to address the full lifecycle of interactions, transactions and events (i.e., before, during, and after they occur).
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Offering a flexible business model
Our strategy is to offer our solutions in alignment with both on-premises and cloud-based enterprise software business models, adjusting our solutions to our clients’ changing needs.
In the on-premises model, customers purchase a license to use our software indefinitely, while also purchasing related professional services and annual software maintenance. We also offer someAs part of our solutions under a term license, according to which customers purchase a license to usegrowth strategy, we are expanding our software for a fixed period of time. Growthbusiness in maintenance revenues (which is primarily a result of high maintenance contract renewal rates,select regions globally, where we can further grow and establish our presence in less penetrated, growing markets. We are doing this by leveraging our existing offering and
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growing partner ecosystem, in both the growth of our on-premises client base and the increase in cloud sales) is driving an increase in our recurring revenue.

We offer our solutions in cloud-based models as well, providing our customers access to faster innovation, more flexibilityCustomer Engagement business as well as a lower TCO. Given the growing demand for these models, we’ve expandedFinancial Crime and Compliance business. We continue to expand our portfolio and penetrated the mid-market segment, as well as enabledinternational partner network.
Expanding our existing customers to broaden their useglobal partnerships
As part of our products. We intendgrowth strategy, we are investing in expanding relationships with global go to continue offeringmarket partners that we believe can accelerate our solutions in a variety of models, which enables us to be flexible in effectively addressing our customers’ needs. This, in turn, will enable us to focus on growth and improving profitability.
An increase inwhile ensuring the proportion of recurring revenue (both from recurring maintenance and cloud sales) outsuccess of our overall revenue mix is expectedcustomers. In addition, as part of our open platforms, we are enabling the success of our technology partners who complement our product offerings to provide increasingly predictable revenue streams.bring unique value to our customers.

Customer Engagement Business Strategy

Our strategy is to extend our market leading positioncontinue serving as a leader in the customer engagement space, while continuing toCustomer Engagement market and expand our reach beyond the boundaries of the contact center toby fundamentally reinventing the differentway consumers interact with organizations in today's digital era. We are driving a new customer experience channelsstandard by intelligently meeting customers wherever they choose to begin their journey, enabling resolution through generative purpose-built AI and touch pointsdata-driven self-service and providing agents with multiple delivery models.knowledge and tools to successfully resolve any need in real-time. We intend to achieve this by:
•Infusing AI, analytics and automation into every element of our Customer Engagement offerings to enable predictive and proactive service, workforce augmentation and automation. We leverage insights from an extensive number of interactions, with hundreds of purpose-built CX AI models to create frictionless customer experiences that are smarter and faster.

•Enabling our customers to deploy AI-driven intelligent conversational bots, to provide self-service and assisted service capabilities, which improve customer experience as well as reduce the cost to service consumers.

•Providing agents with unique unified and native capabilities including digital collaboration, agent assistants, AI-powered copiloting capabilities, real-time guidance, to assist agents, using conversational context and knowledge-based information.

•Empowering our customers to anticipate business demands with smarter, AI-based forecasting and scheduling tools, and providing their workforce with AI- enhanced training and analytics tools to help them gain the accountability, transparency and flexibility they need around their performance, as part of our holistic WEM suite that enhances both agent engagement and customer experiences.

•Offering CXone, the global leading unified cloud customer engagement platform that combines guided journey orchestration for voice and digital channels, and comprises of tightly integrated IVR, advance digital capabilities, self-service, bots, proactive conversational AI purpose-built for CX use-cases, knowledge management, agent assist tools, customer journey analytics, leading Workforce Engagement Management and automation solutions.

•Expanding our capabilities to provide holistic digital and self-service experiences throughout the entire customer journey, starting at the very beginning on search, apps and other digital doorsteps, and continuing through self-service and engagement with the contact center through voice or digital enabling customer service organizations to provide a true omnichannel service experience across all touchpoints.

•Leading cloud transformation across the entire Customer Engagement portfolio for all market segments and regions to enable rapid innovation, enhance flexibility and agility, and lower operational costs.

•Offering our customers the ability to extend our solutions through innovative third-party applications provided by providing solutions that focus on:our DEVone dedicated partner ecosystem. Our customers can self-select these third-party applications from our platform’s CXexchange marketplace.


·
Offering a unified, open, cloud platform that combines omnichannel routing, IVR, self-service, customer journey analytics, adaptive WFO and automation: NICE inContact CXone™, a global leading cloud customer experience platform.
•Increasing our presence across all verticals, regions and market segments with CXone, AI innovation and enhanced data to help organizations adapt to today’s complex consumer expectations as well as ever changing CX realities.

·Offering solutions to all customer touchpoints, as well as solutions that benefit back office operations, retail branches, and self-service channels with the ability to easily connect future channels.

·Offering our clients the possibility to extend our solutions through innovative third party solutions that they can self-select using our platform’s CXexchange application marketplace as part of our DEVone dedicated partner ecosystem for developers.

·Leading cloud transformation across the entire Customer Engagement portfolio for all segments and regions to enhance flexibility, agility and lower TCO.

·Providing a comprehensive suite of customer service essentials, from predictive omnichannel routing and WFO to advanced analytics based applications.

·Transforming the workforce through Adaptive Workforce Optimization (Adaptive WFO), by creating and managing agent personas through enhancement of the employee experience and engagement, in order to drive their motivation and reduce attrition.


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·Infusing analytics into each and every element of customer engagement.
•Leveraging our large customer base in all verticals and regions to generate incremental revenue growth through up-selling and cross-selling our Customer Engagement portfolio.


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Leveraging artificial intelligence and advanced process automation technologies to automate customer engagement and to dramatically reduce routine employee activities, while using our advanced analytics to identify processes suitable for automation.

•Extending our public safety offering to the Public Safety Answering Points (PSAP) to support next generation digital emergency communication, ensuring compliance and enabling enhanced digital evidence collection and investigation.
·Analyzing individual customer journeys and operationalizing the insights extracted to create business value in real-time for customer experience stakeholders.


·Capturing customer feedback across all touch points, driving specific insights and taking action to address the needs of Customer Experience Officers and other stakeholders in the marketing department in order to improve customer loyalty and satisfaction.

·Extending Workforce Management functionality to proactively identify and solve staffing gaps, manage agent communication and adjust schedules.

•Offering one of the industry’s most leading unified cloud-based Digital Evidence Management and Investigation platform, Evidencentral, that integrates and consolidates all forms of evidence information - data and media from police records and dispatch management systems.
Financial Crime and Compliance Business Strategy

We plan to continue to extendextending our market leading position and our addressable market, while further supporting the move to the cloud by financial institutions. We also plan to leverage our capabilities to facilitate both better financial crime protection and to help our customers realize cost reductions. We intend to achieve this by focusing on:

·Delivering integrated financial crime and compliance solutions that help financial services organizations to identify issues faster and earlier.
•Delivering integrated Financial Crime and Compliance solutions that help financial services organizations identify risks faster and earlier throughout all phases of the customer lifecycle.

·Providing a new platform for Financial Crime and Compliance solutions with data and analytics agility, driving forward the Autonomous Financial Crime Management (AFCM) vision and our ability to cross sell solutions, leveraging Big Data, machine learning, advanced automation and other technologies to help customers reduce the cost of operations while increasing their adherence and capturing more crime.
•Expanding our market reach within the mid-tier banks and financial institutions with our Xceed native cloud and AI platform, which provides AML and Fraud solutions in a packaged SaaS offering to smaller organizations, enabling them to benefit from the capabilities previously only afforded to large organizations.

·Leveraging our cloud based platform Essentials to expand our market reach to mid-size banks and financial institutions.
•Expanding X-Sight, our cloud-native AI platform and solutions for the top tiers of the market to further strengthen and grow our market leadership position. X-Sight combines data and analytics agility and provides us the ability to cross-sell solutions. Our cloud platform leverages data, AI, machine learning, advanced automation, and other technologies to help customers reduce the cost of operations, while increasing their adherence to compliance and preventing financial crime.

·Continuing to cross-sell and up-sell into our existing customer base around the world.
•Expanding X-Sight AI, machine-learning data-driven, analytics-managed service or do-it-yourself environment to help further optimize analytic models and develop new analytics by leveraging insights across our broad customer base and our market-wide and domain expertise in fraud prevention and anti-money laundering.


·Continuing to focus on tier 1 and tier 2 clients by providing them with solutions to meet their needs via cloud and on-premise models.
•Empowering our customers to increase their operations teams’ productivity by providing more purpose-built Generative AI offerings within X-Sight AI and Xceed to enable faster and more accurate investigations.


·Introducing cloud based solutions to monitor procurement, payments, and travel and expense data within organizations
•Offering X-Sight DataIQ, our orchestration and aggregation engine that effortlessly connects to multiple premium and public data sources, turning raw data into the data intelligence to fight financial crimes.


·Partnering with world-class consultancy and other firms to identify additional significant opportunities.
•Expanding the X-Sight Marketplace, an ecosystem of innovative third-party partners where our customers can select complementary offerings to extend our platforms and products.


·Increasingly selling holistic solutions, combining Financial Crime and Compliance offerings with Customer Engagement offerings.
•Offering our solutions to verticals outside of the traditional financial services, such as technology, gaming, energy, insurance, industry regulators, government agencies, as well as to fintech and alternative payments providers.


·Offering our solutions to verticals outside of the traditional financial services, such as gaming, energy, insurance, healthcare, industry regulators, government agencies, and alternative payments providers.
•Further expanding our footprint across international geographies and segments while continuing to cross-sell and up-sell into our existing customer base around the world.


•Expanding our sales channels with world-class systems integrators, consultancies, core banking providers, and other regional reseller firms to identify additional significant opportunities.

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Our Solutions
I.Offering Overview - Customer Engagement
With the growing complexity, demand and urgency of customer service needs, the exponential usage of digital and the growing maturity of Generative AI capabilities, organizations are required to adapt new operating models to maintain a holistic relationship with their customers. These dynamics are challenging organizations to differentiate themselves through efficient, effective and high-quality customer experiences that are digital, including agent-assisted and self-help channels that are smart, secure, consistent and personalized across all touch points. In addition, organizations must find ways to generate business insights, better understand and predict customer intent and create smarter customer connections, as well as provide their employees with the flexibility and balance they seek. Organizations need to accomplish these objectives while containing operational costs and adhering to regulations.

To fully accomplish this new era of a holistic relationship between consumers and organizations, and to be able to manage all interactions, channels, data and knowledge in one place, we have extended the reach of our offering with CXone and our advanced data and AI platform, NICE Enlighten AI, to allow organizations understand, engage and interact with their customers throughout their entire journey, creating smart, connected, self-service and human-assisted digital interactions, leveraging the power of AI.

Our Platform and Solutions’ Core CapabilitiesCapabilities:

Omnichannel RoutingOur Cloud Native Open Platform, NICE CXone, is one of the industry’s most comprehensive customer engagement platforms, with best-in-class customer analytics, AI routing, digital engagement, journey orchestration, knowledge management, voice of the customer, complete workforce engagement and IVRautomation, all on an open cloud foundation. CXone consolidates all communication channels, applications, data and knowledge, bringing together both platform and external data, to deliver a full view of the customer experience. CXone is designed to support any sized organization, and encompasses our customer-centric expert services, unique domain expertise and extensive ecosystem of partnerships, while meeting the strictest security and uptime standards. In today's reality, customer journeys extend well beyond traditional contact center interactions, and CXone is our leading AI-powered CX platform that provides the benefits of a modern native cloud architecture and delivers a complete suite of customer engagement applications. This multipath approach enables organizations to runleverage CXone in many ways, such as a complete open suite, an open suite integrated with third-party Automatic Contact Distributor (ACD) or a hybrid approach that combines native applications with existing premise recording and ACD systems.

Our CX purpose-built AI, NICE Enlighten, is embedded across our entire platform and suite of applications. It uses our proprietary data to understand CX intents, behaviors and different types of characteristics, analyzes every interaction and allows proactive identification of the needs of consumers, agents and CX leaders, as well as the ability to act on them in real time. In addition, it incorporates LLMs as a conversational interface to humanize the experience.
On the consumer side, NICE Enlighten is trained on extensive conversational data to understand multi-level consumer intents and learn from an organization’s top-performing employee-assisted interactions to discover and deliver on automation opportunities for self-service and bots.
On the agent side, NICE Enlighten augments agents in real-time to reduce friction, keeping them informed and prepared by surfacing knowledge at the right time and auto-composing responses, and connecting agents with consumers on a personal level to optimize outcomes. It redefines the quality and coaching process to be based on agents’ soft skill behaviors measured on all interactions.
On the Business side, NICE Enlighten identifies optimization opportunities across the platform, with access to all native and connected CXone applications, enabling CX leaders to act on business insights with a click of a button.

Our Entry Points solutions enable organizations to build scalable and effective digital experience and empower consumers with smart AI-based self-service that is purpose-built for CX, enabling them to address their contact centerneeds in a human-like conversational way. We allow organizations to meet their consumers wherever their journey start, provide the cloud,right knowledge management tools to drive knowledge at any point of their journey, starting with search, and then proactively reach-out to consumers and present the most relevant offers to them based on analyzing their needs, while guiding them in real-time on their channel of choice through an interactive conversation.

Our Journey Orchestration and Proactive Engagement solutions empower organizations to connect and route contacts and interactions to ensure agents positively and productively interact withtheir customers on any channel. Organizations gain business flexibility by quickly deploying agents anytime, anywhere for maximum operational flexibility and implementing routing and interactiveacross their entire journey over 30 supported channels, including voice IVR and digital, channel response changes in hours, not months.a joint, consistent, and smart way by combining every touchpoint including online search, mobile apps and other digital doorsteps, continuing through to self-service and interacting with the contact center. Our proactive engagement capabilities enhance the overall experience by anticipating needs and initiating contact before issues arise, ensuring a seamless and preemptive service approach. Consumers can easily and effortlessly move between channels, while maintaining the full context and a sense of a
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Omnichannel, Real-time Interaction Analyticssingle consistent journey. We create highly personalized interaction experiences by matching the most appropriate agent or bot to deal with the customer's request, connecting them using real time AI-based routing.

Our Digital andSmart Self-Service solutions empower organizations to build intelligent automated conversations based on data that indicates what customers need and how they express these needs and deliver the right resolution. Our smart self service allows organizations to design data-driven, personalized self-service interactions, using NICE’s purpose-built NICE Enlighten AI experience optimization engine, to identify customer needs and automate the right conversations, resulting in fast and satisfying resolutions and offers. This profound understanding of consumers' needs also enables organizations to uncoverproactively engage with their consumers to resolve their issues before they occur. We provide intelligent bots that are able to comprehend human conversations through a powerful conversational AI platform that learns and improves over time, leveraging Generative AI and LLMs.

Our solutions and tools designed for Employee Augmentation and automation enable contact center agents and supervisors to be engaged in real-time and to be knowledgeable and prepared so they can create the valuable datamost hyper-personalized, unique interactions that increase customer satisfaction and resolve issues quickly. We ensure employees have the right content and context delivered to them through smart knowledge management that is available in real-time. We guide and alert employees to specific behavioral insights hidden in customer interactions. It uses advanced technology powered by Nexidia Analytics, for analyzing speech, text, call flow, customer sentimentso they can take immediate action to improve resolution, and increase employee desktop activity, in orderpotential with a personalized virtual companion to understand the root causeguide them through any type of service issuesrequest and a set of tools to drive business results.complete mundane and manual processes for them.

Omnichannel RecordingOur Workforce Engagement and Interaction Management enablesAnalytics solutions help capture, understand, analyze and continuously optimize all elements that impact customer experiences. We enable organizations to capturerecord structured and unstructured customer interaction and transaction data from multipleon any channel, in a secure and compliant way, forecast the complex staffing needs across all channels including: phone calls, chats, emails, videos,including asynchronous digital touch points, and automate intraday schedules with an AI-based Workforce Management suite, while empowering agents with mobility and notifications to engage and maintain their desired work-life balance, taking into consideration their personal attributes and preferences. We drive better agent behaviors with a leading AI-powered Quality Management solution, to consistently measure agent soft skills and customer feedback, web sessions, social media postings,satisfaction indicators in real time. We analyze all interactions, across all channels, to identify areas for performance improvement, then turn the insights into daily business processes. We provide employees with a comprehensive Performance Management solution, creating a consolidated view for agent measurements, drive engagements with gamification capabilities and walk-in centers.deliver persona-based coaching for constant improvement.

Employee Engagement enables organizations to improve agent’s individual productivity, identify performance gaps, deliver targeted coaching,NICE Evidencentral - Our Digital Evidence Management and effectively forecast workloadsInvestigation Platform for public safety emergency communications, law enforcement and schedule staff in an adaptive manner enabling intra-day scheduling. It fosters performance-driven operationscriminal justice transforms how digital evidence and culture, leverages the power of advanceddata are managed. Public safety and justice agencies spend precious time managing digital evidence and data- collecting, storing, copying, analyzing, sharing and even physically transporting it. Evidencentral helps overcome these obstacles by breaking down data silos, applying analytics and embeds the voiceworkflow automation to processes, and by connecting public safety and criminal justice agencies together, so justice can flow smoothly, from incident to court. Evidencentral help agencies get control of the customer into daily operations to engage employees.digital evidence and data, so they can get emergency response right, be a greater force for good, ensure safer communities, and provide timelier justice for victims.

 Customer Journey Solutions enable organizations to analyze the entire customer journey across various touchpoints, transactions and events. These solutions allow our customers to have a comprehensive view of customer intents and actions throughout their journey. They also leverage Big Data infrastructure and predictive analytics models to identify and sequence individual customer interactions across time and touch points, including calls, text, IVR, web, self-service and others. With this analysis, organizations can understand the context of each contact, uncover patterns, predict needs and personalize interactions in real time.
Advanced Process Automation provides organizations with a real-time decisioning engine that supports business decisions. The engine draws on business rules and predictive models to automate mundane manual tasks through process insights derived from analytics that are applied while interactions are taking place, for attended and unattended automation environments. This combination enables organizations to make the right decision during individual interactions and across a mass number of interactions, which in turn drives future next-best-action guidance through process automation.
Open Cloud Platform powers rapid innovation with an extensible enterprise-grade platform that scales securely, deploys quickly, and serves customers of all sizes globally. We guarantee industry-best availability and offer easy customization through RESTful APIs and our developer program, plus CXexchange marketplace for pre-built integrations from ecosystem partners. The combination of the above capabilities enables organizations to improve customer experience and achieve business and operational goals. Solutions are available individually or as an integrated whole.
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Addressing Business and Operational Needs
1. Omnichannel Routing
SolutionDescription
Automatic Contact Distributor and Interactive Voice ResponseEnsure customer requests are routed to qualified agents or resolved with self-service through a skills-based omnichannel routing engine that provides a universal queue for real-time interaction management, and a consolidated interface with a seamlessly integrated IVR for routing strategies across all supported channels.
Personal ConnectionProvide inside sales an easier way to attain quota by connecting with more prospects every day and customer service the ability to reduce inbound calls through personalized, low cost, and proactive outbound notifications.
Customer Interaction ChannelsEnable contact centers to service customers via any channel, with extensive routing options, consolidated reporting and a state-of-the-art agent interface. Channels include inbound and outbound voice, callback, voicemail, email, chat, text/SMS, Social Media and work items. Other channels, such as video, are implemented using work items.

2. Open Cloud Platform
SolutionDescription
CRM IntegrationsProvide pre-built CRM integrations, such as Salesforce, and empower agents to personalize omnichannel customer service. Provide seamless, bidirectional CRM integrations with the contact center that increase agent efficiency and independence by delivering a real-time 360-degree view of the customer.
UCaaS IntegrationsProvide pre-built or partner-provided integration with Unified Communication tools that enables seamless collaboration between contact center agents and experts in their organization. This easy to deploy integration provides a single solution for formal and informal contact center agents.
Network and Voice Connectivity SolutionsProvide Voice as a Service network connectivity suite that delivers flexible and reliable telephony services built specifically for the contact center. Offering a full range of telephony options, with guaranteed voice quality. Through our partnership with a leading, independent 3rd party, proactive diagnostic tools and extensive telephony expertise we guarantee voice quality based on mean opinion score (MOS).
APIsEmpower organizations to customize and integrate their contact center with other business critical solutions to create the optimal customer service environment.

3. Compliance and Risk
SolutionDescription
Compliance Omnichannel RecordingProactively captures and retains all customer interactions across multiple touch points to help ensure compliance with government regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Security Exchange Commission Rule 17a-4, the Health Insurance Portability and Accountability Act, the Sarbanes–Oxley Act, the Payment Card Industry Data Security Standard, the Financial Services Authority and Medicare Improvements for Patients and Providers Act, the General Data Protection Regulation (GDPR) as well as with internal policies. Compliance Recording is also an invaluable tool to resolve disputes, perform investigations and verify sales, as well as provide redundancy and disaster recovery capabilities to meet business continuity requirements.
Trading Floor Compliance SolutionsEnables organizations to capture, monitor and analyze interactions and transactions in real time, in order to proactively minimize risks, detect potential regulatory breaches, counter fraudulent activities, and improve investigative capabilities. These solutions deliver comprehensive, integrated capabilities to effectively manage the complex, ongoing, high-risk exchange of interactions and transactions between traders, firms and their counterparties.
Communication SurveillanceMonitors trading activity across trading turrets, fixed and mobile phones, email, text and instant messaging, chat and social media. It automatically detects potential risks and enables compliance officers to see emerging trends, so that compliance breaches and fraud can be averted. It also enables firms to meet the requirements of the regulatory environment established with the introduction of the Dodd-Frank Act, and related rules and regulations.
Complaint ManagementEnables organizations to use analytics to identify interactions at risk, and manage the process of handling the complaint.
Compliance and Script Adherence
Monitors agent interactions, searches for any phrase, at any time, and utilizes the phrases in issue resolution and training exercises. Incorporates real-time monitoring and alerting to guide towards required behaviors. Knows which calls are contained in the audio and helps ensure reading for an audit.

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4. Operational Efficiency
SolutionDescription
Contact Center Omnichannel RecordingProvides comprehensive call recording technology that adapts easily to the unique operational requirements of any contact center. It supports virtually any telephony environment and hybrid networks. This enables a seamless transition during technology migrations as the contact center grows and evolves. It supports thousands of concurrent IP streams in a single platform: capturing, forwarding streams in real time, recording and archiving. It also captures non-voice interactions such as video, chat and email, and stores them in a single recording platform, ensuring regulatory adherence and standardized cross-channel workforce optimization.
Performance ManagementMaps enterprise business objectives to group and individual goals, and tracks and reports performance. It also automates critical managerial activities, including employee coaching, recognition, and performance improvement, allowing front-line managers to become more effective and efficient in developing their teams. Performance Management also includes unique capabilities, such as gamification, to engage and motivate and align employees around common and personalized business goals.
Workforce ManagementForecasts an organization’s interactions load, schedules agent shifts across multiple sites with appropriate skills to manage and optimize the level of customer service resources in multi-skilled environments. It measures agent and team performance, and provides real-time change management to proactively respond to changing conditions.
Employee Engagement  ManagementReal-time analysis of understaffing and overstaffing combined with mobility and dynamic scheduling to facilitate agents with the flexibility required, while ensuring that a company's operational goals and KPIs are achieved. The application also allows self-management of schedules through an intuitive mobile application anytime, anywhere and on-the-go, allowing employees to perform sophisticated transactions like shift bidding and shift swaps, setting preferences, reporting absences, and receiving immediate confirmation;
Quality CentralAutomates quality assurance processes and selection of calls for evaluation based on performance data. The solution facilitates root-cause evaluation, with easy drill down to interactions missing their Key Performance Indicator targets. Quality improvement is thus managed across voice, email, chat, and social media channels.
Nexidia Interaction AnalyticsAnalyzes large quantities of customer interactions across multiple channels in real time to identify hot topics and root causes quickly, and to produce actionable insights. These insights are then leveraged to improve processes, enhance customer experience, increase sales, reduce attrition, optimize marketing campaigns and reduce operational costs.
Back Office Workforce OptimizationAutomates manual processes, integrates data from employees’ desktops, improves forecast accuracy, enables managers to view and manage resource capacity, and empowers employees to improve their own performance. It also provides tools to ensure regulatory compliance and accuracy, elevating the level of service customers receive across the entire enterprise.
Real-time AuthenticationLeverages voice biometrics for authenticating customers in real time. The technology helps organizations to seamlessly enroll customers, expedites agent service, and significantly reduces the risk of fraud for all customers across voice and IVR channels
Call Volume OptimizationLeverages Big Data infrastructure and advanced predictive analytics to help organizations resolve customer needs in one contact, to predict and preempt follow-up calls, and to enable customers to effectively use self-service tools.
Desktop AutomationAutomatically monitors agent activity in real time, enabling organizations to identify process bottlenecks and implement best practices. With this information, the solution navigates agents through complex processes using on-screen guidance, and automates routine tasks to shorten handle time and eliminate manual processing errors.
Interactive Voice Response (“IVR”) OptimizationThe IVR Optimization solution enables customers to reduce customer effort by increasing IVR containment rate, reducing IVR repeat calls, agent transfers, drop-offs and deflections and dramatically improving call center efficiency.
Robotic AutomationRobotic solution for the automation of routine back office and contact center processes. Operated on virtual machines and monitored centrally, these robots handle end-to-end processes, essentially performing any routine task which the human user would otherwise do manually.
Desktop analyticsMonitors and collects data for every application log-in, screen navigation, mouse selection, field entry or any other activity that employees are performing on their desktop to analyze processes for weaknesses, measure concrete results and identify best practices.

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5. Customer Experience
SolutionDescription
Voice of the CustomerCollects and analyzes comprehensive data from multiple interaction touch points and channels; analyzes interactions in real time and provides guidance on the next-best-action; proactively reaches out for customer feedback from any touch point, including text message, email, IVR, mobile app, and online forms immediately following an interaction through their channel of choice; and leverages social media analytics to monitor social networks and address customer issues. This enables companies to drive operations and deliver insights across departments by incorporating the customer’s perspective.
Customer Journey OptimizationHelps organizations optimize their overall customer interactions process across multiple touch points. The solution automatically constructs a cross-channel map of the customer journey, providing insights into trends and focus areas. It automatically assigns contact reasons to every interaction and reveals customer behavior patterns, helping to predict the customer’s next action and to respond accordingly. The solution highlights opportunities for self-service channel containment and offers real-time guidance for an improved customer experience.
Customer Loyalty
Understands the business practices and behaviors that drive customer loyalty by calculating Net Promoter Score (NPS). Simplifies the customer experience, through methods such as quicker caller identification. Attracts new customers by offering an easier path to service than the competition. Statistically determines which business processes and agent behaviors have the greatest impact on customer behavior.
Customer Churn
Analyzes historic defection data to create models for predicting future churn. Understands causes and effects of customer churn and how to design procedures to reduce the defection rate. Prioritizes at-risk customers based on search results combined with customer data. Collects information to refine retention marketing offers that are better tailored to customer types and demographics.

6. Sales Optimization
SolutionDescription
Sales Performance ManagementProvides the end-to-end ability to create, manage and distribute all aspects of a commissions program. It automates the process of commission, bonus and incentive administration, in support of any type of variable pay system that rewards employees for achieving targets aligned with the business strategy.
Real Time Web PersonalizationUses customer intelligence, predictive models and machine learning to make insightful, real-time personalization decisions during customer interactions over the Web. The solution helps organizations improve customer retention, increase online conversion rates, and deliver better service by taking the next-best-action.
Sales EffectivenessHelps organizations optimize their campaigns. Locates and quantifies specific events by building the right metrics to align with corporate objectives such as offers made versus up-sell opportunities. Correlates data points such as customer spend and purchase history to build predictive models, prioritizing customers with a propensity to buy and create the next-best offer. Identifies high-performing agents, and bases best practices off their behavior. Establishes thresholds and works with agents, measuring performance against sales driven metrics.
7. Public Safety Incident Debriefing and Investigation
SolutionDescription
NICE InformEnables public safety agencies and organizations across various industries to capture, consolidate, synchronize and manage multimedia incident information efficiently and effectively. It captures and processes event information from a variety of media: radio and call audio, video, text, Computer-Aided Dispatch (CAD) systems, Geographic Information Systems, and others.
NICE InvestigateAutomates and expedites the end-to-end collection, analysis and sharing of all digital case evidence – from Records Management Systems, CAD, interview room and emergency call audio, documents, photos, private and public CCTV, body-worn and in-car video, social media and more – to help facilitate building and clearing more cases faster.

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8. Public Safety Emergency Response Optimization
SolutionDescription
NICE Multimedia RecordingAddresses the needs of emergency communications, dispatch and air traffic control operations. The recording platform automatically records, analyzes, stores, quickly retrieves and instantly replays telephony, radio and IP voice calls, operator console screens and SMS Text-to-911. TDM and VoIP recordings can be used to ensure compliance with regulations, provide case or incident evidence, and manage and improve departmental quality and productivity.
NICE InformHelps emergency centers to effectively record, manage and derive valuable insights from today’s higher volume and variety of communications. It captures multimedia communications and helps manage, synchronize and put incidents into context – saving time, money and resources, while ensuring quality and compliance.
II.Offering Overview - Financial Crime and Compliance
Enabling trusted financial transactions is critical in the digital banking era and is increasingly challenging for financial services organizations. To stay competitive, organizations are providing more digital channels and more products and services to acquire and retain customers, all of which need to be monitored for fraud and regulatory compliance.With criminals, organized crime rings, and armies of cyber bots leveraging AI to attack digital payments and banking channels while also scamming individuals and corporations, preventing fraud without customer friction and detecting and predicting money laundering is more complex than ever.In addition, adhering to capital markets compliance regulations by surveilling trades across all asset classes for market manipulation has also become more complex.
These demands, the evolving regulatory landscape and market dynamics coupled with consumers’ desire for frictionless digital transactions require organizations to transform and modernize their financial crime programs.
NICE Actimize provides the market-leading purpose-built AI-based cloud platforms and solutions for detecting and preventing financial crimes and ensuring compliance, with proven AI capabilities for real-time and cross-channel fraud prevention, anti-money laundering and capital markets compliance. We enable financial institutions to effectively adapt to
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changing threats, provide excellent customer experiences and grow their business, all while protecting their organization, safeguarding their customers, and ensuring the integrity of the financial services industry.

Our Platforms’ and Solutions’ Core Capabilities
Autonomous•Our AI cloud platform for the high-end of the market, X-Sight, is an open and flexible AI-cloud platform for Financial Crime Management (AFCM): By merging data, analytics and automation technologies,Compliance, enabling top-tier financial services organizations are able to improve detection, improveleverage market-leading solutions and services that meet their operational efficiencies,sophisticated and reduce costs. Rawunique needs with security, scalability and speed. X-Sight provides global customers with immediate access to new innovations, removing expensive and lengthy system integrations and product lifecycles by leveraging the unified modern cloud architecture. We offer configuration and customization through APIs and available services and leverage elastic cloud computing for massive scalability, so the largest global financial institutions have the flexibility to configure their controls and financial crime programs to meet their unique needs.

•Our AI cloud platform for the mid-market,Xceed, brings together powerful AI, data becomes actionable intelligence, by applying machine learning, advanced analytics and automation. This innovative process will create a unique environmentinsights for comprehensive AML and fraud prevention for small and mid-sized organizations. The solutions on Xceed provide the protection that more effectively addresses the challengeslarger organizations receive but are packaged and pain points that financial services organizations are facing by allowing them to tailor their operations to lower costs and drive greater profitability, all while improving accuracy and throughput. Autonomous Financial Crime Management also allowsconnect directly with core banking providers for smaller organizations to configure which decisionsrealize immediate value.

•Our X-Sight and Xceed AI offerings apply advanced AI techniques fueled by insights we receive in working collaboratively with our large world-class client base to directprovide rich intelligence to human experts, supporting either semi-autonomousoptimize machine learning prevention and detection analytics in our portfolio of solutions as well use Generative AI and automation to fully autonomous operations.
Core platform: cut down analysts time when investigating financial crimes. This allows us to provide market-leading solutions to our customers, addressing numerous business use cases across risk domains and coverage areas. All Financial Crime and Compliance solutions (also known as NICE Actimize solutions) share a single, flexibleare infused with Always on AI, our multi-layered approach that injects AI, machine learning, automation, natural language processing, and scalable core platform that enablesother advanced technologies throughout the financial institutions,crime and compliance value chain. This provides financial services providers, healthcare providersorganizations with innovative and gaming providerspatented technologies which fuel automation and analytic precision to expanddetect and prevent financial crimes in real-time and provides secure and frictionless customer experiences.

•Our cloud platforms provide financial services organizations with the useagility required to quickly adapt to changing regulatory and threat landscapes. With machine learning, predictive analytics, and embedded AI, organizations are able to proactively prevent crime faster, leading to higher customer satisfaction, lower losses, and reduced risk of NICE’sregulatory enforcement action or reputational damage. Our platforms and solutions over time. This eases implementationenable organizations to have a more comprehensive understanding of their customers’ activities and lowers total cost of ownership.
Analytical models and flexible tools: The core platform provides dozens of out-of-the-box analytical models with each specific solution,risk, as well as flexible tools that can be usedthe organization’s risk exposure.

•Our data intelligence solutions enable organizations to developturn raw data into comprehensive actionable intelligence to prevent and customize analytical models,detect financial crimes and enable better and faster decisions. With effortless access to data sources, and our X-Sight Marketplace ecosystem of complementary partner offerings, our solutions deliver comprehensive real-time intelligence to fuel analytics and enrich investigations.

•Our AI and Analytics innovative technologies, our deep domain expertise, and the insights we receive by working collaboratively and collectively with our large world-class client base provide rich intelligence to our solutions. This allows us to provide market leading solutions to our customers, addressing numerous business processes at both the businessuse-cases across risk domains and IT levels.
Multi-channel transaction management: Thecoverage areas. All Financial Crime and Compliance solutions are proveninfused with Always on AI, our multi-layered approach that injects AI, machine learning, automation, natural language processing, and other advanced technologies throughout the financial crime and compliance value chain. This provides financial services organizations with innovative and patented technologies which fuel automation and analytic precision to capturedetect and analyzeprevent financial crimes in real-time and provides secure and frictionless customer experiences.

•Our vast coverage of solutions enable organizations to detect market manipulations and prevent money laundering and fraud while helping them adhere to compliance regulations. With broad coverage for compliance around regulations and financial crime risks including account takeover, social engineering scams and many other financial crimes, the solutions include hundreds of out-of-the-box engineered models for current risk topologies across global regulatory regimes as well as emerging risk types including cryptocurrencies and cannabis-related risks to name a couple. Organizations gain holistic coverage to reduce risk, mitigate losses and protect their organizations and customers.

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•Our intelligent investigations solutions serve hundreds of thousands of financial transactions a second from a variety of sourcesanalysts and channels.investigators across the globe enabling them to make better, faster decisions. The rich and robust, purpose-built solutions include out-of-the-box workflows and audits for the regulated industry to intelligently route alerts and cases and track all activity for quick, accurate and transparent investigations. With built-in automation and interactive visual displays, organizations can empower their teams with comprehensive intelligence to optimize efficiency.

Domain-specific advanced analytics: Comprehensive, domain-specific•Our Self-Service solutions detect anomalous customer or employee behavior in real time, leveraging industry-proven analytics.provide organizations with customization and self-development capabilities powered by APIs and intuitive tools for 24/7 access to smart self-service.
Real-time decisioning and enforcement: A real-time decisioning engine draws on analyzed data to trigger alerts that enable optimal enforcement and resolution. Built-in capabilities for comprehensive workflow and investigation allow effective alert management.
Solutions are available individually or as an integrated whole.
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Addressing Business Needs
1. Enterprise Risk Management
SolutionDescription
Enterprise Risk Case ManagerEnables firms to better manage and mitigate organizational risk by providing a single view of risk across the business. It serves as a central platform for managing alerts, cases, investigations, link analysis, regulatory reporting, financial losses, oversight and more, across multiple lines of business, channels, products, and regions, turning them into actionable insights.
Robotic Process Automation (RPA)Robotic Process Automation (RPA) includes attended robots that are digital assistants that live in the case manager on analysts’ desktops and collaborate with them as needed during the day. These robots can be used on demand – as for copying and pasting or navigating between systems and screens – to help analysts complete their evidence gathering processes and get to a decision point faster and more accurately. It also includes unattended robots which are a digital workforce, working 24/7 without human intervention. These robots can be used to fetch data from legacy systems and update enterprise systems so data is always in the right place when you need it. As no integrations are needed, implementations are faster and cheaper.
Quality​ AssuranceActimize Quality​ Assurance helps risk & compliance teams create a truly closed-loop, end-to-end investigation process. With it, compliance and quality teams can collaborate in order to reduce re-opens, work more efficiently and lower risk.
Productivity StudioActimize Productivity Studio allows organizations to increase speed and efficiency, without compromising on accuracy. Teams are empowered to understand their productivity by seeing gaps and bottlenecks in their workflows, as well as patterns and trends in their activities.
Notifications & AttestationsWith Actimize Notifications & Attestations, management and internal audit can gain oversight of their teams, ensuring everyone is aligned; teams can mitigate risk by lowering organizational and personal accountability risk; and finally, teams can improve their efficiency with quick access to all past and present notifications without leaving the case management platform.
Investigation Management Actimize Investigation Management is an automation and discovery suite for investigators. The solution helps automate evidence gathering, so that more time is spent analyzing and assessing risks.

2. Anti-Money Laundering
SolutionDescription
Suspicious Activity MonitoringLeverages transaction analytics to offer end-to-end coverage for detection, scoring, alerting, workflow processing and reporting of suspicious activity to make sure nothing slips through the cracks. It supports the full investigation life cycle and, with NICE’s integrated case management platform, improves staff productivity, helping meet regulatory obligations in a cost-effective manner.
Watch List FilteringProvides enterprise-wide customer and transaction screening against multiple watch lists, for end-to-end sanctions list coverage. It identifies and manages sanctioned or high-risk individuals and entities, with real-time name recognition capabilities, providing customers the ability to conduct accurate name matching to prevent non-compliance occurrences.
Customer Due DiligenceProvides integrated risk-based rating and continuous monitoring of accounts throughout the entire customer life-cycle, from initial applicant onboarding to periodic re-screening of existing customers. It is an open, flexible platform that can adapt to unique requirements across business segments, regions, and jurisdictions.
CTR Processing and AutomationProvides seamless automated Currency Transaction Reporting (“CTR”) processing to ensure compliance with U.S. Bank Secrecy Act standards, and to optimize CTR processes for efficiency and cost-effectiveness. This allows for the reduction in manual intervention and errors. Built-in validation tools and flexible capabilities enhance the quality and timeliness of completed reports while letting organizations adapt to changing regulatory and business needs.
FATCA ComplianceHelps U.S. and non-U.S. financial institutions comply with the Foreign Account Tax Compliance Act (or FATCA), that requires foreign financial institutions and certain other non-financial foreign entities to report on the foreign assets held by their U.S. account holders). The solution helps establish a structured FATCA program from identifying U.S. owners and customers, and managing their documentation, to generating reports to meet United States Internal Revenue Service requirements. The solution enables complete life cycle assessment for FATCA-status identification, management and reporting, ensuring compliance while minimizing operational and customer impact.
AML EssentialsA cloud-based offering that uses the same power and experience as our enterprise solutions, with coverage that includes Transaction Monitoring, Customer Due Diligence, and Sanctions Screening, offers rapid deployment and reduces overhead to make compliance easier and at a lower total cost of ownership.
Anti-Bribery &​ Corruption ​(ABC)Anti-Bribery and Corruption ​is a cloud-based solution that provides ongoing monitoring of procurement, payments, and travel & expense data within organizations. Based upon two decades of transactional analytics experience, Actimize ABC analyzes transactions and behavior across the organization and the supply chain, for a real-time, up to date view of their bribery and corruption risk across business, geographic, vendor and customer lines.

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3. Fraud Prevention
SolutionDescription
ActimizeWatchActimizeWatch is a cloud-based managed services solution to optimize analytics. ActimizeWatch continuously monitors the transactional data for individual FIs to assess when analytics must be tuned, and leverages insights from a market-wide view to proactively optimize analytics for members of the service. ActimizeWatch uses machine learning analytics to assess cross-market transactional data, identify fraud patterns within individual organizations and across the market. ActimizeWatch proactively optimizes analytics using automation for quick delivery of implementation-ready models and features.
Fraud EssentialsA cloud-based offering that uses the same power and experience as our enterprise solutions. The Fraud Essentials solution serves as both a single and cross-channel solution for online banking and mobile banking channels. It can detect fraud perpetrated against enrollments, address or account-based bill payments, and inter-bank transactions such as wire, ACH, etc.
Card Fraud
Enables card issuers, acquirers and processors to detect fraudulent transactions, whether ATM, PIN, signature point-of-sale, or without a physical card. Market leading profile based behavioral analytics takes into account all available transaction, reference and location data to provide holistic coverage of card and account takeover. Solution includes the Actimize Digital & Mobile Wallet Fraud which protects customers from digital account takeover, and protects organizations from fraud liability and negative brand reputation. Monitors and protects a full range of wallet activity, including card/account provisioning, card present and not present purchases, person-to-person transfers, bill payments, and account-service events.
The Actimize Pre-Paid Card Fraud solution identifies and prevents fraud in the pre-paid sector. From ATM to point-of-sale (POS) and Card-Not-Present (CNP), all transactions can be identified, interdicted on and alerted in real time.
Payment Gateway ProtectionActimize’s Payment Gateway Protection solution provides real-time fraud monitoring for all payments transactions before they leave the banking environment to travel onto payment rails, as well as monitoring of inbound transactions. The solution applies payment level analytics that seek out anomalies in transaction patterns and flows without need for channel data.
Omni-channel Protection for RetailProvides end-to-end protection against account takeover from online, mobile, IVR, and contact center transactions. Unique industry-leading analytic models accurately detect anomalies and patterns in real time, and Actimize open analytics offer the flexibility to develop in-house models and strategies. A central “risk hub” enables the sharing of internal and third-party data from multiple channels for fraud and cyber detection, operations, and investigations. By accurately and efficiently coordinating customer lifetime value, transaction amounts and service history, the solution optimizes fraud prevention by offering greater insight into cross-channel authentication and facilitates interdiction strategies.
Omni-Channel Protection for Commercial/WholesaleSpecifically designed to address the complexities facing commercial banks, applying targeted analytics to identify fraudulent payments among the high volume of legitimate transactions processed by commercial clients each day. The solution protects payments from origination through approval and processing, allowing organizations to interdict in real time to address suspicious activity and ensure an excellent customer experience.
Employee FraudOffers advanced analytic monitoring capabilities and flexible configuration options to detect fraudulent employee activity and violation of corporate policy across the enterprise, business lines, and channels. Comprehensive investigation tools are supported by multichannel data ingest, multi-country data and policy requirement configurations, secure and auditable user access levels, and automated configurable workflows, enabling banks to efficiently sift through employee audit reports and build cases to support fraudulent employee activity.
Deposit Account FraudHelps institutions minimize deposit fraud losses by providing comprehensive account activity monitoring. The solution analyzes risk across silos of data and lines of business, consolidates suspicious activity notifications into account and customer level alerts, and allows real-time decisioning to safely accelerate fund availability and enhance customer satisfaction.
Authentication-IQManages multiple authentication methods and risk-based decisions by creating a complete customer profile, based on historical authentication activity, account servicing, and transactional behavior which is then used to identify suspicious behavior at log-in or throughout a session, producing real-time actionable risk scores. In addition, the solution manages the process of step up authentication, choosing the appropriate method, producing alerts and enabling real-time interdiction. Finally, it provides alert and case management in a unified context to prioritize investigations and optimize workflow across the enterprise.

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4. Financial Markets Compliance
SolutionDescription
Institutional Trade SurveillanceProvides scenario management for identifying market manipulation and abuse, fair dealings with customers, and insider trading across asset classes (such as equities, fixed income, swaps and futures). It includes specific tools for desk supervision, control room surveillance, and trade reporting practices, to ensure comprehensive oversight and sales and trading compliance across all channels.
Retail Trade SurveillanceAddresses organization-wide compliance needs across a broad range of retail sales practices relating to Know Your Customer (“KYC”) and Suitability requirements. It enables local and regional branch management to effectively delegate supervision across products and provides automated desk supervision, with electronic access and sign-off on individual trades.
Employee Trade SurveillanceDetects conflicts of interest and rogue trading. It completely automates the submission, review and approval process for employees’ personal trades, including post-trade reconciliation. It analyzes transactions against rules mapped to the organization’s employee trading policies and procedures.
Enterprise Conflicts ManagementOffers a unified approach to maintain controls and detect conflicts of interest before they occur on a global, enterprise-wide scale. Enables organizations to effectively manage employee requests for personal trades by evaluating details of the proposed trade in real time and automatically determining if the request should be approved, rejected, or escalated to a supervisor for approval. The solution includes detection models that compare executions with the employee’s trade request history to determine whether the trade was pre-cleared and approved and to reconcile the trade details with the terms and conditions of the approved trade request.
Sales Practices and SuitabilityProvides coverage for a broad range of sales practices and issues, helping firms meet current and future global regulatory requirements and ensure investment recommendations are consistent with each client’s investment objectives and suitability profiles. It also includes a comprehensive toolset to automate sales practice compliance processes. By automating oversight and supervision, firms can ensure consistency and maintain a consolidated audit trail, lowering regulatory risk while improving productivity and efficiency.
Markets Surveillance Cloud (MSC)Actimize Markets Surveillance Cloud (MSC) is a turnkey solution that effectively detects market manipulation and reduces false positives by enabling firms to create rules and tailor alert thresholds based on their trading activity.
Holistic SurveillanceActimize Holistic Surveillance view puts the pieces together and NICE Actimize Holistic Surveillance allows a holistic view across both trade and communications data, proactively analyzing all trading interactions, while monitoring the full trade life cycle in conjunction with​ relevant news events.
Holistic Behavioral AnalyticsActimize Holistic Behavioral Analytics enables sell side, buy side, and retail brokerage firms to easily pinpoint individuals whose actions are putting their firms at risk. The solution does this by analyzing a wide range of data and identifying deviations from normal behavior. In addition, Actimize Holistic Behavioral Analytics is the natural complement to traditional analytics, allowing you to cover both sides of compliance — known and hidden threats.
Trade ReconstructionTrade Reconstruction dramatically simplifies the reconstruction of a trade by normalizing, analyzing, indexing and correlating data across structured and unstructured data sources.

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Strategic Alliances

We sell our Customer Engagement and Financial Crime and Compliance platforms and solutions and products worldwide, bothprimarily directly to customers and indirectly through selected partners to better serve our global customers. We partner with companies in a variety of sales channels, including service providers, system integrators, consulting firms, distributors, value-added resellers and complimentary technology vendors. These partners form a vital network for selling and supporting our solutions and products.platforms. We have established a cross-organization business partner program which providesto support our ever-growing eco-system, providing a full supportrange of tools and a broad portfolio of sales toolsbenefits to help our partners promote the NICE offerings helping toand drive mutual revenue growth and success.

We also haveOur strategic technology partnerships in place to ensure full integration with NICE’sthe NICE offerings, delivering value added capabilities that address a varietyenable them to provide our customers with an improved set of technology environments. solutions and services.

Our DEVone program, comprising more than 200 partners, allows third partythird-party software providers that bring complementary capabilities, to integrate with our CXone platform and extend its functionality. We currently have over 100 DEVone partners.partner offerings are listed in our CXexchange Marketplace. Our Actimize X-Sight Marketplace hosts market leading vendors in the AML and Fraud domains that complement the Financial Crime and Compliance solution suite.

The following isOur Evidencentral Marketplace hosts an expanding ecosystem of technology vendors that integrate with our Evidencentral platform to extend its functionality and make it simpler and faster for Emergency Communications, Law Enforcement and Criminal Justice agencies to bring a partial listhigh volume of our main partners, some of which we cooperate with across all of our businesses, while others are only involved in a portion of our initiatives: Accenture, Bain, Boston Consulting Group, Cisco, Cognizant, ConvergeOne, Deloitte, Fuze, IBM, Infosys, IPC, Motorola, PWC, RingCentral, Salesforce.com, Servion, Tata Consulting Servicesmultimedia evidence together, accelerate case building, unearth hidden evidence and Verizon.address evidence disclosure challenges.

Professional Service and Support
The NICE Professional Services and Support organization enables our customers to derive sustainable business value from our solutions.
The Professional Service and Support offerings focus on enablinginclude a variety of services - both standalone and sustaining business value forbundled with our customers.products. We address all stages of the technology lifecycle, including defining requirements, planning, design, implementation, customization, optimization, proactive maintenance and ongoing support.

Enabling Value
Solution Delivery optimizes solution delivery to our customers and enables our customersthem to achieve their specific business and organizational goals, on time and on budget. NICE solutions are delivered by certified project managers, technical experts, and application specialists. We follow a proven methodology that includes business discovery to map solutions to business processes.
Business Consulting promotes customer success through Value Realization Services (VRS) targeted to improve business operations, by leveragingensure quick, deep and integratingsustained adoption of the NICE solutions into the customer’s daily practices. This global consulting team consists of industry experts who have accumulated a broad portfolio of best practices and honed domain expertise, with extensive experience in implementing vertical market solutions for many industries. Their focus on continuous value realization helpssolutions. These services enable our customers accelerateto leverage the features and functionalities of our solutions to drive immediate and long-term results, aligned to their specific business case, accelerating their return on investment.The services are specifically designed to address the top short and long-term business concerns we heard through working with hundreds of customers across the globe. VRS teams work with customers during all phases of solution implementation – before, during and after go-live. We begin working with customer teams as soon as the project is kicked off, when the solution goes live, and for months after the solution is implemented.Our experience has shown that our customers benefit greatly from access to NICE VRS resources once they begin using the solution. This post-implementation engagement allows us to build skill and ownership within customer teams, embed changes within the customer organization and determine return on investment increase revenue and minimize business costs.from the solution.

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Managed Servicesempowers organizations to meet short term objectives, such as loweringreducing handle time or improving sales rates, along with achieving long term goals such as customer retention. Our team of experienced practitioners work with customers, guiding the process of collecting interactions, prioritizing subjects to study, conducting analysis and most importantly, developing plans that put the results of the analysis into action.
Customer Education Servicesprovide users with the necessary knowledge and skills to operate NICE solutions and to leverage their capabilities to meet customer needs. These services are offered both before and after the deployment of NICE solutions.
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Sustaining Value
Customer Successmeans working hand-in-hand with our customers to identify areas thatwhere they can maximize business value and minimize complications, ensuring continued delivery of business benefits.
Cloud ServicesOperations ensure that solutions hosted indeployed on the NICE cloud run optimally and allow more simplified software upgrades, maximizing availability, performance and quality, while ensuring the security of customer information. This is donedelivered by use of veryusing sophisticated proprietary utilities and automations that performoperate in a proactive manner, allowingproviding the means to avoid impacting customer and business interruption.operations. This includes: NICE Cloud Services Operations, running our Hosting Centers as well as our newly launched AWS Global Regions; a matureArchitecture teams that design cloud service delivery and operation architectures; Cloud Security teams that help ensure that we set and meet the required Security certifications; Cloud Infrastructure teams that manage both virtual and physical infrastructure requirements; Cloud DevOps team who design and developteams that implement the utilities and automations while working with our product development teams to optimize our solutions for the cloud environment,environment; and the 7X24 Cloud Application Support teams that monitor and manage the solutions for our customers, ensuring world class up-time, performance, scalability and security.The NICE Cloud utilizes multiple underlying technologies to give our customers many paths to the cloud – these include Physical Data Centers and Public Cloud providers such as AWS and Azure. NICE maintains multiple Cloud Certifications including SOC 2 Type II – Applications; HITRUST; ISO:27001 and PCI.

Customer Support and Maintenance responds to customer requests for support on a 24/7 basis, using advanced tools and methodologies. NICE offers flexible service level agreements to meet our customers’ needs. Our solutions are generally sold with a warranty for repairs of hardware and software defects or malfunctions. Software maintenance includes an enhancement program with (in the majority of cases) an ongoing delivery of “like-for-like” upgrade releases, service packs and hot fixes. NICE also offers a Technical Account Management service or TAM. The TAM is a designated manager responsible for escalation management and overall customer care services.

Proactive Maintenance addresses issues before they can significantly impact our customers’ businesses. These offerings include:
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Proactive Maintenance addresses issues before they can significantly impact our customers’ businesses. These offerings include:
•Advanced Services – Technical experts perform system-level audits to ensure ongoing compliance with operational specifications as well as specific product customizations tailored to the requirements of the customer.
•Application Performance Services – A 24/7 function that proactively monitors NICE-hosted and customer-premises environments with triage, resolution and escalation of system alarms.
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Advanced Services – Technical experts perform system-level audits to ensure ongoing compliance with operational specifications as well as specific product customizations tailored to the requirements of the customer.
Managed Technical Services (Technical and Operation) – NICE offers a suite of managed technical and operation services that enable the customer to fully outsource all necessary responsibilities and functions required in order to manage the NICE solutions. This service includes dedicated onsite and remote support engineers, system management, system operation, updates and upgrades.
Information Security - we have established information security management policies and procedures to protect the confidentiality, integrity, and availability of our data while providing value to the way we conduct our business. We have security measures, internal policies, and procedures in place to protect our customers’ information and ensure that proper measures are taken in connection with our customers’ and their end users’ information. Additionally, we ensure that information security controls are designed and implemented throughout our products and services development lifecycle. Our privacy information management policies and procedures comply with industry accepted standards, such as ISO 27001. For additional information on information security, please see Item 16K, “Cybersecurity“ in this annual report.
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Application Performance Services – A 24/7 function that proactively monitors NICE-hosted and customer-premise environments with triage, resolution and escalation of system alarms.
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Managed Technical Services (Technical & Operation) – NICE offers a suite of managed technical & operation services that enable the customer to fully outsource all necessary responsibilities & functions required in order to manage the NICE solutions. This service includes: dedicated onsite and remote support engineers, system management, system operation, updates and upgrades.

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Manufacturing and Source of Supplies
The vast majorityMany of our solutions isare software-based and isare deployed by customers onopen cloud platform and standard commercial servers.
There is a small portion of our products that have certain hardware elements that are based primarily on standard commercial off-the-shelf components and utilize proprietary in-house developed circuit cards and algorithms, digital processing techniques and software. These products are IT-grade compatible.
We manufacture those of our products that contain hardware elements through subcontractors. Our manufacturers provide us with turnkey manufacturing solutions including order receipt, purchasing, manufacturing, testing, configuration, inventory management and delivery to customers for all of our product lines. NICE is entitled to, and exercises various control mechanisms and supervision over the entire production process. In addition, the manufacturer of a significant portion of such products, which is a subsidiary of a global electronics manufacturing service provider, is obligated to ensure the readiness of a back-up site in the event that the main production site is unable to operate as required. We believe these outsourcing agreements provide us with a number of cost advantages due to such manufacturer's large-scale purchasing power and greater supply chain flexibility.

advantages.
Some of the components we use have a single approved manufacturer while others have two or more optionsalternatives for purchasing.supply. In addition, we maintain an inventory for some of the components and subassemblies in order to limit the potential for interruption. We also maintain relationships directly with some of the more significant manufacturers of our components. Although certain components, and subassemblies we use in our existing products are purchased from a limited number of suppliers, we believe that we can obtain alternative sources of supply in the event that suchthe suppliers are unable to meet our requirements in a timely manner.
We have qualified for and received the ISO-9001:20082015 quality management, for all of our products, as well as the ISO 27001:2013 information security management, ISO 27701:2019 privacy management and ISO 14001:2015 environmental management certifications.

Research and Development

We believe that the development of new products and solutions and the enhancement of existing products and solutions are essential to our future success. Therefore, we intend to continue to devote substantial resources to research and new product and service development, and to continuously improve our systems and design processes in order to reduce the cost of our products.products and services. We conduct our research and development activities primarily in Israel, India and the U.S. Our research and development efforts have been financed through our internal funds and through some programs sponsored through the government of Israel and the European community. We believe our research and development effort has been an important factor in establishing and maintaining our competitive position. Gross expenditures on research and development in 2015, 2016 and 2017 were approximately $132.0 million, $151.7 million, and $211.4 million respectively, of which approximately $2.1 million, $1.7 million, and $2.4 million, respectively, were derived from third-party funding, and $1.4 million, $8.5 million, and $27.9 million, respectively, were capitalized software development costs.Israel.


In 2017, we were qualified toWe participate in seven programs funded by the Israeli NATIIIA to develop generic technology relevant to the development of our products. Such programs are approved pursuant to the Law for the Encouragement of Industrial Research, Development and Development, 1984Technological Innovation in Industry 5744-1984 (the “Research and Development Law”), and the regulations promulgated thereunder. We were eligible to receive grants constituting between 40%30% and 66%55% of certain research and development expenses relating to these programs. Some of these programs were approved as programs for companies with large research and development activities and some of these programs are in the form of membership in certain Magnet consortiums. Accordingly, the grants under these programs are not required to be repaid by way of royalties. However, the restrictions of the Research and Development Law described below apply to these programs. In 2015, 2016 and 2017 we received a total of $2.1 million, $1.3 million, and $2.1 million from the NATI programs, respectively.
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The Research and Development Law generally requires that the product incorporating know-how developed under an NATI-fundedIIA-funded program be manufactured in Israel. However, upon the approval of the NATIIIA (or notification in the event set forth below, as the case may be), some of the manufacturing volume may be performed outside of Israel, provided that the grant recipient pays royalties at an increased rate, which may be substantial, and the aggregate repayment amount is increased, which increase might be up to 300% of the grant (depending on the portion of the total manufacturing volume that is performed outside of Israel)increased). Following notification (rather than approval) to the NATIIIA (and provided the NATIIIA did not object), up to 10% of the grant recipient’s approved Israeli manufacturing volume, measured on an aggregate basis, may be transferred out of Israel, subject to payment of the increased royalties referenced above.
The Research and Development Law also provides that know-how (or rights thereto) developed under an approved research and development program may not be transferred or pledged to third parties without the approval of the NATI.IIA. Such approval is not required for the sale or export of any products resulting from such research or development. The NATI,IIA, under special circumstances, may approve the transfer of NATI-fundedIIA-funded know-how outside Israel, including, in the event of a sale of the know how or sale of the grant recipient,know-how, provided that the grant recipient pays to the NATIIIA a portion of the sale price, paid in consideration for such NATI-funded know-how or in consideration for the sale of the grant recipient itself, as the case may be, which portion will not exceed six
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times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the R&D activities of the grant recipient in Israel after the transfer).
The Research and Development Law imposes reporting requirements with respect to certain changes in the ownership of a grant recipient. The law requires the grant recipient, its controlling shareholders and non-Israeli interested parties to notify the NATI of any change in control of the recipient, or a change in the holdings of the means of control of the recipient that results in becoming an interested party directly in the recipient. Further, if the interested party is non-Israeli, requires the party to undertake to the NATI to comply with the Research and Development Law. In addition, the rules of the NATI may require prior approval of the NATI or additional information or representations in respect of certain of such events. Furthermore, the Research and Development Law imposes reporting requirements in the event that proceedings commence against the grant recipient, including under certain applicable liquidation, receivership or debtor's relief law or in the event that special officers, such as a receiver or liquidator, are appointed to the grant recipient.
Failure to satisfy the Research and Development Law’s requirements may subject us to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to criminal proceedings. In addition, the Government of Israel may from time to time audit sales of products which it claims incorporates technology funded through NATI programs which may lead to additional royalties being payable on additional products.
          The funds available for NATI grants out of the annual budget of the State of Israel were reduced in recent years, and the Israeli authorities have indicated in the past that the government may further reduce or abolish NATI grants in the future. Even if these grants are maintained, we cannot presently predict what would be the amounts of future grants, if any, that we might receive.
We may participate from time to time in the European Community Framework Program for Research, Technological Development and Demonstration, which funds and promotes research. There are no royalty obligations associated with receiving such funding.
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Intellectual Property
We currently rely on a combination of trade secret, patent, copyright and trademark law, together with non-disclosure and non-compete agreements, to establish and/or protect the technology used in our systems.

We currently hold 225529 U.S. patents and 4940 patents issued in additional countries covering substantially the same technology as the U.S. patents. We have over 64206 patent applications pending in the United States and other countries. We believe that the improvement of existing products and the development of new products are important in establishing and maintaining a competitive advantage. We believe that the value of our products is dependent upon our proprietary software and hardware continuing to be “trade secrets” or subject to copyright or patent protection. We generally enter into non-disclosure and non-compete agreements with our employees and subcontractors. However, there can be no assurance that such measures will protect our technology, or that others will not develop a similar technology or use technology in products competitive with those offered by us. In most of the areas in which we operate, third parties also have patents which could be found applicable to our technology and products. Such third parties may include competitors, as well as large companies, which invest millions of dollars in their patent portfolios, regardless of their actual field of business. Although we believe that our products do not infringe upon the proprietary rights of third parties, there can be no assurance that one or more third parties will not make a contrary claim or that we will be successful in defending such claim.
In the past we received, from time to time, “cease and desist” letters claiming patent infringements. Although there are currently no formal infringement claims or other actions pending against us, in the event that we are required to defend ourselves against any such claims or actions, we could be subject to substantial costs and diversion of management resources.
In addition, to the extent we are not successful in defending such claims, we may be subject to injunctions with respect to the use or sale of certain of our products or to liabilities for damages and may be required to obtain licenses which may not be available on reasonable terms. Any of these may have a material adverse impact on our business or financial condition.

We own the following trademarks and/or registered trademarks in different countries: Actimize, Actimize logo, NICE Adaptive WFO, NICE WFM, NICE Voice of the Customer, NICE Work Force Management, NICE Incentive Compensation, NICE Real Time Solutions, NICE Trading Recording, NICE Uptivity, NICE Air, NICE Communication Surveillance, Customer Engagement Analytics, Decisive Moment, Fizzback, IEX, inContact, inContact Logo, NICE inContact, Insight from Interactions, Intent. Insight. Impact., Last Message Replay, Mirra, NICE, NICE Analyzer, NICE Engage, NICE Engage Platform, NICE Interaction Management, NICE Sentinel, NICE Inform, NICE Inform Lite, NICE Performance Compliance, NICE Inform Media Player, NICE Inform Verify, NICE Logo, NICE Perform, NICE Incentive Compensation Management, NICE Real Time Solutions, NICE Trading Recording, NICE Proactive Compliance, NICE Seamless, NICE Security Recording, NICE SmartCenter, NICE, NiceLog, Nexidia, Nexidia ((!)) Logo, Nexidia Interaction Analytics, Nexidia Advanced Interaction Analytics, Nexidia Search Grid, Neural Phonetic Speech Analytics, Own the Decisive Moment, Scenario Replay, Syfact, Syfact Investigator, TotalView, inContact Cloud Center Solutions, Supervisor on-the-go, VAAS, Voice as a Service, Personal Connection, InTouch, Echo, inCloud, CXone, CXone Logo, NICE inContact CXone, NICE Perform Compliance, NICE Performance Management, inContact Automatic Contact Distributor, inContact Personal Connection, inContact Interactive Voice Response, and inContact Work Force Management.Management, Mattersight, Mattersight Logo, Mattersight See What Matters, Chemistry of Conversation, Net Promoter, Satmetrix, NPX, NPS, Fraudmap, Guardian Analytics, Evidence Lake, Alacra, Free your business, Resolve, Brand Embassy and Hiperos, ContactEngine, ContactEngine Logo, GoMoxie, FluenCX, TRUTH DEPENDS ON IT, MindTouch, NICE ElevateAI, ElevateAI and the NICE Smile design logo, StatsViewer, ScheduleViewer, VoApps, Directdrop voicemail and Directdrop voicemail logo, LiveVox, LiveVox Logo, Human Call Initiator, HCI and HTI.
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Seasonality
TheIn previous years the majority of our business operates asoperated under an on-premises enterprise software model, which iswas characterized, in part, by uneven business cycles throughout the year, and under whichwith a significant numberportion of our licenses are entered intocustomer orders received in the fourth quarter of each calendar year. We believe that seasonality inThis was due primarily to year-end capital purchases by customers and holiday season spending. In recent years, our business may becomehas been shifting more prominent asand more to the proportioncloud, which is characterized by more evenly distributed business, which balances the impact of advanced software applications outbeing heavily weighted towards the fourth quarter. While the seasonality associated with our cloud business is less impactful, we continue to have a second half fiscal year which typically results in higher usage of our overall sales mix continues to increase. We believe that these seasonal factorssolutions stemming primarily reflect customer spending patternsfrom the retail and budget cycles. In addition, we charge for some of our cloud software based on actual consumption, which may also fluctuate seasonally. insurance verticals.While seasonal factors such as these are common in the software and technology industry, this pattern should not be considered a reliable indicator of our future revenue or financial performance. Many other factors, including general economic conditions, also have an impact on our business and financial results. See “Risk Factors” under Item 3, "Key Information"“Key Information” of this annual report for a more detailed discussion of factors which may affect our business and financial results.
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Regulation

Data Privacy, and Cyber-Related Security Restrictions
and AI
We are subject to applicable data privacy and cyber-related security restrictions in countries in which our customers and their end-users are located, specificallyincluding the United States, Israel and the E.U., mostly in relation to our SaaS, hosting and cloud-based services,cloud offering, as well as other outsourced services,services. With heightened privacy concerns and regulations, failure to comply with the applicable legislation, procedures and security measures may result in significant financial penalties. In addition, as the regulatory landscape continues to evolve, new laws, rules and regulations governing the use of AI technologies may also apply. For more information on data privacy and cyber security related concerns and legislation, including the United States, IsraelGDPR and upcoming regulations governing AI, see also Item 3, "Key Information - Risk Factors" in this annual report.
We are also subject to domestic data privacy laws, such as the Israeli Privacy Law, the CCPA, CPRA and the European Union. For example, on April 14, 2016, the European Parliament formally adopted the GeneralUnited Kingdom Data Protection Regulation,Act 2018. We are evaluating the business impact of compliance with the constantly changing data privacy laws and regulations, which formally goesmay include domestic laws, regulations and guidelines that may come into effect on May 25, 2018. In the event we do notin additional regions as well, and apply to our products and services.

As part of our effort to comply with such regulations and mitigate any future risks related to data privacy and cyber-relatedcyber-security, we have adopted certain internal policies and procedures related to information security restrictions,and incident response, as well as Business Continuity Plans, Risk Assessment Procedures and Vendor Management Policies. These internal policies and procedures are intended to address our business and operational practices as well as our customers' information security concerns, and to avoid or mitigate the risks associated with our information assets and those of our customers. In addition, we received the ISO 27001:2013 information security management certification, ISO 27701:2019 privacy management and SOC2 Type II, PCI, Hitrust and FedRamp certifications were provided to the relevant business lines (as required). Furthermore, we continually evaluate our policies and procedures in light of the regulations related to data privacy, cyber-security and AI and to our customers' needs.


Trade Compliance
As a company with global operations, we may be subject to significant financial penalties.laws as well as international treaties and conventions controlling imports, exports, re-export and transfer of goods, services and technology. These include import and customs laws, export controls, trade embargoes and economic sanctions, restrictions on sales to parties that are listed on (or are owned or controlled by one or more parties listed on) denied party watch lists and anti-boycott measures.

Export Restrictions

We are subject to applicable export control regulations in countries from which we export goods and services, including the United States, Israel, European Union and the United Kingdom. Such regulations may apply with respect to product components that are developed or manufactured in, or shipped from, the United States, Israel, European Union and the United Kingdom, or with respect to certain content contained in our products. There are restrictions that apply to software products that contain encryption functionality. In the event that our products and services are subject to such controls and restrictions, we may be required to obtain an export license or authorization and comply with other applicable requirements pursuant to such regulations.regulations or may be restricted from exporting certain products and services to certain countries or to sanctioned parties.


European Environmental Regulations

Our European activities require us to comply with the Directive 2002/95/EC2011/65/EU of the European Parliament and of the Council on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment and the Commission Delegated Directive 2011/65/EU of the European Parliament on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment(EU) 2015/863 (together “RoHS”). RoHS provides, among other things, that producers of electrical and electronic equipment may not place new equipment containing certain materials, in amounts exceeding certain maximum concentration values, on the market in the European Union.EU. We are also required to comply with Regulation (EC) 1907/2006 of the European Community Regulation on chemicalsParliament and their safe use (EC 1907/2006) that deals withof the Council Registration, Evaluation, AuthorizationAuthorisation and Restriction of Chemical substancesChemicals (“REACH”, SVHC-173)SVHC-205), which requires producers to manage the risks from chemicals used in their products and to provide safety information on the substances found in their products.


Our products meet the requirements of the RoHS and REACH directives, and we are making every effort in order to maintain compliance, without adversely affecting the quality and functionalities of our products. If we fail to maintain
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compliance, including by reason of failure of our suppliers to comply, we may be restricted from conducting certain business in the European Union,EU, which could adversely affect our results of operations.
Our European activities also require us to comply with Directive 2002/96/EC2012/19/EU of the European Parliament on Waste Electrical and Electronic Equipment (“WEEE”). The WEEE directive covers the labeling, recovery and recycling of IT/Telecommunications equipment, electrical and electronic tools, monitoring and control instruments and other types of equipment, devices and items, and we have set up the operational and financial infrastructure required for collection and recycling of WEEE, as stipulated in the WEEE directive, including product labeling, registration and the joining of compliance schemes. We are taking and will continue to take all requisite steps to ensure compliance with this directive. If we fail to maintain compliance, we may be restricted from conducting certain business in the European Union,EU, which could adversely affect our results of operations.

Similar regulations have been, or are being, formulated in other parts of the world. We may be required to comply with other similar programs that might beare enacted outside Europe in the future.
Environmental, Social and Governance (ESG) Report

NICE is guided by a deep commitment to social contribution, environmental sustainability and corporate citizenship that is ingrained in our core values. For further information on our ESG strategy and performance, you may access our full ESG Report, which is located on our Corporate Responsibility webpage at https://www.nice.com/company/corporate-responsibility. The contents of our ESG Report and related supplemental information (including information on our website) are not incorporated by reference into this annual report or in any other report or document we file with the SEC.
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Competition

We believe that our solutions have several competitive advantages (as set forth above in “Our Solutions” section in this Item 4, “Information on the Company – “BusinessBusiness Overview”) as well asin their scale, performance and accuracy, comprehensiveness of solutions and broad functionality.

We are leaders in the Customer Engagement space. We compete against WFO players such as Aspect,Alvaria, Calabrio, Genesys and Verint. In the CCaaS market, which is a part of the Contact Center Infrastructure market that is still mainly held by traditional on-premises players, we compete against Amazon Connect,Amazon-connect, Avaya, Cisco, Five9, Genesys and Genesys,TalkDesk, as well as other niche vendors. We also compete against certain cloud communicationsUCaaS and Collaboration Software vendors, (UCaaS), such as 8x8, Vonage and Zoom, which offer basic CCaaS capabilities.capabilities, and certain digital engagement vendors, such as LivePerson, which offer digital engagement and self-service capabilities for contact centers. In addition, we are seeing some CRM companies, such as Salesforce and Zendesk, that provide a subset functionality of our broader offerings. In the emergency communications market, we compete against traditional recording vendors like Eventide, Equature and Exacom. In the Law Enforcement and Justice space, we compete against evidence content generation providers like Axon and Genetec who are looking to expand into broader digital evidence management.

We are leaders in the Financial Crime and Compliance space. We compete against niche vendors that provide one subset of functionality to protect against a specific risk and against vendors that provide a more comprehensive offering. SuchIn the Anti-Fraud market, we compete against vendors include BAE Systems,such as SAS, FICO, NASDAQ Smarts,Featurespace and Feedzai. In the Anti-Money Laundering market we compete against vendors such as SAS, Oracle and SAS Institute.Quantexa. In the Financial Markets Compliance market, we compete against vendors such as SMARTS, Oracle and SAS. In the Mid-market segment, we compete mainly against Verafin.

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Item 4.C     Organizational Structure
The following is a list of our significant subsidiaries and other subsidiaries, including the name and country of incorporation or residence. Each of our significant subsidiaries listed below is wholly-ownedwholly owned by us.
Name of SubsidiaryCountry of Incorporation or Residence
NiceNICE Systems Australia PTY Ltd.Australia
NICE Systems Technologies Brasil LTDABrazil
NICE Systems Canada Ltd.Canada
Nice Systems China Ltd.China
Nice France S.A.R.L.France
NICE Systems GmbHGermany
NICE APAC Ltd.Hong Kong
NICE Systems KftHungary
Nice Interactive Solutions India Private Ltd.India
Nice TechnologiesActimize Ltd.IrelandIsrael
ActimizeNICE Japan Ltd.IsraelJapan
Nice Japan Ltd.Japan
NICE Technologies Mexico S.R.L.Mexico
NICE Netherlands B.V.Netherlands
NiceNICE Systems (Singapore) Pte. Ltd.Singapore
Nice Switzerland AGNICE Technologies Sole Proprietorship LLCSwitzerlandUnited Arab Emirates
Actimize UK LimitedUnited Kingdom
NICE Systems Technologies UK LimitedUnited Kingdom
NICE Systems UK Ltd.United Kingdom
Actimize Inc.United States
NiceinContact Inc.United States
NICE Systems Inc.United States
Nice Systems Latin America, Inc.United States
NiceNICE Systems Technologies Inc.United States
Nexidia
LiveVox Inc.

United States
inContact Inc.United States
inContact Bolivia S.R.L.Bolivia
inContact Philippines Inc.Philippines

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Item 4.D    Property, Plants and Equipment
Our executive offices and engineering, research and development operations are located in North Ra’anana, Israel. The offices occupy approximately 242,000 square feet, with an annual rent and maintenance fee of approximately $9.1 million in 2018 and thereafter, paid in NIS and linked to the Israeli consumer price index. The lease for these offices in our Northern Ra’anana facilities will expire in October 2022.

We have leased various other offices and facilities in several other countries. countries, which include the following headquarter offices:
•Our Israeli headquarters in each regionRa'anana occupies approximately 165,000 square feet.
•Our North American headquarters in Hoboken, New Jersey, occupies approximately 60,000 square feet;
•Our EMEA headquarters in London, occupies approximately 10,000 square feet; and
•Our APAC headquarters in Singapore occupies approximately 5,600 square feet.
Additional material leased facilities consist of the following facilities:

·
Our North American headquarters in Hoboken, New Jersey, occupies approximately 60,000 square feet. We consolidated our North American locations into this one office location in November 2016, and we sub-leased our two former facilities in New Jersey and New York for the remainder of their respective lease terms through 2023 and 2021, respectively;
·Our EMEA headquarters in London, occupies approximately 22,500 square feet (of which 5,543 square feet are sub-leased for a term ending in 2023), and includes an office space and lab; and
·Our APAC headquarters in Singapore occupies approximately 8,000 square feet and is used as office space.
We also have additional material leased facilities, consisting of the following:
•Americas facilities located in –
·Our Americas facilities located in –
◦Atlanta, Georgia - and office that occupies approximately 17,000 square feet;
◦Salt Lake City, Utah – an office that occupies approximately 128,000 square feet; and
oSalt Lake City, Utah – an office that occupies approximately 128,000 square feet and includes office space and training facilities;
◦Additional offices are located in Colorado, Texas, Ohio and California.
•APAC facilities include an office space located in Pune, India, which occupies approximately 135,000 square feet . There are also additional APAC offices located in Bengaluru, Manila and Tokyo.
oAtlanta, Georgia – two offices that occupy together approximately 40,000 square feet and are used as office space and a lab; and

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oAdditional offices are located in Colorado, Texas, Ohio and California.

·Our APAC facilities are located in Pune, India - occupies approximately 108,000 square feet and includes a research and development and service center. There are also additional APAC offices located in Bangalore, Manila, Hong Kong and Tokyo.
We believe that our existing facilities are adequate to meet our current needs and substantially adequate to meet our foreseeable future needs.
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Item 4A.Unresolved Staff Comments.
None.
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Item 5.Operating and Financial Review and Prospects.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statementsconsolidated financial statements and the related notes and other financial information included elsewhere in this annual report. This discussion contains certain forward-looking statements that involve risks, uncertainties and assumptions. As a result of many factors, including those set forth under Item 3, “Key Information - Risk Factors” and elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements. For more information about forward-looking statements, see the “Preliminary Note” that precedesimmediately follows the Table of Contents of this annual report.
Overview
NICE is a global enterprise software leader, providing solutions for theAI-powered cloud platforms that serve two main markets: Customer Engagement and Financial Crime and Compliance markets. NICE’s solutions use advanced omnichannel analytics and automation based on an open cloud platform to improve customer experience as well as prevent financial crime.
NICE’sCompliance. Our core mission is to empower organizationstransform experiences to act smarterbe extraordinary and respond faster both to provide superior customer servicetrusted and to prevent financial crime.create a frictionless and safe digital-first consumer reality where every interaction is intelligent, meaningful and effortless. Our software issolutions are used by customer service organizations of enterprises of all sizes and verticalsare offered in multiple delivery models, including cloud and on-premises.
Our strategy is based on serving rapidly expanding, specialized markets that require feature-rich solutions, with robust, comprehensive cloud platforms that are spearheaded by complianceAI as an overarching catalyst, propelling our unique AI-driven vectors of growth: using AI differentiation to expand our cloud win rates, positioning AI as the bedrock for driving rapid expansion into digital, utilizing AI to fuel massive platform-adoption and leveraging AI as a lucrative source for new domain-specific use-cases.
In the Customer Engagement market, we enable organizations to transform experiences with specialized AI-powered solutions aimed at augmenting employee activities with smart copiloting capabilities, delivering seamless automated customer self-service using conversational AI, orchestrating journeys across multiple channels and intents, meeting consumers wherever they choose to begin their journey, providing them with the knowledge element they need, and creating smarter personalized customer interactions. We help organizations transform their workforce experience with AI-powered solutions aimed at guiding and engaging employees, optimizing operations and automating processes to deliver seamless transition between automated service and human-assisted interactions. We are also digitally transforming the evidence process from police investigators and district attorneys to court and correction facilities, providing a single, streamlined view of the truth as the core of our Public Safety and Justice business, which is part of our Customer Engagement segment.

In the Financial Crime and Compliance market, we protect financial services organizations, with solutions that identify risks and help prevent money laundering and fraud, prevention groupsas well as help ensure financial markets compliance in financial institutions.
real-time. With an integrated cloud platformour holistic, data and advanced analytics solutionsentity-centric approach, we help financial services organizations understand their customers, engage their employees and improve their processes. Additionally, we help them predict needs and identify risks to create an excellent customer experience, prevent fraud and ensure compliance. These capabilitiesaddress the new dynamic of financial crime threats, which are enhanced throughsignificantly growing in the utilization of advanced automation and artificial intelligence capabilities. Our software constantly improves by offering collective insights and some of our newer software offerings apply machine learning to cross-industry and cross-organizations data and by offering collective insights.digital era.

NICE is at the forefront of twoseveral industry transformations;technological disruptions that have greatly accelerated in the last several years: the growing acceptance and adoption of specialized AI-powered solutions combining domain-specific use-cases, Generative AI and LLMs, the adoption of cloud platforms by enterprisesorganizations of all sizes and verticals, the shift of consumer and organizational preferences towards digital-centric services and experiences, an increase in consumer cross channel, self-service usage and the shift by financial institutionsneed to manage, optimize and engage a diverse workforce while retaining and attracting top talent. Our suite of integrated risk management solutions, for end-to-endbased on our unique domain expertise, enables customer service, financial crime prevention.prevention and criminal justice organizations to innovate and thrive with industry-leading cloud platforms that use domain-specific data and AI powered solutions.
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In both cases, our ability to deeply integrate analytics and automation and apply it across multiple data sources and workflows enables customers to achieve greater effectiveness and efficiency.

We rely on severalmultiple key assets to drive our growth:

·•Our market-leading integrated open cloud platformplatforms which natively embed AI, analytics and solutions for omnichannel routing, data capture, analytics, automation, and artificial intelligence, many of whichare purpose-built for our specific domains, scale up to any sized organization, offer a comprehensive application suite for complete functionality, and are protected by a broad array of patents.
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·Our ability to provide solutions that cover all market segments, from small to mid-sized business to large scale Fortune 100 enterprises.
·•Our extensive portfolio of applications as well as a large partner ecosystem allow NICE’sthat address organizational needs across all our areas of domain expertise.
•Our broad array of proprietary technologies and algorithms in the domains of Generative AI, LLMs, automation, analytics, machine learning, speech-to-text, natural language processing, personality-based routing and others. Our native AI models are based on years of industry-specific data and domain expertise, consistently using machine learning for generating actionable insights.
•Our access to vast amount of CX data, derived from billions of domain-specific interactions of all types, enriching our applications and enabling us to build hundreds of CX purpose-built AI models.

•Our unique digital capabilities that are critical for organizations of all sizes and across all industries in dealing with the exponential adoption of digital in consumer preferences, banking transactions and justice agencies operations.
•Our advanced data security and compliance capabilities that deliver trusted enterprise software across all our markets, including FedRAMP authorization to the relevant business lines, with 30 authorized applications, native PCI, supported by the most advanced SOC in the industry.
•Our flexible delivery model that allows our customers to benefit from a wide range of both cloud and on-premises solutions.
•Our solutions' market coverage of all segments, from small and mid-sized businesses to large scale Fortune 100 enterprises.
·•The mission critical nature of our solutions to the operations of our customers and our cloud platforms that are essential for enabling a scalable and sustainable work-from-anywhere environment.
•Our market leadership, which makes us a well-recognized brand and creates top-of-mind awareness for our solutions in our areas of operation.
•Our broad partner ecosystem that enables us to reach and serve a large number of customers across many countries.
·•Our loyal customer base. Today,base of more than 25,000 organizations in over 150 countries, across many industries, including 85 of the Fortune 100 companies, use NICE solutions.companies.
•Our strong profitability and free cash flow that allows us to invest in innovative solutions and product development and fuels strategic acquisitions.
·
•Our ability to quickly drive mainstream adoption for innovative solutions and new technologies and trends, which we introduce to the market through our direct sales force and distribution network.
·•Our skilled employees and domain expertise in our core markets allowsallow us to bring our customers the right solutions to address key business challenges and build strong customer partnerships.
·•Our access to data for improving our algorithms through machine learning and artificial intelligence, which relies on a combination of our extensive customer base, cloud-base deployments and domain expertise.
·Our services, customer support and operations, which enable our customers to quickly enjoy the benefits of our solutions, with multiple deployment models in the cloud or on-premiseon-premises throughout the world and support for full value realization and customer success.

•Our outcome-oriented white-glove services that enable our customers achieve greater efficiency, higher revenue, and lower operating costs with our solutions.
We have established a leadership position in many of our areas of operation by offering comprehensive and innovative enterprise-grade platforms, solutions and technologies. Our customers, across all sizes and verticals, including banking, telecommunications, healthcare, insurance, retail, travel, gaming, public safety, state and local government and more, are benefiting from the tangible and practical business value that our solutions provide.
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Recent Acquisitions
From time to time we complete acquisitions and investments. Some of them are not considered material to our business and operations. During 2023, we completed several acquisitions for total consideration of approximately $446.9 million. During 2022, we completed an acquisition for total cash consideration of approximately $30 million and contingent consideration with a fair value of approximately $20.4 million. For additional information see Note 1b to our Consolidated Financial Statements included elsewhere in this annual report.

The following acquisitions were accounted for by the acquisition method of accounting, and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The results of operations related to each acquisition are included in our consolidated statementstatements of income from the date of acquisition. On November 14, 2016, we completed the acquisition of inContact, a leading provider of cloud contact center software and agent optimization tools.

Critical Accounting Estimates
We acquired inContact for total consideration of approximately $1 billion in cash. The acquisition enables us to offer a fully integrated and complete cloud contact center where companies can interact with customers. The acquisition enabled the two market leaders to join forces and provide the industry’s first fully integrated and complete cloud contact center solution suite.
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On March 22, 2016, we completed the acquisition of Nexidia, a leading provider of advanced customer analytics. We acquired Nexidia for total consideration of approximately $135 million in cash. The acquisition allows us to offer a combined offering, featuring a best-in-class, analytics-based solution with accuracy, scalability and performance, enabling organizations to expand their analytics usage in critical business use cases.
On March 11, 2016, we completed the acquisition of Voiceprint International, Inc. (“VPI”), a provider of workforce optimization software and services for enterprises, contact centers, first responders and trading floors. We acquired VPI for total consideration of approximately $21.7 million in cash.

In addition, from time to time we complete acquisitions and investments that are not considered material to prepare our business and operations. During 2017, we completed two acquisitions for a total consideration of approximately $77 million in cash. For additional information see Note 1b to our Consolidated Financial Statements included elsewhere in this annual report.

Discontinued Operations
In September 2015, we completed the sale of our Physical Security operation to Battery Ventures for total consideration of $92.5 million, compromised of $74.6 million in cash, notes of $2.9 million and up to $15.0 million earn out based on future business performance. ​Through the Physical Security operation we previously provided video surveillance technologies and capabilities to security-aware organizations. We previously accounted for the Physical Security operation under the Security Solution segment.
In July 2015, we completed the sale of our Cyber and Intelligence operation to Elbit Systems and one of its subsidiaries (together, “Elbit”) for total consideration of $151.6 million, compromised of $111.6 million in cash and $40.0 million in earn out based on future business performance conditions, which were not met. In 2016, Elbit made certain claims in relation to the transaction consolidated financial statements in accordance with the procedures set in the acquisition agreement between the parties, which the parties settled in December 2016. Pursuant to such settlement,U.S. GAAP.

Certain accounting policies require that we recorded additional expenses in 2016 and a final net working capital price adjustment. Under the settlement agreement, we also agreed to reduce the earnout by $4.0 million. ​We previously accounted for the Cyber and Intelligence operation under the Security Solution segment.
Following the sale of these two operations, we have classified their results of operations (including the gain on their disposal) and their assets and liabilities as discontinued operations in accordance with ASC 205-20, “Presentation of Financial Statements - Discontinued Operations”.

The carrying amount usedapply significant judgment in determining the gain on disposalappropriate assumptions for calculating financial estimates. By their nature, these judgments will be subject to an inherent degree of uncertainty. Our judgments are based upon our management’s historical experience, terms of existing contracts, observance of trends in the operations included goodwill inindustry, information provided by our customers and information available from other outside sources, as appropriate.

We believe that the accounting policies and estimates discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an amount calculated based on the relative fair values of the disposed operations and the portion of the operation that was retained within the segment.

Off-Balance Sheet Transactions
We have not engaged in nor been a partyaccounting estimate to any off-balance sheet transactions, as defined in Item 5 of Form 20-F.
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Critical Accounting Policies
The preparation of the Consolidated Financial Statements in conformity with U.S. GAAPbe critical if: (1) it requires managementus to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates, judgments and assumptions used are reasonable based uponbecause information was not available at the time they are made. Management believesor it included matters that were highly uncertain at the significant accounting policies, which affect its more significant judgmentstime we were making our estimate and estimates used(2) changes in the preparationestimate could have a material impact on our financial condition or results of the Consolidated Financial Statements, and those that are the most critical to aid in fully understanding and evaluating our reported results, include the following:operations.

·Revenue recognition;
·Impairment of long-lived assets;
·Income taxes;
·Legal contingencies;
·Business combination;
·Stock-based compensation;
·Marketable securities;
·Fair value of financial instruments; and
·Exchangeable senior notes.
Revenue Recognition. WeWe generate revenues from sales of cloud, service and software products, services and cloud, which include software license, SaaS, and network connectivity, hosting, support and maintenance, implementation, configuration, project management, consulting and training, as well as hardware sales.and software licenses. We sell our cloud, products and services directly through our sales force and indirectly through a global network of distributors, system integrators and strategic partners, all of whom are considered end-users.

The basisWe recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers” (“ASC 606”). Under this standard, we recognize revenues when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive in exchange for our softwarethose goods or services. To determine revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, “Software-Revenue Recognition“. Revenues from sales of our software productsfor contracts that are recognized when persuasive evidence of an agreement exists, delivery of the product has occurred, the fee is fixed or determinable and collectability is probable. Revenues from maintenance and professional services are recognized ratably over the contractual period and as services are performed, respectively. In transactions where a customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or as the acceptance provision has lapsed.
For multiple element arrangements within the scope of softwarethis standard, we perform the following five steps:

1) Identify the contract(s) with a customer

A contract with a customer exists when (i) there is an enforceable contract with the customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance; and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is likely based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer's historical payment experience.

2) Identify the performance obligations of the contract

We enter into contracts that may include multiple performance obligations. We account for individual products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

3) Determine the transaction price
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The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer.

Payment terms and conditions vary by contract type. In instances where the timing of revenue recognition guidance, revenuesdiffers from the timing of invoicing, we generally do not include a significant financing component in our contracts since our sale prices are allocatednot subject to billing terms and the purpose of our contracts is not to receive financing from, or provide financing to, customers. In addition, we elected to apply the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Revenue is measured based on the consideration specified in a contract with a customer, excluding taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

4) Allocate the transaction price to the different elements in the arrangement under the "residual method" when Vendor Specific Objective Evidence ("VSOE") of fair value exists for all undelivered elements and no VSOE exists for the delivered elements. Under the residual method, we defer revenue for the fair value of its undelivered elements and recognize revenue for the remainderperformance obligations of the arrangement fee attributable tocontract

We allocate the elements initially delivered in the arrangement when the basic criteria in ASC 985-605 have been met. Any discount in the arrangement is allocated to the delivered elements.
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For arrangements that contain both software and non-software components that function together to deliver the products' essential functionality, we allocate revenuetransaction price to each elementperformance obligation identified based on its relative standalone selling price. Inprice (“SSP”) out of the total consideration of the contract.

We use judgment in determining the SSP. If the SSP is not observable through standalone transactions, we estimate the SSP by taking into account available information such as geographic or regional specific factors, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligations.

We typically establish SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change. SSP for products and services can evolve over time due to changes in NICE pricing practices that are influenced by intense competition, changes in demand for products and services, and economic factors, among others.

For products for which the accounting principles establishSSP cannot be determined based on observable prices given that the same products are sold for a hierarchy to determinebroad range of amounts (i.e., the selling price to be used for allocating revenue to deliverables. The selling price foris highly variable), the SSP included in a deliverable is based on its VSOE, if available, third party evidence (“TPE”) if VSOE is not available, or best estimated selling price (“BESP”) if neither VSOE nor TPE are available. We establish VSOE of fair value using the price charged for a deliverable when sold separately. When VSOE cannot be established, we attempt to establish fair value of each element based on TPE. TPEcontract with multiple performance obligations is determined based on competitor prices for similar deliverables when sold separately. Generally, our go-to-market strategy differs from that of our peers and our offerings containby applying a significant level of differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, weresidual approach whereby all other performance obligations within a contract are unable to reliably determine what similar competitor products’ selling prices are onfirst allocated a standalone basis. Therefore, we are typically not able to determine TPE. The BESP price is established considering several external and internal factors including, but not limited to, historical sales, pricing practices and geographies in which we offer our products. The determinationportion of the BESP is subject to discretion.
Our policy for establishing VSOE of fair value of maintenance services istransaction price based on the price charged when the maintenance is renewed separately. Establishment of VSOE of fair value of professional services is based on the price charged when these services are sold separately.
Revenues from fixed price contracts that require significant customization, integration and installation are recognized based on ASC 605-35, “Construction-Type and Production-Type Contracts“, using the percentage-of-completion method of accounting based on the ratio of costs related to contract performance incurred to date to the total estimatedupon their respective SSPs, with any residual amount of such costs. The amounttransaction price allocated to these product revenues.

5) Recognize revenue when (or as) the entity satisfies a performance obligation

We derive our cloud revenues from subscription services, which are comprised of revenue recognized is based on the totalsubscription fees under the arrangement and the percentage of completion achieved. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss on the entire contact.
Our SaaS offerings providefrom granting customers access to certain of our software within a cloud-based IT environment on a subscription basis, and may also includecloud platforms, network connectivity and/or services over our network or through third party network connectivity providers on a usage basis. Because such offerings do not grant customers the right to take possessionfees for deployment of the software, we consider these arrangements to be service contracts which are not within the scope of ASC 985-605. In addition, we also derive revenuecertain cloud platforms.

Revenue from professionalsubscription services included in implementing or improving a customer’s cloud software solutions experience.
Revenues for our SaaS offerings areis recognized either ratably over the contract termperiod or based on actual usage, commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. Revenue from the network connectivity usage is derived based on customer specific rate plans and call usage and is recognized in the period the call is initiated. Upfrontinitiated and services fees for deployment are amortized over average customer life.

Revenue from software license, support and maintenance services are recognized at the time the related performance obligation is satisfied by transferring the promised product or service to professional servicesthe customer. Software license revenues are recognized at the point in time when the software license is delivered, and the customer obtains control of the asset. Support and maintenance service revenues are recognized ratably over the term of the underlying maintenance contract term. Renewals of maintenance contracts create new performance obligations that are not considered to have standalone value, are deferred and recognizedsatisfied over the estimated lifeterm with the revenues recognized ratably over the period of the customer.renewal.

To assess the probabilityProfessional services revenues, except fees for deployment of collection for revenue recognition, we have a credit policy that determines the credit limit that reflects an amount that is deemed probably collectible for each customer. These credit limitscertain cloud platforms, are reviewed and revised periodically on the basis of new customer financial statements information, credit insurance data and payment performance.recognized as services are performed.

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We maintain a provision for product returns and other contractual rights, which are estimated based on our past experience and are deducted from revenues.
Deferred revenues and advances from customers include payments received from customers for which revenue has not yet been recognized.
Impairment of Long-Lived Assets. Our long-lived assets include goodwill, property and equipment and identifiable other intangible assets that are subject to amortization.
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Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, "Intangible - Goodwill and Other,"Other" ("ASC 350"), goodwill is not amortized, but rather is subject to an annual impairment test. ASC 350 requires goodwill to be tested for impairment at the reporting unit level at least annually or between annual tests in certain circumstances, and written down when impaired. GoodwillIf we determine that it is tested for impairment by comparingmore likely than not that the fair value of thea reporting unit withis less than its carrying value. ASC 350 allows us to first assess qualitative factorsvalue, then we prepare a quantitative analysis to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.carrying value of reporting unit exceeds its estimated fair value. If the qualitative assessment does not result incarrying value of a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits us to bypass the qualitative assessment for any reporting unit exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and proceed directly to performing the first step of the goodwill impairment test.
Other (Topic 350).
During the fourth quarter of each of the fiscal years ended December 31, 2015, 20162023, 2022 and 2017,2021, we performed a qualitative assessment for our reporting units and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required. Accordingly, no impairment charge was recognized during any of such fiscal years.
 Our other long-lived assets (besides goodwill)Income Taxes. To prepare our consolidated financial statements, we estimate our income taxes in each of the jurisdictions in which we operate, and identifiable intangibles thatin certain of these jurisdictions, our income taxes are subjectcalculated based on our assumptions as to amortization are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment", whenever events or changes in circumstances indicate thatour entitlement to various benefits under the carrying amount of an asset may not be recoverable. Impairment indicators include any significant changesapplicable tax laws in the manner ofjurisdiction. The entitlement to such benefits depends upon our use ofcompliance with the assetsterms and significant negative industry or economic trends. Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of the carrying amount over fair value. No impairment charge was recognized during any of such fiscal years.conditions set out in these laws.
Income Taxes. We account for income taxes in accordance with ASC 740, "Income Taxes".“Income Taxes.” This topic prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred tax assets and deferred tax liabilities are presented under long-term assets and long-term liabilities, respectively.
We implement a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative basis) likely to be realized upon ultimate settlement.
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We classify interest and penalties on income taxes (which includes uncertain tax positions) as taxes on income.
Legal Contingencies. We are currently involvedIn December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in various claims and legal proceedings. We reviewTopic 740 related to the status of each matter and assess its potential financial exposure. Ifapproach for intra-period tax allocation, the potential loss from any claim or legal proceeding is considered probablemethodology for calculating income taxes in an interim period and the amount can be reasonably estimated, we accruerecognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a liability forstep-up in the estimated loss.tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The adoption of ASU 2019-12 did not have a significant impact on our consolidated financial statements.
Business Combination. We apply the provisions of ASC 805, “Business Combination“,Combination,” and we allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
Contingent consideration incurred in a business combination is included as part of the acquisition price and recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the
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contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in earnings under general and administrative expenses.
In October 2021, the FASB issued ASU No. 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from ASC 606 rather than adjust them to fair value at the acquisition date. We early adopted ASU 2021-08 in the fourth quarter of 2021, retroactively applying it to all business combinations since January 1, 2021. The adoption did not have a material effect on our consolidated financial statements.

Stock-based Compensation. We account for stock-based compensation in accordance with ASC 718, "Compensation“Compensation - Stock Compensation" ("Compensation” (“ASC 718"718”), which requires the measurement and recognition of stock base compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model.model and account for forfeitures as they occur.
We recognize compensation expenses for the value of our awards, which have graded vesting, based on the accelerated attribution method over the requisite service period of each of the awards.
We account for forfeitures as they occur.
We estimate the fair value of stock options granted using the Black-Scholes-Merton option-pricing model, which requires a number of assumptions: the expected volatility is based upon actual historical stock price movements; the expected term of options granted is based upon historical experience and represents the period of time that options granted are expected to be outstanding; the risk-free interest rate is based on the yield from U.S. Federal Reserve zero-coupon bonds with an equivalent term; and the expected dividend rate (an annualized dividend yield) is based on the per share dividend declared by the our Board of Directors. For information on our dividend payments, see Note 13d to our Consolidated Financial Statements included elsewhere in this annual report.
We measure the fair value of restricted stock based on the market value of the underlying shares at the date of grant.
Marketable Securities.We account for investments in debt securities in accordance with ASC 320, "Investments“Investments - Debt Securities” and Equity Securities"ASC No. 326, “Financial Instruments - Credit Losses”. Management determines the appropriate classification of itsour investments in debt securities at the time of purchase and re-evaluates such determinations at each balance sheet date.date.
Marketable securities classified as "available-for-sale"“available-for-sale” (“AFS”) are carried at fair value, based on quoted market prices.value. Unrealized gains and losses are reported in a separate component of shareholders'shareholders’ equity in accumulated other comprehensive income, (loss).net of taxes. Gains and losses are recognized when realized, on a specific identification basis, in our consolidated statements of income.

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Our securitiesFor each reporting period, we evaluate whether declines in fair value below the amortized cost are reviewed for impairmentdue to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 320-10-35. If such assets are considered to be impaired, the impairment charge is recognized in earnings when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason326. Allowance for the decline in value, the potential recovery period and our intent to sell, including whether it is more likely than not that we will be required to sell the investment before recovery of cost basis. For securities with an unrealized loss that we intend to sell, or it is more likely than not that we will be required to sell before recovery of their amortized cost basis, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet these criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses while declineson AFS debt securities are recognized as a charge in fair value related tofinancial expenses (income) and other, factorsnet, on the consolidated statements of income, and any remaining unrealized losses, net of taxes, are recognizedincluded in accumulated other comprehensive income (loss). As of December 31, 2023, no credit losses have been recorded.


Fair Value of Financial Instruments.We apply ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"). Under this standard, fair value is definedclassified all our securities with maturities beyond 12 months as current assets under the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. We measure ourcaption short term investments in money market funds classified as cash equivalents, marketable securities and its foreign currency derivative contracts at fair value.
In determining fair value, we use various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best informationconsolidated balance sheet. These securities are available in the circumstances.to support current operations and we may sell these debt securities prior to their stated maturities.
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The hierarchy is broken down into three levels based on the inputs as follows:
·Level 1 - Valuations based on quoted prices in active markets for identical assets that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
·Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
·Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particularExchangeable Senior Notes. Through December 31, 2021, prior to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determinationadoption of fair value requires more judgment and the investments are categorized as Level 3.
Our marketable securities and foreign currency derivative contracts are classified within Level 2. For more information, see Note 3 and Note 10 to our Consolidated Financial Statements included elsewhere in this annual report.
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables and trade payables, approximate their fair value due to the immediate or short-term maturities of these financial instruments. The carrying amount of the long term loan approximates its fair value due to the fact the loan bears a variable interest rate.
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Exchangeable Senior Notes. We apply ASC 815 “Derivative and Hedging” (“ASC 815”) and ASC 470 “Debt” (“ASC 470”). Under these standards,ASU 2020-06, we separately accountaccounted for the liability and equity components of convertible debt instruments that may be settled in combination of cash in a manner that reflects our nonconvertible debt borrowing rate.and shares. The liability component at issuance iswas recognized at fair value, based on the fair value of a similar instrument that doesdid not have a conversion feature. The equity component iswas based on the excess of the principal amount of the debenturesproceeds over the fair value of the liability component, after adjusting for an allocation of debt issuance costs, and iswas recorded as capitaladditional paid in excess of par. capital.
Debt discounts arewere amortized as additional non-cash interest expense over the expected life of the debt.
Recently Adopted Accounting Standards
In March 2016, We allocated the FASB issued ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvementstotal issuance costs incurred to Employee Share-Based Payment Accounting" ("ASU 2016-09"), which simplified certain aspectsthe liability and equity components of the exchangeable senior notes based on the same proportions as the proceeds from the notes.

On December 31, 2021, we entered into the First Supplemental Indenture to the 2017 Indenture (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture") (the “First Supplemental Indenture”). In accordance with the First Supplemental Indenture, we irrevocably elected Cash Settlement for the principal and any premium due upon conversion to apply to all conversions of the 2017 Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture") with an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021. As a result, the conversion feature of the 2017 Notes was required to be bifurcated from the debt host and accounted for separately as a derivative liability. As such, we recognized a derivative liability at an amount equal to the fair value of the conversion feature at that date. Subsequent changes in fair value of the bifurcated conversion derivative are reflected in financial income (expenses) on a net basis.

Additionally, in December 2021, we made an irrevocable election to settle the principal amount of the 2020 Notes (as defined in Item 10, "Additional Information - Material Contracts - Notes and Indenture") in cash. Accordingly, upon conversion, the principal amount shall be paid in cash. Any amount in excess of the principal amount may be paid, or delivered, as the case may be, in cash, shares of common stock or a combination of cash and shares of the Company stock, at the Company's discretion. Prior to this irrevocable election, upon conversion, we, could have elected to deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock to settle the principal amount.

Starting January 1, 2022, we adopted ASU 2020-06, which simplifies the guidance on the issuer’s accounting for share-based payment transactions, including income taxes, classification of awardsconvertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and classification(2) convertible instruments with a beneficial conversion feature. As a result, we do not separately present in the statement of cash flows. ASU 2016-09 became effective for us beginning the first quarter of 2017, at which timeequity an embedded conversion feature in such debt. Instead, we changed our accounting policy to account for forfeituresa convertible debt instrument wholly as they occur. The change was applied ondebt, unless the debt contains embedded derivatives required to be bifurcated or the debt is issued at a modified retrospective basis withsubstantial premium. We recognized a cumulative effect of initially applying ASU 2020-06 as an adjustment to the January 1, 2022 opening balance of accumulated deficit. We combined the previously separated equity component with the liability component, which together is classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense. Similarly, the portion of issuance costs previously allocated to equity was reclassified to debt and amortized as interest expense. Accordingly, we recorded as of January 1, 2022 an increase to retained earnings of $6,208 as of January 1, 2017. In addition, historically, excess tax benefits or deficiencies from our equity awards were recorded asapproximately $7,331, a decrease to additional paid-in capital of $28,816, an increase to long-term debt of $24,758, a decrease to deferred tax liabilities of $2,937, and an increase in our consolidated balance sheets and were classifieddebt issuance costs of $336. There will be an impact to earnings per share as a financing activity in the consolidated statements of cash flows. As a result of the adoption based on the if-converted method if the we average share price will prospectively record any excess tax benefits or deficiencies from our equity awards as partexceed the conversion price of our provision for income taxes in our consolidated statements$299.19 of operations in the reporting periods in which equity vesting occurs. Excess tax benefits for share-based payments are now presented as2020 Notes, then there will be an operating activity in the statements of cash flows rather than financing activity. We electedimpact to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities and in a decrease to cash generated by financing activities in the consolidated statements of Cash Flows of $7,868 and $7,595earnings per share for the years ended December 31, 2016dilution impact above the conversion price as a result of the adoption based on the if-converted method. The prior period consolidated financial statements have not been retrospectively adjusted and December 31, 2015, respectively.continue to be reported under the accounting standards in effect for those periods (see Note 15 to our Consolidated Financial Statements included elsewhere in this annual report).



Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the FASB issued Accounting Standards Update 2014-09 (“ASU 2014-09”) "Revenue from Contracts with Customers (Topic 606)". ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Subsequently, the FASB issued several additional ASUs related to ASU 2014-09, collectively they are referred to as the “new revenue standards”, which become effective for us beginning January 1, 2018. We have adopted the new revenue standards using the modified retrospective transition method.

We estimated the analysis of all potential impacts of the new revenue standards. The impacts mainly relate to arrangements that include term-based software licenses, allocation of transaction price to each performance obligation on a relative standalone selling price and capitalization of costs related to obtaining customer contracts. Based on work performed to date, on January 1, 2018 we expect to record a cumulative-effect of approximately $39 million attributed to Deferred Revenues and approximately $45 million attributed to costs related to obtaining customer contracts. These amounts will be recorded as adjustment to retained earnings. The impact derives from arrangements that based on "Revenue Recognition (Topic 605)" were to be recognized in future years during 2018 to 2022.

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In January 2016,November 2023, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)2023-07, Segment Reporting (Topic 280): RecognitionImprovements to Reportable Segment Disclosures. This standard updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for us forinformation used to assess segment performance on an interim and annual periods beginning on or after January 1, 2018. We expect no material impact on our Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"). The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements.basis. This update is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods; early adoption is permitted and modified retrospective application is required. We are currently evaluating the impact of adopting ASU 2016-02 on our Consolidated Financial Statements.
In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments." The guidance addresses the classification of cash flow related to (1) debt prepayment or extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance, including bank-owned life insurance, (6) distributions received from equity method investees and (7) beneficial interests in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance will generally be applied retrospectively and is effective for financial statements issued for annual reporting periods beginning after December 15, 2017. We expect no material impact on our statement of cash flows.
In October 2016, the FASB issued Accounting Standards Update 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory” (“ASU 2016-16”), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory. ASU 2016-16 will be effective for us for interim and annual periods beginning after December 15, 2017. We expect no material impact on our Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment" (“ASU 2017-04”). ASU 2017-04 eliminates step 2 of the goodwill impairment test, which requires the calculation of the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are currently evaluating the effect that this guidance will have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business" (“ASU 2017-01”), which provides guidance to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. ASU 2017-01 is effective for us for fiscal years beginning after December 15, 2017, including interim periods within those periods. . We expect no material impact on our Consolidated Financial Statements.
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In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" ("ASU 2016-13"). The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be of greater use to users of the financial statements. ASU 2016-13 is effective for us for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is allowed as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The objectives of this ASU are to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and to make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 is effective for fiscal years beginning after December 15, 20182023, and interim periods within those fiscal years. We are currently evaluating the effect that this guidance willyears beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-07 is not expected to have a significant impact on our Consolidated Financial Statements.consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures", which expands the disclosure requirements for income taxes, primarily related to the rate
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reconciliation and income taxes paid. This guidance is effective for the fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-09 is not expected to have a significant impact our consolidated financial statements.                                        
Results of Operations
The following table sets forth our selected consolidated statements of income for the years ended December 31, 2015, 2016,2022 and 2017,2023, expressed as a percentage of total revenues. Totalsrevenues (totals may not add up due to rounding.
  2015  2016  2017 
Revenues         
Products            34.3%  30.2%  23.9%
Services            61.8   61.4   49.0 
Cloud            3.9   8.4   27.1 
   100.0   100.0   100.0 
Cost of revenues            
Products            7.2   5.2   3.8 
Services            24.0   24.6   16.9 
Cloud            1.6   3.5   14.5 
   32.8   33.3   35.2 
             
Gross profit  67.2   66.7   64.8 
             
Operating expenses            
Research and development, net  13.9   13.9   13.6 
Selling and marketing            24.4   26.4   27.1 
General and administrative            9.8   11.5   9.7 
Amortization of acquired intangibles  1.3   1.7   3.1 
Total operating expenses            49.3   53.5   53.5 
             
Operating income            17.9   13.2   11.3 
Financial income (expense), net            0.7   1.1   (1.5)
Other expenses, net            (0.1)  (0.1)  - 
             
Income before taxes            18.5   14.2   9.8 
Taxes on income (tax benefits)            3.3   2.1   (1.0)
             
Net income from continuing operations  15.2   12.1   10.8 
Income (loss) from discontinued operations  16.4   (0.8)  - 
Taxes on income (tax benefits) from discontinued operations  3.7   (0.2)  - 
Net income (loss) from discontinued operations  12.7   (0.6)  - 
Net income            27.9   11.5   10.8 

67
rounding).
20232022
Revenue:
Cloud66.5 %59.4 %
Services27.0 29.8 
Product6.5 10.8 
100.0 100.0 
Cost of revenue:
Cloud23.3 21.7 
Services7.9 8.4 
Product1.1 1.2 
32.3 31.3 
Gross profit67.7 68.7 
Operating expenses:
Research and development, net13.6 14.0 
Selling and marketing25.2 28.0 
General and administrative10.6 11.3 
Total operating expenses49.4 53.2 
Operating income18.3 15.5 
Financial income and other, net(0.9)(0.5)
Income before taxes19.2 15.8 
Taxes on income5.0 3.6 
Net income14.2 12.2 
Comparison of Years Ended December 31, 20162023 and 20172022

Revenues
For a comparison of our results for the years ended 2022 and 2021, please refer to Item 5 in our annual report on Form 20-F for the year ended 2022, filed with the SEC on March 30, 2023.
Our total revenues increased by approximately 31.2% to $1,332.2$196.2 million, or 9%, from $2,181.3 million in 2017 from $1,015.5the year ended December 31, 2022 to $2,377.5 million in 2016. Revenues from salesthe year ended December 31, 2023. The increase consisted of a $205.3 million increase in Customer Engagement Solutions andrevenue, which was partially offset by a $9.1 million decrease in Financial Crime and Compliance Solutions in 2017 were $1,051.4 million and $280.8 million, respectively, an increaserevenue.
The revenue growth of 39.4% and 7.5% from 2016, respectively.
The growth in revenues from our Customer Engagement Solutions is mainly attributed to increased demand for our solutions delivered over the cloud and to our expanded analytics offerings primarily due to the full year inclusion of inContact and Nexidia, respectively. These offerings enable organizations to improve operational efficiency and customer experience, enhance compliance and improve sales optimization.
The growthbusiness segment in revenues from Financial Crime and Compliance Solutions is primarily driven by increased demand of financial institutions throughout our markets for solutions that secure financial transactions and prevent fraud and complex financial crimes, magnified by the continued evolution of advancements in our technology.
  
Years Ended December 31,
(U.S. dollars in millions)
        
  2016  2017  
Dollar
Change
  
Percentage
 Change
 
             
Product revenues $306.2  $318.9  $12.7   4.1%
Service revenues  623.8   652.1   28.3   4.5 
Cloud revenues  85.5   361.2   275.7   322.4 
Total revenues $1,015.5  $1,332.2  $316.7   31.2%

The increase of $12.7 million in product revenues2023 is attributed to the increased demand for our cloud platform CXone from new customers and ongoing expansion within our installed customer base, driven by furtherpenetration into both large enterprises and the mid-market.

51

The revenue decrease in our Financial Crime and Compliance Solutions products mainly duebusiness segment in 2023 is primarily attributed to increased demand of financial institutions throughout our markets.
The growth in service revenues is mainly due to increase in maintenance services resulting primarily from an increase in install base from previous years' sales, partially offset by a decrease in professional services due to the growing transition from on-premise to cloud-based solutions.
The growth in cloud revenues is mainly due to the full year inclusion of inContact and Nexidia and due to the growing transition from on-premise to cloud-based solutions.

68
Revenue by Region
  
Years Ended December 31,
(U.S. dollars in millions)
       
  
 
2016
  
 
2017
  
Dollar
Change
  
Percentage
Change
 
             
United States, Canada and Central and South America (“Americas”)
 $720.5  $1,035.9  $315.4   43.8%
Europe, the Middle East and Africa (“EMEA”)  193.5   190.0   (3.5)  (1.8)
Asia-Pacific (“APAC”)  101.5   106.3   4.8   4.7 
Total revenues $1,015.5  $1,332.2  $316.7   31.2%

The Americasproduct revenue, increased by 43.8%, driven by our Customer Engagement Solutions, mainly due to increased demand for our solutions delivered over the cloud and our analytics offerings, primarily due to the full year inclusion of inContact and Nexidia, respectively.

The EMEA revenue decreased by 1.8%, mainly driven by a lower demand for our solutions,which was partially offset by an increase in cloud revenue due to increased adoption of our analytics offerings.cloud platforms X-Sight and Xceed.
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
Cloud revenue$1,581.8 $1,295.3 22.1 %
Service revenue641.4 650.1 (1.3)
Product revenue154.3 235.9 (34.6)
Total revenue$2,377.5 $2,181.3 9.0 %
The APAC
Our cloud revenue in 2023 increased by 4.7%22.1%, or $286.5 million, to $1,581.8 million compared to $1,295.3 million in 2022, mainly driven by increaseddue to an increase in the Customer Engagement segment from growing demand for our CXone cloud platform, including ongoing penetration in the mid-market with further adoption at the high end of the market and increasing international cloud adoption, resulting from both new customers and expansion from existing customers. In addition, the increase in overall cloud revenue is partially attributed to the growing adoption of our cloud solutions in the Financial Crime and Compliance Solutions andsegment. Revenue derived from our Customer Engagement Solutions.
Costcloud platforms accounted for 66.5% of Revenues
 
Years Ended December 31,
(U.S. dollars in millions)
       
  2016  2017  
Dollar
Change
  
Percentage
Change
 
             
Cost of product revenues $53.0  $51.1  $(1.9)  (3.6)%
Cost of service revenues  250.0   225.0   (25)  (10)
Cost of cloud revenues  34.7   192.6   157.9   455 
Total cost of revenues $337.7  $468.7  $131   38.8%
Costour total revenue in 2023, as part of product revenues decreased both on a dollar basis andour cloud-first strategy of increasing cloud revenue as a percentage of product revenues. The decrease is mostly a result ofour total revenue.

Our service revenue in 2023 decreased by 1.3%, or $8.7 million, to $641.4 million compared to $650.1 million in 2022, mainly due to a decrease in amortizationmaintenance revenue as a growing number of intangibles assetsour existing on-premises customers transitioned to our cloud-based solutions.

Our product revenue in 2023 decreased by 34.6%, or $81.6 million, to $154.3 million compared to $235.9 million in 2022, as demand decreased for on-premises products in 2023 compared to 2022, primarily in the Financial Crime and third party royalties payableCompliance business segment, as a growing number of our existing on-premises customers transitioned to vendors.our cloud-based solutions.

Revenue by Region
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
United States, Canada and Central and South America (“Americas”)$1,986.6 $1,802.2 10.2 %
Europe, the Middle East and Africa (“EMEA”)248.0 249.7 (0.7)
Asia-Pacific (“APAC”)142.9 129.4 10.5 
Total revenues$2,377.5 $2,181.3 9.0 %

Revenue in Americas increased in 2023 by 10.2%, or $184.4 million, to $1,986.6 million compared to $1,802.2 million in 2022, mainly due to an increase in cloud revenue for our cloud platforms, primarily from CXone.

Revenue in EMEA decreased in 2023 by 0.7%, or $1.7 million, to $248.0 million compared to $249.7 million in 2022, primarily attributed to the decrease in product revenue from the Financial Crime and Compliance segment, largely offset by an increase in cloud revenue in both business segments.

Revenue in APAC increased in 2023 by 10.5%, or $13.5 million, to $142.9 million compared to $129.4 million in 2022. The increase in revenue in 2023 is primarily attributed to the increase in cloud revenue in the Customer Engagement segment and an increase in service revenue in the Financial Crime and Compliance segment.
52

Cost of service revenues decreased both on a dollar basis and as a percentage of service revenues. The decrease is primarily due to increased efficiency in service organization, migration of certain functions to low-cost countries and a decrease in amortization of intangible assets.Revenue
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
Cost of cloud revenue$553.7 $472.8 17.1 %
Cost of service revenue188.9 183.9 2.7 
Cost of product revenue25.6 26.9 (4.8)
Total cost of revenue$768.2 $683.7 12.4 %
CostOur cost of cloud revenuesrevenue in 2023 increased both on a dollar basisby $80.9 million, or 17.1% compared to 2022, and decreased as a percentage of cloud revenues. The increase is primarily due to the full year inclusion of inContact and Nexidia and the growing transition from on-premise to cloud-based solutions.
69
Gross Profit
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2016  2017  
Dollar
Change
  
Percentage
Change
 
             
Gross profit on product revenues $253.2  $267.9  $14.7   5.8%
    as a percentage of product revenues
  82.7%  84.0%        
Gross profit on service revenues $373.8  $427.0   53.2   14.2 
    as a percentage of service revenues  59.9%  65.5%        
Gross profit on cloud revenues $50.8  $168.6   117.8   231.9 
    as a percentage of cloud revenues
  59.4%  46.7%        
Total gross profit $677.8  $863.5  $185.7   27.4%
    as a percentage of total revenues
  66.7%  64.8%        

revenue. The increase in gross profit on product revenuesthe cost of cloud revenue is primarily a result of increased sales of software based solutions with higher margins and a decrease in third party royalties payable to vendors and amortization of intangible assets.

The increase in gross profit on service revenues is mainly attributed to the increase in service revenues, a decrease in costs due to efficiency in service organization and a decrease in amortization of intangible assets.
The increase in gross profit on cloud revenues is due to an increase in our cloud sales, whichsales. The decrease as percentage of cloud revenue is primarily due to the full year inclusionincreased scale in our cloud business in 2023.

Our cost of inContactservice revenue in 2023 increased by $5.0 million, or 2.7%, compared to 2022 and Nexidia.slightly increased as a percentage of service revenue compared to 2022.
Our cost of product revenue in 2023 decreased by $1.3 million, or 4.8%, compared to 2022 and increased as a percentage of product revenue compared to 2022, mainly due to decreased scale in our product business in 2023.

Gross Profit
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
Gross profit on cloud revenue$1,028.2 $822.5 25.0 %
as a percentage of cloud revenue65.0 %63.5 %
Gross profit on service revenue452.5 466.2 (2.9)
as a percentage of service revenue70.5 %71.7 %
Gross profit on product revenue128.6 208.9 (38.5)
as a percentage of product revenue83.3 %88.6 %
Total gross profit$1,609.3 $1,497.6 7.5 %
as a percentage of total revenue67.7 %68.7 %

Our cloud gross profit was $1,028.2 in 2023 compared to $822.5 in 2022, representing an increase of $205.7 million, or 25.0%. Our cloud gross profit as percentage of cloud revenue increased to 65.0% in 2023 compared to 63.5% in 2022. The decreaseincrease in cloud gross profit and margin is mainly attributed to scaling in our cloud business, further adoption of higher margin software offerings within our cloud platforms and efficiencies in our internal operations.
Our services gross profit was $452.5 in 2023 compared to $466.2 in 2022, representing a decrease of $13.7 million, or 2.9%, which is mainly attributed to a decrease in maintenance revenue as a growing number of our existing on-premises customers transition to our cloud-based solutions. As a percentage of service revenue, our services gross profit was 70.5% in 2023 compared to 71.7% in 2022.

Our product gross profit was $128.6 in 2023 compared to $208.9 in 2022, representing a decrease of $80.3 million, or 38.5%, which is mainly attributed to the execution of our strategy as a cloud first company. Our product gross margin decreased to 83.3% in 2023 compared to 88.6% in 2022, mainly due to inContact cloud which historically had a lower gross margin.the change in product revenue mix sold as compared to the prior year.
53

Operating Expenses
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
Research and development, net$322.7 $306.1 5.4 %
Selling and marketing599.1 609.8 (1.8)%
General and administrative252.3 246.5 2.4 %
Total operating expenses$1,174.1 $1,162.4 1.0 %
  
Years Ended December 31,
(U.S. dollars in millions)
        
  2016  2017  
Dollar
Change
  
Percentage
Change
 
          
Research and development, net           $141.5  $181.1  $39.6   28.0%
Selling and marketing         268.3   361.3   93.0   34.7 
General and administrative   116.6   129.1   12.5   10.7 
Amortization of acquired intangible assets $17.2  $41.9  $24.7   143.6%
Research and Development, Net. ResearchNet research and development expenses before capitalization of software development costs and government grants, increased by $57.2$16.6 million to $211.4$322.7 million in 2017, as2023 compared to $151.7$306.1 million in 2016,2022, and represented 15.7%13.6% and 14.9%14.0% of revenues in 20172023 and 2016,2022, respectively. The increase in research and development expenses is attributed primarily to the full year inclusion of inContact and Nexidia andmainly to an increase in cost of wages. Capitalized software development costs increased by $19.4 millionheadcount to $27.9 millionfurther drive innovation in 2017 from $8.5 million in 2016 primarily due to increase in capitalized software development costs related toour AI based solutions and expand our cloud based solutions.platforms and capabilities.


70
Selling and Marketing Expenses. Selling and marketing expenses increaseddecreased by $10.7 million to $361.3$599.1 million in 2017 as compared2023 compared to $268.3$609.8 million in 2016,2022, which represented 27.1%25.2% and 26.4%28.0% of total revenues in 20172023 and in 2016,2022, respectively. The increasedecrease in selling and marketing expenses is attributed primarily to the full year inclusion of inContacta decrease in marketing costs, stock-based compensation costs and Nexidia and tofully amortized intangible assets. The decrease was partially offset by an increase in cost of wages.selling costs to obtain contracts and an increase in our go-to-market headcount.

General and Administrative Expenses. General and administrative expenses increasedin 2023 were $252.3 million compared to $129.1$246.5 million in 2017, as compared to $116.6 million in 2016,2022, which represented 9.7%10.6% of total revenues in 2017,2023, as compared to 11.5%11.3% of total revenues in 2016.2022. The increase in general and administrative expenses is attributed primarily to the full year inclusion of inContact and Nexidia, partially offset by a decrease in acquisition and integration related expenses and a decrease in rent costs.
Amortization of acquired intangible assets. Amortization of acquired intangible assets included in the operating expenses represented 3.1% and 1.7% of our revenues in 2017 and 2016, respectively. Thean increase in amortization of acquired intangible assets is attributable to our recent acquisitions, mainly inContact.headcount and an increase in stock-based compensation costs.

Financial Income (Expense), net,Expenses and Other, Expense, net
Years Ended December 31,Percentage
(In millions)Change
202320222022-2023
Financial income and other, net(22.5)(10.2)120.6 %
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2016  2017  
Dollar Change
  Percentage Change 
             
Financial income (expense), net           $10.8  $(20.4) $(31.2)  (288.9)%
Other expenses, net  0.5   -   (0.5)  (100)%


Financial Expense income and Other, net.Financial expenses,income and other, net, were $20.4increased by $12.3 million to income of $22.5 million in 2017,2023 compared to financial net income of $10.8$10.2 million in 2016.2022. The increase in financial expenses,income and other, net is attributable primarily to the long term loan and the exchangeable notes expenses related to financing of the acquisition of inContact, a decrease in gain on realization of investments and a decreasean increase in interest income as a result of lower averageearned from our cash balance versus previous years.and investment portfolio.

OtherTaxes on Income. Total tax expenses net amounted to $0.5were $119.4 million in 2016,2023 and are comprised primarily of loss on disposal of assets.
Taxes on Income. In 2017, tax benefits amounted to $13.6 million, as compared to tax expenses of $21.4$79.4 million in 2016. Our tax expenses during 2017 decreased as compared with 2016 primarily due to realization of $31.0 million net deferred tax liabilities as a one-time tax adjustment as a result of a decrease in the U.S. federal tax rate under the U.S. Tax Reform. See Note 2 and Note 12 to the Consolidated Financial Statements included elsewhere in this annual for more details about the U.S. Tax Reform and its effects.
2022. Our effective tax rate for 2017 was (10.5%), comparedwas 26.1% in 2023 and 23.0% in 2022.
The increase in 2023 of $40.0 million in tax expenses is mainly due to 14.8%our increased profitability. The increase in 2016. Ourour effective tax rate is mainly attributed to an increase in 2017 was lower mainly dueour U.S. market-based income with a higher income tax rate and to the above realization of net deferreda change in certain tax liability.positions.

The majority of our income in Israel continues to benefit from lowerreduced tax rates, which were 12.0%was 12% in 20172023 and 16% in 2016,2022, pursuant to our Preferred Technology Enterprise programs, which isas discussed in Note 1213 of our Consolidated Financial Statements included elsewhere in this annual report under the caption “Taxes on Income”.

Net Income from continuing operations.Income. Net income was $143.3increased by $72.4 million to $338.3 million in 2017, as2023 compared to $116.9$265.9 million in 2016.2022. The increase in 20172023 resulted primarily from an increase in our revenue, and gross profit, operating income and financial income, partially offset by higher operating expenses and an increase in our interest expenses attributable primarily to long term debt and tax benefits due to the U.S Tax Reform.

expenses.
71
54
Comparison of Years Ended December 31, 2015

Liquidity andCapital Resources
To date, we have financed our operations, acquisitions and 2016

Revenues
Our total revenues increased by approximately 9.6% to $1,015.5 million in 2016 from $926.9 million in 2015. Revenues from sales of Customer Engagement Solutions and Financial Crime and Compliance Solutions in 2016 were $754.4 million and $261.1 million, respectively, an increase of 9.6% and 9.4% from 2015, respectively.
The growth in revenues from our Customer Engagement Solutions is mainly attributed to increased demand for our solutions delivered over the cloud and to our expanded analytics offerings, as these offerings enable organizations to improve operational efficiency and customer experience, enhance compliance and improve sales optimization.
The growth in revenues from Financial Crime and Compliance Solutions is primarily driven by increased demand of financial institutions across the globe for solutions that secure financial transactions and prevent fraud and complex financial crimes, magnified by the continued evolution of advancements in our technology.
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2015  2016  
Dollar Change
  
Percentage Change
 
             
Product revenues $317.9  $306.2  $(11.7)  (3.7)%
Service revenues  609.0   709.3   100.3   16.5 
Total revenues $926.9  $1,015.5  $88.6   9.6%

The decrease of $27.1 million in product revenues is attributed to our Customer Engagement Solutions, offset by an increase of $15.4 million in revenues from our Financial Crime and Compliance Solutions. The decrease in product revenues is mainly the result of a transition to cloud based solutions in which SaaS revenues are recognized as service revenues and over a subscription period.
The growth in service revenues is mainly due to our solutions delivered over cloud, which constitute approximately 52% of such growth, maintenance services resulting primarily from an increase in install base from previous years’ sales, which constitute approximately 29% of such growth, and professional services, which constitute approximately 19% of such growth.
Revenue by Region
  
Years Ended December 31,
(U.S. dollars in millions)
       
  
 
2015
  
 
2016
  
Dollar
Change
  
Percentage
Change
 
             
United States, Canada and Central and South America (“Americas”) $630.1  $720.5  $90.4   14.4%
Europe, the Middle East and Africa (“EMEA”)  196.9   193.5   (3.4)  (1.7)
Asia-Pacific (“APAC”)  99.9   101.5   1.6   1.6 
Total revenues $926.9  $1,015.5  $88.6   9.6%

The Americas revenue increased by 14.4% driven by our Customer Engagement Solutions, mainly due to increased demand for our solutions delivered over the cloud and to our analytics offerings.
The EMEA revenue decreased by 1.7%, mainly driven by unfavorable currency effects, partially offset by our Customer Engagement Solutions due to an increase in our analytics offerings.
The APAC revenue increased by 1.6% mainly due to increased demand for our Financial Crime and Compliance Solutions, offset by a decrease in Customer Engagement Solutions.
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Cost of Revenues
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2015  2016  
Dollar
Change
  
Percentage
Change
 
             
Cost of product revenues $66.4  $53.0  $(13.4)  (20.2)%
Cost of service revenues  237.2   284.7   47.5   20.0 
Total cost of revenues $303.6  $337.7  $34.1   11.2%

Cost of product revenues decreased both on a dollar basis and as a percentage of product revenues. The decrease is mostly a result of a decrease in royalties and third party product costs payable to vendors, partially offset by higher amortization of intangible assets arising from our recent acquisitions.
Cost of service revenues increased both on a dollar basis and as a percentage of service revenues. The increase is primarily due to increased personnel and amortization of intangible assets arising from our recent acquisitions.
Gross Profit
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2015  2016  
Dollar
Change
  
Percentage
Change
 
             
Gross profit on product revenues $251.5  $253.2  $1.7   0.7%
    as a percentage of product revenues  79.1%  82.7%        
Gross profit on service revenues  371.8   424.6   52.8   14.2%
    as a percentage of service revenues  61.0%  59.9%        
Total gross profit $623.3  $677.8  $54.5   8.7%
    as a percentage of total revenues  67.2%  66.7%        

The increase in gross profit on product revenues is primarily a result of increased sales of software based solutions with higher margins and a decrease in royalties and third party product costs payable to vendors.
The increase in service gross profit is mainly attributed to the increase in service revenues. The decrease in service gross margin is primarily attributed to amortization of intangible assets as a resultrepurchase of our recent acquisitions, partially offset by higher margins on SaaS revenues.
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Operating Expenses

  
Years Ended December 31,
(U.S. dollars in millions)
       
  2015  2016  
Dollar
Change
  
Percentage
Change
 
          
Research and development, net           $128.5  $141.5  $13.0   10.2%
Selling and marketing      225.8   268.3   42.5   18.8 
General and administrative         90.4   116.6   26.2   29.0 
Amortization of acquired intangible assets  12.5   17.2   4.7   37.5%
Research and Development, Net. Research and development expenses, before capitalization of software development costs and government grants, increased by $19.5 million to $151.5 million in 2016, as compared to $132.0 million in 2015, and represented 14.9% and 14.2% of revenues in 2016 and 2015, respectively. The increase in research and development is attributedequity, primarily to additional personnel as a result of recent acquisitions. Research and development, net increased by $13.0 million following an increase in capitalized software development costs to $8.5 million in 2016, compared to $1.4 million in 2015. The increase in capitalized software development is related to our cloud based solutions. Amortization of capitalized software development costs included in cost of product revenues were $0.5 million in 2016 and $0.4 million in 2015.
Selling and Marketing Expenses. Selling and marketing expenses increased to $268.3 million in 2016 as compared to $225.8 million in 2015, and represented 26.4% and 24.4% of total revenues in 2016 and in 2015, respectively. The increase in selling and marketing expenses is attributed primarily to additional personnel as a result of recent acquisitions, an increase in sales incentives and an increase in marketing expenses.
General and Administrative Expenses. General and administrative expenses increased to $116.6 million in 2016 as compared to $90.4 million in 2015, and represented 11.5% of total revenues in 2016 as compared to 9.8% of total revenues in 2015. The increase in general and administrative expenses is attributed primarily to recent acquisitions and integration related expenses, mainly related to the acquisition of inContact, an increase in rent costs following restructuring of our Americas offices and additional personnel as a result of recent acquisitions.
Amortization of acquired intangible assets. Amortization of acquired intangibles included in the operating expenses represented 1.7% and 1.3% of our revenues in 2016 and 2015, respectively. The increase in amortization of acquired intangible assets is attributable to our recent acquisitions, mainly inContact and Nexidia.
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Financial and Other Income
  
Years Ended December 31,
(U.S. dollars in millions)
       
  2015  2016  
Dollar
Change
  
Percentage
Change
 
             
Financial income, net        $5.7  $10.8  $5.1   89.5%
Other expenses, net  0.4   0.5   0.1   25%
Financial Income and Other, net. Financial income, net, was $10.8 million in 2016 compared to $5.7 million in 2015. The increase in financial income, net is attributable primarily to gain on realization of investments and gain on currency exchange, partially offset by credit facility expenses related to financing of the inContact acquisition. Other, net amounted to $0.5 million in 2016, compared to $0.4 million in 2015. The expenses comprised primarily of loss on disposal of assets.
Taxes on Income. In 2016, taxes on income amounted to $21.4 million, as compared to $30.8 million in 2015. Our provision for taxes during 2016 decreased as compared with 2015, primarily due to a proportionally significant realization of deferred tax liabilities recorded against the amortization of the newly acquired intangible assets of inContact and Nexidia, and which was partially offset by an increase in our provision for uncertain tax positions.
Our effective tax rate for 2016 was 14.8%, compared to 18.0% in 2015. Our effective tax rate in 2016 was lower due to the above realization of deferred tax liabilities being mainly realized at higher tax rates, as compared with 2015, thus increasing the offsetting effect on the effective tax rate.
The majority of our income in Israel continues to benefit from lower tax rates, which were 16.0% in 2016 and 2015, pursuant to our Preferred Enterprise programs, which is discussed in Note 12 of our Consolidated Financial Statements under the caption “Taxes on Income”. 
Net Income. Net income was $123.1 million in 2016, as compared to $140.6 million in 2015. The decrease in 2016 resulted primarily from acquisition and integration related expenses, inclusion of inContact and Nexidia results with lower operating margin, amortization of intangible assets resulting from our recent acquisitions and increase in rent costs following restructuring of our Americas offices.
Discontinued operations. During 2015 we sold our Cyber and Intelligence and Physical Security business units for gains of $101.8 million and $45.5 million, respectively, which is presented as part of the net income on discontinued operations. During 2016 we recorded additional expenses following a settlement agreement and final net working capital price adjustment.
Liquidity and Capital Resources
In recent years, thethrough cash generated from our operating activities has financed our operations as well as through debt financing in the repurchaseform of Exchangeable Notes.
As of December 31, 2023, we had $1,407.8 million of cash equivalents and in short-term investments, which included $511.8 million in cash and cash equivalents, and $896.0 million in short-term investments. We believe our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
We plan to continue to finance our operations in the future primarily through sales of our ordinary sharessolutions, most notably our cloud platforms. Our future capital requirements will depend on many factors, including our growth rate, continuing market acceptance of our solutions, client retention, our ability to gain new clients, the timing and paymentextent of dividends. spending to support research and development efforts, the expansion of sales and marketing activities and personnel, the introduction of new and enhanced offerings, and the impact of changes to the global economy, among other factors. We may also acquire or invest in complementary businesses, technologies and intellectual property rights, which may increase our use of cash and future capital requirements, both to pay acquisition costs and to support our combined operations.
We continually evaluate our capital needs and may decide to raise additional capital to fund the growth of our business and future acquisitions and investments, through public or private equity offerings or through additional debt financing. Access to additional capital may not be available or on favorable terms.
Cash Flows
Generally, we invest our excess cash in highly liquid investment grade securities. As of December 31, 217,2023, we had $525.1$1,407.8 million of cash and cash equivalents and short-term and long-term investments, as compared to $286.0$1,571.5 million at December 31, 2016 and $828.4 million at December 31, 2015.2022.
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Cash provided by operating activities was $394.7 million, $228.2$561.4 million and $252.3$479.7 million in 2017, 2016,2023 and 2015,2022, respectively. Net cash from operations in 20172023 consisted primarily of net income of $143.3$338.3 million, adjusted for non-cash activities such as depreciation and amortization of $167.4 million, stock-based compensation of $176.7 million, an increase in deferred taxes of $66.6 million as well as working capital changes derived from a decrease in deferred revenues of $45.9 million and a decrease in accrued expenses and other liabilities of $55.7 million, partially offset by an increase in trade receivables of $34.3 million . Net cash from operations in 2022 consisted primarily of net income of $265.9 million, adjusted for non-cash activities such as depreciation and amortization of $156.3$176.5 million, stock-based compensation of $57.0$182.7 million, an increase in deferred taxes of $52.6 million as well as working capital changes derived fromfrom an increase in deferred revenues of $41.6$6.4 million, increase in accrued expenses and other liabilities of $25.5 million, decrease in deferred taxes of $70.8 million and decrease in trade receivables of $37.7 million. Net cash from operations in 2016 consisted primarily of net income of $126.1 million (excluding non-cash gain on disposal of discontinued operations of $9.1 million), adjusted for non-cash activities such as depreciation and amortization of $77.8 million, stock-based compensation of $40.5 million as well as working capital changes derived from an increase in accrued expenses and other liabilities of $18.0$33.7 million decrease in deferred taxes of $25.9 million and increase in trade receivables of $31.7 million. Net cash from operations in 2015 consisted primarily of net income of $111.5 million (excluding non-cash gain on disposal of discontinued operations of $147.3 million), adjusted for non-cash activities such as depreciation and amortization of $57.9 million, stock-based compensation of $28.4 million as well as working capital changes derived from an increase in accrued expenses and other liabilities of $38.5 million and increase in deferred revenues of $54.9 million, which were partially offset by an increase in trade receivables of $56.3$129.7 million.
Net cash used in investing activities was $213.0 million, $800.0$293.6 million and $28.4$152.4 million in 2017, 20162023 and 2015,2022, respectively. In 2017,2023, net cash used in investing activities consisted primarily of payment for acquisitions in anthe aggregate amount of $76.0$415.2 million, net investment in marketable securities and short term bank deposits of $69.1 million and purchase of property and equipment of $39.9 $29.2 million and capitalization of internal use software costs of $27.9 $55.0 million, partially offset by net proceeds from investment in marketable securities and short-term bank deposits of $205.8 million. In 2016,2022, net cash used in investing activities consisted primarily of payment for thean acquisition of inContact, Nexidia and other acquisitions in an aggregatethe amount of $1,157$29.7 million, which were partially offset by net proceeds received from the sale of marketable securities of $402.7 million. In 2015, net cash used in investing activities consisted primarily of net investment in marketable securities and short termshort-term bank deposits of $195.0$40.7 million and purchase of property and equipment of $16.6$31.9 million which were offset by proceeds from the saleand capitalization of discontinued operationsinternal use software costs of $186.1$50.0 million.
Net cash provided by (used in)used in financing activities was $(14.8) million, $405.4$290.3 million and $(79.4)$164.5 million in 2017, 20162023 and 2015,2022, respectively.
In 2017,2023, net cash used in financing activities was attributed primarily to the repayment of long term debt of $260.0 million, repurchase of our ordinary shares of $24.4 million$288.4 million and paymentrepayment of dividendslong-term debt in the amount of $9.6$2.6 million, which were offset primarily by proceeds from issuance of exchangeable notes of $260.1 million and proceeds from issuance of shares upon exercise of share options and purchase of shares under employee share purchase plans of $19.24 million. In 2016, net cash provided by financing activities was attributed primarily to the long term loan of $464.8 million and proceeds from issuance of shares upon exercise of options and purchase of shares under employee share purchase plans of $23.5 million, which were partially offset by payment of dividends of $38.2 million and repurchase of our ordinary shares of $43.6 million. In 2015, net cash used in financing activities was attributed primarily to the repurchase of our ordinary shares of $68.4 million and payment of dividends of $38.2 million, which were offset by proceeds from the issuance of shares upon the exercise of options of $2.6 million. In 2022, net cash used in financing activities was attributed primarily to repayment of long-term debt in the amount of $20.1 million and repurchase of our ordinary shares of $144.9 million, which were partially offset by proceeds from the issuance of shares upon the exercise of options of $1.0 million.
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Contractual and purchaseOther Obligations
Set forth below are our material contractual obligations and other commercial commitments as of sharesDecember 31, 2023 (in thousands).
Payments Due by Period
Contractual ObligationsTotalLess than 1 year1- 3 years3-5 yearsMore than 5 years
Debt Obligations, including estimated interest *$669,900 $209,900 $460,000 $— $— 
Operating Leases146,78217,96232,90729,15566,758
Unconditional Purchase Obligations$425,702 $105,843 $170,181 $149,678 $— 
Severance Pay**$17,078 
Total Contractual Cash Obligations$1,259,462 $333,705 $663,088 $178,833 $66,758 
Uncertain Income Tax Positions ***$90,124 
*    Debt obligations includes senior exchangeable notes. The principal balances of the exchangeable senior notes are reflected in the payment periods in the table above based on their respective contractual maturities assuming no conversion. See Note 15 to our consolidated financial statements included elsewhere in this annual report for further details. In January 2024, the 2017 Notes fully matured, and the entire aggregate principal amount of $87,432 was settled in cash (see Note 19 to our consolidated financial statements).
**    Severance pay relates to accrued obligations to employees as required under employee share purchase plansapplicable labor laws. These obligations are payable only upon termination, retirement or death of $27.5 million. For morethe respective employees.
***    Uncertain income tax positions under ASC 740 are due upon settlement and we are unable to reasonably estimate the ultimate amount or timing of settlement. See Note 13(i) of our consolidated financial statements included elsewhere in this annual report for further information regarding the long term debt, see Note 14 to our Consolidated Financial Statements.liability under ASC 740.
Amount of Commitment Expiration Per Period
Other Commercial CommitmentsTotal Amounts CommittedLess than 1 year1- 3 years3- 5 yearsMore than 5 years
Guarantees*$2,986 $794 $2,192 $— $— 
We believe that based on our current operating forecast, the combination of existing working capital and expected cash flows from operations will be sufficient to finance our ongoing operations for the next twelve months.* Primarily in connection with office lease agreements.

Research and Development and Intellectual Property
For information on our research and development policies and intellectual property, please see “Research and Development” and “Intellectual Property” under Item 4, “Information on the Company” in this annual report.
Trend Information
For additional information on trends in our industry, please see Item 4, “Information on the Company—Business Overview—Industry and Technology Trends” in this annual report.
For moreadditional information on trends, uncertainties, demands, commitments or events that may have a material effect on revenue, please see Item 3, “Key Information—Risk Factors” in this annual report.
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Contractual Obligations
Set forth below are our contractual obligations and other commercial commitments as of December 31, 2017 (in thousands of U.S. dollars).
  Payments Due by Period 
Contractual Obligations Total  Less than 1 year  1- 3 years  3-5 years  More than 5 years 
Long-term debt obligations, including estimated interest *  526,622   218,785   11,352   7,188   289,297 
Operating Leases  97,378   18,626   32,127   27,593   19,392 
Unconditional Purchase Obligations  31,773   20,646   10,924   203   - 
Severance Pay**  17,250                 
Total Contractual Cash Obligations  673,383   258,057   54,403   34,984   308,689 
Uncertain Income Tax Positions ***  43,984                 
*Long-term debt obligations mainly include senior exchangeable notes and long-term loan as disclosed in Note 14 to our Consolidated Financial Statements.
**Severance pay relates to accrued obligations to employees as required under applicable labor laws. These obligations are payable only upon termination, retirement or death of the respective employees.
***Uncertain income tax positions under ASC 740 are due upon settlement and we are unable to reasonably estimate the ultimate amount or timing of settlement. See Note 12(i) of our Consolidated Financial Statements for further information regarding our liability under ASC 740.
     Amount of Commitment Expiration Per Period 
Other Commercial Commitments 
Total
Amounts Committed
  
Less
than 1 year
  
 
1- 3 years
  
 
3-5 years
  
More
than 5 years
 
Guarantees – Continuing operations  4,792,805   4,202,626   400,673   189,506   - 
Guarantees – Discontinued operations*  19,488,497   18,324,591   1,163,906   -   - 
Total Guarantees  24,281,302   22,527,217   1,564,579   189,506   -- 
* Represents guarantees that were not endorsed and are still in effect with respect to contracts assumed as part of the sale of the Cyber and Intelligence line of business, for which we have a back to back contractual commitment and entitlement to indemnification upon realization of the guarantees.

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Item 6.Directors, Senior Management and Employees.


6.A. Item 6A.    Directors and Senior Management.
The following tables set forth, as of March 20, 2018, 19, 2024, the name, age and position of each of our directors and executive officers and, in regard to our directors, any of the committees of our board of directors on which they serve and whether any such director is an outside director:
Members of the Board of Directors
NameAgePositionAudit Committee MemberCompensation Committee MemberInternal Audit Committee MemberMergers and Acquisitions Committee MemberNominations Committee MemberOutside Director*
David Kostman5359Chairman of the Board of Directors
XX
Rimon Ben-Shaoul
X
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X
Director		XX
Dan Falk79DirectorXXXXXX
Rimon Ben-ShaoulYocheved Dvir7371Director
X
XX
X
Dan FalkYehoshua Ehrlich7374Director
X
X
X
X
X
X
Yocheved DvirLeo Apotheker6570Director
X
X
X
X
Yehoshua EhrlichJoe Cowan6875DirectorXX
X
Leo Apotheker64Director
X
X
Joe Cowan69Director
X
X
Zehava Simon
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65
Director
X
X
X
X

*See Item 6,6C., “Directors, Senior Management and Employees—Board Practices— Outside Directors.”
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57

Members of Management


Name
Age
Position
Barak Eilam
42
48		Chief Executive Officer
Miki MigdalBeth Gaspich
57
58		Chief Financial Officer
Barry Cooper53President, Enterprise Product GroupCX
Joseph FrisciaCraig Costigan
63
President, NICE-Actimize
Paul Jarman
48
Chief Executive Officer, inContactNICE Actimize
Beth GaspichYaron Hertz
52
53		Chief Financial OfficerPresident, NICE Americas
Eran LironDarren Rushworth
50
56		President, CE International
Awan Roy53Vice President, Head of NICE India
Shiri Neder48Executive Vice President, Marketing and Corporate DevelopmentHuman Resources
Barry Cooper
47
Chief Operating Officer
Tali Mirsky
45
51		Corporate Vice President, General Counsel and Corporate Secretary
Hagit YnonGil Vassoly
46
50		Corporate Vice President, Corporate Finance

In December 2017, Mr. Yechiam Cohen retired from his position as Corporate Vice President, General Counsel and Corporate Secretary, effective December 31, 2017, and Mrs. Tali Mirsky assumed the position effective March 2018.
In January 2018, Mr. Eran Porat retired from his position as Corporate Vice President, Finance, effective January 2018, and Ms. Hagit Ynon assumed the position effective January 2018.Set forth below is a biographical summary of each of the above-named directors and executive officers of NICE. Each of our directors qualifies as an independent director under applicable NASDAQ rules.
David Kostmanhas served as one of our directors for mostsince 2001 (with the exception of the period since 2001between June 2007 and July 2008), and as our Chairman of the Board since February 2013. Mr. Kostman is currently co-CEO and board member of publicly traded Outbrain, Inc. and serves on the board of directors of ironSource Ltd.publicly traded Unity Inc. and privately held Tivit S.A., and is a member of Nanoosh LLC. Mr. Kostman is also a former board member of publicly traded Retalix Ltd. (acquired by NCR). From 2006 until 2008, Mr. Kostman was a Managing Director in the investment banking division of Lehman Brothers, heading the Global Internet Group. From April 2003 until July 2006, Mr. Kostman was Chief Operating Officer and then Chief Executive Officer of Delta Galil USA, a subsidiary of publicly traded Delta Galil Industries Ltd. From 2000 until 2002, Mr. Kostman was President of the International Division and Chief Operating Officer of publicly traded VerticalNet Inc. Prior to that Mr. Kostman worked in the investment banking divisions of Lehman Brothers from 1994 to 2000, focusing on the technology and Internet sectors, and NM Rothschild & Sons from 1992 to 1993, focusing on mergers and acquisitions and privatizations. Mr. Kostman holds a Bachelor’s degree in Law from Tel Aviv University and a Master’s degree in Business Administration from INSEAD.

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Rimon Ben-Shaoul has served as one of our directors since September 2001. Between 2001 and 2005, Mr. Ben-Shaoul has served as Co-Chairman, President, and Chief Executive Officer of Koonras Technologies Ltd., a technology investment company controlled by LEADER Ltd., an Israeli holding company. Since 2002 Mr. Ben-Shaoul serves as Chairman of Grand AutoMotive LLP.LLP, a private company. Mr. Ben-Shaoul also served as a director of MIND C.T.I. Ltd., BVR Systems Ltd. and several private companies. In addition, he served as the President and Chief Executive Officer of Polar Communications Ltd., which manages media and communications investments. Mr. Ben-Shaoul also served as the Chairman of T.A.T Technologies Ltd., a public company listed on NASDAQ and TASE. Between 1997 and 2001, Mr. Ben-Shaoul was the President and Chief Executive Officer of Clal Industries and Investments Ltd., one of the largest holding companies in Israel with substantial holdings in the high techhigh-tech industry. During that time, Mr. Ben-Shaoul also served as Chairman of the Board of Directors of Clal Electronics Industries Ltd., Scitex Corporation Ltd., and various other companies within the Clal Group. Mr. Ben-Shaoul also served as a director of ECI Telecom Ltd., Fundtech Ltd., Creo Products, Inc. and Nova Measuring Instruments Ltd. From 1985 to 1997, Mr. Ben-Shaoul was President and Chief Executive Officer of Clal Insurance Company Ltd. and a director of the company and its various subsidiaries. Mr. Ben-Shaoul holds a Bachelor’s degree in Economics and Statistics and a Master’s degree in Business Administration, both from Tel-Aviv University.
Dan Falk has served as one of our statutory outside directors since 2001. Mr. Falk is currently a board member and the Chair of the audit committee of each of Innoviz Technologies Ltd. and Evogene Ltd. Mr. Falk also served on the board of directors of each of Attunity Ltd. and Orbotech Ltd. and until recently also served on the board of directors of Ormat Technologies Inc. From 1999 to 2000, Mr. Falk was President and Chief Operating Officer of Sapiens International Corporation N.V. From 1985 to 1999, Mr. Falk served in various positions in Orbotech Ltd., the last of which werewas Chief Financial Officer and Executive Vice President. From 1973 to 1985, he served in several executive positions in the Israel Discount Bank. Mr. Falk also serves on the board of directors of Orbotech Ltd., Ormat Technologies Inc. and Attunity Ltd. Mr. Falk holds a Bachelor’s degree in Economics and Political Science and a Master’s degree in Business Administration, both from the Hebrew University of Jerusalem.

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Yocheved Dvir has served as one of our statutory outside directors since January 2008. Since 2000, Ms. Dvir has served as a strategic advisor in business development affairs to multiple companies and initiatives that were being founded.initiatives. Ms. Dvir also serves on the board of directors of Menorah Insurance Company and its subsidiary,Company. She previously served on the board of directors of Xenia Venture Capital, Endey Med, Alrov Real Estate, and Endey Med. She recently served on the boards of Visa Cal, Trendline Business Information & Communications Ltd., Israel Corporation Ltd., ECI Telecom Ltd., Strauss Industries Ltd., Phoenix Holding and Phoenix Insurance Co. Between 1990 and 2000, Ms. Dvir served as a Senior Vice President of the Migdal Group. Ms. Dvir joined the Migdal Group in 1981 and, until late 2000, held a number of senior financial and managerial positions, including Head of the Group’s Economics Department (1986-1988), Head of the Group’s Corporate Office from 1989 to1992,to 1992, Head of the Group’s General Insurance Division and Corporate Office from 1993 to 1997, Group CFO from 1997 to 1999, and Head of the Group’s Strategic Development Division and Marketing Array and Risk Manager in 2000. Ms. Dvir holds a Bachelor’s degree in Economics and Statistics from the University of Haifa and completed studies towards a second degree in Statistics from the Hebrew University of Jerusalem.
Yehoshua (Shuki) Ehrlichhas served as one of our directors since September 2012. Mr. Ehrlich is an active social investor, serving as Chairman of "Committed“Committed to Give"Give”, a group formed by Israeli social investors for promoting philanthropy in Israel and several other social organizations. Mr. Ehrlich also serves as a board member of the executive board of Israel Venture NetworkAmerican Joint Distribution Committee and a board member of AfterDox, an angels'angels’ investment group. Between the years 2000 and 2010, Mr. Ehrlich served as Managing Director at Giza Venture Capital, where he focused on the communications, enterprise software and information technology sectors. Additionally, Mr. Ehrlich had a fifteen-year career with Amdocs, a public software company specializing in billing, CRM, order management systems for telecommunications and Internet service providers. In his last role at Amdocs, Mr. Ehrlich served as Senior Vice President of Business Development. Mr. Ehrlich holds a Bachelor of Science in Mathematics and Computer Science from the Tel Aviv University.
Leo Apotheker has served as one of our directors since August 2013. Mr. Apotheker is currently chairman of the board of Syncron AB, Harvest and Eudonet, and a member of the board of Schneider SE and MercuryGate. Mr. Apotheker was the Co-Chief Executive Officer of Burgundy Technology Acquisition Corp until recently and from 2012 to 2014, he was the Managing Partner and co-founder of Efficiency Capital SAS, a growth capital advisory firm, from 2012 to 2014.firm. From 2010 to 2011, Mr. Apotheker served as Chief Executive Officer of Hewlett Packard. From 2008 to 2010, he served as Chief Executive Officer of SAP AG. In addition, he is currentlyMr. Apotheker also previously served as the chairman of the board of Unit4,, a leading Dutch software company and Signavio GmbH, Vice Chairman and Lead Director of Schneider SE, and a member of the board of KMD, P2 Energy Services and Taulia Inc. Mr. Apotheker holds a Bachelor’s degree in Economics and International Relations from the Hebrew University of Jerusalem.
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Joe Cowan has served as one of our directors since August 2013. Mr. Cowan is currently a director of Auburn University Foundation, StartProto and MachineMetrics, private entities. Until recently, Mr. Cowan served as a director of Drishti Technologies Inc, ChannelAdvisor Inc and SAI Global. From October 2013 until September 2017, Mr. Cowan was the CEO and director of Epicor, and since September 2016 has been a director of ChannelAdvidsor, Inc.Epicor. During 2013, Mr. Cowan also served as President of DataDirect Networks, Inc. He also served as a director of DataDirect Networks, Inc. between 2011 and 2013. From 2010 until 2013, Mr. Cowan served as the Chief Executive Officer and President of Online Resources Corp. During 2009, he served as an Operating Executive and Consultant at Vector Capital. From 2007 to 2009, Mr. Cowan served as the Chief Executive Officer of Interwoven Inc. From 2004 to 2006, Mr. Cowan served as the President and Chief Executive Officer of Manugistics Inc. and Manugistics Group Inc. Prior to that, Mr. Cowan served in various senior executive positions, including as the Chief Operating Officer of Baan Co. NV and Avantis GOB NV. He has been a Director of DataDirect Networks, Inc. between 2011 and February 2013. Mr. Cowan has also served on the boardsboard of various publicly traded companies, including ChannelAdvidsor Inc., Interwoven Inc., Online Resources Corporation, Manugistics Group Inc. anddirectors of Blackboard Inc., as well as several private companies. Mr. Cowan holds aan M.S. degree in Electrical Engineering from Arizona State University and holds a B.S. degree in Electrical Engineering from Auburn University.


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Zehava Simonhas served as one of our statutory outside directors since July 2015. Ms. Simon served as a Vice President of BMC Software Inc. from 2000 until 2013, most recently as Vice President of Corporate Development. From 2002 to 2011, Ms. Simon also served as Vice President and General Manager of BMC Software in Israel. Prior to that, Ms. Simon held various positions at Intel Israel, which she joined in 1982, including acting as leader of Finance and Operations and Business Development for Intel in Israel. Ms. Simon is currently a board member of Audiocodes aLtd. and Nova Measurements, both public companycompanies traded on NASDAQ and TASE, Nova Measurements, a publicly-traded company on NASDAQ and TASE, and Amiad Water Systems, a public company traded on the London Stock Exchange.TASE. Ms. Simon is a former member of the board of directors of Insightec Ltd., M-Systems Ltd. (acquired by SanDisk Corp.) and, Tower Semiconductor Ltd. and Amiad Water Systems, a public company traded on the London Stock Exchange. Ms. Simon holds a B.A. in Social Sciences from the Hebrew University, Jerusalem, a law degree (LL.B.) from the Interdisciplinary Center in Herzliya and an M.A. in Business and Management from Boston University.

Barak Eilam has served as Chief Executive Officer since April 2014. In his previous position with NICE, Mr. Eilam was President of our American division from July 2012 to March 2014. Prior to that, Mr. Eilam was the head of sales and the general manager of the Enterprise Group in the Americas. From 2007 to 2009, Mr. Eilam founded and served as the general manager of the NICE Interaction Analytics Global Business Unit. Mr. Eilam has also served in a variety of executive positions within NICE, managing different aspects of the business in product development, sales and product management. Before joining NICE in 1999, Mr. Eilam was an officer for an elite intelligence unit in the Israeli defense forces. Mr. Eilam holds a Bachelor'sBachelor’s degree in Electrical and Electronics Engineering from Tel Aviv University.
Miki Migdal has served as President of the NICE Enterprise Product Group since July 2014. Prior to joining NICE, Mr. Migdal was the CEO of SAP Israel and held additional leadership roles at SAP including Senior Vice President of Development at SAP Global and President of SAP Labs Israel. He also served in executive positions at B.V.R Systems, Amdocs and Mercury Interactive (HP Software). Mr. Migdal holds a B.Sc. in Math and Computer Science from Tel Aviv University.
Joseph Friscia has served as President of NICE Actimize since April 2014. Prior to joining NICE, Mr. Friscia served as President of BAE Systems’ Applied Intelligence Americas business. He joined BAE when BAE Systems acquired Norkom Technologies, where he had served as General Manager and Executive Vice President of the Americas. Prior to Norkom, Mr. Friscia was a co-founder of Pegasystems, Inc., the leading Business Process Management software company, from its origin and through taking it public in 1996. Mr. Friscia holds an MBA degree from Adelphi University and a B.A. from Long Island University.
Paul Jarman has served as NICE inContact CEO since November 2016, and served as inContact CEO since January 2005 until we acquired inContact. Prior to becoming CEO, Mr. Jarman served as inContact’s President from December 2002​. Prior to December 2002, he served as inContact’s Executive Vice President.​ Mr. Jarman was instrumental in guiding inContact from its roots in telecommunications to its strategic offering of cloud-based contact center solutions and has been a part of every major enhancement the company has made since 1997. Mr. Jarman led inContact's listing on NASDAQ. ​Prior to joining inContact, he was an executive with HealthRider, Inc. Mr. Jarman holds a Bachelor of Science degree in Accounting from the University of Utah.

Beth Gaspich has served as our Chief Financial Officer since October 2016. Ms. Gaspich joined NICE as CFO of the Financial Crime and Compliance division NICE Actimize in September 2011, where she was responsible for finance, legal and business operations. Prior to joining NICE, she was Chief Financial Officer for Archive Systems, Inc., a privately held document management software provider. She also served as Vice President of Finance at RiskMetrics Group, Inc., a cloud basedcloud-based risk management software company. Ms. Gaspich was one of the founding members of RiskMetrics Group and assisted in taking the company through a successful public offering on the NYSE in January 2008. Prior to that, Ms. Gaspich held several other senior positions throughout her career at large global financial institutions, including JP Morgan and Price Waterhouse. Ms. Gaspich holds a BAB.A. in Accounting from the University of Missouri.

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Eran Liron has served as our Executive Vice President, Marketing and Corporate Development since October 2013, and as Executive Vice President, Corporate Development since February 2006. From 2004 to 2006, he served as Director of Corporate Development at Mercury Interactive Corporation, a software company, and prior thereto he held several business development positions at Mercury Interactive. Before joining Mercury, Mr. Liron served in several marketing roles at software startups and at Tower Semiconductor. Mr. Liron holds a Bachelor of Science degree from the Technion – Israel Institute of Technology and a Doctorate in Business from the Stanford Graduate School of Business in California.
Barry Cooper has been with NICE since March 2011 and serves as our President, CX since October 2022. Previously he served as our President, WCX - Workforce Engagement & Customer Experience from January 2019, and from May 2016 until December 2018, he served as Chief Operating Officer (COO) since May 2016.. Prior to serving as COO, Mr. Cooper served as Vice President, Business Operations for NICE APAC from March 2011 until June 2013, and as of July 2013 and until assuming the role of COO, he served as Executive Vice President, Professional Services and Cloud. Prior to joining NICE, Mr. Cooper was a Management Consultant at Accenture; the Head of Customer Service, IT and Billing at Time Telekom, Malaysia; and Vice President of Professional Services, APAC for CSG Systems, later Comverse. Mr. Cooper holds a First Class Bachelor of Computer Science and Mathematics with Honors from Salford University in the United Kingdom.
Craig Costigan has served as NICE Actimize CEO since November 2018. From 2016 to 2018, he served as President of Capital Markets & Credit at Fidelity National Information Services Inc. (FIS), where he managed a team of approximately 4,000 staff worldwide, overseeing risk, compliance, credit, security finance, securities processing and market data solutions and services for over 2,000 banks, broker dealers, investment firms, hedge funds, insurance companies and clients in the financial market. Prior to that, Mr. Costigan served as President of the Risk, Compliance and Global Securities Business at SunGard. Mr. Costigan holds a BS in Economics from Northeastern University.
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Yaron Hertz has served as our President, NICE Americas since 2017. Mr. Hertz joined NICE in 2007 as part of the Actimize acquisition by NICE. Prior to his current position, Mr. Hertz served as the head of sales for NICE Actimize in the Americas. Prior to joining Actimize, Mr Hertz severed as Head of Partner and Channel development for RSA Security. In addition, Mr. Hertz has extensive experience in senior leadership position, and he served as VP of Business Development in Cyota. Mr. Hertz is a former attorney and holds an LLB from the University of Northumbria in Newcastle, England.
Darren Rushworth has been with NICE since 2017 and serves as our President, CE International since April 2022. Previously he served as President of NICE APAC. Mr. Rushworth’s career spans over 30 years in the IT industry of which the past 21 years have been in the Asia Pacific Region. Prior to joining NICE, Mr. Rushworth held the role of Managing Director of Singapore for SAP Asia Pacific and he also led SAP’s Philippine and Emerging Market operations. Prior to that, Mr. Rushworth held multiple leadership roles at Oracle including VP Applications Sales APAC, VP Channels and VP Oracle Direct APAC.
Awan Roy has served as our Vice President, Head of NICE India GTC since March 2021. From 2007 to 2020 Mr. Roy served as Sr Director, R&D and India Site Head at Varian Medical Systems where he established the India center, growing it into a global Center of Excellence for Infrastructure and Informatics software. Prior to that, Mr. Roy served as Sr Manager at Siemens Healthineers where he led the development of several medical software products and platforms. Mr. Roy holds a Bachelor's degree in Computer Science from the University of Delhi and a Masters' degree in Computer Science from Devi Ahilya Vishwavidyalaya.
Shiri Neder has served as our Executive Vice President, Human Resource since February 2018. Prior to joining NICE, Ms. Neder was the Corporate Vice President, Head of Human Resources at Nova Measuring Instruments. Prior to that, Ms. Neder worked at Amdocs as Vice President, Human Resources for the Product and Delivery organizations and served as head of Amdocs’ Talent Development organization. In addition, Ms. Neder has held positions at Microsoft where she established the Human Resources function for the Telecom division as well as served as Regional Senior Human Resources Manager for the EMEA region. Ms. Neder holds a B.A. in Social Science and an M.A. in Law from Bar Ilan University.
Tali Mirsky has served as our Corporate Vice President, General Counsel and Corporate Secretary since March 2018. From 2010 to early 2018, she served as Global Vice President of Legal Affairs and Corporate Secretary at Frutarom Industries Ltd., where she led the company’s M&A transactions in addition to managing the company’s legal department and handling all legal matters and corporate and securities related items. Prior to that, TaliMs. Mirsky served as Vice President, General Counsel and Corporate Secretary of Alvarion, led Business and Legal Affairs at Nicast and Midbar Tech and was an associate with Naschitz Brandes & Co law office. She holds an LL.BLL.B. in Law and Business Administration from IDC, Herzliya and is admitted to practice law in Israel.
Hagit YnonGil Vassoly has served as our Corporate Vice President, Corporate Finance since January 2018. Prior to serving as Corporate Vice President Finance, Ms. YnonAugust 2022. Between 2019 and August 2022, Mr. Vassoly served as Vice President Accounting, TreasuryFinance and Tax from 2008 until 2017. From 2000 to 2007, Ms. YnonOperations for KLA Ltd., where he led the Electronics, Packaging and Components Finance Organization and the Orbotech integration, and in early 2019 he served as Corporate ControllerChief Financial Officer for StoreONE. Prior to that, between 2015 and other managerial positions in2019, Mr. Vassoly served as Executive Vice President, Chief Operating Officer and Chief Financial Officer for Gibbs International Inc., where he led the finance department. Ms. Ynonand operations activity. In addition, Mr. Vassoly held positions at The Gores Group and PwC in Israel, as an Audit Manager. Mr. Vassoly is a certified public accountantCertified Public Accountant (CPA) and holds a Bachelor’s degreeBA in Business and Accounting from the College of Management Academic Studies and a Masters in Business Administration from the College of Management Academic Studies.Management.
There are no family relationships between any of the directors or executive officers named above.

6.B. Compensation
Item 6B.    Compensation.
(a) Aggregate Executive Compensation
The aggregate compensation paid to or accrued on behalf of all our directors and executive officers as a group of 1719 persons during 2017for 2023 (including compensation accrued for such year) consisted of approximately $7.7$8.7 million in salary, fees, bonus, commissions and directors’ fees and approximately $0.7$1 million in amounts set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but excluding amounts we expended for automobiles made available to our officers, expenses (including business travel, relocation, professional and business association dues and expenses)expenses reimbursed to our officersdirectors and other fringe benefits commonly reimbursed or paidexecutive officers.

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Our compensation policy for our executive management team, as approved by companies in Israel.our shareholders, following the recommendation of our compensation committee and approval by our Board of Directors (as amended, the “Compensation Policy”), is annually reviewed and approved by our Board of Directors, as is any bonus payment made under the policy.

We have a performance-based bonus plan for our executive management team. The plan is based on our overall performance, the particular unit performance and individual performance and the results of the customer satisfaction survey conducted annually.performance. The measurements can change from year overto year, and arebased on a combination of financial parameters, including revenues, booking and operating income.income as well as other non-financial parameters, such as customer satisfaction and others. The plan is reviewed and approved by our compensation committee and Board of Directors annually, as is any bonus payment under the plan.
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During 2017,2023, our officers and directors received, in the aggregate, (i) options to purchase 146,80072,615 ordinary shares, thatwhich include 56,80050,676 options with an exercise price equal to the par value of the ordinary shares (the “par value options”), and (ii) 182,500185,343 restricted share units, under our equity basedequity-based compensation plans. The options (other than the par value options) have a weighted average price of $79.21$206.5 and all options will expire six years after the date of grant. The restricted shares units are granted at par value of the ordinary shares. For information regarding our option exchange program, see "Share Ownership–Option Exchanges and Price Adjustment" below.
Pursuant to the requirements of the Israeli Companies Law, 5759–1999 (the “Israeli Companies Law”), remuneration of our directors requires shareholder approval. Compensation and reimbursement for outside directors (as described below) is statuto-rilystatutorily determined pursuant to the Israeli Companies Law. Effective as of July 1, 2015, our shareholders approved the payment to each of our non-executive directors, including outside directors, of an annual fee of $40,000 and a meeting attendance fee of $1,500 for each Board meeting attended (whether in person or through media), and $1,000 for each Board committee meeting attended (whether in person or through media) (in each case paid in U.S. dollars or in NIS based on the exchange rate on July 1, 2015), subject to additional value added tax, as applicable.
On July 9, 2015, at our 2015 annual general meeting of shareholders, following the recommendation of our compensation committee and approval by our Board of Directors, our shareholders approved an amended compensation policy for directors and officers. In addition, our shareholders approved a special annual cash fee for the Chairman of the Board in the amount of NIS 450,000 (equivalent to approximately $129,348)$124,000). The special annual fee is subject to adjustment for changes in the Israeli consumer price index after September 2012. At the Company's specialCompany’s 2023 annual general meeting, held on December 21, 2016, following the recommendation of our compensation committee and approval by our Board of Directors, our shareholders approved certain amendments to the current compensation policy.
reapproved our Compensation Policy, as further discussed below in Item 10, “Additional Information. – Approval of Office Holder Compensation” in this annual report.
(b) Individual Compensation of Covered Executives
The following describes the compensation of our five most highly compensated executive officers in 2017,2023, based on the total of salary costs, bonus cost and equity costs for equity granted and expensed by the Company in 2017 ("2023 (“Covered Executives"Executives”).

The compensation specified below is broken down into the following components (all amounts specified below are in terms of cost to the Company, as recorded in our financial statements).statements, and U.S. dollar amounts indicated for Salary, Bonus Costs and Equity Costs are in thousands of dollars. Fordollars):

(1)Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include, to the extent applicable to each Covered Executives in Israel these amounts are based onExecutive, payments, contributions and/or allocations for pension, severance, vacation, travel and accommodation, car or car allowance, medical insurances and risk insurances (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for social security, and other benefits consistent with the Shekel exchange rate of 3.60, which represents the average rate for 2017, and forCompany’s guidelines.
(2)Bonus Costs. Bonus Costs represent bonuses granted to the Covered Executive with respect to the year ended December 31, 2023, paid in Singapore are based onaccordance with the Singapore dollar exchange rateCompany’s performance-based bonus plan or as detailed below.
(3)Equity Costs. Represents the expense recorded in our financial statements for the year ended December 31, 2023, with respect to equity granted in 2023 and in previous years (if applicable). For assumptions and key variables used in the calculation of 1.42, which represents the average rate for 2017.
(1)Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include, to the extent applicable to each Covered Executive, payments, contributions and/or allocations for pension, severance, vacation, travel and accommodation, car or car allowance, medical insurances and risk insurances (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for social security, and other benefits consistent with the Company's guidelines.
(2)Bonus Costs. Bonus Costs represent bonuses granted to the Covered Executive with respect to the year ended December 31, 2017, paid in accordance with the Company's performance-based bonus plan or as detailed in footnotes below.
(3)Equity Costs. Represents the expense recorded in our financial statements for the year ended December 31, 2017, with respect to equity granted in 2017 and in previous years (if applicable). For assumptions and key variables used in the calculation of such amounts see Note 13b of our audited Consolidated Financial Statements.
such amounts, see Note 14b of our audited consolidated financial
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i.
Barak Eilam – CEO. Salary Costs - $788; Bonus Costs - $1,257; Equity Costs - $1,913 expense recorded in 2017 for equity granted in 2017 and $2,313 expense recorded in 2017 for equity granted in previous years.
statements.
i.Barak Eilam – CEO. Salary Costs - $1,042; Bonus Costs - $1,125; Equity Costs - $6,697 expense recorded in 2023 for equity granted in 2023; and $15,627 expense recorded in 2023 for equity granted in previous years.
ii.
Paul Jarman – CEO, inContact. Salary Costs - $424; Bonus Costs - $367; Equity Costs - $2,352 expense recorded in 2017 for equity granted in 2017 and $793 expense recorded in 2017 for equity granted in previous years.

ii.Barry Cooper – President, CX. Salary Costs - $532; Bonus Costs - $533; Equity Costs - $3,729 expense recorded in 2023 for equity granted in 2023 and $4,194 expense recorded in 2023 for equity granted in previous years.
iii.
Yaron Hertz – President, NICE Americas. Salary Costs - $386; Bonus Costs - $437 and $997 expense recorded in 2017 for equity granted in 2017 and $161 expense recorded in 2017 for equity granted in previous years.
iii.Yaron Hertz – President, NICE Americas. Salary Costs - $510; Bonus Costs - $401; Equity Costs - $3,263 expense recorded in 2023 for equity granted in 2023 and $3,595 expense recorded in 2023 for equity granted in previous years.
iv.Darren Rushworth– President, CE International. Salary Costs - $801; Bonus Costs $418; Equity Costs - $1,808 expense recorded in 2023 for equity granted in 2023 and $2,272 expense recorded in 2023 for equity granted in previous years.
iv.
Joseph Friscia – President, NICE Actimize. Salary Costs - $437; Bonus Costs - $438; Equity Costs - $694 expense recorded in 2017 for equity granted in 2017 and $692 expense recorded in 2017 for equity granted in previous years.
v.Craig Costigan – CEO, NICE Actimize. Salary Costs - $495; Bonus Costs - $526; Equity Costs - $1,866 expense recorded in 2023 for equity granted in 2023 and $2,273 expense recorded in 2023 for equity granted in previous years.

v.
Miki Migdal –President, NICE Enterprise Product Group. Salary Costs - $457; Bonus Costs - $406; Equity Costs - $543 expense recorded in 2017 for equity granted in 2017 and $608 expense recorded in 2017 for equity granted in previous years.
Item 6C.    Board Practices
Corporate Governance Practices
We are incorporated in Israel and therefore are subject to various corporate governance practices under the Israeli Companies Law, relating to such matters as outside directors, the internal audit committee, the internal auditor and approvals of interested party transactions. These matters are in addition to the ongoing listing conditions of the NASDAQ and other relevant provisions of U.S. securities laws. Under applicable NASDAQ rules, a foreign private issuer may generally follow its home country rules of corporate governance in lieu of comparable NASDAQ requirements, except for certain matters such as composition and responsibilities of the audit committee and the independence of its members. For further information, see Item 16G, “Corporate Governance” of this annual report.
General Board Practices
Our articles of association provide that the number of directors serving on the Board shall be not less than three but shall not exceed thirteen. Our directors, other than outside directors, are elected at the annual shareholders meeting to serve until the next annual meeting or until their earlier resignation, death, resignation, bankruptcy, incapacity or removal by an extraordinary resolution of the general shareholders meeting. Directors may be re-elected at each annual shareholdersshareholders’ meeting. The Board may appoint additional directors (whether to fill a vacancy or create new directorships) to serve until the next annual shareholders meeting, provided, however, that the Board shall have no obligation to fill any vacancy unless the number of directors is less than three.
The Board may, subject to the provisions of the Israeli Companies Law, appoint a committee of the Board and delegate to such committee all or any of the powers of the Board, as it deems appropriate. Notwithstanding the foregoing and subject to the provisions of the Israeli Companies law, the Board may, at any time, amend, restate or cancel the delegation of any of its powers to any of its committees. The Board has appointed an internal audit committee under the Israeli Companies Law that has three members, an audit committee that has five members, a compensation committee that has five members, a nominations committee that has two members and a mergers and acquisitions committee that has six members. In addition, from time to time the Board may appoint an ad hoc committee for certain purposes, such as the review, negotiation and recommendation of approval of M&A transactions. We do not have, nor do our subsidiaries have, any directors’ service contracts granting to the directors any benefits upon termination of their service.
service as Board members.
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Outside Directors
Except as discussed below, under the Israeli Companies Law companies incorporated under the laws of Israel whose shares have been offered to the public in or outside of Israel are required to appoint at least two “outside” directors.Pursuant to regulations under the Israeli Companies Law that took effect in April 2016, a NASDAQ -listedNASDAQ-listed company that does not have a controlling shareholder is entitled to opt out of the provisions of the Israeli Companies Law requiring at least two outside directors and certain related requirements, so long as the company complies with the SEC regulations and NASDAQ listing rules regarding independent directors and the composition of the audit and compensation committees. In December 2016, our shareholders approved amendments to our articles of association, pursuant to which our Board of Directors may elect to opt out of such requirements for appointment of outside directors (together the "2016“2016 Relief Amendments"Amendments”). According to the 2016 Relief Amendments, an outside director that was appointed prior to a company opting out of such requirements may continue in office until the end of his or her then-current term or until the end of the second annual general meeting convened after the applicable company opts out of the requirement, whichever is earlier. At this time, our Board of Directors has not made an election to opt out of such requirements.
Outside directors are required to possess professional qualifications as set out in regulations promulgated under the Israeli Companies Law. The Israeli Companies Law provides that a person may not be appointed as an outside director if (i) such person or person’s relative or affiliate has, at the date of appointment, or had at any time during the two years preceding such date, any affiliation with the company, a controlling shareholder thereof or their respective affiliates; or (ii) in a company that does not have a 25% shareholder, such person has an affiliation with any person who, at the time of appointment, is the chairman, the chief executive officer, the chief financial officer or a 5% shareholder of the company. In general, the term “affiliation” includes: an employment relationship; a business or professional relationship maintained on a regular basis; control; and service as an office holder.
No person may serve as an outside director if the person’s position or other activities create or may create a conflict of interest with the person’s responsibilities as an outside director or may otherwise interfere with the person’s ability to serve as an outside director. Until the lapse of two years from termination of office, a company or its controlling shareholder may not give any direct or indirect benefit to the former outside director.
Outside directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:
•the majority of shares voted at the meeting shall include at least a majority of the shares of non-controlling shareholders present at the meeting and voting on the matter (without taking into account the votes of the abstaining shareholders); or
·the majority of shares voted at the meeting shall include at least a majority of the shares of non-controlling shareholders present at the meeting and voting on the matter (without taking into account the votes of the abstaining shareholders); or
•the total number of shares of non-controlling shareholders voted against the election of the outside directors does not exceed two percent of the aggregate voting rights in the company.
·the total number of shares of non-controlling shareholders voted against the election of the outside directors does not exceed two percent of the aggregate voting rights in the company.
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The initial term of an outside director is three years and may be extended for up to two additional three-year terms. Thereafter, he or she may be reelected by our shareholders for additional periods of up to three years each only if the internal audit committee and the Board of Directors confirm that, in light of the outside director’s expertise and special contribution to the work of the Board of Directors and its committees, the reelection for such additional period is beneficial to the company. Reelection of an outside director may be effected through one of the following mechanisms: (1) the Board of Directors proposed the reelection of the nominee and the election was approved by the shareholders in the same mannerrequired to appoint outside directors for their initial term; or (2) one or more shareholders holding one percent or more of a company’s voting rights or the outside director proposed the reelection of the nominee, and the reelection is approved by a majority of the votes cast by the shareholders of the company, excluding the votes of controlling shareholders and those who have a personal interest in the matter as a result of their relations with the controlling shareholders, provided that the aggregate votes cast in favor of the reelection by such non-excluded shareholders constitute more than two percent of the voting rights in the company. An outside director may be removed only in a general meeting, by the same percentage of shareholders as is required for electing an outside director, or by a court, and in both cases only if the outside director ceases to meet the statutory qualifications for appointment or if he or she has violated the duty of loyalty to us. Unless we actually adopt the applicable relief provided under the 2016 Relief Amendments, each committee of the Company’s Board of Directors which is empowered to exercise any of the Board’s powers is required to include at least one outside director, provided that each of the internal audit committee and compensation committee must include all of the outside directors. At this time, our Board of Directors has not made an election to opt out of such requirements.
An outside director is entitled to compensation as provided in regulations adopted under the Israeli Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, from the company. In accordance with such regulations, our shareholders approved that our outside directors are to receive compensation equal to that paid to
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the other members of the Board of Directors. For further information, please see Item 6, “Directors, Senior Management and Employees—Compensation” in this annual report.
Financial and Accounting Expertise
Pursuant to the Israeli Companies Law, our Board of Directors has determined that at least one member of our Board of Directors must be an “accounting and financial expert.” The Israeli Companies Law requires that all outside directors must be “professionally qualified.” Under applicable NASDAQ rules, each member of our audit committee must be financially literate and at least one of the members must have experience or background that results in such member’s financial sophistication. Our Board of Directors has determined that each of Dan Falk and Yocheved Dvir is an “accounting and financial expert” for purposes of the Israeli Companies Law and is financially sophisticated for purposes of applicable NASDAQ rules. See also Item 16A, “Audit Committee Financial Expert” in this annual report.

Independent Directors

Under the rules of the NASDAQ, a majority of our directors are required to be “independent” as defined in applicable NASDAQ rules. All of our directors satisfy the respective independence requirements of NASDAQ.

In addition, our Articles of Association provide that, if we do not have a shareholder that holds 25% or more of our issued and outstanding share capital, a majority of the directors must be "independent"“independent” as defined in the Israeli Companies Law and the regulations promulgated thereunder. If we have a shareholder that holds 25% or more of our issued and outstanding share capital, then at least one third of the directors must be "independent."“independent.” All of our directors satisfy the respective independence requirements of the Israeli Companies Law. The qualifications for independent directors under the Israeli Companies Law are similar to those for outside directors, as described above under “Outside Directors”, including the nine-year term limit and the ability to extend such term beyond nine years upon the approval of our internal audit committee and Board of Directors.
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Internal Audit Committee

The Israeli Companies Law requires public companies to appoint an internal audit committee. The role of the internal audit committee under the Israeli Companies Law is to examine flaws in the management of the company’s business in consultation with the internal auditors and the independent accountants, and to propose remedial measures to the Board. The internal audit committee also reviews interested party transactions for approval as required by law, including approval of the remuneration of a director in any capacity, which also requires Board, Compensation Committeecompensation committee and shareholder approval. The internal audit committee also assesses our internal audit system and the performance of our internal auditor and oversees the implementation and enforcement of our compliance program. Under the Israeli Companies Law, an internal audit committee must consist of at least three directors, including all of the outside directors. The members of the internal audit committee must satisfy certain independence standards under the Israeli Companies Law, and the chairman of the internal audit committee must be an outside director. The following may not serve as members of the internal audit committee: the chairman of the Board of Directors, any director employed by the company or by its controlling shareholder or by an entity controlled by the controlling shareholder, a director who regularly provides services to the company or to its controlling shareholder, any director who derives most of its income from the controlling shareholder and a controlling shareholder or any relative of a controlling shareholder, may not be a member of the internal audit committee.shareholder. Pursuant to the 2016 Relief Amendments, the Company may elect to opt out of the composition and attendance rules set with respect to the internal audit committee under the Israeli Companies Law, so long as the companyCompany complies with the SEC regulations and NASDAQ listing rules regarding the composition and attendance rules in that respect. At this time, our Board of Directors has not made an election to opt out of such requirements.
All of the current members of our internal audit committee (presently comprised of Yocheved Dvir (Chairman)(Chair), Dan Falk and Zehava Simon) meet these qualifications.

Internal Auditor

Under the Israeli Companies Law, the Board of Directors must appoint an internal auditor, proposed by the internal audit committee. The role of the internal auditor is to examine, among other matters, whether the company’s activities comply with the law and orderly business procedure.procedures. Under the Israeli Companies Law, the internal auditor may be an employee of the company but may not be an interested party or office holder, or a relative of any interested party or office
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holder and may not be a member of the company’s independent accounting firm or its representative. We have appointed an internal auditor in accordance with the requirements of the Israeli Companies Law.

Audit Committee

The NASDAQ rules require that the audit committee of a listed company be composed of at least three directors, each of whom is (i) independent; (ii) does not receive any compensation (except for board fees) from the company; (iii) is not an affiliated person of the company or any subsidiary; and (iv) has not participated in the preparation of the company’s (or a current subsidiary’s) financial statements during the past three years. All of the current members of our audit committee (presently comprised of Zehava Simon (Chair), Rimon Ben-Shaoul, (Chairman), David Kostman, Dan Falk, Yocheved Dvir and Zehava Simon)Joe Cowan) meet the NASDAQ standards described above.

Our audit committee has adopted a charter specifying the committee’s purpose and outlining its duties and responsibilities which include, among other things, (i) appointing, retaining and compensating the company’s independent auditor, subject to Board of Directors and shareholder approval, (ii) pre-approving all services of the independent auditor, (iii) reviewing the annual audited financial statements and quarterly financial statements and the content of our earnings press releases, and (iv) overseeing our accounting and financial reporting processes and the audits of our financial statements. Our audit committee is also authorized to act as our “qualified legal compliance committee.” As such, our audit committee will be responsible for investigating reports made by attorneys appearing and practicing before the SEC in representing us, of perceived material violations of U.S. federal or state securities laws, breaches of fiduciary duty or similar material violations of U.S. law by us or any of our agents.
We believe we currently meet the applicable NASDAQ requirements with respect to our Audit Committee and we intend to continue to take all actions as may be necessary for us to maintain our compliance with applicable NASDAQ requirements with respect to our Audit Committee.
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Compensation Committee
As required by NASDAQ rules, our compensation committee approves the compensation of our executive officers. The compensation committee is also authorized to approve the grant of stock options and other securities to eligible grantees under our benefit plans pursuant to guidelines adopted by our Board of Directors. However, grants of stock options and other securities to our executive officers also require approval of our Board of Directors. Under the Israeli Companies Law, the Board of Directors of a public company must establish a compensation committee. Pursuant to the 2016 Relief Amendments, the Company may elect to opt out of the relevant composition and attendance rules set under the Israeli Companies Law, and to comply with the SEC regulations and NASDAQ listing rules that apply to the composition and attendance rules of a compensation committee. At this time, our Board of Directors has not made an election to opt out of such requirements and we have continued to comply with the Israeli Companies Law with respect to the composition and attendance rules of a compensation committee, as our compensation committee consists of at least three directors who satisfy the independence qualifications detailed above in “Internal Audit Committee”, and the chairman of the compensation committee is an outside director.
Under the Israeli Companies Law, the role of the compensation committee is to recommend to the Board of Directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of office holders based on specified criteria, to review modifications to the compensation policyCompensation Policy from time to time, to review its implementation and to approve the actual compensation terms of office holders prior to the approval thereof by the Board of Directors.
Pursuant to the NASDAQ rules, our compensation committee is required to consist of at least two members, with all members of the compensation committee required to be independent, unless we elect to take advantage of the exemption provided to "foreignforeign private issuers"issuers to comply with home country practice instead of the listing rules of exchanges such as NASDAQ, which we doNASDAQ. At this time, our Board of Directors has not presently intendmade an election to do.opt out of such requirements. The determination of whether a director is independent takes into account all factors relevant to whether a director has a relationship with the Company which would be material to such director’s ability to be independent from management in connection with carrying out the duties of a compensation committee member. Factors required for consideration in making this determination specifically include (i) the source of compensation of such director (including any consulting, advisory or other compensatory fee paid to such director) and (ii) whether such director is affiliated with the Company or one of its affiliates or subsidiaries. Pursuant to the NASDAQ rules, we are also required to have a compensation committee charter, which, among other things,
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must set forth the scope of the compensation committee’s responsibilities and how they will be carried out, as well as grant the compensation committee the power to retain compensation advisers following consideration of certain factors that may be indicative of a conflict of interest by the compensation adviser in rendering compensation advice.
Our Board of Directors adopted a compensation committee charter that includes the requirements of the NASDAQ rules. However, the charter provides that if there is any conflict between the responsibilities and requirements set forth therein and either the Israeli Companies Law or compensation policy approved by our Board of Directors upon the recommendation of our compensation committee and subsequently approved by our shareholders (the “Compensation Policy”),Compensation Policy, the latter will govern. For information regarding the Compensation Policy, see Item 10, - “Additional Information -– Memorandum and Articles of Association – Approval of Office Holder Compensation” in this annual report.
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We do not believe that there are any existing conflicts between the compensation committee charter and either of the Israeli Companies Law or the Compensation Policy. However, if any such conflict should develop such that we are no longer in compliance with the requirements of the NASDAQ rules, we intend to utilize the foreign private issuer exemption described above with respect to such requirement, and in accordance with the NASDAQ rules we will disclose the practice that we follow in lieu of the applicable NASDAQ requirement in our future annual reports.
All of the current members of the compensation committee (presently comprised of Dan Falk (chairman)(Chairman), Yocheved Dvir, Joe Cowan, Leo Apotheker, and Zehava Simon and Yehoshua Ehrlich) satisfy the respective independence requirements of both the NASDAQ rules and the Israeli Companies Law.
Nominations Committee
As required by NASDAQ rules, our nominations committee recommends candidates for election to our Board of Directors pursuant to a written charter. Both of the current members of this committee David(David Kostman and Dan Falk,Falk) are independent directors.
Mergers and Acquisitions Committee
Our Board of Directors has delegated powers with respect to the review and recommendation of mergers and acquisitions and related investments and transactions, which are then subject to approval by the Board of Directors. The committee also has limited authority to approve mergers and acquisitions for consideration up to a certain amount. All of the current members of this committee (presently comprised of David Kostman (chairman)(Chairman), Dan Falk, Rimon Ben Shaoul, Yehoshua Ehrlich, Leo Apotheker and Joe Cowan,Cowan) are independent directors.
Item 6D.    Employees.
Employees

As of December 31, 2017,2023, we had 5,2088,384 employees worldwide, which represented an increase of approximately 5.6%5.8% from December 31, 2016.2022, resulting from both organic and non-organic growth.


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The following table sets forth the number of our full-time employees at the end of each of the last three fiscal years as well as the main category of activity and geographic location of such employees:

At December 31,
Category of Activity202320222021
Customer Support*3,0122,7942,603
Sales and Marketing1,7461,6781,471
Research and Development2,7802,6432,303
General and Administrative846811725
Total8,3847,9267,102
Geographic Location
Americas3,6743,4393,112
EMEA1,5261,5091,480
APAC3,1842,9782,510
Total8,3847,9267,102
  At December 31, 
Category of Activity 2015   2016*   2017 
            
Operations            107   66   67 
Customer Support            1,374   1,928   2,028 
Sales & Marketing            682   1,069   1,169 
Research & Development            801   1,294   1,396 
General & Administrative            
352
   
573
   
548
 
Total          
  
3,316
   
4,930
   
5,208
 
             
Geographic Location            
Israel            946   944   913 
Americas            1,263   2,544   2,557 
Europe            564   530   510 
Asia Pacific            
543
   
912
   
1,228
 
Total          
  
3,316
   
4,930
   
5,208
 

*    The substantial increase inIncluding the number of employees designated under “Operations” in 2016 resulted mainly from acquisitions and an increase in personnel in certain locations (for more information, please see Item 5, “Operating and Financial Review and Prospects—Recent Acquisitions” in thisour previous annual report).reports.
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We also utilize temporary employees in various activities. On average, we employed 6835 temporary employees and obtained services from 8761,501 consultants (not included in the numbers set forth above) during 2017.
2023.
Our future success will depend in part upon our ability to attract and retain highly skilled and qualified personnel. Although competition for such personnel is generally intense, we believe that adequate personnel resources are currently available in Israel to meet our requirements.
In almost all jurisdictions, weWe are not a party to any collective bargaining agreement with our employees or with any labor organization.organization in substantially all jurisdictions where we operate. However, we are subject to certain labor related statutes and certain provisions of collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordinating Bureau of Economic Organizations (includ-ing(including the Industrialists’ Association of Israel) that apply to our Israeli employ-eesemployees by order of the Israeli Ministry of Labor and Welfare. These statutes and provisions principally deal with the length of the work day and the work week, minimum wages, insurance coverage of work-related accidents, determination of severance pay and the provisions of other employment matters. Israeli law generally requires the payment of severance pay by employers upon an employee’s death, retirement or termination of employment by the employer without due cause. We currently fund our ongoing severance payment obligations in Israel by making monthly payments to approved severance funds or insurance policies. For more information please see Note 2p of our Consolidated Financial Statements.consolidated financial statements. In addition, according to the National Insurance Law, Israeli employers and employees are required to pay predetermined sums to the National Insurance Institute, an organization similar to the U.S. Social Security Administration. These contributions entitle the employees to benefits in periods of unemployment, work injury, maternity leave, disability, reserve military service and bankruptcy or winding-up of the employer. Since January 1, 1995 these contributionsemployer and also include payments for national health insurance. The payments to the National Insurance Institute are equal to approximately 16.37%varies between 7.05%-19.6% of an employee’s wagessalary (up to a certain cap as determined from time to time by the law), of which the employee contributes approximately 60.58%3.5%-12.0% and the employer contributes approximately 39.42%3.55%-7.6%.


In addition, we pay severance benefits to our employees located elsewhere in accordance with local laws and practices of the countries in which they are employed, including our U.S. based employees pursuant to the U.S. Federal Department labor legislation and requirements and local state regulations.
Employment Agreements

We have employment agreements with our officers. Pursuant to these employ-mentemployment agreements, each party may terminate the employment without cause by giving a 30, 60 or 90 day prior written notice (six to twelve months in the case of
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certain senior officers). In addition, we may terminate such agreement for cause with no prior notice. The agreements generally include non-competition and non-disclosure provisions, although the enforceability of non-competition provisions in employment agreements may be limited under applicable law.
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Item 6E.    Share OwnershipOwnership.
As of March 8, 2018,19, 2024, our directors and executive officers serving at that timethen-serving beneficially owned an aggregate of 385,633340,737 ordinary shares, including options and restricted share units to purchase ordinary shares that were vested on such date or that are scheduled to vest within 60 days thereafter, or approximately 0.63%0.5% of our outstanding ordinary shares. The options and restricted share units have an average exercise price of $48.27$82.09 per share and the options will expire between 20192024 and 2026.2030. No individual director or executive officer beneficially owns 1% or more of our outstanding ordinary shares.

The following is a description of each of our option equity plans under which awards were outstanding during 2017.as of March 19, 2024.

2008 Share2016 Share Incentive Plan and 2016 Share Incentive Plan

In June 2008 the Company adopted the 2008 Share Incentive Plan (the “2008 Plan”) and in February 2016 the Company adopted the 2016 Share Incentive Plan (the “2016 Plan”, and together with the 2008 Plan, the “Plans”). The Company adopted the Plans2016 Plan to provide incentives to employees, directors, consultants and/or contractors by rewarding performance and encouraging behavior that will improve the Company’s profitability.

Under each of the Plans,2016 Plan, the Company'sCompany’s employees, directors, consultants and/or contractors may be granted any equity-related award, including: any type of an option to acquire the Company ordinary shares; share appreciation right; share and/or restricted share award (“RSA”); restricted stock unit (“RSU”) and/or other share unit; and/or other share-based award and/or other right or benefit under the Plans,2016 Plan, including any such equity-related award that is a performance basedperformance-based award (each an "Award"“Award”). In regard to the 2008 Plan, please see the discussion below regarding performance-based awards beginning calendar year 2014.

Generally, under the terms of the Plans,2016 Plan, unless determined otherwise by the administrator of the Plans,2016 Plan, 25% of an Award granted becomes exercisable on the first anniversary of the date of grant and 6.25% becomes exercisable once every quarter during the subsequent three years. Specifically with respect to RSUs and options granted with an exercise price equal to the nominal value of an ordinary share ("(“par value options"options”), unless determined otherwise by the Board of Directors, 25% of the RSUs and the par value options granted become vested on each of the four consecutive annual anniversaries following the date of grant. Certain executive officers are entitled to acceleration of vesting of Awards in the event of a change of control, subject to certain conditions. Different terms related to vesting of Awards may apply with respect to Awards granted in relation to equity grants assumed pursuant to acquisition transactions. Awards with a vesting period expire six years after the date of grant. Pursuant to a resolution of the Company's Board of Directors dated February 4, 2014, options that are performance-based and that were granted during calendar year 2014 and thereafter shall expire seven years following the date of grant. The maximum number of shares that may be subject to Awards granted under each of the Plans2016 Plan is calculated each calendar year as 3.5%3% of the Company’s issued and outstanding share capital as of December 31 of the preceding calendar year. Such amount is reset for each calendar year. Awards are non-transferable except by will or the laws of descent and distribution.

Following an amendment made in December 2010 to the 2008 Plan and also appliedOptions granted under the 2016 Plan (the “2010 Amendment”), options granted under such plan are granted at an exercise price equal to the average of the closing prices of one ADR as quoted on the NASDAQ market during the 30 consecutive calendar days preceding the date of grant, unless determined otherwise by the administrator of the Plans2016 Plan (including par value options in some cases).

Prior to the 2010 Amendment, the options were granted at an exercise price of not less than the fair market value of the ordinary shares on the date of the grant, subject to certain exceptions that could be approved by the Company's Board of Directors, including in some cases par value options.

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The Company’s Board of Directors also adopted an addendum to the Plans2016 Plan for Awards granted to residents of Israel (the "Addendum"“Addendum”) and resolved to elect the "Capital“Capital Gains Route"Route” (as defined in Section 102(b)(2)) of the Israeli Income Tax Ordinance-5721-1961 (“Tax Ordinance”) for the grant of Awards to Israeli grantees. There is also a U.S. addendum under each of the Plans2016 Plan that applies to non-qualified stock options for purposes of U.S. tax laws.

The Plans are2016 Plan is generally administered by our Board of Directors and compensation committee, which determine the grantees under the 2016 Plan and the number of Awards to be granted. As of March 8, 2018,19, 2024, options and restricted share units to purchase 722,158 ordinary shares were outstanding under the 2008 Plan at a weighted average exercise price of $20.47. As of March 8, 2018, options and restricted share units to purchase 2,092,265 ordinary2,876,265 ordinary shares were outstanding under the 2016 Plan at a weighted average exercise price of $7.13. $9.84.
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Guardian Analytics, Inc. 2006 Stock Plan
In 2006, Guardian Analytics, Inc. (“Guardian Analytics”) adopted the Guardian Analytics, Inc. 2006 Stock Plan (the “Guardian Plan”), to attract and retain Guardian Analytics' employees and consultants (which includes its directors and advisors), and to align the interests of such recipients with the interests of Guardian Analytics’ shareholders.
Pursuant to the terms of the Guardian Analytics' acquisition agreement, we assumed and converted Guardian Analytics' stock options originally granted under the Guardian Plan into stock options of NICE.
As of March 19, 2024, assumed Guardian Analytics' stock options to purchase 2,888 shares of NICE were outstanding under the Guardian Plan, at a weighted average exercise price of $32.26. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 5,823 ordinary shares for issuance under the Guardian Plan.
Nexidia Inc. 2005 Stock Incentive Plan
In 2005, Nexidia adopted the Nexidia Inc. 2005 Stock Incentive Plan (the “Nexidia Plan”), to attract and retain Nexidia’s employees, directors, consultants and advisors and to align the interests of such recipients with the interests of Nexidia’s shareholders. Under the Nexidia Plan, the grantees can receive incentive and non-qualified options to acquire shares of Nexidia’s common stock, restricted stock awards, restricted stock units and stock appreciation rights.
Pursuant to the terms of the Nexidia acquisition agreement, we assumed and converted Nexidia’s stock options and restricted stock units originally granted under the Nexidia Plan into stock options and restricted stock units of NICE, respectively.
As of March 8, 2018,March 19, 2024, assumed Nexidia options to purchase 11,863381 shares of NICE and 85,550 assumed restricted share units were outstanding under the Nexidia Plan, at a weighted average exercise price of $0.78.$6.84. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 173,860 ordinary shares for issuance under the Nexidia Plan.

Plan.
inContact, Inc. 2008 Equity Incentive Plan
In 2008, inContact adopted the inContact, Inc. 2008 Equity Incentive Plan, as subsequently amended in June 14, 2012 (as amended, the “inContact Plan”) to enhance inContact’s ability to attract and retain those employees, officers, directors and consultants who are expected to make important contributions to inContact and any of its subsidiaries and to align the interests of such recipients with the interests of inContact’s shareholders. Under the inContact Plan, the grantees can receive incentive and non-qualified options to acquire shares of inContact’s common stock and can receive stock appreciation rights.
Pursuant to the terms of the inContact Merger Agreement,acquisition agreement, we assumed and converted inContact’s stock options, restricted stock awards and restricted stock units originally granted under the inContact Plan into stock options, restricted stock awards and restricted stock units of NICE, respectively.
As of March 8, 2018March 19, 2024, assumed inContact options and restricted share units to purchase 159,8591,037 shares of NICE and 84,719 assumed restricted share units and restricted shares were outstanding under the inContact Plan, at a weighted average exercise price of $27.28.$42.04. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 476,114 ordinary shares for issuance under the inContact Plan.
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e-Glue Software Technologies Inc., 2004 Stock Option Plan
In 2004, e-Glue adopted the 2004 Stock Option Plan that was further amended by e-Glue on June 9, 2010 (the “2004 e-Glue Plan”), for the grant of awards to employees, directors and service providers of e-Glue and its subsidiaries. The 2004 e-Glue Plan provides for the grant of options to acquire e-Glue’s stock, for the grant of restricted stock and for the grant of restricted share units.
Pursuant to the terms of the e-Glue acquisition agreement, we assumed the outstanding stock options and restricted share units granted by e-Glue under the 2004 e-Glue Plan that did not expire upon closing of the e-Glue acquisition. Following such assumption, the options represent rights to purchase ordinary shares of NICE or restricted share units of NICE, pursuant to a set formula (such options and restricted share units, together the “Assumed e-Glue Options”). Some of the Assumed e-Glue Options have a three year vesting period, with a third becoming vested and exercisable one year from their date of grant and the remainder vesting and become exercisable in equal installments on an annual basis over the following two years. The remaining portion of the Assumed e-Glue Options vest as follows: 25% vest and become exercisable one year from their date of grant, and the remaining 75% vested and became exercisable on December 31, 2011. Certain Assumed e-Glue Options are subject to acceleration rights if employment is terminated within a limited time period and under certain circumstances. Assumed e-Glue Options generally expire ten years after the date of grant. When applicable, the Assumed e-Glue Options shall be held by, and registered in the nameItem 6F.     Disclosure of a trustee, accordingregistrant’s action to Section 102(b) of the Tax Ordinance.recover erroneously awarded compensation.
Not applicable.
As of March 8, 2018, assumed e-Glue Options and restricted share unit to purchase 420 ordinary shares of NICE were outstanding under the 2004 e-Glue Plan. The exercise price per share underlying the options and restricted share units is equal to the nominal value of an ordinary share. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 76,035 ADRs for issuance under the 2004 e-Glue Plan.
Fizzback Group (Holdings) Limited Employee Share Option Scheme
In July 2010, Fizzback adopted the Fizzback Group (Holdings) Limited Employee Share Option Scheme, as amended (the "Fizzback Plan"), to grant options to employees, directors and consultants, as applicable, of Fizzback. Under the Fizzback Plan, the grantees could be granted options which are deemed "qualifying options" for the purposes of the EMI Code (as that term is defined in the United Kingdom’s Income Tax (Earnings and Pensions) Act 1993) to acquire Fizzback’s ordinary shares, restricted share units and unapproved options.
Pursuant to the terms of the Fizzback share purchase agreement, we replaced the options and restricted share units originally granted under the Fizzback Plan with stock options to purchase ordinary shares of NICE and restricted share units of NICE, respectively.
Under the Fizzback Plan, the exercise price per option shall be determined by the Board of Directors in its sole and absolute discretion provided that such price shall not be less than the nominal value per option, or (when applicable) such price as from time to time adjusted pursuant to the Fizzback Plan. If a grantee ceases to be an employee, all options which have not become exercisable or which, having become exercisable, have not been exercised, shall lapse.
Options generally expire, inter alia, ten years after the date of grant, upon an insolvent liquidation of Fizzback or upon the grantee being adjudged bankrupt.
As of March 8, 2018, assumed Fizzback options and restricted share units to purchase 1,742 ordinary shares of NICE were outstanding under the Fizzback Plan, at a weighted average exercise price of $0.69. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 165,695 ordinary shares for issuance under the Fizzback Plan.

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Merced Plans
Merced Systems, Inc. 2001 Stock Plan
In 2001, Merced adopted the Merced Systems, Inc. 2001 Stock Plan, as amended (the "2001 Merced Plan"), to afford an incentive to employees and consultants of Merced and to promote the success of Merced’s business. Under the 2001 Merced Plan, the grantees could be granted options to acquire Merced’s ordinary shares and restricted shares.
Pursuant to the terms of the Merced acquisition agreement, we assumed and converted Merced's options and replaced Merced’s restricted shares that were originally granted under the 2001 Merced Plan into stock options to purchase ordinary shares of NICE and with restricted shares of NICE, respectively.
Under the 2001 Merced Plan, the exercise price per share of incentive stock options granted to an employee shall be no less than 100% of the fair market value per share on the date of grant, or 110% of the fair market value if the employee was a 10% shareholder of Merced at the date of grant. The exercise price per share of non-statutory stock options granted shall be no less than 85% of the fair market value per share on the date of grant, or 110% of the fair market value if the person was a 10% shareholder of Merced at the date of grant, if required by applicable law and, if not so required, the exercise price per share shall be determined by the plan administrator. Notwithstanding the foregoing, options may be granted with an exercise price per share other than as required above pursuant to a merger or other corporate transaction.
An option granted under the 2001 Merced Plan is exercisable at the rate of at least 20% per year over five years from the date the option was granted. Options generally expire ten years after the date of grant.
Merced Systems, Inc. 2011 Stock Plan
In 2011, Merced adopted the Merced Systems, Inc. 2011 Stock Plan (the "2011 Merced Plan"), to afford an incentive to employees and consultants of Merced and to promote the success of Merced’s business. Under the 2011 Merced Plan, the grantees could be granted options to acquire Merced’s ordinary shares and restricted share units.
Pursuant to the terms of the Merced acquisition agreement, we assumed and converted Merced's options and restricted share units originally granted under the 2011 Merced Plan into stock options to purchase ordinary shares of NICE and restricted share units of NICE, respectively.
Under the 2011 Merced Plan, the exercise price per share of incentive stock options granted to an employee shall be no less than 100% of the fair market value per share on the date of grant, or 110% of the fair market value if the employee was a 10% shareholder of Merced at the date of grant. The exercise price per share of non-statutory stock options shall be no less than 85% of the fair market value per share on the date of grant, or 110% of the fair market value if the person was a 10% shareholder of Merced at the date of grant, if required by applicable law and, if not so required, the exercise price per share shall be determined by the plan administrator. Notwithstanding the foregoing, options may be granted with an exercise price per share other than as required above pursuant to a merger or other corporate transaction.
An option granted under the 2011 Merced Plan is exercisable at the rate of at least 20% per year over five years from the date the option was granted. Options generally expire ten years after the date of grant.
As of March 8, 2018, assumed Merced options, restricted share units and restricted shares to purchase 4,619 ordinary shares of NICE were outstanding under the 2001 Merced Plan and the 2011 Merced Plan, at a weighted average exercise price of $14.13. We have registered, through the filing of a registration statement on Form S-8 with the SEC under the Securities Act, 343,288 ordinary shares for issuance under the 2001 Merced Plan and the 2011 Merced Plan.
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Item 7.Major Shareholders and Related Party Transactions
Major Shareholders

The following table sets forth certain information with respect to the beneficial ownership of our ordinary shares, with respect to each person known to us to be the beneficial owner of 5% or more of our outstanding ordinary shares, reported as of March 20, 2018. NoneMarch 19, 2024. None of our shareholders has any different voting rights than any other shareholder.
Name and AddressNumber of Shares
Percent of Shares
Beneficially Owned (1)
Capital Research Global Investors4,980,331 (2)7.9 %
BlackRock, Inc.3,226,820 (3)5.1 %
Name and Address Number of Shares  
Percent of Shares Beneficially Owned (1)
 
Janus Henderson Group plc
201 Bishopsgate EC2M 3AE
United Kingdom
  4,947,800
(2) 
  8.1%
         
Massachusetts Financial Services Company
111 Huntington Avenue
Boston, Massachusetts 02199
  4,594,141
(3) 
  7.5%
__________
(1)Based upon 61,212,87463,058,665 ordinary shares issued and outstanding as of March 20, 2018.19, 2024.
(2)Janus Henderson Group plc reported that these shares are held by managed portfolios. ThisThe information is based upon aAmendment No. 4 to Schedule 13G filed by Janus Henderson Group plc with the SEC by Capital Research Global Investors (“CRGI”) on February 13, 2018.9, 2024.
(3)ThisThe information is based upon aAmendment No. 2 to Schedule 13G/A13G filed byMassachusetts Financial Service Company with the SEC by BlackRock, Inc. on February 1, 2023.
On February 9, 2018.2024, FMR LLC filed Amendment No. 1 to Schedule 13G with the SEC reporting that they are no longer a beneficial owner of 5% or more of our outstanding ordinary shares.
As of March 14, 2018, 19, 2024, we had approximately 44 registered42 registered ADS holders of record in the United States, with our ADS holders holding in total approximately 49%61% of our outstanding ordinary shares, as reported by JPMorgan Chase Bank, N.A., the depositary for our ADSs.
As of October 26, 2017, Migdal Insurance & Financial Holdings Ltd. (“Migdal”) reported that it held 3,005,795, or 4.95%, of our ordinary shares. This information is based upon a Schedule 13G filed by Migdal with the SEC on October 31, 2017. Of these shares, (i) 2,791,731 ordinary shares are held for members of the public through, among others, provident funds, mutual funds, pension funds and insurance policies, which are managed by subsidiaries of Migdal, according to the following segmentation: 1,517,114 ordinary shares are held by profit-participating life assurance accounts, 1,102,469 ordinary shares are held by Provident funds and companies that manage Provident funds, and 172,148 ordinary shares are held by companies for the management of funds for joint investments in trusteeship, each of which subsidiaries operates under independent management and makes independent voting and investment decisions, and (ii) 214,064 are beneficially held for their own account (Nostro account). 
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As of December 29, 2017, Psagot Investment House Ltd. (“Psagot”) reported that it held 2,979,017, or 4.89%, of our ordinary shares. This information is based upon a Schedule 13G/A filed by Psagot with the SEC on February 12, 2018. These securities are beneficially owned by portfolio accounts managed by Psagot Securities Ltd., Psagot Exchange Traded Notes Ltd., mutual funds managed by Psagot Mutual Funds Ltd., and provident funds and pension funds managed by Psagot Provident Funds and Pension Ltd. managed savings managed by Psagot Insurance Company Ltd. according to the following segmentation: 1,410,642 ordinary shares are held by portfolio accounts managed by Psagot Securities Ltd., 781,272 ordinary shares are held by Psagot Exchange Traded Notes Ltd., 63,676 ordinary shares are held by mutual funds managed by Psagot Mutual Funds Ltd. (of this amount, 12,000 shares may also be considered beneficially owned by Psagot Securities Ltd., but are not included in the shares beneficially owned by Psagot Securities Ltd., as indicated above), 712,203 ordinary shares are held by provident funds and pension funds managed by Psagot Provident Funds and Pension Ltd. and 11,224 ordinary shares are held by Psagot Insurance Company Ltd. Each of the foregoing companies is a wholly-owned subsidiary of Psagot Investment House Ltd.   
To our knowledge, we are not directly or indirectly owned or controlled by another corporation or by any foreign government and there are no arrangements that might result in a change in control of our company.

Related Party Transactions

None.

Item 8.Financial Information.
A. Consolidated Statements and Other Financial Information
See Item 18, “Financial Statements” in this annual report.
Legal Proceedings

From time to time, we or our subsidiaries may be involved in legal proceedings and/or litigation arising in the ordinary course of our business. While the outcome of these matters cannot be predicted with certainty, we do not believe they, individually or in the aggregate, will have a material effect on our business, consolidated financial position, results of operations, or cash flows.

Dividends
We are not involved in any legal proceedings that we believe, individually or in the aggregate, will have a material adverse effect on our business, financial condition or results of operation, except as noted below.
Patent Lawsuit by NICE

On August 27, 2015, we initiated a lawsuit in the United States District Court for the District of Delaware by filing a complaint against ClickFox for infringement of NICE's U.S. Patent No. 8,976,955 (“the ‘955 patent”) entitled “System and method for tracking web interactions with real time analytics”. On October 11, 2017, the Court of Appeals affirmed without opinion the district court’s judgment granting ClickFox’s motion to dismiss.

California Lawsuit
In May 2009, inContact was served a lawsuit titled California College, Inc., et al., v. UCN, Inc., et al. in connection with the sale of services with those Insidesales.com, Inc.  California College originally sought damages in excess of $20.0 million. Insidesales.com and inContact filed cross-claims against one another, which they subsequently agreed to dismiss with prejudice. In October 2011, California College reached a settlement with Insidesales.com, the terms of which have not been disclosed and remain confidential. In June of 2013, California College amended its damages claim to $14.4 million, of which approximately $5.0 million was alleged to be pre-judgment interest. On September 10, 2013, the court issued an order on inContact's Motion for Partial Summary Judgment. The court determined that factual disputes exist as to several of the claims, but dismissed California College's cause of action for intentional interference with prospective economic relations and the claim for prejudgment interest. Dismissing the claim for prejudgment interest effectively reduced the claim for damages to approximately $9.2 million. The trial court granted inContact’s motion to stay the trial without date pending an interlocutory appeal to the Utah Supreme Court of the trial court’s ruling with respect to allowing California College’s experts to testify at trial. The briefs were filed in the matter and oral arguments were made in August 2017. The Utah Court of Appeals has yet to rule on the matter. At this stage we are unable to evaluate the probability of a favorable or unfavorable outcome in this litigation.
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Gordon Complaint
On June 10, 2016, a complaint captioned Natalie Gordon v. inContact, Inc., et al., was filed in the Third Judicial District Court of Salt Lake County, State of Utah (the “Court”) naming as defendants inContact and its Board of Directors (the “Gordon Action”). On August 4, 2016 the parties entered into a Memorandum of Understanding for the settlement of the three actions. The parties have completed the negotiation of the settlement agreement, and the Utah Third District Court has approved the settlement, formally dismissing this action.
Dividends
Our Board of Directors previously approved a dividend plan under which we paid quarterly cash dividends to holders of our ordinary shares and ADRs subject to declaration by the Board. The annual dividend amount under the dividend plan was $0.64 per share or $0.16 per share quarterly. Under Israeli law, dividends may be paid only out of profits and other surplus (as defined in the law) as of our most recent financial statements or as accrued over a period of two years, whichever is higher, provided that there is no reasonable concern that the dividend distribution will prevent us from meeting our existing and foreseeable obligations as they come due.
On January 6, 2017, our Board of Directors approved the termination of this dividend plan in connection with our adoption of a capital return strategy to optimize our long term growth profile. Accordingly, we do not have any plans at this time to make any future dividend payments. Payment of future dividends, if any, will be at the discretion of our Board of Directors and will depend on various factors, such as our statutory profits, financial condition, operating results and current and anticipated cash needs. In the event cash dividends are declared by us, we may
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decide to pay such dividends in Israeli currency. Under current Israeli regulations, any cash dividend in Israeli currency paid in respect of ordinary shares purchased by non-residents of Israel with non-Israeli currency may be freely repatriated in such non-Israeli currency, at the rate of exchange prevailing at the time of conversion. For more information regarding the taxation implications of the dividend plan, see “ItemItem 10, - Additional"Additional Information - Taxation” of this annual report.
B. Significant Changes
There are no significant changes that occurred since December 31, 2017,2023, except as otherwise disclosed in this annual report and in the annual consolidated financial statements included in this annual report. In January 2024, the 2017 Notes matured and were settled in the amount of $87.4 million.


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Item 9.    The Offer and Listing.
Item 9.
The Offer and Listing.
Trading in the ADSs
Our ADSs have been quoted on the NASDAQ Stock Market under the symbol “NICEV” from our initial public offering in January 1996 until April 7, 1999, and thereafter under the symbol “NICE.” Prior to that time, there was no public market for our ordinary shares in the United States. Each ADS represents one ordinary share. The following table sets forth, for the periods indicated, the high and low reported market (sale) prices for our ADSs.
  ADSs 
  High  Low 
Annual      
2013 $42.12  $33.63 
2014  51.75   37.08 
2015  68.38   47.95 
2016  69.79   54.12 
2017  92.33   65.59 
         
Quarterly        
         
Quarterly 2017        
First Quarter $70.84  $65.59 
Second Quarter  81.16   66.57 
Third Quarter  83.95   73.65 
Fourth Quarter  92.33   78.49 
         
Quarterly 2018        
First Quarter (through March 29, 2018)  98.48   84.49 
         
Monthly        
September 2017 $83.95  $77.24 
October 2017  83.78   78.49 
November 2017  88.52   81.35 
December 2017  92.33   86.01 
January 2018  95.65   90.36 
February 2018  98.06   84.49 
March 2018 (through March 29, 2018)  98.48   89.28 
On March 29, 2018, the last reported price of our ADSs was $93.93 per ADS.
JPMorgan Chase Bank, N.A. is the depositary for our ADSs. Its address is 4 New York Plaza, Floor 12, New York, New York 10004.
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Trading in the Ordinary Shares
Our ordinary shares have been listed on the Tel-Aviv Stock Exchange, or TASE, since 1991.1991 under the symbol “NICE.TA.” Our ordinary shares are not listed on any other stock exchange and have not been publicly traded outside Israel (other than through ADSs, as noted above). The table below sets forth the high and low reported market (sale) prices of our ordinary shares (in NIS and U.S. dollars) on the TASE. The translation into dollars is based on the daily representative rate of exchange published by the Bank of Israel.
  Ordinary Shares 
  High  Low 
  NIS  $  NIS  $ 
Annual            
             
2013  
149.10
   
42.21
   
122.10
   
33.27
 
2014  
203.30
   
51.94
   
130.60
   
36.90
 
2015  
262.6
   
68.76
   
189.4
   
47.95
 
2016  
268.0
   
69.76
   
207.2
   
53.29
 
2017  
320.4
   
92.28
   
239.3
   
65.58
 
                 
Quarterly 2017                
First Quarter  
269.5
   
71.19
   
239.3
   
65.58
 
Second Quarter  
288.7
   
81.44
   
240.9
   
66.66
 
Third Quarter  
289.9
   
82.48
   
263.4
   
73.36
 
Fourth Quarter  
320.4
   
92.28
   
280.9
   
79.86
 
                 
Quarterly 2018                
First Quarter  
342.9
   
99.33
   
296.0
   
84.94
 
                 
Monthly                
September 2017  
289.9
   
82.48
   
274.9
   
76.45
 
October 2017  
293.4
   
83.59
   
280.9
   
79.86
 
November 2017  
311.0
   
88.76
   
281.7
   
80.35
 
December 2017  
320.4
   
92.28
   
306.3
   
86.73
 
January 2018  
326.0
   
95.13
   
308.1
   
90.04
 
February 2018  
342.5
   
98.33
   
296.0
   
84.94
 
March 2018 (through March 29, 2018)  
342.9
   
99.33
   
312.0
   
89.65
 
As of March 29, 2018, the last reported price of our ordinary shares on the TASE was NIS 325.7 (or $92.69) per share.
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Item 10.Additional Information.
Memorandum and Articles of Association
Organization and Register
We are a company limited by shares organized in the State of Israel under the Israeli Companies Law. We are registered with the Registrar of Companies of the State of Israel and have the company number 52-0036872.
Objectives and Purposes
Our objectives and purposes include a wide variety of business purposes, including all kinds of research, development, manufacture, distribution, service and maintenance of products in all fields of technology and engineering and to engage in any other kind of business or commercial activity. Our objectives and purposes are set forth in detail in Section 2 of our memorandum of association.
Directors
Our articles of association provide that the number of directors serving on the Board shall be not less than three but shall not exceed thirteen. As discussed above in Item 6, “Directors, Senior Management and Employees – Board Practices – Outside Directors”,Directors,” in December 2016, our shareholders approved amendments to our articles of association, pursuant to which our Board of Directors may elect to opt out of such requirements and we would not be required to have outside directors serve on our Board of Directors. At this time, our Board of Directors has not made an election to opt out of such requirements. Our directors, other than outside directors, are elected at the annual shareholders meeting to serve until the next annual meeting or until their earlier death, resignation, bankruptcy, incapacity or removal by resolution of the general shareholders meeting. Directors may be re-elected at each annual shareholdersshareholders’ meeting. The Board may appoint additional directors (whether to fill a vacancy or create new directorship) to serve until the next annual shareholders meeting, provided,
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however, that the Board shall have no obligation to fill any vacancy unless the number of directors is less than three. Our officers serve at the discretion of the Board.
The Board of Directors may meet and adjourn its meetings according to the Company’s needs but must meet at least once every three months. A meeting of the Board may be called at the request of any two directors. The quorum required for a meeting of the Board consists of a majority of directors who are lawfully entitled to participate in the meeting and vote thereon. The adoption of a resolution by the Board requires approval by a simple majority of the directors present at a meeting in which such resolution is proposed. In lieu of a Board meeting, a resolution may be adopted if all of the directors lawfully entitled to vote thereon consent not to convene a meeting.
Subject to the Israeli Companies law, the Board may appoint a committee of the Board and delegate to such committee all or any of the powers of the Board, as it deems appropriate. Under the Israeli Companies Law, the Board of Directors must appoint an internal audit committee comprised of at least three directors. The function of the internal audit committee is to review irregularities in the management of the Company’s business and recommend remedial measures. The committee is also required, under the Israeli Companies Law, to approve certain related party transactions and to assess our internal audit system and the performance of our internal auditor. Notwithstanding the foregoing, the Board may, at any time, amend, restate or cancel the delegation of any of its powers to any of its committees. The Board has appointed an internal audit committee which has three members, an audit committee which has five members, a compensation committee which has five members, a nominations committee which has two members and a mergers and acquisitions committee which has six members. For more information on the Company’s committees, please see Item 6,6C., “Directors, Senior Management and Employees—Board Practices” in this annual report.
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Fiduciary Duties of Officers
The Israeli Companies Law codifies the fiduciary duties that “office holders,” including directors and executive officers, owe to a company. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of loyalty includes avoiding any conflict of interest between the office holder’s position in the company and his personal affairs, avoiding any competition with the company, avoiding exploiting any business opportunity of the company in order to receive personal advantage for himself or others, and revealing to the company any information or documents relating to the company’s affairs which the office holder has received due to his position as an office holder.

Approval of Certain Transactions

The Israeli Companies Law requires that an office holder of a company promptly disclose any personal interest that he or she may have and all related material information known to him or her, in connection with any existing or proposed transaction by the company. In addition, if the transaction is an extraordinary transaction as defined under Israeli law, the office holder must also disclose any personal interest held by the office holder’s spouse, siblings, parents, grandpar-ents,grandparents, descendants, spouse’s descendants and the spouses of any of the foregoing. In addition, the office holder must also disclose any interest held by any corporation in which the office holder is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one director or the general manager. An extraordinary transaction is defined as a transaction not in the ordinary course of business, not on market terms, or that is likely to have a material impact on the company’s profitability, assets or liabilities.

In the case of a transaction which is not an extraordinary transaction, after the office holder complies with the above disclosure requirement, only Board approval is required unless the articles of association of the company provide otherwise. The transaction must not be adverse to the company’s interest. Furthermore, if the transaction is an extraordinary transaction, then, in addition to any approval stipulated by the articles of association, it also must be approved by the company’s internal audit committee and then by the Board of Directors, and, under certain circumstances, by a meeting of the shareholders of the company. An office holder who has a personal interest in a transaction that is considered at a meeting of the Board of Directors or the internal audit committee generally may not be present at the deliberations or vote on this matter, unless the chairman of the Board or chairman of the internal audit committee, as the case may be, determined that the presence of such person is necessary to present the transaction to the meeting. If a majority of the directors have a personal interest in an extraordinary transaction with the company, shareholder approval of the transaction is required.
It is the responsibility of the audit committee to determine whether or not a transaction should be deemed an extraordinary transaction. In addition, as a result of a recent amendment to the Israeli Companies Law, the audit committee must also establish (i) procedures for the consideration of any transaction with a controlling shareholder, even if it is not extraordinary, such as a competitive process with third parties or
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negotiation by independent directors, and (ii) approval requirements for controlling shareholder transactions that are not negligible. 
The Israeli Companies Law applies the same disclosure requirements to a controlling share-holdershareholder of a public company, which includes a shareholder that holds 25% or more of the voting rights if no other shareholder owns more than 50% of the voting rights in the company. Extraor-dinaryExtraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, and the terms of management fees of a controlling shareholder or compensation of a controlling shareholder who is an office holder, require the approval of the audit committee, the Board of Directors and the shareholders of the company by simple majority; provided that either such majority vote must include at least a simple majority of the shareholders who have no personal interest in the transaction and are present at the meeting (without taking into account the votes of the abstaining shareholders), or that the total shareholdings of those who have no personal interest in the transaction who vote against the transaction represent no more than two percent of the voting rights in the company. Any such extraordinary transaction whose term is longer than three years requires further shareholder approval every three years, unless (with respect to transactions not involving management fees or employment terms) the internal audit committee approves that a longer term is reasonable under the circumstances.
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In addition, under the Israeli Companies Law, a private placement of securities requires approval by the Board of Directors and the shareholders of the company if it will cause a person to become a controlling shareholder or if:

•the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;
·the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;
•some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
•the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.
·some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
·the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.

According to the Company’s articles of association, certain resolutions, such as resolutions regarding mergers and windings up, require approval of the holders of 75% of the shares represented at the meeting and voting thereon.

Approval of Office Holder Compensation

Under the Israeli Companies Law, we are required to adopt a compensation policy, recommended by the compensation committee, and approved by the Board of Directors and the shareholders, in that order, at least once every three years. Following the recommendation of our compensation committee and approval by our Board of Directors, our shareholders approved such compensation policy at our 2013 annual general meeting of shareholders held on August 27, 2013, and an amended compensation policy at our 2015 annual general meeting of shareholders held on July 9, 2015. At the Company's special general meeting held on December 21, 2016, following the recommendation of our compensation committee and approval by our Board of Directors, our shareholders approved certain amendments to the current compensation policy. The shareholder approval requires a majority of the votes cast by shareholders, excluding any controlling shareholder and those who have a personal interest in the matter (similar to the threshold described above). Our current Compensation Policy was approved by our shareholders at our 2023 annual general meeting. In general, all office holders’ terms of compensation – including fixed remuneration, bonuses, equity compensation, retirement or termination payments, indemnification, liability insurance and the grant of an exemption from liability - must comply with the company's compensation policy.Company’s Compensation Policy. Although NASDAQ rules generally require shareholder approval when an equity basedequity-based compensation plan is established or materially amended, as a foreign company we follow the aforementioned requirements of the Israeli Companies Law.
In addition, the compensation terms of directors, the chief executive officer, and any employee or service provider who is considered a controlling shareholder generally must be approved separately by the compensation committee, the Board of Directors and the shareholders of the company, in that order. Notwithstanding, a company'scompany’s compensation committee and board of directors are permitted to approve the compensation terms of a chief executive officer or of a director, without convening a general meeting of shareholders, provided however, that such terms: (1) are not more beneficial than such officer’s former terms or than the terms of his predecessor, or are essentially the same in their effect; (2) are in line with the compensation policy;Compensation Policy; and (3) are brought for shareholder approval at the next general meeting of shareholders.
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The compensation terms of other officers require the approval of the compensation committee and the Board of Directors. An amendment of existing compensation terms of an office holder who is not a director, if the compensation committee determines that the amendment is not material, requires the approval of the compensation committee only. Pursuant to a recent amendment to regulations promulgated under the Israeli Companies Law, governing the relaxation in transactions with interested parties - an amendment of the existing compensation terms of
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office holders who are subordinate to the chief executive officer, if the amendment is not material and the changes are in line with the existing compensation policy,Compensation Policy, requires only the chief executive officer’s approval (in accordance to such amendment, on December 21, 2016,approval. Under our shareholders approved an amendment to the compensation policy, which providedCompensation Policy, our Chief Executive Officer the authorityis authorized to approve non-material changes to the compensation terms of office holders subordinated to him, without seeking the approval of the compensation committee).committee.

The Compensation Policy sets forth the guidelines for the compensation of our office holders. It is tailored to ensure a compensation which balances performance targets and time horizons through rewarding business results and long-term performance. The Compensation Policy requires that compensation of our office holders include a mix of fixed amounts (such as annual based salaries), variable performance-based components (such as performance-based cash incentive compensation), and long term incentive components (such as long-term equity-based compensation, including performance- based equity). Pursuant to the Compensation Policy, performance-based compensation granted may be based on our overall performance, the particular unit performance, individual performance and the results of the customer satisfaction survey conducted annually. Our Compensation Policy includes applicable clawback provisions and references the Company's compensation recovery policy adopted pursuant to the recent NASDAQ listing rules in response to Exchange Act Rule 10D-1.

Duties of Shareholders

Under the Israeli Companies Law, a shareholder has a duty to act in good faith towards the company and other shareholders and to refrain from abusing his or her power in the company including, among other things, voting in a general meeting of shareholders on the following matters:

•any amendment to the articles of association;
·any amendment to the articles of association;
•an increase of the company’s authorized share capital;
•a merger; or
·an increase of the company’s authorized share capital;
•approval of interested party transactions which require shareholder approval.
·a merger; or
·approval of interested party transactions which require shareholder approval.

In addition, any controlling shareholder, any shareholder who knows that it possesses power to determine the outcome of a shareholder vote and any shareholder who, pursuant to the provisions of a company’s articles of association, has the power to appoint or prevent the appointment of an office holder in the company, is under a duty to act with fairness towards the company. The Israeli Companies Law does not describe the substance of this duty but provides that a breach of his duty is tantamount to a breach of fiduciary duty of an officer of the company.

Exemption, Insurance and Indemnification of Directors and Officers

We provide our directors with indemnification letters whereby we agree to indemnify them to the fullest extent permitted by law. On September 19, 2011, at our 2011 annual general meeting of shareholders, after the approval of the audit committee and the Board, our shareholders approved a modified form of indemnification letter to ensure that our directors are afforded protection to the fullest extent permitted by law.

Exemption of Office Holders

Under the Israeli Companies Law, an Israeli company may not exempt an office holder from liability for breach of his duty of loyalty but may exempt in advance an office holder from liability to the company, in whole or in part, for a breach of his duty of care (except in connection with distributions), provided the articles of association of the company allow it to do so. Our articles of association do not allow us to do so.
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Office Holder Insurance

Our articles of association provide that, subject to the provisions of the Israeli Companies Law, including the receipt of all approvals as required therein or under any applicable law, we may enter into an agreement to insure an office holder for any responsibility or liability that may be imposed on such office holder in connection with an act performed by such office holder in such office holder'sholder’s capacity as an office holder of us with respect to each of the following:
•a violation of his duty of care to us or to another person;
•a breach of his duty of loyalty to us, provided that the office holder acted in good faith and had reasonable grounds to assume that his act would not prejudice our interests;
·a violation of his duty of care to us or to another person,
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·a breach of his duty of loyalty to us, provided that the office holder acted in good faith and had reasonable grounds to assume that his act would not prejudice our interests,
·a financial obligation imposed upon him for the benefit of another person,
·a payment which the office holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 5728-1968, as amended (the "Securities Law") and Litigation Expenses (as defined below) that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, and
·any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder.


•a financial obligation imposed upon him for the benefit of another person;
•a payment which the office holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 5728-1968, as amended (the “Securities Law”) and Litigation Expenses (as defined below) that the office holder incurred in connection with a proceeding under Chapters H’3, H’4 or I’1 of the Securities Law; and
•any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder.
Indemnification of Office Holders

Our articles of association provide that, subject to the provisions of the Israeli Companies Law, including the receipt of all approvals as required therein or under any applicable law we may indemnify an office holder with respect to any liability or expense for which indemnification may be provided under the Israeli Companies Law, including the following liabilities and expenses, provided that such liabilities or expenses were imposed upon or incurred by such office holder in such office holder'sholder’s capacity as an office holder of us:

•a monetary liability imposed on or incurred by an office holder pursuant to a judgment in favor of another person, including a judgment imposed on such office holder in a settlement or in an arbitration decision that was approved by a court of law;
·a monetary liability imposed on or incurred by an office holder pursuant to a judgment in favor of another person, including a judgment imposed on such office holder in a settlement or in an arbitration decision that was approved by a court of law;
•reasonable Litigation Expenses, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent (mens rea) or in connection with a financial sanction;
•“conclusion of a proceeding without filing an indictment” in a matter in which a criminal investigation has been instigated and “financial liability in lieu of a criminal proceeding,” have the meaning ascribed to them under the Israeli Companies Law. The term “Litigation Expenses” shall include, without limitation, attorneys’ fees and all other costs, expenses and obligations paid or incurred by an office holder in connection with investigating, defending, being a witness or participating in (including on appeal), or preparing to defend, be a witness or participate in any claim or proceeding relating to any matter for which indemnification may be provided;
·
reasonable Litigation Expenses, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent (mens rea) or in connection with a financial sanction;
•reasonable Litigation Expenses, which the office holder incurred or with which the office holder was charged by a court of law, in a proceeding brought against the office holder, by the Company, on its behalf or by another person, or in a criminal prosecution in which the office holder was acquitted, or in a criminal prosecution in which the office holder was convicted of an offense that does not require proof of criminal intent (mens rea);
•a payment which the office holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law, and Litigation Expenses that the office holder incurred in connection with a proceeding under Chapters H’3, H’4 or I’1 of the Securities Law; and
·“conclusion of a proceeding without filing an indictment” in a matter in which a criminal investigation has been instigated and “financial liability in lieu of a criminal proceeding,” have the meaning ascribed to them under the Israeli Companies Law. The term “Litigation Expenses” shall include, without limitation, attorneys’ fees and all other costs, expenses and obligations paid or incurred by an office holder in connection with investigating, defending, being a witness or participating in (including on appeal), or preparing to defend, be a witness or participate in any claim or proceeding relating to any matter for which indemnification may be provided;
•any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder.
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·
reasonable Litigation Expenses, which the office holder incurred or with which the office holder was charged by a court of law, in a proceeding brought against the office holder, by the Company, on its behalf or by another person, or in a criminal prosecution in which the office holder was acquitted, or in a criminal prosecution in which the office holder was convicted of an offense that does not require proof of criminal intent (mens rea);
·a payment which the office holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law, and Litigation Expenses that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law; and
·any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder.

The foregoing indemnification may be procured by us (a) retroactively and (b) as a commitment in advance to indemnify an office holder, provided that, in respect of the first bullet above, such commitment shall be limited to (A) such events that in the opinion of the Board of Directors are foreseeable in light of our actual operations at the time the undertaking to indemnify is provided, and (B) to the amounts or criterion that the Board of Directors deems reasonable under the circumstances; and further provided that such events and amounts or criterion are set forth in the undertaking to indemnify, and which shall in no event exceed, in the aggregate, the greater of: (i) 25% of our shareholder’s equity at the time of the indemnification or (ii) 25% of our shareholder’s equity at the end of fiscal year of 2010.
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We have undertaken to indemnify our directors and officers pursuant to applicable law. Welaw and we have obtained directors' and officers' liability insurance for the benefit of our directors and officers. The Company currently has a directors and officers liability insurance policy limited to $100 million (the “Policy”), at an annual premium of approximately $360,664. Our internal audit committee, Board of Directors, and shareholders have approved the Company’s “Side A” Difference in Conditions extension of the Policy, limited to an additional $25 million, which provides the directors and officers with personal asset protection in situations when other sources of insurance or indemnification fail or are not available (the “Extended Policy”). The Extended Policy portion is at an additional annual premium of approximately $50,000.

Limitations on Exemption, Insurance and Indemnification

The Israeli Companies Law provides that a company may not exempt or indemnify an office holder, or enter into an insurance contract, which would provide coverage for any monetary liability incurred as a result of any of the following:

•a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
·a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
•a breach by the office holder of his duty of care if the breach was done intentionally or recklessly (other than if solely done in negligence);
•any act or omission done with the intent to derive an illegal personal benefit; or
·a breach by the office holder of his duty of care if the breach was done intentionally or recklessly (other than if solely done in negligence);
•a fine, civil fine or ransom levied on an office holder, or a financial sanction imposed upon an office holder under Israeli Law.
·any act or omission done with the intent to derive an illegal personal benefit; or
·a fine, civil fine or ransom levied on an Office Holder, or a financial sanction imposed upon an Office Holder under Israeli Law.
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Required Approvals

In addition, under the Israeli Companies Law, any exemption of, indemnification of, or procurement of insurance coverage for, our office holders must be approved by our audit committeeAudit Committee and our Board of Directors and, if the beneficiary is the chief executive officer or a director, by our shareholders. We have obtained such approvals for the procurement of liability insurance covering our officers and directors and for the grant of indemnification letters to our officers and directors.

Rights of Ordinary Shares
Our ordinary shares confer upon our shareholders the right to receive notices of, and to attend, shareholder meetings, the right to one vote per ordinary share at all shareholders’ meetings for all purposes, and to share equally, on a per share basis, in such dividends as may be declared by our Board of Directors; and upon liquidation or dissolution, the right to participate in the distribution of any surplus assets of the Company legally available for distribution to shareholders after payment of all debts and other liabilities of the Company. All ordinary shares rank pari passu in all respects with each other. Our Board of Directors may, from time to time, make such calls as it may think fit upon a shareholder in respect of any sum unpaid in respect of shares held by such shareholder which is not payable at a fixed time, and each shareholder shall pay the amount of every call so made upon him (and of each installment thereof if the same is payable in installments).
Meetings of Shareholders
An annual general meeting of our shareholders shall be held once in every calendar year at such time and at such place either within or without the State of Israel as may be determined by our Board of Directors.
Our Board of Directors may, whenever it thinks fit, convene a special general meeting at such time and place, within or without the State of Israel, as may be determined by the Board of Directors. Special general meetings may also be convened upon shareholder request in accordance with the Israeli Companies Law and our articles of association.
The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy who hold or represent between them at least 25% of the outstanding voting shares, unless otherwise required by applicable rules. Although NASDAQ generally requires a quorum of 33-1/3%, we havesubject to an exceptionexemption under the NASDAQ rules andwe follow the generally accepted business practice for companies in Israel, which have a quorum requirement of 25%. A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place or any time and place as the chairman may designate with the consent of a majority of the voting power represented at the meeting and voting on the matter adjourned. At such reconvened meeting, the required quorum consists of any two members present in person or by proxy.
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Mergers and Acquisitions
A merger of the Company shall require the approval of the holders of a majority of 75% of the voting power represented at the annual or special general meeting in person or by proxy or by written ballot, as shall be permitted, and voting thereon in accordance with the provisions of the Israeli Companies Law. Upon the request of a creditor of either party of the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger. In addition, a merger may not be completed unless at least (i) 50 days have passed from the time that the requisite proposal for the merger has been filed by each party with the Israeli Registrar of Companies and (ii) 30 days have passed since the merger was approved by the shareholders of each party.
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The Israeli Companies Law also provides that an acquisition of shares of a public company must be made by means of a tender offer if, as a result of the acquisition, the purchaser would become a 25% or greater shareholder of the company and there is no existing 25% or greater shareholder in the company. An acquisition of shares of a public company must be made by means of a tender offer if, as a result of the acquisition, the purchaser would become ahold more than 45% or greater shareholder of the company and there is no existing shareholder of more than 45% or greater shareholder in the company. These requirements do not apply if the acquisition (i) occurs in the context of a private placement by the company that received shareholder approval for the purpose of reaching such threshold, (ii) was from a 25% shareholder of the company and resulted in the acquirer becoming a 25% shareholder of the company or (iii) was from a greater than 45% shareholder of the company and resulted in the acquirer becoming a greater than 45% shareholder of the company. The tender offer must be extended to all shareholders, but the offeror is not required to purchase more than 5% of the company’s outstanding shares, regardless of how many shares are tendered by shareholders. The tender offer may be consummated only if (i) at least 5% of the company’s outstanding shares will be acquired by the offeror and (ii) the number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer.
If as a result of an acquisition of shares the acquirer will hold more than 90% of a company’s outstanding shares, the acquisition must be made by means of a tender offer for all of the outstanding shares. If as a result of a full tender offer the acquirer would own more than 95% of the outstanding shares, then all the shares that the acquirer offered to purchase will be transferred to it. The law provides for appraisal rights if any shareholder files a request in court within six months following the consummation of a full tender offer, but the acquirer is entitled to stipulate that tendering shareholders forfeit their appraisal rights. If as a result of a full tender offer the acquirer would own 95% or less of the outstanding shares, then the acquirer may not acquire shares that will cause his shareholding to exceed 90% of the outstanding shares. Shareholders may request an appraisal in connection with a tender offer for a period of six months following the consummation of the tender offer, but the purchaser is entitled to stipulate as a condition of such tender offer that any tendering shareholder renounce its appraisal rights.
Material Contracts
Nexidia Acquisition Agreement

On January 11, 2016, we entered into an Agreement and Plan of Merger to acquire Nexidia, a leading provider of advanced customer analytics. We acquired Nexidia for total consideration of approximately $135.0 million in cash. The acquisition allows us to offer a combined offering, featuring analytics capabilities with accuracy, scalability and performance, enabling organizations to expand their analytics usage in critical business use cases. Organizations will benefit from the combined offering, which features a best-in-class, analytics-based solution.
inContact Acquisition Agreement

On May 17, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with inContact Inc. and Victory Merger Sub Inc., a wholly owned subsidiary of ours (the “Merger Sub”). On November 14, 2016, pursuant to the terms of the Merger Agreement, Merger Sub merged with and into inContact, with inContact surviving the merger as a wholly owned subsidiary of ours. At the effective time of the merger, each outstanding share of inContact common stock (the “inContact Shares”) (other than (i) shares owned by inContact or us, (ii) for which inContact stockholders exercised appraisal rights under Delaware law, or (iii) outstanding restricted stock) was cancelled and converted into the right to receive $14.00, without interest. Also, at the effective time of the merger, outstanding vested inContact RSUs and stock options were cancelled in exchange for the right to receive in cash (a) in the case of RSUs, $14.00 for each inContact share subject to such vested RSU, less any required tax withholding, and (b) in the case of stock options, the excess, if any, of $14.00 over the applicable per share exercise price for each inContact share underlying a vested stock option, less any required tax withholding. Additionally, outstanding unvested inContact RSUs, stock options and restricted stock at the effective time of the merger were cancelled and converted into RSUs with ADSs to be received upon settlement, options to acquire ADSs and restricted ADSs, respectively, in each case with the number of ADSs subject to such award (and in the case of options, the exercise price) adjusted pursuant to an exchange ratio determined based upon the average closing price of ADSs for the ten trading days immediately preceding the closing date for the transaction. Other than the number of ADSs subject to such unvested equity awards (and in the case of options, the adjusted exercise price), the unvested equity awards remain subject to the same terms and conditions that the cancelled equity awards were subject to, including as to vesting and settlement.
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Credit Agreement

On November 14, 2016, in connection with the consummation of the inContact acquisition, we and Nice Systems entered into a secured Credit Agreement with the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. The Credit Agreement provides for a term loan facility of $475 million and a revolving facility of $75 million. The Credit Agreement is guaranteed by most of our Israeli and U.S. material subsidiaries, including NICE Systems, and secured by substantially all assets of our and the guarantors assets, subject to certain customary exceptions.
Unless terminated earlier, loans outstanding under the term loan facility mature and commitments under the revolving facility expire on November 14, 2021. The term loan amortizes in equal quarterly installments in annual amounts (expressed as percentages of the loans made under the term loan facility on November 14, 2016 (the initial funding date of the term loan facility)) at the repayment rate of 1.25% during the period from March 2017 to December 2019 and 2.50% during the period from March 2020 to September 2021, with the remaining balance due on the final maturity date of the term loan facility.
We have the right to prepay borrowings under the Credit Agreement and to reduce the unutilized portion of the revolving credit facility, in each case, at any time without premium or penalty (except for Eurodollar breakage fees, if any). In January 2017, we used the net proceeds of the Notes offering described below to repay a principal amount of $260 million, which resulted in $5.3 million amortization of debt issuance costs. In addition, the contractual principal payments for the long term loan have changed and we will pay the entire remaining principal of $215 million on the final maturity date of the term loan facility. We are required to prepay borrowings under the term loan facility with all of the net cash proceeds of sales or dispositions of assets or other property, subject to certain reinvestment rights and other exceptions. The interest rates under the Credit Agreement are variable based on LIBOR or an alternate base rate at the time of the borrowing, plus a margin to be determined based on our leverage as measured by a ratio of consolidated total net indebtedness to consolidated EBITDA (the “Consolidated Total Net Leverage Ratio”) and ranging from 1.25% to 2.00%, in the case of LIBOR rate loans, or 0.25% to 1.00%, in the case of base rate loans. A commitment fee will accrue on the average daily unused portion of the revolving facility at the rate ranging from 0.25% to 0.50%, depending on the Consolidated Total Net Leverage Ratio, and is initially set at 0.375% per annum.
The Credit Agreement contains customary covenants, which include, among others, limitations or restrictions on the incurrence of indebtedness, the incurrence of liens and entry into sales and leaseback transactions, mergers, transfers, leases, licenses, sublicenses or dispositions of any asset, including any Equity Interest (as defined in the Credit Agreement) owned by us or any of our subsidiaries, transactions with affiliates and certain transactions limiting the ability of subsidiaries to pay dividends, in each case, subject to certain exceptions. The Credit Agreement also includes a requirement, to be tested quarterly, that we maintain a Consolidated Total Net Leverage Ratio, as of the last day of any fiscal quarter ending on or after March 31, 2017 and on or prior to December 31, 2018, that does not exceed 3.00 to 1.00 and as of the last day of any fiscal quarter ending thereafter, does not exceed 2.50 to 1.00. For these ratios, consolidated EBITDA and consolidated interest expense are calculated in a manner defined in the Credit Agreement. The Credit Agreement also includes customary events of defaults.
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Notes and Indenture

2017 Notes and Indenture

On January 18, 2017, NICE Systems Inc., a wholly owned subsidiary of the Company ("NICE Systems"), issued $287.5 million aggregate principal amount of the Notes.1.25% exchangeable senior notes due 2024(the "2017 Notes"). The 2017 Notes arewere the general unsecured obligations of NICE Systems, guaranteed by us. The sale of the Notes generated net proceeds of approximately $260.1 million. The 2017 Notes were issued pursuant to an indenture (the “Indenture”“2017 Indenture”) among us, NICE Systems and the Trustee.

On December 31, 2021, the Company entered into the First Supplemental Indenture. In accordance with the First Supplemental Indenture, the Company settled certain exchangeable notes by way of a Cash Settlement (as defined in the 2017 Indenture).

The 2017 Notes fully matured on January 15, 2024 and were settled in cash in the amount of $87.4 million.


2020 Notes and Indenture

On August 27, 2020, we issued $400 million aggregate principal amount of 0% exchangeable senior notes due 2025 (the “2020 Notes” and together with the 2017 Notes, the “Notes”) and on September 4, 2020, we issued an additional $60 million of the 2020 Notes pursuant to the exercise of the initial purchasers’ option. The 2020 Notes are general unsecured
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obligations of the Company. The sale of the 2020 Notes generated net proceeds of approximately $451 million. The 2020 Notes were issued pursuant to an indenture (the “2020 Indenture” and collectively with the 2017 Indenture, the "Indentures") between us and U. S. Bank National Association, as trustee (the “trustee”“Trustee”).

The 2020 Notes do not bear regular interest, at a fixed rateand the principal amount of 1.25% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2017.the 2020 Notes does not accrete. The 2020 Notes will mature on JanuarySeptember 15, 2024,2025, unless earlier prepaid, redeemed or exchanged,converted, and are not redeemable at NICE Systems’our option prior to their maturity date,September 21, 2023, except in the event of certain tax law changes.
Subject We may redeem for cash all or any portion of the 2020 Notes, at our option, on or after September 21, 2023 if the last reported sale price of the ADSs has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. In the case of any redemption, the redemption price will be equal to satisfaction100% of the principal amount of the 2020 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. A holder may convert its 2020 Notes at its option at any time prior to the close of business on the business day immediately preceding June 15, 2025 in the event certain conditions andare met during certain periods,set periods. On or after June 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert its 2020 Notes at the option of the holders the Notes are exchangeable for (atany time.

Upon conversion, we, at our election)election, can pay or deliver (i) cash, (ii) ADSs or (iii) a combination thereof. The exchangeconversion rate waswill initially set at 12.0260be 3.3424 ADSs per $1,000 principal amount of 2020 Notes (equivalent to an initial exchangeconversion price of approximately $83.15$299.19 per ADS). The exchangeconversion rate iswill be subject to adjustment in some events. In addition, following certain corporate events that occur prior to the maturity date or NICE Systems’our delivery of a notice of tax redemption, inthe Company will under certain circumstances, NICE Systems will increase the exchangeconversion rate for a holder who elects to exchangeconvert its 2020 Notes in connection with such a corporate event or taxto convert its 2020 Notes called for redemption in connection with such notice of redemption, as the case may be.

If we undergo a fundamental change, holders of the 2020 Notes will have the right to require us to repurchase all or NICE Systems undergoa portion of their 2020 Notes upon the occurrence of a fundamental change (as defined in the 2020 Indenture), holders may require NICE Systems to prepay for cash all or part of their Notes at a prepaymentcash repurchase price equal to 100% of the principal amount of the 2020 Notes to be prepaid,repurchased, plus any accrued and unpaid interest, if any, to, but excluding the fundamental change prepaymentrepurchase date.

The Indenture containsIndentures contain customary events of default. Indefault, including a default in the casepayment of an event ofprincipal or interest when due, default arising fromin compliance with the covenants set forth therein, and certain events of bankruptcy, insolvency or reorganization, with respectreorganization.

On December 31, 2021, the Company irrevocably elected that all conversions occurring on or after December 31, 2021 will be settled pursuant to us, NICE Systems or any of our subsidiaries that is a significant subsidiaryCombination Settlement (as defined in the 2020 Indenture), all outstanding Notes will become due and payable immediately without further action or notice. If any other event of default, other with a Specified Dollar Amount (as defined in the 2020 Indenture) no less than for the failure to file reports described below, occurs and is continuing, then the Trustee or the holders of at least 25% in$1,000 per $1,000 principal amount of 2020 Notes. Generally, under this settlement method, the then outstanding Notes may declare the Notesconversion value corresponding to be due and payable. The Indenture further provides that with respect to an event of default arising from the Company’s failure to comply with the obligations to timely file any document or report that it is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as applicable, we may elect to pay additional interest on the Notes as the sole remedy for such event of default during the period indicated below. Additional interest will accrue on the Notes at a rate equal to (i) 0.25% per annum of the principal amount ofwill be converted in cash, and the Notes outstanding for each day during the period beginning on, and including, the date on which such event of default first occurred and ending on the earlier of (x) the date on which such event of default is cured or validly waived and (y) the 90th day immediately following, and including, the date on which such event of default first occurred and (ii) if such event of default has not been cured or validly waived prior to the 91st day immediately following, and including, the date on which such event of default first occurred, 0.50% per annum ofconversion value over the principal amount of notes outstanding for each day duringwill be settled, at the period beginning on, and including, the 91st day immediately following, and including, the date on which such event of default first occurred and ending on the earlier of (x) the date on which the event of default is curedCompany’s election, in cash or validly waived and (y) the 180th day immediately following, and including, the date on which such event of default first occurred.shares or a combination thereof.


Exchange Controls

Holders of ADSs are able to convert dividends and liquidation distributions into freely repatriable non-Israeli currencies at the rate of exchange prevailing at the time of repatriation, pursuant to regulations issued under the Currency Control Law, 5738–1978, provided that Israeli income tax has been withheld by us with respect to amounts that are being repatriated to the extent applicable or an exemption has been obtained.
Our ADSs may be freely held and traded pursuant to the General Permit and the Currency Control Law. The ownership or voting of ADSs by non-residents of Israel except with respect to citizens of countries that are in a state of war with Israel, are not restricted in any way by our memorandum of association or articles of association or by the laws of the State of Israel.
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Israel, except subjects of a country deemed an “enemy country” under Israeli legislation or persons or individuals on weapon of mass destruction or terror sanctions lists.
Taxation
The following is a discussion of Israeli and United States tax consequences material to our shareholders. The discussion is not intended, and should not be construed, as legal or professional tax advice and does not exhaust all possible tax considerations.
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Holders of our ADSs should consult their own tax advisors as to the United States, Israeli or other tax consequences of the purchase, ownership and disposition of our ADSs, including, in particular, the effect of any foreign, state or local taxes.
Israeli Tax Considerations
The following is a summary of both the principalgeneral corporate tax laws applicable to companies in Israel, with special reference to their effect on us. The following also containsus, and a discussion of the material Israeli tax consequences to purchasersholders of our ordinary shares or ADSs.ADSs related to our domicile in Israel. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investorholder in light of his or her personal investment circumstances or to some types of investorsholders subject to special treatment under Israeli law. To the extent that the discussion is based on new tax legislation which has not been subject to judicial or administrative interpretation, we cannot assure you that the views expressed in the discussion will be accepted by the appropriate tax authorities or the courts. The discussion is not intended, and should not be construed, as a legal or professional tax advice and is not exhaustive of all possible tax considerations.

General Corporate Tax Structure

Taxation in Israel
Generally, Israeli companies are subject to corporate tax on taxable income, including capital gains, at the rate of 25% for the 2016 tax year, 24% for the 2017 tax year and 23% for the 2018 tax year2023 and thereafter.
Israeli companies are generally subject to capital gains tax at the corporate tax rate.2024. However, the effective tax rate payable by a company that generates income qualifyingis eligible for tax benefits under the Israeli Law for the Encouragement of Capital Investments-1959 (the "Investments Law"), and in particular the 12% rate under the Preferred Technology Enterprise regime (as discussed below), may be considerably less.
We are permitted to measure our Israeli taxable income in U.S. dollars pursuant to regulations published by the Israeli Minister of Finance, which provide the conditions for doing so. We believe that we meet, and will continue to meet, the necessary conditions and as such, we measure our results for tax purposes based on the U.S. dollar/NIS exchange rate on December 31 of the relevant tax year.
Tax Benefits under the Israeli Law for the Encouragement of Capital Investments, 1959, as amended.
WePursuant to Investments Law and its various amendments, under which both the Company and its Israeli subsidiary have been granted “Approved Enterprise” status, we have derived and expect to continue to derive significant tax benefits in Israel relating to our “Approved, Privileged, and Preferred Enterprise” programs for which we were eligible up to and including the 2016 tax year, and relating to the newly introduced Preferred Technological Enterprise program for the 2017 and subsequent tax years, pursuant to the Law for Encouragement of Capital Investments-1959 (the “Investments Law”), including its various amendments.years. To be eligible for these tax benefits, onea beneficiary must continue to meet certain conditions. In the event we are considered as havingto have failed to comply with these conditions, in whole or in part, the eligibility for the benefits may be canceled and we may be required to refund the relevant amount, including interest and inflation adjustments.adjustments. As of December 31, 2017,2023, we believe that we are in compliance with all the conditions required by the Investments Law.
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For the 2013 through 2016 tax years, our Israeli entities were eligible for benefits under the “Preferred Enterprise” regime, which included the following benefits:
·A reduced flat corporate tax rate for industrial enterprises, provided that more than 25% of their annual income was derived from export. In 2016 the reduced tax rate was 16% for industrial facilities located in Israel (except for Development Area A).
·The reduced tax rates applied on “Preferred Income” were not contingent upon making a minimum qualifying investment in productive assets.
·A reduced dividend withholding tax rate of 15% for tax year 2013, and 20% for tax year 2014 and thereafter on dividends paid from Preferred Income to both Israeli and non-Israeli investors, with an exemption from such withholding tax applying to dividends paid to an Israeli company.

In December 2016, the Israeli Knesset passed a number of changes to the Investments Law. These changes became retroactively effective beginning January 1, 2017, following promulgation of Regulations by the Finance Ministry in May 2017 to implement the “Nexus Principles” based on OECD guidelines published as part of the Base Erosion and Profit Shifting (BEPS) project. The Regulations provide rules for implementation of the new tax regime, thatwhich applies to usboth the Company and its Israeli subsidiary, effective from the 2017 tax year and onwards.
Benefits under the new “Preferred Technology Enterprise” regime effectiveinclude:
•A reduced 12% corporate tax rate (or 7.5% for entities located in Development Area A) on qualifying income deriving from eligible intellectual property (“Preferred Technology Income”), subject to a number of base conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditures and R&D employees, as well as having at least 25% of annual income derived from export;
•A 12% capital gains tax rate on the 2017sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more; and subsequent
•A withholding tax years, will include:rate of 20% for dividends paid from Preferred Technology Income (with an exemption from such withholding tax applying to dividends paid to an Israeli company). Such rate may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity.
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·A reduced 12% corporate tax rate (or 7.5% for entities located in Development Area A) on qualifying income deriving from eligible intellectual property (“Preferred Technology Income”), subject to a number of base conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from export.
The above rates may be reduced by an applicable double tax treaty, subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate.
·A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 Million or more.
·A withholding tax rate of 20% for dividends paid from Preferred Technology Income (with an exemption from such withholding tax applying to dividends paid to an Israeli company). Such rate may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity.

The effective tax rate applying to our Preferred Technology Enterprise is calculated based on the Nexus Principals introduced by the OECD,Principles, taking into account eligible and ineligible R&D expenses incurred by us, as prescribed in the Regulations.
Income from sources other than the Preferred Technology Income are taxable at regular corporate tax rates.rates of 23% for 2023 and 2024.
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Full details regarding our Preferred and Preferred Technology Enterprises may be found in Note 12(a)13(a)(1) of our Consolidated Financial Statements.consolidated financial statements.
Tax Benefits and Grants for Research and Development

Israeli tax law allows, under specified conditions, a tax deduction for expenditures, including capital expenditures, for the year in which they are incurred. These expenses must relate to scientific research and development projects and must be approved by the relevant Israeli government ministry, determined by the field of research, and the research and development must be conducted for the promotion of the company and carried out by or on behalf of the company seeking such deduction. However, the amount of such deductible expenses shall beis reduced by the sum of any funds received through government grants for the financing of such scientific research and development projects. No deduction is allowed if it is related to an expense invested in an asset depreciable under the general depreciation rules of the Tax Ordinance. Expenditures not so approved, but otherwise qualifying for deduction, are deductible over a three‑year period.
Tax Benefits under the Law for the Encouragement of Industry (Taxes), 1969

Under the Law for the Encouragement of Industry (Taxes), 1969 (the “Industry Encouragement Law”), Industrial Companies (as defined below) are entitled to the following tax benefits, among others:
•deductions over an eight-year period for purchases of know-how and patents;
·deductions over an eight‑year period for purchases of know‑how and patents;
•deductions over a three-year period of expenses involved with the issuance and listing of shares on a stock market; and
·deductions over a three-year period of expenses involved with the issuance and listing of shares on a stock market;
·the right to elect, under specified conditions, to file a consolidated tax return with other related Israeli Industrial Companies; and
·accelerated depreciation rates on equipment and buildings.
•the right to elect, under specified conditions, to file a consolidated tax return with other related Israeli Industrial Companies.
Eligibility for benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any governmental authority. Under the Industry Encouragement Law, an “Industrial Company” is defined as a company whichthat is an Israeli resident for tax purposes whichand at least 90% of the income of which (other than income from certain government loans), in any tax year, determined in Israeli currency, exclusive of income from government loans, capital gains, interest and dividends, is derived from an “Industrial Enterprise” that is located in Israel and owned by it.such company.
An “Industrial Enterprise” is defined as an enterprise whose major activity in a given tax year is industrial production activity.Eligibility for benefits under the Industry Encouragement Law is not contingent upon the approval of any governmental authority. We believe that we currently qualify as an Industrial Company within the definition of the Industry Encouragement Law. No assurance can be given that we will continue to qualify as an Industrial Company or that the benefits described above will be available in the future.
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Taxation of Holders of Ordinary Shares
The following discussion refers to the tax consequences to holders of our ordinary shares. However, the same tax treatment would apply to holders of our ADSs.
Capital Gains Tax on Sales of Our Ordinary Shares

Israeli law generally imposes a capital gains tax on the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of assets located in Israel, including shares in Israeli companies, by both residents and non-residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The Tax Ordinance distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain equivalent to the increase of the relevant asset’s purchase price attributable to an increase in the Israeli consumer price index, or, under certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the inflationary surplus.
The following discussion refers to the sale of our ordinary shares. However, the same tax treatment would apply to the sale of our ADSs.
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Taxation of Israeli Residents

As of January 1, 2012, theIsraeli individuals are generally subject to a tax rate generally applicable to theof 25% on capital gains derived from the sale of shares, whether listed on a stock market or not unless such shareholder claims a deduction for financing expenses in connection with such shares, in which case the gain is 25% for Israeli individuals, unlessgenerally taxed at a rate of 30%. In addition, if such shareholder is considered a “significant shareholder” at any time during the 12-month period preceding such sale (i.e.(i.e., such shareholder holds directly or indirectly, including jointly with others, at least 10% of any means of control in the company), in which case the tax rate will be 30%. Israeli companiesIndividuals who are subject to the corporate tax rate on capital gains derived from the sale of listed shares. However, different tax rates may apply to dealers in securities and shareholders who acquired their shares prior to an initial public offering.
 As of January 1, 2013, shareholders thatIsrael are individuals who have taxable income that exceeds NIS 800,000 in a tax year (linked to the CPI each year), will bealso subject to an additional tax, referred to as Income Surtax,income surtax at thea rate of 2% on their taxable income for such tax year which is in excess of such threshold. Under an amendment enacted in December 2016 to the Tax Ordinance, for tax year 2017 and thereafter the rate of High Income Tax was increased to 3% and will be applicable to annual income exceeding NIS 640,000 (linked to the CPI each year)(as described below). For this purpose, taxable income will include taxable capital gains from the sale of our shares and taxable income from dividend distributions. Certain Israeli institutions that are exempt from tax under Section 9(2) or Section 129C(a)(1) of the Tax Ordinance (such as exempt trust funds and pension funds) may be exempt from capital gains tax on the sale of the shares.
Israeli companies are subject to the corporate tax rate on capital gains derived from the sale of listed shares.
Different tax rates may apply to dealers in securities and shareholders who acquired their shares prior to an initial public offering.
Taxation of Non-Israeli Residents

Non-IsraeliBoth individual and corporate non-Israeli residents are generally exempt from Israeli capital gains tax on any gains derived from the sale of shares publicly traded on the TASE provided that (among other things) such gains did not derive from a permanent establishment of such shareholders in Israel. Non-Israeli residents are also exempt from Israeli capital gains tax on any gains derived from the sale of shares of Israeli companies publicly traded on a recognized stock market outside of Israel, provided that (among other things) such shareholders did not acquire their shares prior to the issuer’s initial public offering (in which case a partial exemption may be available),and that the gains did not derive from a permanent establishment of such shareholders in Israel. However, non-Israeli corporations will not be entitled to such exemption if Israeli residents (i) have a controlling interest of more than 25% in such non-Israeli corporation,corporation; or (ii) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.
In addition, the sale, exchange or disposition of our ordinary shares by a shareholder who is a U.S. resident individual or corporate shareholder (for purposes of the U.S.-Israel Tax Treaty), and who holds ordinary shares as a capital asset, is also exempt from Israeli capital gains tax under the U.S.-Israel Tax Treaty unless either (i) the U.S. resident shareholder holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding such sale orsale; (ii) the capital gains arising from such sale, exchange or disposition are attributable to either real estate located in Israel, a permanent establishment of the shareholder located in Israel.Israel, or royalties; or (iii) such U.S. resident shareholder is an individual and was present in Israel for 183 days or more during the relevant taxable year. If the above conditions are not met, the U.S. resident would be subject to Israeli tax, to the extent applicable. However, under the U.S.-Israel Tax Treaty, the gain would be treated as foreign source income for United States foreign tax credit purposes and such U.S. resident would be permitted to claim a credit for such taxes against the United States federal income tax imposed on such sale, exchange or disposition, subject to the limitations under the United States federal income tax laws applicable to foreign tax credits.
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Taxation of Dividends Paid on our Ordinary Shares

The following discussion refers to dividends paid on our ordinary shares. However, the same tax treatment would apply to dividends paid on our ADSs.
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Taxation of Israeli Residents
Israeli resident individuals are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares, other than bonus shares (share dividends) or stock dividends. As of January 1, 2012, theThe tax rate applicable to such dividends is 25% or 30% for a shareholder that is considered a significant shareholder at any time during the 12-month period preceding such distribution. Individuals may also be required to pay surtax with respect to dividends received, as further explained below. Dividends paid out of profits sourced from ordinary income are subject to withholding tax at the rate of 25% if the shares are registered with a nominee company (whether the recipient is a significant shareholder or 30%not). Dividends paid from income derived from our Approved and Privileged Enterprises are subject to withholding tax at the rate of 15%. Dividends, and dividends paid as of January 1, 2014 from income derived from our Preferred Enterprise and Preferred Technology Enterprise will beare subject to withholding tax at the rate of 20%. We cannot assure you that we will designate the profits that are being distributed in a way that will reduce shareholders’ tax liability.


All dividendDividend distributions to Israeli resident corporations are generally not subject to a withholding tax.

For information with respect to the applicability of Income Surtax on distribution of dividends, please see "Capital Gains Tax on Sales of Our Ordinary Shares" and "Taxation of Israeli Residents" above in this Item 10.

Taxation of Non-Israeli Residents
Non-residents of Israel, both companies and individuals, are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares, at the aforementioned rates applicable to Israeli residents, which tax will be withheld at source, unless a different rate is provided in a treaty between Israel and the shareholder’s country of residence.
Under the U.S.-Israel Treaty, the maximum Israeli withholding tax on dividends paid by us is 25%. The U.S.-Israel Tax Treaty further provides for a 12.5% Israeli dividend withholding tax rate on dividends paid by an Israeli company to a U.S. corporation owning at least 10% or more of such Israeli company’s issued voting power for, in general, the part of the tax year which precedes the date of payment of the dividend and the entire preceding tax year. The lower 12.5% rate applies only to dividends paid from regular income (and not derived from an Approved, Privileged Preferred Enterprise or Preferred Technological Enterprise) in the applicable period and does not apply if the company has more than 25% of its gross income derived from certain types of passive income (ifincome. If the conditions mentioned above are met, dividends from income of an Approved, Privileged Preferred Enterprise or Preferred Technological Enterprise are subject to a 15% withholding tax rate under the U.S.-Israel Tax Treaty).Treaty. Residents of the United States generally will have withholding tax in Israel deducted at source. They may be entitled to a credit or deduction for United States federal income tax purposes in the amount of the taxes withheld, subject to detailed rules contained in United States tax legislation.statutes, rules and regulations.

AAn individual or corporate non-resident of Israel who has dividend income derived from or accrued in Israel, from which tax was withheld at source, is generally exempt from the duty to file tax returns in Israel with respect to such income, provided that (i) such income was not derived from a business conducted in Israel by the taxpayer.taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed in Israel; and (iii) the taxpayer is not obligated to pay income surtax in Israel (as discussed below).

Surtax

Subject to the provisions of any applicable tax treaty, individuals who are subject to tax in Israel (whether or not any such individual is an Israeli resident) are also subject to a surtax at the rate of 3% on annual income (including, but not limited to, dividends, interest and capital gains) exceeding NIS 721,560 for 2024, which amount is linked to the annual change in the Israeli consumer price index.

U.S. Federal Income Tax Considerations
The following is a summary of the material U.S. Federalfederal income tax consequences that apply to U.S. holders (defined below) who hold ADSs as capital assets for tax purposes. This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing final, temporary and proposed regulations thereunder, judicial decisions and published positions of the Internal Revenue Service (the "IRS") and the U.S.-Israel income tax treaty in effect as of the date of this annual report, all of which are subject to change at any time (including changes in interpretation), possibly with retroactive effect. On December 22, 2017, the United States enacted theeffect, in a manner that could adversely affect a U.S. Tax Reform which alters significantly the U.S. Federal income tax system, generally beginning in 2018. Given the complexity of this new law, U.S. holders should consult their own tax advisors regarding its potential impact on the U.S. Federal income tax consequences to them in light of their particular circumstances.holder.
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This summary is also based in part on representations by JPMorgan Chase Bank, N.A., the depositary for our ADSs, and assumes that each obligation under the Deposit Agreement between us and JPMorgan Chase Bank, N.A. and any related agreement will be performed in accordance with its terms.
This summary does not address all U.S. Federalfederal income tax matters that may be relevantrelevant to a particular prospective holder or all tax considerations that may be relevant with respect to an investment in ADSs.ADSs, including the U.S. federal estate,
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gift, or alternative minimum tax consequences, or any state, local or non-U.S. tax consequences, of the acquisition, ownership and disposition of ADSs.
This summary does not address tax considerations applicable to a holder of an ADS that may be subject to special tax rules including, without limitation, the following:
•dealers or traders in securities, currencies or notional principal contracts;
·dealers or traders in securities, currencies or notional principal contracts;
•financial institutions, banks and financial services entities;;
•insurance companies;
·financial institutions;
•real estate investment trusts;
•persons subject to special tax accounting rules under Section 451(b) of the Code;
·insurance companies;
•investors subject to the alternative minimum tax;
•tax-exempt organizations;
·real estate investment trusts;
•regulated investment companies;
•investors that actually or constructively own 10 percent or more of our shares and/or other equity by vote or value;
·banks;
·investors subject to the alternative minimum tax;
·tax-exempt organizations;
·regulated investment companies;
·investors that actually or constructively own 10 percent or more of our voting shares;
·•investors that will hold the ADSs as part of a hedging or conversion transaction or as a position in a straddle or a part of a synthetic security or other integrated transaction for U.S. Federal income tax purposes;
·investors that are treated as partnerships or other pass through entities for U.S. Federal income tax purposes and persons who hold the ADSs through partnerships or other pass through entities;
·investors whose functional currency is not the U.S. dollar; and
·expatriates or former long-term residents of the United States.
This summary does not address the effect of any U.S. Federal taxation other than U.S. Federal income taxation. In addition, this summary does not include any discussion of state, local or foreign taxation or the indirect effects on the holders of equity interests in a holderstraddle or a part of an ADS.a synthetic security or other integrated transaction for U.S. federal income tax purposes;
•investors that are treated as partnerships or other pass-through entities for U.S. federal income tax purposes and persons who hold the ADSs through partnerships or other pass-through entities;
•investors whose functional currency is not the U.S. dollar; and
•expatriates or former long-term residents of the United States.
You are urged to consult your own tax advisor regarding the foreign and U.S. Federal,federal, state and local and other tax consequences of an investment in ADSs.
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For purposes of this summary, a “U.S. holder” is a beneficial owner of ADSs that is, for U.S. Federalfederal income tax purposes:
•an individual who is a citizen or a resident of the United States;
·an individual who is a citizen or a resident of the United States;
•a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;
•an estate whose income is subject to U.S. federal income tax regardless of its source; or
·a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;
•a trust if:
(a)the trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes; or
·an estate whose income is subject to U.S. Federal income tax regardless of its source; or
(b)(i) a court within the United States is able to exercise primary supervision over the administration of the trust; and (ii)one or more United States persons have the authority to control all substantial decisions of the trust
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·a trust if:

(a)a court within the United States is able to exercise primary supervision over administration of the trust; and
(b)one or more United States persons have the authority to control all substantial decisions of the trust.
If an entity that is classified as a partnership for U.S. federal tax purposes holds ADSs, the U.S. federal income tax treatment of its partners will generally depend upon the status of the partners and the activities of the partnership. Entities that are classified as partnerships for U.S. federal tax purposes and persons holding ADSs through such entities should consult their own tax advisors.
In general, if you hold ADSs, you will be treated as the holder of the underlying shares represented by those ADSs for U.S. Federalfederal income tax purposes. Accordingly, no gain or loss will be recognized if you exchange ADSs for the underlying shares represented by those ADSs.
U.S. holders should consult their own tax advisors regarding the U.S. federal income tax consequences to them with respect to the acquisition, ownership and disposition of ADSs in light of their particular circumstances.
U.S. Taxation of ADSs
Distributions
Subject to the discussion under “Passive Foreign Investment Companies” below, the gross amount of any distribution, including the amount of any Israeli taxes withheld from these distributions (see “Israeli Tax Considerations”), actually or constructively received by a U.S. holder with respect to ADSs will be taxable to the U.S. holder as a dividend to the extent of our current and accumulated earnings and profits as determined under U.S. Federalfederal income tax principles. Distributions in excess of earnings and profits will be non-taxable to the U.S. holder to the extent of, and will be applied against and reduce, the U.S. holder’s adjusted tax basis in the ADSs. Distributions in excess of earnings and profits and such adjusted tax basis will generally be taxable to the U.S. holder as a capital gain from the sale or exchange of property. We do not maintain calculations of our earnings and profits under U.S. Federalfederal income tax principles. If we do not report to a U.S. holder the portion of a distribution that exceeds earnings and profits, the distribution will generally be taxable as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as a capital gain under the rules described above. The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution. TheA U.S. holder that is a corporation will not except as provided by Section 245 of the Code, be eligible for any dividends received deduction, in respectexcept as provided by Sections 245 and 245A of the dividend otherwise allowable to corporations.
Code.
Under the Code, certain dividends received by non-corporate U.S. holders willmay be subject to a maximum“qualified dividend income, tax” which is taxed at the lower capital gains rate, ofcurrently 20%. This reduced income tax rate is only applicable to dividends paid by a “qualified foreign corporation” that is not a “passive foreign investment company” and only with respect to shares held by a qualified U.S. holder (i.e., a non-corporate holder) for a minimum holding period (generally 61 days during the 121-day period beginning 60 days before the ex-dividend date). We should be considered a qualified foreign corporation because (i) we are eligible for the benefits of a comprehensive tax treaty between Israel and the U.S., which includes an exchange of information program,program; and (ii) the ADSs are readily tradable on an established securities market in the U.S. In addition, based on our current business plans, we do not expect to be classified as a “passive foreign investment company” (see “Passive Foreign Investment Companies” below). Accordingly, dividends paid by us to individual U.S. holders on shares held for the minimum holding period should be eligible for the reduced income tax rate. In addition to the income tax on dividends discussed above, certain non-corporate U.S. holders will also be subject to the 3.8% Medicare tax on dividends as discussed below under “Medicare Tax on Unearned Income”.
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The amount of any distribution paid in a currency other than U.S. dollars (a “foreign currency”) including the amount of any withholding tax thereon, will be included in the gross income of a U.S. holder in an amount equal to the U.S. dollar value of the foreign currencies calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the foreign currencies are converted into U.S. dollars. If the foreign currencies are converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend. If the foreign currencies received in the distribution are not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the foreign currencies equal to its U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currencies will be treated as ordinary income or loss.
Generally, dividends received by a U.S. holder with respect to ADSs will be treated as foreign source income for the purposes of calculating that holder’s foreign tax credit limitation. Subject to certain conditions and limitations, any Israeli taxes withheld on dividends at the rate provided by the U.S.-Israel tax treaty may be deducted from taxable income or credited against a U.S. holder’s U.S. Federalfederal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign tax credit is calculated separately with respect to various categories of income, including “passive” income and “general”
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income. The rules relating to foreign tax credits and the timing thereof are complex. U.S. holders should consult their own tax advisors regarding the availability of a foreign tax credit under their particular situation.
Sale or Other Disposition of ADSs
If a U.S. holder sells or otherwise disposes of its ADSs, gain or loss will be recognized for U.S. Federalfederal income tax purposes in an amount equal to the difference between the amount realized on the sale or other disposition and such holder’s adjusted tax basis in the ADSs. Subject to the discussion below under the heading “Passive Foreign Investment Companies,” such gain or loss generally will be a capital gain or loss and will be a long-term a capital gain or loss if the holder had held the ADSs for more than one year at the time of the sale or other disposition. Long-term capital gains realized by individual U.S. holders generally are subject to a lower marginal U.S. Federalfederal income tax rate (currently up to 20%) than the marginal tax rate on ordinary income. In addition to the income tax on gains discussed above, certain non-corporate U.S. holders will also be subject to the 3.8% Medicare tax on net gains as discussed below under “Medicare Tax on Unearned Income”. Under most circumstances, any gain that a holder recognizes on the sale or other disposition of ADSs will be U.S. sourced for purposes of the foreign tax credit limitation and any recognized losses will be allocated against U.S. source income.
If a U.S. holder receives foreign currency upon a sale or exchange of ADSs, gain or loss, if any, recognized on the subsequent sale, conversion or disposition of such foreign currency will be ordinary income or loss, and will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. However, if such foreign currency is converted into U.S. dollars on the date received by the U.S. holder, the U.S. holder generally should not be required to recognize any gain or loss on such conversion.
A U.S. holder who holds shares through an Israeli stockbroker or other Israeli intermediary may be subject to Israeli withholding tax on any capital gain recognized if the U.S. holder does not obtain approval of an exemption from the Israeli Tax Authorities or claim any allowable refunds or reductions. U.S. holders are advised that any Israeli tax paid under circumstances in which an exemption from (or a refund of or a reduction in) such tax was available will not give rise to a deduction or credit for foreign taxes paid for U.S. federal income tax purposes. If applicable, U.S. holders are advised to consult their Israeli stockbroker or intermediary regarding the procedures for obtaining an exemption or reduction.
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Medicare Tax on Unearned Income
Certain U.S. holders that are individuals, estates or trusts are required to pay an additional 3.8% tax on all or a portion of their “net investment income,” which includes dividends and net gains from the sale or other dispositions of ADSs (other than ADSs held in a trade or business).

Passive Foreign Investment Companies
For U.S. Federalfederal income tax purposes, we will be considered a passive foreign investment company (“PFIC”) for any taxable year in which either (i) 75% or more of our gross income is "passive income, or at least 50% income", as defined in the relevant provisions of the Code; or (ii) on average, value of allat least 50% of our assets for the taxable year produce(generally determined on a quarterly basis) produce or are held for the production of passive income. For this purpose, passive income includes dividend, interest, royalty, rent, and annuity income and the excess of gaingains over losses from the disposition of assets which produce passive income. If we were determined to be a PFIC for U.S. Federalfederal income tax purposes, highly complex rules would apply to U.S. holders owning ADSs.
Based on our estimated gross income, the average value of our gross assets and the nature of our business, we do not believe that we will be classified as a PFIC in the current taxable year. Our status in any taxable year will depend on our assets and activities in each year and because this is a factual determination made annually at the end of each taxable year, there can be no assurance that we will not be considered a PFIC for any future taxable year. If we were treated as a PFIC in any year during which a U.S. holder owns ADSs, certainsuch U.S. holder may be subject to materially adverse tax consequences, could apply.including additional U.S. federal income tax liability and tax filing obligations. Given our current business plans, however, we do not expect that we will be classified as a PFIC in future years.
You are urged to consult your own tax advisor regarding the possibility of us being classified as a PFIC and the potential tax consequences arising from the ownership and disposition (directly or indirectly) of an interest in a PFIC.
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Tax Cuts and Jobs Act (the "U.S. Tax Reform" or "TCJA")

As a global corporation, we are subject to income, non-income and transactional tax regimes in the United States and various other jurisdictions, which are unsettled and may be subject to significant change. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "TCJA"), a comprehensive tax law that included several key tax changes to the taxation of business entities, among which is the change to Section 174 of the Code, that went into effect for taxable years beginning after December 31, 2021, requiring research and development expenses to be capitalized and amortized over a period of either five or fifteen years. Prior to this change, the research and development expenses could be fully expensed, as incurred, for U.S. federal income tax purposes.
The final impact of the TCJA may differ due to, among other things, possible changes in the interpretations and assumptions made by us as a result of additional information, additional guidance or finalization of law and regulations that will be issued by the U.S. Department of Treasury, the IRS or other standard-setting bodies, and which may impact our future financial statements, and will be accounted for when such guidance is issued.
Backup Withholding and Information Reporting
Payments of dividends with respect to ADSs and the proceeds from the sale, retirement, or other disposition of ADSs made by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. holder as may be required under applicable U.S. Treasury regulations. We, or an agent, a broker, or any paying agent, as the case may be, may be required to withhold tax (backup withholding), currently at the rate of 28%24%, if a non-corporate U.S. holder that is not otherwise exempt fails to provide an accurate taxpayer identification number and comply with other IRS requirements concerning information reporting. Certain U.S. holders (including, among others, corporations and tax-exempt organizations) are not subject to backup withholding. Any amount of backup withholding withheld may be used as a credit against your U.S. Federalfederal income tax liability provided that the required information is timely furnished to the IRS. U.S. holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption.
Foreign Asset Reporting
Certain U.S. Holdersholders who are specified individuals or specified domestic entities are required to report information relating to an interest in our ADSs on IRS Form 8938 (Statement of Specified Foreign Financial Assets), subject to certain exceptions (including an exception for shares held in accounts maintained by financial institutions). U.S. Holdersholders are encouraged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of our ADSs.
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Documents on Display
We are subject to certain of the information reporting requirements of the Securities and Exchange Act of 1934, as amended. As a “foreignforeign private issuer”issuer, we are exempt from the rules and regulations under the Securities Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Securities Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Securities Exchange Act. NASDAQ rules generally require that companies send an annual report to shareholders prior to the annual general meeting, however we rely upon an exception under the NASDAQ rules and follow the generally accepted business practice for companies in Israel. Specifically, we file annual reports on Form 20-F, which contain financial statements audited by an independent accounting firm, electronically with the SEC and post a copy on our website. We also furnish to the SEC quarterly reports on Form 6-K containing unaudited financial information after the end of each of the first three quarters.
You may read and copy any document we file with the SEC at its public reference facilities at, 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices at 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a web sitewebsite that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.SEC, and our SEC reports can be viewed or downloaded there. The address of this web site is http://www.sec.gov. Please callIn addition, information that we furnish or file with the SEC, including annual reports on Form 20-F, reports on Form 6-K, proxy and information statements and any amendments to, or exhibits included in, those reports are available to be viewed or download, free of charge, on our website at 1-800-SEC-0330 for further information onhttp://www.nice.com/company/investors as soon as reasonably practicable after such materials are filed or furnished with the operation of the public reference facilities. In addition, our ADSs are quoted on the NASDAQ Global Select Market, so our reports and other informationSEC. Information contained, or
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that can be inspected at the officesaccessed through, our website does not constitute a part of the National Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.this annual report and is not incorporated by reference herein, and we have included our website address in this annual report solely for informational purposes.
Item 11.
Quantitative and Qualitative Disclosures About Market Risk.
Item 11.    Quantitative and Qualitative Disclosures About Market Risk.
General
Market risks relating to our operations result primarily from weak economic conditions in the markets in which we sell our products and changes in interest and exchange rates. To manage the volatility related to the latter exposure, we may enter into various derivative transactions. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in currency exchange rates. It is our policy and practice to use derivative financial instruments only to manage such exposures. We do not use financial instruments for trading purposes and we are not a party to any leveraged derivative.
Foreign Currency Exchange Risk
We conduct our business primarily in U.S. dollars but also in the currencies of Israel, United Kingdom, the European UnionU.K., the E.U., India and IndiaPhilippines, as well as other currencies. Thus, we are exposed to foreign exchange fluctuations, primarily in NIS, GBP, EUR, INR and INR.PHP. We monitor foreign currency exposure and from time to time we may use various instruments to preserve the value of sale transactions and commitments, however, this cannot assure us protection against risks of currency fluctuations. For more information regarding foreign currency related risks, please refer to Item 3, “Key Information—General Risks Relating to Our Business” of this annual report. We use currency forward contracts and option contracts in order to protect against the increase in value of forecasted non-dollar currency cash flows and to hedge future anticipated payments.
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As of December 31, 2017,2023, we had outstanding currency option and forward contracts to hedge payroll, and facilities expenses and lease obligations, denominated in NIS, INR and INR,PHP, in the total amount of approximately $54.0approximately $209.21 million. The fair value adjustment of those contracts was approximately $1.25 million.$719 thousand. These transactions were for a period of up to one year.
year.
The following table details the balance sheet exposure (i.e., the difference between assets and liabilities) in our main foreign currencies, as of December 31, 2017,2023, against the relevant functional currency.
Functional currencies
(In U.S. dollars in millions)
USDGBPCADMXNAUDSGD
Foreign currencies
USD$— $1 $19 $(2)$1 $8 
GBP$3 $— $— $— $— $— 
EUR$21 $20 $— $— $— $— 
CAD$20 $— $— $— $— $— 
AUD$2 $— $— $— $— $— 
MXN$5 $— $— $— $— $— 
CHF$— $— $— $— $— $— 
JPY$(6)$— $— $— $— $— 
INR$(7)$— $— $— $— $— 
SGD$(15)$— $— $— $— $— 
HKD$(6)$— $— $— $— $— 
NIS$(16)$— $— $— $— $— 
PHP$(3)$— $— $— $— $— 
BRL$6 $— $— $— $— $— 
Other currencies$2 $— $— $— $— $— 
 Functional currencies 
 (In U.S. dollars in millions) 
  USD  GBP  EUR  CAD  MXN  AUD  BRL  SGD  Other currencies 
Foreign currencies
                           
USD
  -   12.1   (0.8)  (2.9)  1.9   1.2   (2.4)  (1.3)  - 
GBP
  10.7   -   (0.0)  -   -   -   -   (0.0)  - 
EUR
  6.8   20.9   -   -   -   -   -   (0.0)  - 
CAD
  2.4   0.3   -   -   -   -   -   -   - 
AUD
  3.3   (0.0)  -   -   -   -   -   (0.0)  - 
MXN
  2.7   0.0   -   -   -   -   -   -   - 
CHF
  (0.1)  0.4   -   -   -   -   -   -   - 
JPY
  1.3   (0.0)  -   -   -   -   -   -   - 
INR
  (6.3)  -   -   -   -   -   -   -   - 
SGD
  (4.2)  0.1   -   -   -   0.0   -   -   - 
HKD
  (3.3)  -   -   -   -   -   -   (0.0)  - 
ILS
  (3.0)  -   -   -   -   -   -   -   - 
Other currencies
  0.1   0.0   -   -   -   -   -   (0.4)  ) (0.0)
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The table below presents the fair value of firmly committed transactions for lease obligations denominated in currencies other than the functionalU.S. dollar, which is our reporting currency:
(In U.S. dollars in millions)
New Israeli ShekelOther currencies *Total
Less than 1 year$(5)$(2)$(7)
1-3 years$(8)$(4)$(12)
3-5 years$(7)$(4)$(11)
Over 5 years$(13)$(4)$(17)
Total$(33)$(14)$(47)
  (In U.S. dollars in millions) 
  New Israeli Shekel  Other currencies  Total 
Less than 1 year  5.70   0.88   6.58 
1-3 years  10.74   1.55   12.29 
3-5 years  10.74   1.37   12.11 
Over 5 years  -   2.75   2.75 
Total  27.18   6.55   33.73 
*    Other currencies include the following currencies: AUD, EUR, GBP, INR, JPY, PHP, COP and SGD.
Interest Rate Risk
We are subject to interest rate risk on our investments and on our borrowings.
In November 2016On August 24, 2020, we completed the acquisition of inContact and utilized $475issued $460.0 million in debt financing with a variable interest rate toward payment of the consideration in the transaction.
As of December 31, 2017 the outstandingaggregate principal amount of the term debt was $215 million.
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The floating rate term loan is exposed to a market risk0% exchangeable senior notes due to fluctuations in interest rates which may affect our interest expense.
2025.
On January 18, 2017, we issued $287.5 million aggregate principal amount of the Notes.1.25% exchangeable senior notes due 2024. The Notes bear interest at a fixed rateprincipal amount as of 1.25% per year.
December 31, 2023, is $87.4 million.
Our outstanding debt obligations, the corresponding interest rates, currency and repayment schedules as of December 31, 20172023, are set forth in the table below in U.S. dollar equivalent terms:terms (in millions).
Currency Total amount  Interest rate  2018  2019  2020  2021  2022  2023 & thereafter 
 (U.S. dollars in millions) 
(In millions)
(In millions)
(In millions)
Fixed Rate:                        
USD $287,500   1.25%                 $287,500 
                               
Floating Rate:                               
USD  215,000   3.30%           215,000        
                                
USD
Total:
Total:
Total:  502,500                  $215,000      $287,500 
Debt issuance costs, net of amortization
  (8,668)                            
Debt issuance costs, net of amortization
Debt issuance costs, net of amortization
Unamortized discount
Unamortized discount
Unamortized discount  (46,190)                            
Total: $447,642                             
Total:
Total:
Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income interest expense and the fair market value of our marketable securities portfolio.
Our marketable securitiesshort term investment portfolio consists of investment-grade corporate debentures, U.S. Government agencies and U.S. treasuries. As of December 31, 2017, 48.4%2023, 82.6% of our portfolio was in such securities.
securities and the remainder was in dollar deposits.
We invest in dollar deposits with U.S. banks, European banks, Israeli banks and money market funds. As of December 31, 2017, 51.6%2023, 17.4% of our portfolio was in such deposits. Since these investments are for short periods, interest income is sensitive to changes in interest rates.
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The weighted average duration of the securities portfolio, as of December 31, 2017,2023, is 1.61.68 years. The securities in our marketable securities portfolio are rated generally as A-A+ according to Standard and Poor’s rating or A3,A1, according to Moody’s rating. Securities representing 3%9.1% of the marketable securities portfolio are rated as AAA; securities representing 37%18.7% of the marketable securities portfolio are rated as AA; securities representing 59%67.4% of the marketable securities portfolio are rated as A; and securities representing 1%3.7% of the marketable securities portfolio are rated below A-as BBB+ securities representing 0.5% of the marketable securities portfolio are rated as BBB and securities representing 0.5 % of the marketable securities portfolio are rated as BBB- after being downgraded during the last two years .
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2022.
The table below presents the fair value of marketable securities which are subject to risk of changes in interest rate, segregated by maturity dates:dates (in U.S. dollars, in millions):

  Amortized Cost  Estimated fair value 
  Up to 1 year  1-3 years  
4-5 years
  Total  Up to 1 year  1-3 years  4-5 years  Total 
Corporate debentures  63.0   122.5   4.3   189.8   63.0   121.8   4.2   189.0 
U.S. treasuries  -   -   7.0       -   -   6.8   6.8 
U.S. government agencies  1.0   -   -   1.0   1.0   -   -   1.0 
Total  64.0   122.5   11.3   197.8   64.0   121.8   11.0   196.8 

Amortized CostEstimated fair value
Up to 1 year1-3 years4-7 yearsTotalUp to 1 year1-3 years4-7 yearsTotal
Corporate debentures236.8422.9176.0835.8233.8413.6173.1820.5
U.S. treasuries10.431.98.851.210.331.48.950.6
U.S. government agencies—2.8—2.8—2.8—2.8
Total247.2457.6184.8889.8244.1447.8182.0873.9
Other risks and uncertainties that could affect actual results and outcomes are described in Item 3, “Key Information—Information – Risk Factors” in this annual report.

Item 12.
Description of Securities Other than Equity Securities.
Item 12.    Description of Securities Other than Equity Securities.
American Depositary Shares and Receipts

Set forth below is a summary of certain provisions in relation to charges and other payments under the Deposit Agreement, as amended, among NICE, JPMorgan Chase Bank, N.A. as depositary (the "Depositary"“Depositary”), and the owners and holders from time to time of ADRs issued thereunder (the “Deposit Agreement”). ThisA summary isof rights of holders and additional terms contained in the Deposit Agreement has been filed as Exhibit 2.4 to this Annual Report. These summaries are not complete and isare qualified in itstheir entirety by the Deposit Agreement, a form of which has been filed as Exhibit 199(a) to the Registration Statement on Form F-6 (Registration No. 333-203623) filed with the SEC on April 24, 2015.2015, as amended by that certain Amendment No. 1 to the Deposit Agreement, a form of which has been filed as Exhibit 99(a)(2) to the Post-Effective Amendment No. 1 to the Form F-6 (Registration No. 333-303623) filed with the SEC on April 29, 2020.

Charges of the Depositary

The depositaryDepositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADRsADSs are cancelled or reduced for any other reason, $0.05 for each ADS issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositaryDepositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights or other distribution prior to such deposit to pay such charge.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:

•a fee of $1.50 per ADR for transfers of certificated or direct registration ADRs;
·a fee of $1.50 per ADR for transfers of certificated or direct registration ADRs;
·a fee of up to $0.05 per ADS for any cash distribution made pursuant to the deposit agreement;
·a fee of up to $0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);
·a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary's or its custodian's compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);
•a fee of up to $0.05 per ADS for any cash distribution made pursuant to the Deposit Agreement;
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•a fee of up to $0.05 per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the Depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);
·stock transfer or other taxes and other governmental charges;
•a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the Depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);
·cable, telex and facsimile transmission and delivery charges incurred at the request of an ADR holder in connection with the deposit or delivery of shares;
•stock transfer or other taxes and other governmental charges;
·transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;
•cable, telex and facsimile transmission and delivery charges incurred at the request of an ADR holder in connection with the deposit or delivery of shares;
·in connection with the conversion of foreign currency into U.S. dollars, the fees, expenses and other charges charged by JPMorgan Chase Bank, N.A. or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion; and
•transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;
·fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage or execute any public or private sale of securities under the deposit agreement.
•in connection with the conversion of foreign currency into U.S. dollars, the fees, charges and expenses of the Depositary (which are paid out of such foreign currency); and

•fees of any division, branch or affiliate of the Depositary utilized by the Depositary to direct, manage or execute any public or private sale of securities under the deposit agreement.
The depositaryDepositary may generally refuse to provide services until it is reimbursed applicable amounts, including stock transfer or other taxes and other governmental charges, and is paid its fees for applicable services.

The fees and charges an ADR holder may be required to pay may vary over time and may be changed by us and by the depositary.Depositary. Our ADR holders will receive prior notice of the increase in any such fees and charges.

We will pay all other charges and expenses of the depositaryDepositary and any agent of the depositaryDepositary (except the custodian) pursuant to agreements from time to time between us and the depositary.Depositary. The charges described above may be amended from time to time by agreement between us and the depositary.

Depositary.
Fees paid by the Depositary

Our depositaryDepositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADR program upon such terms and conditions as we and the depositaryDepositary may agree from time to time. The depositaryDepositary may make available to us a set amount or a portion of the depositaryDepositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositaryDepositary may agree from time to time.

From January 1, 2017 to December 31, 2017, NICEIn respect of 2023, we received a payment in the amount of approximately $1 million from the depositary $123,509Depositary as reimbursement for its expenses we incurred in 2023 in relation to the maintenance and administration of the ADR program.
123
91

PART II
Item 13.Defaults, Dividend Arrearages and Delinquencies.
None.
Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds.
None.
Item 15.Controls and Procedures.
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of NICE’sour management, including itsour Chief Executive Officer and Chief Financial Officer, of the effectiveness of NICE’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, theour Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that NICE’s disclosure controls and procedures were effective as of such date.
Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 15d-15(f) under the Securities Exchange Act. Our internal control over our financial reporting system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective can only provide reasonable assurance with respect to financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.2023. Our management based its assessment on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management has concluded that, as of December 31, 2017,2023, our internal control over financial reporting is effective.
Attestation Report of the Independent Registered Public Accounting Firm

Our independent registered public accounting firm, Kost, Forer, Gabbay & Kasierer, a member of EYErnst & Young Global independently assessed the effectiveness of our internal control over financial reporting and has issued an attestation report, which is included under Item 18 on page F-3F-4 of this annual report.


Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this annual report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

124
Item 16A.Audit Committee Financial Expert.
Our Board of Directors has determined that each of Dan Falk and Yocheved Dvir meets the definition of an audit committee financial expert, as defined in Item 407 of Regulation S-K and is independent under the applicable regulations.
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Item 16B.Code of Ethics.
We have adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) that applies to our principal executive and financial officers, and that also applies to all of our employees. The Code of Ethics is publicly available on our website at www.nice.com. Written copies are available upon request without charge. If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of this code to our chief executive officer, principal financial officer or corporate controller, we will either disclose the nature of such amendment or waiver on our website or in our annual report on Form 20-F.

The Code of Ethics, among other things, summarizes the principles of our Anti-Bribery and Corruption Policy. We have zero tolerance for bribery and corruption and are committed to complying with applicable laws and regulations relating to the fight against bribery and corruption.

The Code of Ethics and our separate Anti-Bribery and Corruption Policy are each available on our website: www.nice.com. Written copies are available upon request without charge.
Item 16C.Principal Accountant Fees and Services.

Fees Paid to Independent Auditors
Fees billed or expected to be billed by Kost, Forer, Gabbay & Kasierer, a member of EY Global, and other members of EY Global for professional services for each of the last two fiscal years were as follows:
Services Rendered2023 Fees2022 Fees
Audit (1)$1,150 $1,012 
Audit-related (2)$95 $73 
Tax (3)$438 $484 
All Other Fees$— $— 
Total$1,683 $1,569 
Services Rendered 2016 Fees  2017 Fees 
Audit (1) $799,489  $953,414 
Audit-related (2) $560,123  $197,097 
Tax (3) $190,761  $650,119 
Total $1,550,373  $1,800,630 
(1)Audit fees refer to audit services for each of the years shown in this table which include fees associated with the annual audit for each of 2022 and 2023 (including an audit in each such year in accordance with section 404 of the Sarbanes-Oxley Act), certain procedures regarding our quarterly financial results submitted on Form 6-K, consultations concerning financial accounting and various accounting issues and performance of local statutory audits.
 (1)
Audit fees refer to audit services for each of the years shown in this table which include fees associated with the annual audit for each of 2016 and 2017 (including an audit in each such year in accordance with section 404 of the Sarbanes-Oxley Act), certain procedures regarding our quarterly financial results submitted on Form 6-K, consultations concerning financial accounting and various accounting issues and performance of local statutory audits.
(2)Audit-related fees relate to assurance and associated services that traditionally are performed by the independent auditor, which include due diligence investigations and audit services related to other statutory or regulatory filings, mainly those related to mergers and acquisitions.

 (2)Audit-related fees relate to assurance and associated services that traditionally are performed by the independent auditor, which include due diligence investigations and audit services related to other statutory or regulatory filings, mainly those related to mergers and acquisitions.

(3)Tax fees refer to professional services rendered by our auditors, which include tax compliance, tax advice on actual or contemplated transactions, tax consulting associated with transfer pricing and global mobility of employees.
(3)Tax fees refer to professional services rendered by our auditors, which include tax compliance, tax advice on actual or contemplated transactions, tax consulting associated with transfer pricing.
Policies and Procedures

Our audit committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our external auditors, Kost, Forer, Gabbay & Kasierer, a member of EY Global. The policy, which is designed to ensure that such services do not impair the independence of our auditors, requires pre-approval from the audit committee on an annual basis for the various audit and non-audit services that may be performed by our auditors. If a type of service, that is to be provided by our auditors, has not received such general pre-approval, it will require specific pre-approval by our audit committee. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by our audit committee. The policy prohibits retention of the independent auditors to perform the prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act of 2002 or the rules of the SEC, and also considers whether proposed services are compatible with the independence of the public auditors.
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Item 16D.Exemptions from the Listing Standards for Audit Committees.
Not applicable.
125
Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
During 2017,2023, we repurchased our ordinary shares as described in the table below.
Period(a) Total number of shares purchased(b) Average price paid per share(c) Total number of shares purchased as part of publicly announced plans or programs(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
(In dollars, except share amounts)
January 1 - January 31246,682,595 
February 1 - February 2867,876 220.25 67,876 231,732,928 
March 1 - March 31241,416 206.12 241,416 181,971,396 
April 1 - April 30— 
May 1 - May 31335,732 183.47 335,732 120,374,875 
June 1 - June 3014,324 200.79 14,324 117,498,774 
July 1 - July 313,500 204.71 3,500 116,782,272 
August 1 - August 31333,251 198.26 333,251 50,710,707 
September 1 - September 30132,613 176.65 132,613 27,285,198 
October 1 - October 3142,307 169.63 42,307 20,108,461 
November 1 - November 30128,632 177.66 128,632 297,255,790 
December 1 - December 31197,628 197.30 197,628 258,264,136 
Total1,497,279 192.63 1,497,279 1,668,667,132 
Period (a) Total number of shares purchased  (b) Average price paid per share  (c) Total number of shares purchased as part of publicly announced plans or programs  (d) Maximum number (or approximately dollar value) of shares that may yet be purchased under the plans or programs 
  (In U.S. dollars, except share amounts) 
             
 January 1 – January 31  2,226   66.54   2,226   161,438,536 
 February 1 - February 28  9,900   68.89   9,900   160,756,528 
 March 1 - March 31  127,723   67.65   127,723   152,115,637 
 April 1 - April 30  96,922   67.80   96,922   145,544,524 
 May 1 - May 31  -       -   145,544,524 
 June 1 - June 30  -       -   145,544,524 
 July 1 - July 31  -       -   145,544,524 
 August 1 - August 31  56,181   75.94   56,181   141,277,914 
 September 1 - September 30  -       -   141,277,914 
 October 1 - October 31  -       -   141,277,914 
 November 1 - November 30  48,825   84.24   48,825   137,165,086 
 December 1 - December 31  -       -   137,165,086 
 Total  341,777   71.45   341,777     

On May 6, 2015November 9, 2022, our Board of Directors authorized a program to repurchase up to $100,000$250 million of the Company'sour issued and outstanding ordinary shares and ADRs. The Company fully executed the $250 million share repurchase program before the end of 2023. On January 10, 2017, we announced thatNovember 15, 2023, our Board of Directors authorized aan additional program to repurchase up to $150$300 million of the Company'sour issued and outstanding ordinary shares and ADRs. This share repurchase programADRs which commenced on April 7, 2017 following completion of the prior program.repurchase program that was authorized by our Board of Directors in 2022. Repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable securities laws and regulations. The timing and amount of the repurchase transactions will be determined by management and may depend on a variety of factors including market conditions, alternative investment opportunities and other considerations.

These programs do not obligate us to acquire any particular amount of ordinary shares and ADRs and each program may be modified or discontinued at any time without prior notice.
Item 16F.Change in Registrant’s Certifying Accountant.
None.

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Item 16G.Corporate Governance.
We follow the Israeli Companies Law, the relevant provisions of which are summarized in this annual report, rather than comply with the NASDAQ requirements relating to: (i) the quorum for shareholder meetings (see Item 10, “Additional Information – Memorandum and Articles of Association – Meetings of Shareholders” in this annual report); (ii) shareholder approval with respect to issuance of securities under equity basedequity-based compensation plans (see Item 10, “Additional Information – Memorandum and Articles of Association – Approval of Certain Transactions” and “Approval of Office Holder Compensation” in this annual report); and (iii) sending annual reports to shareholders (see Item 10, “Additional Information – Documents on Display” in this annual report).
Item 16H.Mine Safety Disclosure.
Not Applicable.
126

PART III
Item 17.Financial Statements16I.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not Applicable.

Item. 16K. Cybersecurity
Cybersecurity forms an integral part of our risk management practices. We have established and maintain a Cybersecurity Risk Program which has been developed to assess, identify and manage material risks from cybersecurity threats. Our program is inclusive of related information security policies and procedures to protect the confidentiality, integrity, and availability of the information contained within our systems, products, and services, and to assess, identify, manage, and address cybersecurity risks. Our internal cybersecurity policies and procedures incorporate industry best practices and are assessed annually as part of our Cybersecurity Risk Program review. These policies and procedures include information security policies, incident response procedure, risk assessment procedures and a vendor management policy.
We have verified our information security management policies and procedures and received certifications in accordance with the ISO 27001:2013 information security management standard and ISO 27701:2019 privacy management standard as well as other certifications such as FedRAMP, SOC 2 Type II Applications, PCI DSS, and HITRUST for specific business lines.

We utilize multiple third-party experts to support our program, to advise us on best practices and assist us in evaluating and enhancing our cybersecurity practices. These experts include threat monitoring service providers, cyber software and managed service providers, penetration testing firms, forensic investigators, cybersecurity consultants, and legal counsel specializing in the cyber domain.

We regularly conduct cybersecurity risk assessments and audits, both internally and through the engagement of third parties. These processes include regular scanning of our information systems for vulnerabilities, including by conducting penetration testing, and we maintain tools to detect unusual or unauthorized activities that may affect our systems, products, and services. We also retain the services of a reputable third-party firm for threat monitoring and detection.

We require that employees, contractors, partners, and vendors understand their cybersecurity responsibilities. All of our employees conduct an annual cybersecurity training and other on-going cybersecurity awareness exercises.

We maintain third party risk management process in order to identify, assess and mitigate the risks associated with our third-party service providers. As part of this process, we impose contractual obligations related to information security and require that our third-party partners maintain adequate security measures and controls to ensure the security of our data.

Our incident response policy provides guidelines for the handling and reporting of cybersecurity incidents. In the event of a potential cybersecurity incident, our Security Operations Center (SOC) conducts an initial assessment and, depending on the severity of the incident, provides a report regarding the incident to our Corporate VP Information Security. The Corporate VP Information Security then consults with other internal and external parties, depending upon the nature and/or severity of the incident, including members of our Cyber Incident Response Team (CIRT) and our General Counsel. Depending on the assessed potential materiality of an incident, notification may be given to our Chief Financial Officer, Chief Executive Officer, the Chair of the Board’s Internal Audit Committee, and the Chairman of our Board of Directors.
95

Additional guidelines covered under our incident response policy include steps for incident identification, containment, eradication, recovery, and lessons learned activities.

Our Cybersecurity Risk Program is run by our Corporate VP Information Security who reports to our Chief Financial Officer. Our Corporate VP Information Security has significant experience assessing and managing cybersecurity programs and risks and has extensive cybersecurity knowledge. Members of the corporate cybersecurity team are responsible for implementing and maintaining the cybersecurity program and practices for the Company. Other cybersecurity teams and professionals within our Company have the responsibility to implement and maintain cybersecurity processes within their business lines. Such teams and individuals work in coordination with our corporate cybersecurity team and under the guidance of our Corporate VP Information Security. The corporate cybersecurity team works closely with the SOC team, which serves as the central hub for monitoring and responding to security incidents and is trained to support our management in incident related matters.

Our management is committed to maintaining a robust cybersecurity program, which includes supplying the necessary resources to sustain the program, including people, tools, processes, procedures, and education. Cybersecurity risks and controls are evaluated and reviewed regularly by our senior management, including as part of our internal audits that are presented to the Internal Audit Committee of the Board of Directors. Our Board of Directors has ultimate oversight of cybersecurity risk management as part of its general oversight function. Our Board of Directors receives and reviews updates, reports and presentations related to cybersecurity threats and trends as well as to our cybersecurity program.

Through the date of filing this annual report, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business strategy, results of operations, or financial condition. If a material cybersecurity incident will occur in the future, it may have an adverse effect on our business or financial condition. For information on the market risks relating to cybersecurity, please see Item 3 “Risks Relating to Information and Product Security and Intellectual Property” in this annual report.
96

PART III
Item 17.    Financial Statements.
Not Applicable.
Item 18.Financial Statements.
See pages F-1 through F-64through F-55 of thisthis annual report attached hereto.

127
Item 19.    Exhibits.
Item 19.
Exhibits.
Exhibit No.DescriptionDescription
1.1
Amended and Restated Memorandum of Association, as approved on December 21, 2006 (English translation) (filed as Exhibit 1.1 to NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on June 13, 2007, and incorporated herein by reference).
1.2
Amended and Restated Articles of Association, as amended on December 21, 2016 (filed as Exhibit 1.2 to NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on April 21, 2017, and incorporated herein by reference).
2.1Form of Share Certificate (filed as Exhibit 4.1 to Amendment No. 1 to NICE Ltd.’s Registration Statement on Form F-1 (Registration No. 333-99640) filed with the SEC on December 29, 1995, and incorporated herein by reference).
2.2
Form of Deposit Agreement including Form of ADR Certificate (filed as Exhibit 1 to NICE Ltd.’s Registration Statement on Form F-6 (Registration No. 333-203623) filed with the SEC on April 24, 2015, and incorporated herein by reference).
4.12.3
NICE Ltd. 2016 Share Incentive PlanForm of Amendment No. 1 to the Deposit Agreement, including Form ADR Certificate (filed as Exhibit 4.399(a)(2) to NICE’s Annual Report onthe Post-Effective Amendment No. 1 to the Form 20-FF-6 (Registration No. 333-303623) filed with the SEC on March 23, 2016,April 29, 2020 and incorporated herein by reference).reference.
4.22.4
NICE Ltd. 2008 Share Incentive Plan, as amendedDescription of Securities (filed as Exhibit 99.12.4 to NICE’s ImmediateNICE Ltd.'s Annual Report on Form 6-K20-F filed with the SEC on May 28, 2015,March 30, 2023, and incorporated herein by reference).
4.34.1
e-Glue Software Technologies, Inc. 2004 Stock Option Plan, as amended (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-168100) filed with the SEC on July 14, 2010, and incorporated herein by reference).
4.4
Fizzback Group (Holdings) Limited Employee Share Option Scheme (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-177510) filed with the SEC on October 26, 2011, and incorporated herein by reference).
4.5
Merced Systems, Inc. 2001 Stock Plan (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-179408) filed with the SEC on February 7, 2012, and incorporated herein by reference).
4.6
Merced Systems, Inc. 2011 Stock Plan (filed as Exhibit 4.5 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-179408) filed with the SEC on February 7, 2012, and incorporated herein by reference).
4.7
Causata Inc. 2010 Stock Plan (filed as Exhibit 4.5 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-191176) filed with the SEC on September 16, 2013, and incorporated herein by reference).
4.8
NICE Ltd.’s's Executives & Directors Compensation Policy (filed as AnnexExhibit A in Exhibit 99.1 of NICE’s ImmediateNICE's Report on Form 6-K filed with the SEC on June 1, 20158, 2023, and incorporated herein by reference).
4.94.2
inContact, Inc. 2008 Equity Incentive Plan (filed as Exhibit 4.4 to NICE Ltd.’s Registration Statement on Form S-8 (Registration No. 333-191176) filed with the SEC on November 15, 2016, and incorporated herein by reference).
4.104.3
Nexidia Inc. 2005 Stock Incentive Plan (filed as Exhibit 4.4 to NICE-Systems Ltd.’s Registration Statement on Form S-8 (Registration No. 333-191176) filed with the SEC on March 23, 2016, and incorporated herein by reference).
4.114.4
Nexidia Agreement andGuardian Analytics, Inc. 2006 Stock Plan of Merger, dated January 10, 2016 (filed as Exhibit 4.144.4 to NICE Ltd.’s Annual ReportRegistration Statement on Form 20-FS-8 (Registration No. 333-249186), filed with the SEC on April 21, 2017,October 1, 2020, and incorporated herein by reference).
4.124.5
Credit Agreement, dated November 14, 2016 (filed as Exhibit 4.15 to NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on April 21, 2017 and incorporated herein by reference).
4.13
Indenture, dated January 18, 2017 (filed as Exhibit 4.16 to NICE Ltd.’s Annual Report on Form 20-F filed with the SEC on April 21, 2017, and incorporated herein by reference).
4.144.6
inContact Agreement and Plan of Merger,2020 Indenture, dated May 17, 2016August 27, 2020 (filed as Exhibit 4.174.14 to NICE Ltd.’s's Annual Report on Form 20-F filed with the SEC on April 21, 2017,March 23, 2021, and incorporated herein by reference).
4.7
NICE Ltd. 2016 Share Incentive Plan (filed as Exhibit 4.7 to NICE Ltd's Annual Report on Form 20-F filed with the SEC on March 30, 2023, and incorporated herein by reference).
8.1
List of significant subsidiaries.
12.1
Certification by the Chief Executive Officer of NICE Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act 2002.
12.2
Certification by the Chief Financial Officer of NICE Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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13.1
Certification by the Chief Executive Officer of NICE Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2
Certification by the Chief Financial Officer of NICE Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1
Consent of Kost, Forer, Gabbay & Kasierer, a member of EY Global.
101
97.1
NICE Ltd. Policy for Recovery of Erroneously Awarded Compensation.
101The following financial information from NICE Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2017,2023, formatted in Inline XBRL (eXtensible Business Reporting Language)("iXBRL"): (i) Consolidated Balance Sheets at December 31, 20172023 and 2016;2022; (ii) Consolidated Statements of Income for the years ended December 31, 2017, 20162023, 2022 and 2015;2021; (iii) Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2017, 20162023, 2022 and 2015;2021; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 20162023, 2022 and 2015;2021; and (v) Notes to Consolidated Financial Statements.
12898

NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2017
2023
IN U.S. DOLLARS
INDEX
Page
Reports of Independent Registered Public Accounting FirmAccounting Firm (PCAOB ID 1281)
F-2F - F-4
Consolidated Balance Sheets
F-5F - F-6
Consolidated Statements of Income
F-7F -
Consolidated Statements of Comprehensive Income
F-8F -
Statements of Changes in Shareholders' Equity
F-9F - F-10
Consolidated Statements of Cash Flows
F-11F - F-12
Notes to Consolidated Financial Statements
F-13F - F-64



eyimage.jpg
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525

Fax: +972-3-5622555

ey.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders and the Board of Directors of


NICE LTD.Ltd.


Opinion on the Financial Statements


We have audited the accompanying consolidated balance sheets of NICE Ltd. and its subsidiaries (the “Company""Company") as of December 31, 20172023, and 2016,2022, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 20172023, and the related notes (collectively referred to as the "financial statements""Consolidated Financial Statements"). In our opinion, the financial statementsConsolidated Financial Statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 20172023, and 20162022, and the consolidated resultresults of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 30, 201827, 2024, expressed an unqualified opinion thereon.


Basis for Opinion


These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesethe Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our auditaudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.

/s/ Kost, Forer, GabbayCritical Audit Matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and Kasiererthat: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

KOST FORER GABBAY & KASIERER
A Member of EY Global

We have served as the Company‘s auditor since 1995.
F-2
Tel-Aviv, Israel
March 30, 2018
F - 2
eyimage.jpg
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525

Fax: +972-3-5622555
ey.com

ey.com
Revenue Recognition
Description of the Matter
As described in Note 2 to the Consolidated Financial Statements, the Company generates revenues mainly from licensing its software products and services, including cloud-based services. The Company enters into contracts with customers that often include promises to transfer multiple products and services, which are accounted for separately if they are distinct performance obligations. In such contracts, the transaction price is then allocated to the distinct performance obligations on a relative standalone selling price basis and revenue is recognized when control of the distinct performance obligation is transferred. Revenues from cloud-based services are recognized either ratably over the contract period or based on usage, as applicable.

The accounting for contracts with multiple elements which include a software license requires the company to exercise significant judgment in determining revenue recognition for these contracts and includes: (a)1identification and determination of whether products and services are considered distinct performance obligations that should be accounted for separately based on the terms and conditions of the relevant agreements, (b) determination of stand-alone selling prices for each distinct performance obligation that is not sold separately. For products that are not sold separately, directly observable data is generally not available, which requires the Company to make significant assumptions regarding the stand-alone selling prices of the related performance obligations based on, among others, geographic or regional-specific factors and internally approved pricing guidelines, and (c) the pattern of transferring control (i.e., timing of when revenue is recognized) for each distinct performance obligation. For cloud-based revenues recognized based on usage, the processing and recognition of revenue are highly automated and involve capturing and pricing significant volumes of data.

Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer contracts was extensive and required a high degree of auditor judgment.

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's process and controls to identify and determine the distinct performance obligations, the relative standalone selling price for each performance obligation, and the determination of the timing of revenue recognition.

Our audit procedures included, among others, evaluating the methodology and reasonableness of management’s assumptions used for the estimate of stand-alone selling prices on a sample basis for products and services that are not sold separately.

For a sample of customers, we: (1) obtained and read contract source documents, including master agreements, and other documents that were part of the agreement, (2) tested management’s identification of significant terms for completeness, including the identification and determination of distinct performance obligations, (3) tested management’s calculations of revenue and the associated timing of revenue recognition, and (4) we involved IT professionals with specialized skill and knowledge to assist in testing certain internal controls over the Company’s revenue process, including controls over the capture related usage transactional information through the Company’s IT systems. On a sample basis, we tested usage and accordingly observed that usage attributes such as duration and type of service were captured in the relevant IT systems.



F-3
eyimage.jpg
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com



Business Combination
Description of the MatterAs described in Note 1 to the consolidated financial statements, during 2023, the Company completed its acquisition of LiveVox Holding Inc. for total consideration of $424.1 million. The transaction was accounted for as a business combination.
Auditing the Company's accounting for its acquisition of LiveVox Holding Inc. was complex due to the significant estimation required by management in determining the fair value of the identified intangible assets, which principally consisted of technology intangible asset in the amount of $137.5 million (hereinafter, “the Intangible Asset”). The significant estimation was primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of this Intangible Asset, as well as the sensitivity of the respective fair value to the underlying significant assumptions. The Company used the discounted cash flow method of the income approach to measure the fair value of this Intangible Asset. The significant assumptions used to estimate the fair value of the Intangible Asset included, among others, discount rate, projected revenue growth rates and royalty rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process for accounting of acquisition of intangible assets. For example, we tested controls over management’s review of the valuation of intangible assets, including the review of the valuation model and significant assumptions used in the valuation.
To test the fair value of this acquired intangible asset, our audit procedures included, among others, evaluating the Company's use of valuation methodologies, evaluating the prospective financial information, and testing the completeness and accuracy of underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions to current industry, market and economic trends, historical results of the acquired business and to other relevant factors.
We involved our valuation professionals to assist in evaluation of the methodology used by the Company and certain assumptions included in the fair value estimates. For example, our valuation professionals performed independent comparative calculations to estimate the acquired entity discount rate.




/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company's auditor since 1995.
Tel-Aviv, Israel
March 27, 2024





F-4
eyimage.jpg
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders and the Board of Directors of NICE Ltd.

NICE LTD.

Opinion on Internal Control over Financial Reporting


We have audited NICE Ltd.'s and its subsidiaries (the “Company")subsidiaries' internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control–IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria")COSO criteria). In our opinion, the CompanyNICE Ltd. and its subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20172023 and 2016 and2022, the related consolidated statementstatements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 20172023, and the related notes and our report dated March 30, 201827, 2024, expressed an unqualified opinion thereon.


Basis for Opinion


The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.


Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.








F-5
eyimage.jpg
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com






Definition and Limitations of Internal Control overOver Financial Reporting


A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
F - 3
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.












/s/ Kost, Forer, Gabbay and KasiererKOST FORER GABBAY & KASIERER
A Member of Ernst& Young Global
Tel-Aviv, Israel
March 27, 2024
F-6
KOST FORER GABBAY & KASIERER
NICE LTD. AND ITS SUBSIDIARIES
A Member of EY Global
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
December 31,
20232022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$511,795 $529,596 
Short-term investments896,044 1,041,943 
Trade receivables (net of allowance for credit losses of $16,712 and $9,253 at December 31, 2023 and 2022, respectively)585,154 518,517 
Debt hedge option121,922 122,323 
Prepaid expenses and other current assets197,967 204,754 
Total current assets
2,312,882 2,417,133 
LONG-TERM ASSETS:
Prepaid expenses and other long-term assets219,332 231,496 
Property and equipment, net174,414 159,285 
Deferred tax assets178,971 116,889 
Operating lease right-of-use assets104,565 102,893 
Other intangible assets, net305,501 209,605 
Goodwill1,821,969 1,617,118 
Total long-term assets
2,804,752 2,437,286 
Total assets
$5,117,634 $4,854,419 
Tel-Aviv, Israel
March 30, 2018
F - 4
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
  December 31, 
  2017  2016 
ASSETS      
       
CURRENT ASSETS:      
Cash and cash equivalents $328,302  $157,026 
Short-term investments  63,951   30,287 
Trade receivables (net of allowance for doubtful accounts of $ 9,554 and $ 7,499 at December 31, 2017 and 2016, respectively)  230,729   260,220 
Prepaid expenses and other current assets  70,074   61,700 
         
Total current assets
  693,056   509,233 
         
LONG-TERM ASSETS:        
Long-term investments  132,820   98,726 
Other long-term assets  19,496   18,701 
Property and equipment, net  118,275   87,678 
Deferred tax assets  11,850   14,093 
Other intangible assets, net  551,347   618,735 
Goodwill  1,318,242   1,284,710 
         
Total long-term assets
  2,152,030   2,122,643 
         
Total assets $2,845,086  $2,631,876 

The accompanying notes are an integral part of the consolidated financial statements.








F - 5
F-7
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
 December 31, 
 2017  2016 
December 31,December 31,
202320232022
LIABILITIES AND SHAREHOLDERS' EQUITY      
      
CURRENT LIABILITIES:      
Current maturities of long-term loan $-  $21,164 
CURRENT LIABILITIES:
CURRENT LIABILITIES:
Trade payables
Trade payables
Trade payables  29,438   25,634 
Deferred revenues and advances from customers  184,564   149,801 
Current maturities of operating leases liabilities
Debt
Accrued expenses and other liabilities  309,350   276,211 
        
Total current liabilities
  523,352   472,810 
Total current liabilities
Total current liabilities
        
LONG-TERM LIABILITIES:        
LONG-TERM LIABILITIES:
LONG-TERM LIABILITIES:
Deferred revenues and advances from customers
Deferred revenues and advances from customers
Deferred revenues and advances from customers  37,550   22,710 
Accrued severance pay  17,250   16,885 
Deferred tax liabilities  57,796   146,952 
Long-term loan  447,642   444,016 
Debt
Operating leases
Other long-term liabilities  11,935   17,171 
        
Total long-term liabilities
  572,173   647,734 
Total long-term liabilities
Total long-term liabilities
        
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES        
        
SHAREHOLDERS' EQUITY:        
SHAREHOLDERS' EQUITY:
SHAREHOLDERS' EQUITY:
Share capital-
Share capital-
Share capital-        
Ordinary shares of NIS 1 par value:        
Authorized: 125,000,000 shares at December 31, 2017 and 2016; Issued: 73,455,167 and 72,323,566 shares at December 31, 2017 and 2016, respectively; Outstanding: 60,925,954 and 59,988,783 shares at December 31, 2017 and 2016, respectively  18,595   18,280 
Ordinary shares of NIS 1 par value:
Ordinary shares of NIS 1 par value:
Authorized: 125,000,000 shares at December 31, 2023 and 2022; Issued: 74,774,827 and 74,774,827 shares at December 31, 2023 and 2022, respectively; Outstanding: 62,870,669 and 63,634,991 shares at December 31, 2023 and 2022, respectively
Authorized: 125,000,000 shares at December 31, 2023 and 2022; Issued: 74,774,827 and 74,774,827 shares at December 31, 2023 and 2022, respectively; Outstanding: 62,870,669 and 63,634,991 shares at December 31, 2023 and 2022, respectively
Authorized: 125,000,000 shares at December 31, 2023 and 2022; Issued: 74,774,827 and 74,774,827 shares at December 31, 2023 and 2022, respectively; Outstanding: 62,870,669 and 63,634,991 shares at December 31, 2023 and 2022, respectively
Additional paid-in capital  1,420,813   1,317,539 
Treasury shares at cost – 12,529,213 and 12,334,783 Ordinary shares at December 31, 2017 and 2016, respectively  (507,705)  (488,573)
Treasury shares at cost – 11,904,158 and 11,139,836 Ordinary shares at December 31, 2023 and 2022, respectively
Accumulated other comprehensive loss  (32,914)  (46,824)
Retained earnings  850,772   710,910 
Total attributable to NICE Ltd.'s shareholders
        
Non-controlling interests
Non-controlling interests
Non-controlling interests
Total shareholders' equity
Total shareholders' equity
Total shareholders' equity
  1,749,561   1,511,332 
        
Total liabilities and shareholders' equity
 $2,845,086  $2,631,876 
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
The accompanying notes are an integral part of the consolidated financial statements.
F - 6F-8
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except share and per share data)
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except share and per share data)
  Year ended December 31, 
  2017  2016  2015 
Revenues:         
Products $318,946  $306,252  $317,900 
Services  652,040   623,783   573,033 
Cloud  361,166   85,507   35,934 
             
Total revenues
  1,332,152   1,015,542   926,867 
             
Cost of revenues:            
Products  51,065   53,032   66,363 
Services  225,020   250,022   222,784 
Cloud  192,588   34,679   14,435 
             
Total cost of revenues
  468,673   337,733   303,582 
             
Gross profit  863,479   677,809   623,285 
             
Operating expenses:            
Research and development, net  181,107   141,528   128,485 
Selling and marketing  361,328   268,349   225,817 
General and administrative  129,071   116,569   90,349 
Amortization of acquired intangibles  41,902   17,187   12,528 
             
Total operating expenses
  713,408   543,633   457,179 
             
Operating income  150,071   134,176   166,106 
Financial income (expenses) and other, net  (20,411)  10,305   5,304 
             
Income before taxes on income  129,660   144,481   171,410 
Taxes on income (tax benefit)  (13,631)  21,412   30,832 
             
Net income from continuing operations  143,291   123,069   140,578 
Discontinued operations:            
Gain on disposal and income (loss) from operations  -   (8,235)  152,459 
Taxes on income (tax benefit)  -   (2,086)  34,206 
             
Net income (loss) on discontinued operations  -   (6,149)  118,253 
             
Net income $143,291  $116,920  $258,831 
             
Basic earnings per share from continuing operations $2.37  $2.06  $2.36 
Basic earnings per share from discontinued operations $-  $(0.10) $1.99 
Basic earnings per share $2.37  $1.96  $4.35 
             
Diluted earnings per share from continuing operations $2.31  $2.02  $2.29 
Diluted earnings per share from discontinued operations $-  $(0.10) $1.93 
Diluted earnings per share $2.31  $1.92  $4.22 
             
Weighted average number of shares used in computing:            
Basic earnings per share  60,444   59,667   59,552 
             
Diluted earnings per share  62,119   61,035   61,281 
Year ended December 31,
202320222021
Revenue:
Cloud$1,581,825 $1,295,323 $1,018,624 
Services641,387 650,116 660,083 
Product154,296 235,855 242,443 
Total revenue
2,377,508 2,181,294 1,921,150 
Cost of revenue:
Cloud553,654 472,805 410,671 
Services188,890 183,938 191,137 
Product25,629 26,945 22,648 
Total cost of revenue
768,173 683,688 624,456 
Gross profit1,609,335 1,497,606 1,296,694 
Operating expenses:
Research and development, net322,708 306,073 271,187 
Selling and marketing599,114 609,833 536,192 
General and administrative252,286 246,527 225,406 
Total operating expenses
1,174,108 1,162,433 1,032,785 
Operating income435,227 335,173 263,909 
Financial expenses (income) and other, net(22,473)(10,159)23,290 
Income before taxes on income457,700 345,332 240,619 
Taxes on income119,399 79,387 41,396 
Net income338,301265,945199,223
Basic earnings per share$5.32 $4.17 $3.15 
Diluted earnings per share$5.11 $4.00 $2.98 
Weighted average number of shares (in thousands) used in computing:
Basic earnings per share63,59063,79063,189
Diluted earnings per share66,26566,46566,896
The accompanying notes are an integral part of the consolidated financial statements.
F - 7F-9
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended
December 31,
202320222021
Net income$338,301 $265,945 $199,223 
Change in foreign currency translation adjustment13,810 (27,582)(7,402)
Available-for-sale investments:
Change in net unrealized gains (losses)18,029 (33,319)(13,368)
Less - reclassification adjustment for net losses (gains) realized and included in net income12,271 419 (1,403)
Net change (net of tax effect of ($4,130), $4,483 and $2,012)30,300 (32,900)(14,771)
Cash flow hedges:
Change in unrealized gains (losses)(5,300)(18,223)5,024 
Less - reclassification adjustment for net gains (losses) realized and included in net income13,335 7,189 (5,928)
Net change (net of tax effect of ($1,096), $1,505 and $123)8,035 (11,034)(904)
Total other comprehensive income (loss)52,145 (71,516)(23,077)
Comprehensive income$390,446 $194,429 $176,146 
U.S. dollars in thousands
  Year ended December 31, 
  2017  2016  2015 
          
Net income $143,291  $116,920  $258,831 
             
Other comprehensive income (loss), net of tax:            
             
Change in foreign currency translation adjustment  13,529   (24,801)  (14,602)
             
Available-for-sale investments:            
Change in net unrealized gains (losses)  (854)  5,102   (2,081)
Less - reclassification adjustment for net gains realized and included in net income  -   (3,388)  (32)
             
Net change (net of tax effect of $(113), $113 and ($338))  (854)  1,714   (2,113)
             
Cash flow hedges:            
Change in unrealized gains (losses)  6,821   600   (954)
Less - reclassification adjustment for net gains (losses) realized and included in net income  (5,586)  (132)  4,010 
             
Net change  1,235   468   3,056 
             
Total other comprehensive income (loss)  13,910   (22,619)  (13,659)
             
Comprehensive income $157,201  $94,301  $245,172 

The accompanying notes are an integral part of the consolidated financial statements.
F - 8F-10

NICE LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands




STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Share
capital		Additional
paid-in
capital		Treasury sharesAccumulated other comprehensive lossRetained earningsNon-controlling InterestTotal
shareholders'
equity
Balance as of January 1, 2023$18,961 $1,951,035 $(743,054)$(111,255)$1,926,398 $13,338 $3,055,423 
Stock-based compensation— 183,302 — — — — 183,302 
Issuance of treasury shares under share-based compensation plan (733,472 ordinary shares)— (23,923)26,496 — — — 2,573 
Treasury shares purchase— — (288,546)— — — (288,546)
Other comprehensive income— — — 52,145 — — 52,145 
Equity awards assumed for acquisitions— 13,073 — — — — 13,073 
Dividends Paid to non-controlling interest— — — — — (1,771)(1,771)
Net income attributable to Nice Shareholders— — — — 336,500 — 336,500 
Net loss attributable to non-controlling interests— — — — — 1,801 1,801 
Balance as of December 31, 2023$18,961 $2,123,487 $(1,005,104)$(59,110)$2,262,898 $13,368 $3,354,500 
U.S. dollars in thousands
  
Share
capital
  
Additional
paid-in
capital
  Treasury shares  Accumulated other comprehensive loss  Retained earnings  
Total
shareholders'
equity
 
                   
Balance as of January 1, 2017 $18,280  $1,317,539  $(488,573) $(46,824) $710,910  $1,511,332 
                         
Exercise of share options  315   17,133   -   -   -   17,448 
Stock-based compensation  -   56,980   -   -   -   56,980 
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (147,347 ordinary shares)  -   (3,642)  5,296   -   -   1,654 
Equity components of exchangeable note  -   30,895   -   -   -   30,895 
Treasury shares purchased  -   -   (24,428)  -   -   (24,428)
Other comprehensive income  -   -   -   13,910   -   13,910 
Dividends paid ($ 0.16 per share)  -   -   -   -   (9,637)  (9,637)
Effect of adopting ASU 2016-09: Improvements to Employee Share-Based Payment Accounting (see note 2aa)  -   1,908   -   -   6,208   8,116 
Net income  -   -   -   -   143,291   143,291 
                         
Balance as of December 31, 2017 $18,595  $1,420,813  $(507,705) $(32,914) $850,772  $1,749,561 

  
Share
capital
  
Additional
paid-in
capital
  Treasury shares  Accumulated other comprehensive loss  Retained earnings  
Total
shareholders'
equity
 
                   
Balance as of January 1, 2016 $17,977  $1,234,206  $(445,021) $(24,205) $632,192  $1,415,149 
                         
Exercise of share options  303   23,321   -   -   -   23,624 
Equity awards assumed for acquisitions  -   11,675   -   -   -   11,675 
Stock-based compensation  -   40,547   -   -   -   40,547 
Excess tax benefit from share-based payment arrangements  -   7,868   -   -   -   7,868 
Issuance of treasury shares under stock purchase plans, upon exercise of options and vesting of restricted stock units (2,290 ordinary shares)  -   (78)  78   -   -   - 
Treasury shares purchased  -   -   (43,630)  -   -   (43,630)
Other comprehensive loss  -   -   -   (22,619)  -   (22,619)
Dividends paid ($ 0.64 per share)  -   -   -   -   (38,202)  (38,202)
Net income  -   -   -   -   116,920   116,920 
                         
Balance as of December 31, 2016 $18,280  $1,317,539  $(488,573) $(46,824) $710,910  $1,511,332 


The accompanying notes are an integral part of the consolidated financial statements.












F - 9
F-11
NICE LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands



Share
capital		Additional
paid-in
capital		Treasury sharesAccumulated other comprehensive lossRetained earningsNon-controlling InterestTotal
shareholders'
equity
Balance as of January 1, 2022$18,961 $1,817,710 $(625,810)$(39,739)$1,653,963 $12,874 $2,837,959 
Adoption of ASU 2020-06 (Note 2k)
— (28,816)— — 7,331 — (21,485)
Stock-based compensation— 188,888 — — — — 188,888 
Issuance of treasury shares under share-based compensation plan (840,766 ordinary shares)
— (26,747)27,700 — — — 953 
Treasury shares purchase— — (144,944)— — — (144,944)
Other comprehensive income— — — (71,516)— — (71,516)
Dividends Paid to non-controlling interest— — — — — (376)(376)
Net income attributable to NICE Shareholders— — — — 265,104 — 265,104 
Net loss attributable to non-controlling interests— — — — — 840 840 
Balance as of December 31, 2022$18,961 $1,951,035 $(743,054)$(111,255)$1,926,398 $13,338 $3,055,423 
NICE LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
  
Share
capital
  
Additional
paid-in
capital
  Treasury shares  Accumulated other comprehensive loss  Retained earnings  
Total
shareholders'
equity
 
                   
Balance as of January 1, 2015 $17,615  $1,171,424  $(376,637) $(10,546) $411,600  $1,213,456 
                         
Exercise of share options  362   26,736   -   -   -   27,098 
Stock-based compensation  -   28,451   -   -   -   28,451 
Excess tax benefit from share-based payment arrangements  -   7,595   -   -   -   7,595 
Treasury shares purchased  -   -   (68,384)  -   -   (68,384)
Other comprehensive loss  -   -   -   (13,659)  -   (13,659)
Dividends paid ($ 0.64 per share)  -   -   -   -   (38,239)  (38,239)
Net income  -   -   -   -   258,831   258,831 
                         
Balance as of December 31, 2015 $17,977  $1,234,206  $(445,021) $(24,205) $632,192  $1,415,149 

The accompanying notes are an integral part of the consolidated financial statements.







F - 10
F-12
NICE LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands




Share
capital		Additional
paid-in
capital		Treasury sharesAccumulated other comprehensive lossRetained earningsNon-controlling InterestTotal
shareholders'
equity
Balance as of January 1, 2021$18,961 $1,681,587 $(574,364)$(16,662)$1,454,388 $24,574 $2,588,484 
Stock-based compensation— 156,373 — — — — 156,373 
Issuance of treasury shares under share-based compensation plan (717,500 ordinary shares)— (17,194)21,618 — — — 4,424 
Treasury shares purchase— — (73,064)— — — (73,064)
Other comprehensive income— — — (23,077)— — (23,077)
Equity component of exchangeable notes, net of issuance costs and deferred tax— 75 — — — — 75 
Equity awards assumed for acquisitions— 183 — — — — 183 
Purchase of subsidiaries' shares from non-controlling, net— (3,314)— — — (9,594)(12,908)
Dividends Paid to non-controlling interest— — — — — (1,754)(1,754)
Net income attributable to NICE Shareholders— — — — 199,575 — 199,575 
Net loss attributable to non-controlling interests— — — — — (352)(352)
Balance as of December 31, 2021$18,961 $1,817,710 $(625,810)$(39,739)$1,653,963 $12,874 $2,837,959 


The accompanying notes are an integral part of the consolidated financial statements





NICE LTD. AND ITS SUBSIDIARIES
F-13
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands
 Year ended December 31, 
Year ended
December 31,		Year ended
December 31,
2023202320222021
Cash flows from operating activities:
 2017  2016  2015 
Cash flows from operating activities:
         
Net income
Net income
         
Net income $143,291  $116,920  $258,831 
Adjustments required to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization  156,301   77,801   57,964 
Stock-based compensation  56,980   40,547   28,451 
Equity in losses of affiliated company  -   -   537 
Depreciation and amortization
Depreciation and amortization
Share-based compensation
Accrued severance pay, net  (788)  3   104 
Amortization of premium and discount and accrued interest on marketable securities  646   2,441   2,799 
Amortization of premium, discount and accrued interest on marketable securities
Deferred taxes, net  (70,805)  (25,905)  10,576 
Changes in operating assets and liabilities:            
Trade receivables, net  37,735   (31,784)  (56,363)
Trade receivables, net
Trade receivables, net
Prepaid expenses and other current assets  (6,839)  2,078   (1,482)
Trade payables  2,665   4,392   2,166 
Accrued expenses and other liabilities  25,541   17,994   38,488 
Deferred revenues  41,624   9,379   54,914 
Long term liabilities  (5,169)  7,529   2,453 
Loss (gain) on disposal of discontinued operations  -   9,148   (147,334)
Realized gain on marketable securities  -   (3,388)  (32)
Accrued expenses and other current liabilities
Operating lease right-of-use assets
Deferred revenue
Realized loss on marketable securities, net
Operating lease liabilities
Amortization of discount on long-term debt  13,547   379   - 
Loss from extinguishment of debt
Change in fair value of contingent consideration
Other  (67)  678   256 
            
Net cash provided by operating activities  394,662   228,212   252,328 
Net cash provided by operating activities
Net cash provided by operating activities
            
Cash flows from investing activities:
Cash flows from investing activities:
Cash flows from investing activities:
            
            
Purchase of property and equipment  (39,889)  (27,278)  (16,596)
Purchase of property and equipment
Purchase of property and equipment
Purchase of investments  (133,423)  (47,221)  (287,593)
Proceeds from investments  64,295   449,880   92,542 
Proceeds from sales of marketable investments
Payments for business acquisitions, net of cash acquired  (76,027)  (1,156,249)  - 
Investments in affiliates and other purchases  -   (1,500)  (1,500)
Capitalization of internal use software costs  (27,936)  (8,502)  (1,380)
Proceeds (repayment) from sale of discontinued operations  -   (9,148)  186,134 
            
Net cash used in investing activities  (212,980)  (800,018)  (28,393)
Net cash used in investing activities
Net cash used in investing activities
The accompanying notes are an integral part of the consolidated financial statements.
F-14
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
F - 11

Year ended
December 31,
202320222021
Cash flows from financing activities:
Proceeds from issuance of shares upon exercise of options2,570 953 4,426 
Purchase of treasury shares(288,443)(144,944)(73,180)
Dividends paid to non-controlling interest(1,771)(376)(1,754)
Purchase of subsidiaries shares from non-controlling interest— — (14,000)
Repayment of debt(2,628)(20,132)(177,308)
Net cash used in financing activities(290,272)(164,499)(261,816)
Effect of exchange rate changes on cash2,643 (8,425)(2,112)
Net change in cash, cash equivalents and restricted cash(19,782)154,440 (63,611)
Cash, cash equivalents and restricted cash at the beginning of the year533,096 378,656 442,267 
Cash, cash equivalents and restricted cash at the end of the year$513,314 $533,096 $378,656 
Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet:
Cash and cash equivalents$511,795 $529,596 $378,656 
Restricted cash included in other current assets1,519 3,500 — 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows$513,314 $533,096 $378,656 
Supplemental disclosure of cash flows activities:
Cash paid during the year for:
Income taxes$210,445 $123,586 $97,258 
Interest1,221 2,974 688 
Non-cash activities:
Change in fair value of contingent consideration(18,258)— — 
Increase in accrued expenses and other liabilities with respect to purchase of treasury shares103 — 4 
NICE LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
  Year ended December 31, 
  2017  2016  2015 
          
Cash flows from financing activities:
         
          
Proceeds from issuance of shares upon exercise of options  19,240   23,525   27,532 
Purchase of treasury shares  (24,428)  (43,630)  (68,384)
Dividends paid  (9,637)  (38,202)  (38,239)
Capital lease payments  (137)  (1,087)  - 
Proceeds from issuance of debt, net of costs  -   464,841   - 
Proceeds from issuance of exchangeable senior notes, net  260,135   -   - 
Repayment of long-term debt  (260,000)  -   - 
Earn out payments related to acquisitions  -   -   (297)
             
Net cash provided by (used in) financing activities  (14,827)  405,447   (79,388)
             
Effect of exchange rate changes on cash  4,421   (2,546)  (6,113)
             
Net change in cash and cash equivalents  171,276   (168,905)  138,434 
Cash and cash equivalents at the beginning of the year  157,026   325,931   187,497 
             
Cash and cash equivalents at the end of the year $328,302  $157,026  $325,931 
             
Supplemental disclosure of cash flows activities:
            
             
Cash paid during the year for:            
             
Income taxes $33,029  $28,396  $53,646 
             
Interest $7,910  $2,201  $107 
             
Non-cash activities:
            
             
Net change in other receivables with respect to exercise of share options $138  $(99) $434 

The accompanying notes are an integral part of the consolidated financial statements.

F - 12F-15
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:-
NICE LTD. AND ITS SUBSIDIARIES
GENERAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)


a.          General:
NOTE 1:-    GENERAL
a.General:
NICE Ltd. and(together with its subsidiaries, (the "Company"“NICE”, or the “Company”) is a global enterprise software leader, providing solutions for theAI-powered cloud platforms that serve two main markets: Customer Engagement and Financial Crime & Compliance markets.and Compliance. The Company’s solutions use advanced omnichannel analytics and automation based on an open cloud platform to improve customer experience as well as prevent financial crime.
The Company’sCompany's core mission is to empowertransform experiences to be extraordinary and trusted and create a frictionless and safe digital-first consumer reality where every interaction is intelligent, meaningful and effortless. The Company's solutions are used by organizations of all sizes and are offered in multiple delivery models, including cloud and on-premises.

The Company's strategy is based on serving rapidly expanding, specialized markets that require feature-rich solutions, with robust, comprehensive cloud platforms that are spearheaded by AI as an overarching catalyst, propelling our unique AI-driven vectors of growth: using AI differentiation to expand the Company cloud win rates, positioning AI as the bedrock for driving rapid expansion into digital, utilizing AI to fuel massive platform-adoption and leveraging AI as a lucrative source for new domain-specific use-cases.
In the Customer Engagement market, The Company enables organizations to acttransform experiences with specialized AI-powered solutions aimed at augmenting employee activities with smart copiloting capabilities, delivering seamless automated customer self-service using conversational AI, orchestrating journeys across multiple channels and intents, meeting consumers wherever they choose to begin their journey, providing them with the knowledge element they need, and creating smarter personalized customer interactions. The Company helps organizations transform their workforce experience with AI-powered solutions aimed at guiding and respond faster bothengaging employees, optimizing operations and automating processes to provide superior customerdeliver seamless transition between automated service and human-assisted interactions. The Company is also digitally transforming the evidence process from police investigators and district attorneys to court and correction facilities, providing a single, streamlined view of the truth as the core of our Public Safety and Justice business, which is part of the Company Customer Engagement segment.

In the Financial Crime and Compliance market, the Company protects financial services organizations, with solutions that identify risks and help prevent money laundering and fraud, as well as help ensure financial crime. markets compliance in real-time. With the Company's holistic, data and entity-centric approach, the Company helps financial services organizations address the new dynamic of financial crime threats, which are significantly growing in the digital era.

The Company’s softwareCompany is usedat the forefront of several industry technological disruptions that have greatly accelerated in the last several years: the growing acceptance and adoption of specialized AI-powered solutions combining domain-specific use-cases, Generative AI and large language models (LLMs), the adoption of cloud platforms by customer service organizations of enterprises of all sizes and verticals, the shift of consumer and by complianceorganizational preferences towards digital-centric services and fraudexperiences, an increase in consumer cross channel, self-service usage and the need to manage, optimize and engage a diverse workforce while retaining and attracting top talent. The Company's suite of integrated solutions, based on The Company's unique domain expertise, enables customer service, financial crime prevention groups in financial institutions.and criminal justice organizations to
F-16
With an integrated cloud platform and advanced analytics solutions, the Company helps organizations understand their customers, engage their employees and improve their processes. Additionally, the Company helps them predict needs and identify risks to create an exceptional customer experience, prevent fraud and ensure compliance. These capabilities are enhanced through the utilization of advanced automation and artificial intelligence capabilities.
NICE LTD. AND ITS SUBSIDIARIES
b.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquisitions:U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL (Cont.)

innovate and thrive with industry-leading cloud platforms that use domain-specific data and AI powered solutions.
1.Acquisition of inContact:


b.Acquisitions:
1.Acquisitions in 2023:
a.On November 14, 2016,December 2023, the Company completed thean acquisition of all of the outstanding shares of inContact,LiveVox Inc. ("inContact"(“LiveVox”), a leading provider of cloud contact center software and agent optimization tools,AI-driven proactive outreach provider. The Company acquired LiveVox for a total consideration of $1,050,054. The acquisition enables the Company to offer a fully integrated and complete cloud contact center where companies can interact with customers.

$424,117.
Upon consummation of the acquisition, inContactLiveVox became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a business combination. This method requires, among other things, that assets acquired, and liabilities assumed in the business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the components of the purchase consideration transferred:

Cash (*) $1,039,028 
Assumed options and restricted shares (**)  11,026 
     
Total purchase consideration $1,050,054 

F - 13

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)

(*)Includes cash consideration for the redemption of inContact's convertible bonds in an amount of $139,438 and for inContact's outstanding vested options and restricted shares as of acquisition date which were cancelled and converted into an amount of $25,366 in cash.

(**)Pursuant to the merger agreement, the Company assumed or replaced all outstanding unvested options, Restricted Stock Awards ("RSAs") and Restricted Stock Units (“RSUs”) and converted them or replaced them with the Company’s options, RSAs and RSUs, as applicable, based on an agreed exchange ratio. Each assumed or replaced option, RSA and RSU is subject to the same terms and conditions, including vesting, exercisability and expiration, as originally applied to any such option, RSA and RSU immediately prior to the acquisition of inContact.
Out of the total estimated fair value of the replacement award, a portion was allocated to the purchase consideration and the remainder was allocated to future services and will be expensed over the remaining service period on an accelerated basis as share-based compensation. The fair value of replacement award was determined using a Black-Scholes-Merton valuation model with the following assumptions: expected life of 12-74 months, risk-free interest rate of 0.58%-1.22%, expected volatility of 21.05%-25.92% and no dividend yield.

The following table summarizes the fair values of the assets acquired and liabilities assumed:

Cash $37,136 
Short term investments  26,714 
Trade receivables  40,667 
Other receivables and prepaid expenses  10,235 
Property and equipment  28,554 
Identified intangibles  538,000 
Goodwill  559,372 
     
Total assets acquired  1,240,678 
     
Trade payables  (16,337)
Accrued expenses and other liabilities  (22,802)
Deferred revenue  (3,967)
Deferred tax liabilities, net  (147,518)
     
Total liabilities assumed  (190,624)
     
Net assets acquired $1,050,054 

F - 14
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:-GENERAL (Cont.)


The following table presents details of the identified intangible assets acquired as of the date of the acquisition:

  
Fair
value
  
Estimated useful life
(in years)
 
       
Trademarks $36,400  2-8 
Core technology  353,700  4-8 
Customer relationships  147,900  5-7 
         
Total $538,000     


Fair ValueEstimated useful life (in years)
Net tangible assets and liabilities assumed$63,575 
Trademarks4,930 5
Technology137,462 5
Customer relationships31,957 5
Goodwill186,193 
Total$424,117 


Goodwill generated from this business combination is primarily attributable to synergies between the Company's and inContact'sLiveVox's respective products and services. The goodwill is not deductible for income tax purposes.purposes.


inContact Inc. constituted approximately 4.2% of the Company's consolidated total assets as of December 31, 2016, and 1.2% attributed to the period from the date of acquisition of the Company's consolidated net income (excluding amortization of related acquired intangible assets) for the year then ended.

The following table presents the unaudited pro forma financial information for the years ended December 31, 2016 and 2015, as if the acquisition occurred on January 1, 2015:
  Year ended December 31 
  2016  2015 
       
Revenue $1,237,329  $1,142,018 
Net income $31,195  $139,123 

The unaudited pro forma financial information for the years ended December 31, 2016 and 2015 has been calculated after adjusting the Company's results and those of inContact to reflect the business combination accounting effects resulting from this acquisition as if the acquisition occurred as of January 1, 2015, including: (i) acquisition related transaction costs; (ii) amortization expense from acquired intangible assets; (iii) post acquisition share-based compensation expense; (iv) debt financing costs incurred for the issuance of a loan received as part of the acquisition financing; and (v) the associated tax effect of these unaudited pro forma adjustments. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2015.

F - 15
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:-GENERAL (Cont.)

The fair value of assets acquired and liabilities assumed from the acquisition of inContact was based on a preliminary valuation which has been finalized during 2017 as part of the measurement period (please refer also to note 8). In accordance with ASU 2015-16, measurement period adjustments determined to be material will be recognized in the period in which the Company determines the amounts, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date.

2.          Acquisition of Nexidia:

On March 22, 2016, the Company completed the acquisition of Nexidia Inc. ("Nexidia"), a provider of advanced customer analytics. The Company acquired Nexidia for a total consideration of $135,150. The acquisition of Nexidia allows the Company to offer a combined offering, featuring analytics capabilities with accuracy, scalability and performance, enabling organizations to expand their analytics usage in critical business use cases.

Upon acquisition, Nexidia became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a business combination. This method requires, among other things, that assets acquired and liabilities assumed in the business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the components of the purchase consideration transferred:

Cash $134,501 
Assumed options  649 
     
Total purchase consideration $135,150 

F - 16

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)

The following table summarizes the fair values of the assets acquired and liabilities assumed:

Cash (net of loan payoff amount) $1,879 
Trade receivables  8,300 
Other receivables and prepaid expenses  4,892 
Property and equipment  2,774 
Identified intangibles  63,400 
Goodwill  75,647 
     
Total assets acquired  156,892 
     
Trade payables  (1,556)
Accrued expenses and other liabilities  (6,371)
Deferred revenue  (9,341)
Deferred tax liabilities, net  (4,474)
     
Total liabilities assumed  (21,742)
     
Net assets acquired $135,150 

The following table presents details of the identified intangible assets acquired as of the date of the acquisition:
  
Fair
value
  
Estimated useful life
(in years)
 
       
Trademarks $7,500  12 
Technology  17,400  5 
Customer backlog  10,900  1 
Customer relationships  27,600  6 
         
Total intangible assets $63,400     

Goodwill generated from this business combination is primarily attributable to synergies between the Company's and Nexidia's respective products and services. The goodwill is not deductible for income tax purposes.

The results of Nexidia operations have been included in the consolidated statements of income since March 22, 2016. Pro forma results of operations related to this acquisition have not been prepared because they are not material to the Company's consolidated statementsfinancial statements.

The preliminary fair value of income.
F - 17
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:-GENERAL (Cont.)

3.          Acquisition of VPI:

On March 11, 2016, the Company completed the acquisition of Voiceprint International, Inc. ("VPI"), a provider of workforce optimization software and services for enterprises, contact centers, first responders and trading floors. The Company acquired VPI for total consideration of $21,720 in cash.

Upon acquisition, VPI became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a business combination. This method requires, among other things, that assets acquired, and liabilities assumed in a business combination be recognized at their fair values as offrom the acquisition, date. The Company recorded customer relationships and goodwill in amount of $8,500 and $16,873, respectively. The estimated useful life of the customer relationships is 6 years.

Goodwill generated from this business combination is attributed to synergies between the Company's and VPI's respective products and services. The goodwill is not deductible for income tax purposes.
The results of VPI operations have been included in the consolidated financial statements since March 11, 2016. Pro forma results of operations related to this acquisition have not been prepared because they are not material to the Company's consolidated statement of income.
4.         Acquisitions in 2017:
During 2017 the Company acquired certain companies. These acquisitions were not individually or in aggregate significant. The financial results of the acquired companies are included in the Company’s consolidated financial statements from their respective acquisition dates, and the results from each of these companies were not individually material to the Company’s consolidated financial statements. In the aggregate, the total preliminary purchase price for these acquisitions was approximately $76,870 in cash. The Company preliminarily recorded $2,291 of net tangible liabilities and $51,015 of identifiable intangible assets, based on their estimated fair values, and $28,145 of residual goodwill. The preliminary fair value estimates for the assets acquired and liabilities assumed for these acquisitions completed during 20172023, were based upon preliminary calculations and valuations, and the estimates and assumptions for these acquisitionsthis acquisition are subject to change as the Company obtains additional information during the respective measurement periods (up to one year from the respective acquisition dates).

During 2023, the Company acquired certain additional companies, which were accounted for as business combinations for a total consideration of $22,815. The financial results of those acquired companies are included in the Company’s consolidated financial statements from their respective acquisition dates. The results from these acquisitions individually and in aggregate, were not material to the Company’s consolidated financial statements. The Company preliminary recorded $13,247 of identifiable intangible assets based on their estimated fair values, and $10,682 of residual goodwill, from these acquisitions.


F-17
5.         
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1:- GENERAL (Cont.)
2.Acquisitions in 2022:
a.On November 14, 2022, the Company completed an acquisition for a total consideration of $50,381 as follow: $30,000 cash consideration; Milestone-based contingent payment in a total sum of up to $24,000 payable in March 2026. The contingent consideration was measured at fair value at the closing date and recorded as a liability on the balance sheet in the amount of $20,381.
Upon consummation of the acquisition, the acquired company became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a business combination. As of the acquisition date the Company preliminarily recorded core technology, customer relationships, trademark and goodwill in amounts of $12,470; $9,058; $459 and $28,039, respectively. The estimated useful life of the core technology, customer relationships, and trademark is four years, four years and three years, respectively.
Goodwill generated from this business combination is attributed to synergies between the Company's and acquired company respective products and services. The goodwill is not deductible for income tax purposes.
The results of the acquired company's operations have been included in the consolidated financial statements since November 14, 2022. Pro forma results of operations related to this acquisition have not been prepared because they are not material to the Company's consolidated financial statements.

The estimated fair value of assets acquired and liabilities assumed from the acquisition completed during 2022 was based upon preliminary calculations and valuations. These estimates were finalized during 2023 as part of the measurement period and the resulting change in fair value for the twelve months ended December 31, 2023 was non-cash income of $18,258 included as a change in the fair value of contingent consideration under general and administrative operating expenses in the consolidated statements of income. This was primarily driven by lower expected performance measurements of the acquired entity as determined in the purchase agreement.

The fair value of the contingent consideration arrangement was classified within Level 3 and was determined using a probability-based scenario analysis approach. The resulting probability-weighted contingent consideration amounts were discounted based on the Company's estimated cost of debt.

3.Acquisitions in 2021:
a.On June 17, 2021, the Company completed the acquisition of ContactEngine Limited ("ContactEngine"), a leading AI automation provider for customer self-service. The Company acquired ContactEngine for a total consideration of $94,897.
Upon consummation of the acquisition, ContactEngine became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a business combination. As of the acquisition date the Company preliminarily recorded core technology, customer relationships, customer backlog and goodwill in amounts of $20,558; $3,279; $5,493 and $69,593, respectively. The estimated useful life of the core technology, customer relationships, and customer backlog is five years, six years and two years, respectively.
Goodwill generated from this business combination is attributed to synergies between the Company's and ContactEngine's respective products and services. The goodwill is not deductible for income tax purposes.
F-18
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:- GENERAL (Cont.)
The results of ContactEngine's operations have been included in the consolidated financial statements since June 17, 2021. Pro forma results of operations related to this acquisition have not been prepared because they are not material to the Company's consolidated financial statements.
b.During 2021, the Company acquired certain additional companies, which were accounted for as business combinations for a total consideration of $59,317. The financial results of those acquired companies are included in the Company’s consolidated financial statements from their respective acquisition dates. The results from these acquisitions individually and in aggregate, were not material to the Company’s consolidated financial statements. The Company preliminary recorded $20,036 of identifiable intangible assets based on their estimated fair values, and $38,590 of residual goodwill, from these acquisitions.
The estimated fair value of assets acquired and liabilities assumed from acquisitions completed during 2021 were based upon preliminary calculations and valuations. These estimates were finalized during 2022 as part of the measurement period. See Note 8 regarding changes made during 2022.
4.Acquisitions related costs:
During 20172023, 2022 and 20162021, acquisition related costs amounted to $970$13,987, $48 and $9,348$1,761, respectively, and were included in general and administrative expenses. During 2015, the Company did not record any acquisition related costs.


F - 18
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)
c.Discontinued operations:

During 2015, the Company divested its Physical Security as well as its Cyber and Intelligence operations, which were a major part of the Security Solutions segment, to allow it to focus on its core markets as part of the execution of its long-term strategy.

In July 2015 the Companycompleted the sale of the Cyber and Intelligence operation to Elbit Systems for a total consideration of $151,583, comprised of $111,583 in cash and $40,000 earn out based on future business performance conditions, which were not met.

The Cyber and Intelligence operation offers solutions which provide law enforcement agencies, intelligence organizations and signal intelligence agencies with tools for generating intelligence from communications. The sale resulted in a capital gain of $101,847, which was presented as part of the net income on discontinued operations in the consolidated statements of income for the year ended December 31, 2015.

On September 18, 2015, the Company completed the sale of the Physical Security operation to Battery Ventures for a total consideration of $92,475, comprised of $74,551 in cash, note receivable of $2,924 and up to $15,000 earn out based on future business performance. The Physical Security operation provides video surveillance technologies and capabilities to security-aware organizations.

The sale resulted in a gain of $45,487, which was presented as part of the net income on discontinued operations in the consolidated statements of income for the year ended December 31, 2015. The carrying amount used in determining the gain on disposal of the operations included goodwill in the amount of $35,554. The amount of goodwill that was included in that carrying amount was based on the relative fair values of the disposed operations and the portion of the operation that was retained within the segment.

Following the divestiture of one of the discontinued operations, the buyer made certain claims in relation to the transaction in accordance with the procedures set in the acquisition agreement between the parties. During 2016, the parties reached a settlement agreement which resulted in a reduction of the gain on disposal of discontinued operations recorded in discontinued operations. Refer to Note 11c for further details.

Following the sale, Physical Security's and Intelligence's results of operations and statement of financial position balances are disclosed as a discontinued operation, including the resulting gain from sales. All prior periods' comparable results of operation, assets and liabilities have been retroactively included in discontinued operations.
F - 19
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)
The results of the discontinued operations including prior periods' comparable results, assets and liabilities which have been retroactively included in discontinued operations as separate line items in the statements of income and balance sheets are presented below:

  Year ended December 31, 
  2017  2016   (*)2015
           
Revenue $-  $-  $68,672 
Cost of sales  -   -   26,956 
Operating expenses  -   850   36,307 
             
Operating income (loss)  -   (850)  5,409 
Other income (expenses), net  -   1,763   (284)
Gain (loss) on disposal of the discontinued operations  -   (9,148)  147,334 
             
Income (loss) before taxes on income  -   (8,235)  152,459 
Taxes on income (tax benefit)  -   (2,086)  34,206 
             
Net income (loss) on discontinued operations $-  $(6,149) $118,253 

(*)          Represent the results of the discontinued operations until their disposal.

Depreciation expense totaled $0, $0 and $724 for the years 2017, 2016 and 2015, respectively.

Amortization expense totaled $0, $0 and $4,362 for the years 2017, 2016 and 2015, respectively.
NOTE 2:-NOTE 2:-    SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements were prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP").

a.Use of estimates:

a.Use of estimates:
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

b.Financial statements in United States dollars:

b.Financial statements in United States dollars:
The currency of the primary economic environment in which the operations of NICE Ltd. and certain subsidiaries are conducted is the U.S. dollar ("dollar"); thus, the dollar is the functional currency of NICE Ltd. and certain subsidiaries.

F - 20
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-          SIGNIFICANT ACCOUNTING POLICIES (Cont.)

NICE Ltd. and certain subsidiaries' transactions and balances denominated in dollars are presented at their original amounts. Non-dollar transactions and balances have been remeasured to dollars in accordance with ASC 830, "Foreign“Foreign Currency Matters"Matters”. All transaction gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of income as financial income or expenses, as appropriate.

For those subsidiaries whose functional currency has been determined to be a non-dollar currency, assets and liabilities are translated at year-end exchange rates and statement of income items are translated at average
F-19
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
exchange rates prevailing during the year. Such translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) in shareholders' equity.

c.Principles of consolidation:
c.Principles of consolidation:

The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.

d.Cash equivalents:

d.Cash equivalents:
Cash equivalents are short-term unrestricted highly liquid investments that are readily convertible into cash, with original maturities of three months or less at acquisition.

e.Marketable securities:

e.Marketable securities:
The Company accounts for investments in debt securities in accordance with ASC 320, "Investments - Debt Securities" and Equity Securities"ASC No. 326, "Financial Instruments - Credit Losses". Management determines the appropriate classification of its investments in debt securities at the time of purchase and re-evaluates such determinations at each balance sheet date.

Marketable securities classified as "available-for-sale" ("AFS") are carried at fair value, based on quoted market prices.value. Unrealized gains and losses are reported in a separate component of shareholders' equity in accumulated other comprehensive income, (loss).net of taxes. Gains and losses are recognized when realized, on a specific identification basis, in the Company's consolidated statements of income.

TheFor each reporting period, the Company evaluates whether declines in fair value below the amortized cost are due to expected credit losses, as well as the Company's securities are reviewed for impairmentability and intention to hold the investment until a forecasted recovery occurs, in accordance with ASC 320-10-35. If such assets are considered to be impaired, the impairment charge is recognized in earnings when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason326. Allowance for the decline in value, the potential recovery period and the Company's intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis. For securities with an unrealized loss that the Company intends to sell, or it is more likely than not that the Company will be required to sell before recovery of their amortized cost basis, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet these criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses while declineson AFS debt securities are recognized as a charge in fair value related tofinancial expenses (income) and other, factorsnet, on the consolidated statements of income, and any remaining unrealized losses, net of taxes, are recognizedincluded in accumulated other comprehensive income (loss). As of December 31, 2023 and 2022, no credit losses have been recorded.

The Company classifies all securities with maturities beyond 12 months as current assets under the caption short term investments on the consolidated balance sheet. These securities are available to support current operations and the company may sell these debt securities prior to their stated maturities.
F - 21
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except sharef.Property and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
f.Property and equipment, net:

equipment, net:
Property and equipment are stated at cost, net of accumulated depreciation.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates:
periods ranges:
%
Years
Computers and peripheral equipment203 - 335
Internal use software3
Office furniture and equipment74 - 2014
Internal use softwareLeasehold improvements33Over the lease term or the estimated useful life of the improvements, whichever is shorter

Leasehold improvements are amortized by the straight-line method over the term of the lease or the estimated useful life of the improvements, whichever is shorter.

g.Internal use software costs:

g.Internal use software costs:
The Company capitalizes development costs incurred during the application development stage whichthat are related to internal use technology that supports its cloud services. Under ASC350-40, Internal-Use Software ASC 350-40, internal-use software
F-20
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
is included in property and equipment, net in the consolidated balance sheets. Capitalization of such costs begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and is ready for its intended purpose. Costs incurred in the process of software production are charged to expenses as incurred.

h.Other intangible assets, net:
h.Other intangible assets, net:

Intangible assets are amortized over their estimated useful lives using the straight-line method, at the following annual ratesperiods ranges:

%Years
Core technology4 – 8
Core technologyCustomer relationships12.5 - 503 – 9
Customer relationshipsTrademarks14.7 - 33.33 – 12
Trademarks12.5 - 50
Customer backlog50 - 1003
F - 22
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

i.Impairment of long-lived assets:

i.Impairment of long-lived assets:
The Company's long-lived assets and identifiable intangibles that are subject to amortization are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment", whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include any significant changes in the manner of the Company's use of the assets and significant negative industry or economic trends.

Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of the carrying amount over fair value. In 2017, 20162023, 2022 and 2015,2021, no impairment charge wascharges were recognized.

j.Goodwill:

j.Goodwill:
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, "Intangible - Goodwill and Other,"Other" ("ASC 350"), goodwill is not amortized, but rather is subject to an annual impairment test.

ASC 350 requires goodwill to be tested for impairment at If the reporting unit level at least annually or between annual tests in certain circumstances, and written down when impaired. GoodwillCompany determines that it is tested for impairment by comparingmore likely than not that the fair value of thea reporting unit withis less than its carrying value.

ASC 350 allows an entity to first assess qualitative factorsvalue, then the Company prepares a quantitative analysis to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.carrying value of reporting unit exceeds its estimated fair value. If the qualitative assessment does not result incarrying value of a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit exceeds its estimated fair value, the Company recognizes an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and proceed directly to performing the first step of the goodwill impairment test.Other (Topic 350).

During the fourth quarter ofFor each of the three years presented,in the Company performed a qualitative assessment for its reporting unitsperiod ended December 31, 2023, 2022 and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required. Accordingly, during the years 2017, 2016 and 2015,2021, no impairment charge was recognized.

identified.
F - 23
F-21
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

k.Exchangeable senior notes:
k.Exchangeable senior notes:

The Company applies ASC 815 “Derivative and Hedging” (“ASC 815”) and ASC 470 “Debt (“ASC 470”). Under these standards,Through December 31, 2021, prior to the adoption of ASU 2020-06, the Company separately accountsaccounted for the liability and equity components of convertible debt instruments that may be settled in a combination of cash in a manner that reflects the Company’s nonconvertible debt borrowing rate.and shares. The liability component at issuance is recognized at fair value, based on the fair value of a similar instrument that doesdid not have a conversion feature. The equity component iswas based on the excess of the principal amount of the debenturesproceeds over the fair value of the liability component, after adjusting for an allocation of debt issuance costs, and iswas recorded as capital in excess of par. paid-in capital.
Debt discounts arewere amortized as additional non-cash interest expense over the expected life of the debt. The Company allocated the total issuance costs incurred to the liability and equity components of the exchangeable senior notes based on the same proportions as the proceeds from the notes.

On December 31, 2021, the Company entered into the First Supplemental Indenture to the 2017 Indenture (the "First Supplemental Indenture"). In accordance with the First Supplemental Indenture, the Company irrevocably elected cash settlement for the principal and any premium due upon conversion to apply to all conversions of notes issued under the 2017 Indenture (the "2017 Notes") with an Exchange date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021. As a result, the conversion feature of the 2017 Notes was required to be bifurcated from the debt host and accounted for separately as a derivative liability. As such the Company recognized a derivative liability at an amount equal to the fair value of the conversion feature at that date. Subsequent changes in fair value of the bifurcated conversion derivative are reflected in financial income (expenses) on a net basis.

Additionally, on December 2021, the Company made an irrevocable election to settle the principal amount of the 2020 Notes only in cash. Accordingly, upon conversion, the Company will pay the principal amount in cash and will pay, or deliver, as the case may be, any amount in excess of the principal amount in cash, shares of common stock or a combination of cash and shares of the Company stock, at the Company's election. Prior to this election, upon conversion, the Company, could have elected to deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock for the principal amount.

Starting January 1, 2022, the Company adopted ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, the Company does not separately present in equity an embedded conversion feature in such debt. Instead, the Company accounts for a convertible debt instrument wholly as debt, unless the debt contains embedded derivatives required to be bifurcated or the debt is issued at a substantial premium.

The Company recognized a cumulative effect of initially applying ASU 2020-06 as an adjustment to the January 1, 2022 opening balance of accumulated deficit. The Company combined the previously separated equity component with the liability component, which together is classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense. Similarly, the portion of issuance costs previously allocated to equity was reclassified to debt and amortized as interest expense. Accordingly, the Company recorded as of January 1, 2022 an increase to retained earnings of approximately $7,331, a decrease to additional paid-in capital of $28,816, an increase to long-term debt of $24,758, a decrease to deferred tax liabilities of $2,937, and an increase in debt issuance costs of $336. There will be an impact to earnings per share as a result of the adoption based on the if-converted method if the Company average share price will exceed the conversion price of $299.19 of the 2020 Notes, then there will be an impact to earnings per share for the dilution impact above the conversion price as a result of the adoption based on the if-converted method. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods (See Note 15 "Debt" for further details).


F-22
NICE LTD. AND ITS SUBSIDIARIES
l.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition:U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

l.Revenue recognition:
The Company generates revenues from sales of software products,cloud, services, and cloud,software products, which include software license, SaaS, and network connectivity, hosting, support and maintenance, implementation, configuration, project management, consulting training, as well as hardware sales.and training. The Company sells its cloud, products and services directly through its sales force and indirectly through a global network of distributors, system integrators and strategic partners, all of whom are considered end-users.

partners.
The basisCompany recognizes revenues in accordance with ASC No. 606, "Revenue from Contracts with Customers" ("ASC 606"). Under the standard, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for the Company's softwarethose goods or services. To determine revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, "Software-Revenue Recognition". Revenues from sales of software productsfor contracts that are recognized when persuasive evidence of an agreement exists, delivery of the product has occurred, the fee is fixed or determinable and collectability is probable. Revenues from maintenance and professional services are recognized ratably over the contractual period and as services are performed, respectively. In transactions where a customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or as the acceptance provision has lapsed.

For multiple element arrangements within the scope of softwarethe standard, the Company performs the following five steps:
1)Identify the contract(s) with a customer
A contract with a customer exists when (i) there is an enforceable contract with the customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance; and (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer's ability and intent to pay, which is based on a variety of factors, including the customer's historical payment experience.
2)Identify the performance obligations of the contract
The Company enters into contracts that can include multiple performance obligations. The Company accounts for individual products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other promises in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

3)Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer.
Payment terms and conditions vary by contract type. In instances where the timing of revenue recognition guidance, revenuesdiffers from the timing of invoicing, the Company determines its contracts generally to not include a significant financing component since the Company's selling prices are allocatednot subjected to billing terms nor is its purpose to receive financing from its customers or to provide customers with financing. In addition, the Company elected to apply the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company will transfer a promised good or service to a customer and when the customer will pay for that good or service will be one year or less.
Revenue is measured based on the consideration specified in a contract with a customer, excluding taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer.
4)Allocate the transaction price to the different elementsperformance obligations in the arrangement undercontract
The Company allocates the "residual method" when Vendor Specific Objective Evidencetransaction price to each performance obligation identified based on its relative standalone selling price ("VSOE"SSP") of fair value exists for all undelivered elements and no VSOE exists for the delivered elements. Under the residual method, the Company defers revenue for the fair value of its undelivered elements and recognizes revenue for the remainderout of the arrangement fee attributable tototal consideration of the elements initially delivered in the arrangement when the basic criteria in ASC 985-605 have been met. Any discount in the arrangement is allocated to the delivered elements.
contract.
F - 24
F-23

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company uses judgment in determining the SSP. If the SSP is not observable through standalone transactions, the Company estimates the SSP taking into account available information such as geographic or regional specific factors, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligations.
The Company typically establishes a SSP range for its products and services, which is reassessed on a periodic basis or when facts and circumstances change. SSP for products and services can evolve over time due to changes in the Company's pricing practices that are influenced by intense competition, changes in demand for products and services, and economic factors, among others.
For arrangements that contain both software and non-software components that function together to delivera product where the products' essential functionality, the Company allocates revenue to each elementSSP cannot be determined based on its relative selling price. In such circumstances,observable prices, given the accounting principles establishsame products are sold for a hierarchy to determinebroad range of amounts (that is, the selling price is highly variable), the SSP included in a contract with multiple performance obligations is determined by applying a residual approach whereby all other performance obligations within a contract are first allocated a portion of the transaction price based upon their respective SSPs, with any residual amount of transaction price allocated to be used for allocatingthese product revenues.
5)Recognize revenue to deliverables. The selling price forwhen (or as) the entity satisfies a deliverable is based on its VSOE, if available, third party evidence ("TPE"), if VSOE is not available, or best estimated selling price ("BESP"), if neither VSOE nor TPE are available.

performance obligation
The Company establishes VSOEderives its cloud revenues from subscription services, which are comprised of fair value using the price charged for a deliverable when sold separately. When VSOE cannot be established, the Company attempts to establish fair value of each element based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company's go-to-market strategy differssubscription fees from that of its peers and the Company's offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products' selling prices are on a standalone basis. Therefore, the Company is typically not able to determine TPE. The BESP price is established considering several external and internal factors including, but not limited to, historical sales, pricing practices and geographies in which the Company offers its products. The determination of the BESP is subject to discretion.

The Company's policy for establishing VSOE of fair value of maintenance services is based on the price charged when the maintenance is renewed separately. Establishment of VSOE of fair value of professional services is based on the price charged when these services are sold separately.

Revenues from fixed price contracts that require significant customization, integration and installation are recognized based on ASC 605-35, "Construction-Type and Production-Type Contracts", using the percentage-of-completion method of accounting based on the ratio of costs related to contract performance incurred to date to the total estimated amount of such costs. The amount of revenue recognized is based on the total fees under the arrangement and the percentage of completion achieved. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss on the entire contact.

The Company's SaaS offerings providegranting customers access to certain of its software within a cloud-based IT environment on a subscription basis, and may also includethe Company’s cloud platforms, network connectivity and services over Company's network or through third party network connectivity providers on a usage basis. Because such offerings do not grant customers the right to take possessionfees for deployment of the software, the Company considers these arrangements to be service contracts which are not within the scope of ASC 985-605. In addition, the Company also derives revenuecertain cloud platforms.
Revenue from professionalsubscription services included in implementing or improving a customer's cloud software solutions experience.

F - 25

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-          SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Revenues for SaaS offerings areis recognized either ratably over the contract termperiod or based on actual usage, commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. Revenue from the network connectivity usage is derived based on customer specific rate plans and call usage and is recognized in the period the call is initiated. Upfrontinitiated, and services fees for deployment are amortized over average customer life.
Revenue from software licenses, support and maintenance services are recognized at the time the related performance obligation is satisfied by transferring the promised product or service to professional servicesthe customer. Software license revenues are recognized at the point in time when the software license is delivered and the customer obtains control of the asset. Support and maintenance service revenues are recognized ratably over the term of the underlying maintenance contract term. Renewals of maintenance contracts create new performance obligations that are not considered to have standalone valuesatisfied over the term with the revenues recognized ratably over the period of the renewal.
Professional services revenues, except fees for deployment of certain cloud platforms, are recognized as services are performed.
Deferred revenues, which represent a contract liability, represent unrecognized fees collected mostly for maintenance, cloud and professional services. Deferred revenues are recognized as (or when) the Company performs under the contract. The amount of revenues recognized in the period that was included in the opening deferred andrevenues balance was approximately $299,598 for the year ended December 31, 2023.
As of December 31, 2023, the aggregate amount of the total transaction price allocated in contracts with original duration greater than one year of the remaining performance obligations was approximately $2,544,325. For performance obligations which are recognized over time, based on usage, the estimatedCompany elected to disclose only the contractual minimum attributed to these performance obligations, as part of the remaining performance obligation disclosure.
As of December 31, 2023, the Company expects to recognize the majority of the revenue of remaining performance obligations over the next 24 months. Such remaining performance obligations represent unsatisfied or partially unsatisfied performance obligations pursuant to ASC 606. The Company has
F-24
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of one year or less.
m.Costs to Obtain Contracts:
The Company capitalizes certain sales commission as costs of obtaining a contract when they are incremental and if they are expected to be recovered. The Company applies judgment in estimating the amortization period by taking into consideration customer contract terms, history of renewals, expected length of customer relationship, as well as the useful life of the customer.

To assessunderlying technology and products. Amortization of sales commission expenses are included in Selling and Marketing expenses in the probabilityaccompanying consolidated statements of collection for revenue recognition,income. For costs that the Company would have capitalized and amortized over one year or less, the Company has a credit policy that determineselected to apply the credit limit that reflects an amount that is deemed probably collectiblepractical expedient and expense these contract costs as incurred. Costs to obtain contracts amortization expense for each customer. These credit limits are reviewedthe years 2023, 2022 and revised periodically on the basis of new customer financial statements information, credit insurance data2021 were $142,699, $135,437 and payment performance.$130,466, respectively.


The Company maintains a provision for product returnsn.Research and other contractual rights which are estimated based on the Company's past experience and are deducted from revenues.

Deferred revenues and advances from customers include payments received from customers, for which revenue has not yet been recognized.

m.Research and development costs:

development costs:
Research and development costs (net of grants and capitalized expenses) incurred in the process of software production are charged to expenses as incurred.

o.Income taxes:
n.Income taxes:

To prepare the consolidated financial statements, the Company estimates its income taxes in each of the jurisdictions in which it operates, and in certain of these jurisdictions, it is calculated based on the Company's assumptions as to its entitlement to various benefits under the applicable tax laws in the jurisdiction. The entitlement to such benefits depends upon the Company's compliance with the terms and conditions set out in these laws.
The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This topicASC 740 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred tax assets and deferred tax liabilities are presented under long-term assets and long-term liabilities, respectively.

The Company implements a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative(on a cumulative basis) likely to be realized upon ultimate settlement.

F - 26

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company classifies interest and penalties on income taxes (which includes uncertain tax positions) as taxes on income. The Company applies ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax.

F-25
NICE LTD. AND ITS SUBSIDIARIES
o.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Non-royalty grants:U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

p.Non-royalty grants:
Non-royalty bearing grants from the Government of Israel and the European Union for funding research and development projects are recognized at the time the Company is entitled to such grants on the basis of the related costs incurred and recorded as a deduction from research and development expenses.

p.Concentrations of credit risk:

q.Concentrations of credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, trade receivables, marketable securities and foreign currency derivative contracts.

The Company's cash and cash equivalents are invested in deposits and money market funds, mainly in dollars with major international banks. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

The Company's trade receivables are derived from sales to customers located primarilygenerated from a multitude of markets in North America, andcountries around the world with the largest proportion denominated in EMEA and APAC.the US dollar. The Company performs ongoing credit evaluations of its customers and insures certainsome of its receivables with a credit insurance company. A generalcompany. The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts is provided, based on the length of time the receivables are past due.credit losses.


The Company's marketable securities include investment in corporate debentures, U.S. Treasuries and U.S. Treasuries.government agencies. The Company's investment policy limits the amount that the Company may invest in any one type of investment per minimum credit rating or specific issuer, thereby reducing credit risk concentrations.

The Company enteredenter into foreign currency forward and option contracts intended to protect cash flows resulting from payroll and facilities related expenses against the volatility in value of forecasted non-dollar currency. The derivative instruments hedge a portion of the Company's non-dollar currency exposure. See Note 10.10 for additional information.

r.Severance pay:
q.Severance pay:

The Israeli Severance Pay Law-1963 (the "Severance Pay Law") generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain circumstances. The Company makes ongoing deposits into Israeli employees’employees' pension plans to fund their severance liabilities. According to Section 14 of the Severance Pay Law, the Company deposits for employees employed by the Company since May 1, 2009 are made in lieu of the Company’sCompany's severance liability;liability, therefore no obligation is provided for in the financial statements. Severance payPay liabilities for employees employed by the Company prior to May 1, 2009, as well as employees with special contractual arrangements, are provided for in the financial statements based upon the latest monthly salary multiplied by the number of years of employment.
F - 27
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Severance pay expenseexpenses for 2017, 20162023, 2022 and 20152021 amounted to $9,862, $9,970$10,917, $8,328 and $8,936,$8,810, respectively.

The Company also has other liabilities for severance pay in other jurisdictions.

The Company provides 401(K)has multiple 401(k) defined contribution plan for the benefit ofplans covering certain employees in the U.S. Under thisAll eligible employees may elect to contribute a portion of their eligible compensation, generally not greater than an annual contribution of $22.5 in 2023 and $19.5 in both 2022 and 2021 (for certain employees over 50 years of age the maximum annual contribution was $30 per year in 2023 and $26 in 2021 and in 2020) of their total annual compensation to the plan through salary deferrals, subject to IRS limits. The Company, at its discretion, matches 50% of employee contributions are based on specified percentagesto the plan up to a limit of pay.6-8% of their eligible
F-26
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
compensation. In the years 2017, 20162023, 2022 and 2015,2021, the Company recorded an expense for all matching contributions in the amount of $7,044, $3,930$11,599; $9,887 and $4,310,$9,366, respectively.

s.Leases
r.Basic and diluted net earnings per share:
Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. The ROU asset is recorded net of any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income.

The Company elected to combine its lease and non-lease components for car leases and to not recognize a lease liability and a right-of-use ("ROU") asset on the balance sheet for leases with a term of twelve months or less. The Company recognizes the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.

t.Basic and diluted net earnings per share:
Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year plus dilutive potential equivalent ordinary shares considered outstanding during the year, in accordance with ASC 260, "Earnings per Share".

As the Company’s intention and ability is to settle the convertible debt in cash, the potential issuance of shares related to the convertible debt does not affect diluted shares.

As further described in Note 14,15, the Company entered into an exchangeable note hedge transaction and warrants transaction. Thetransaction in 2017. While the exchangeable note hedge transaction and the warrants transaction areis anti-dilutive and as such areis not included in the computation of diluted earnings per share, the warrants transaction had a dilutive effect, and as such, was included in the computation of the diluted earnings per share. The number of shares related to the outstanding exchangeable note hedge transaction is 3,457,475.
On December 31, 2021, the Company entered into the First Supplemental Indenture according to which the Company irrevocably elected cash settlement for the principal and warrants transactionany premium due upon conversion to apply to all conversions of the 2017 Notes issued under the 2017 Notes with an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021. As a result, the 2017 Notes do not have a dilutive effect for the year ended December 31, 2023 and 2022 . Prior to December 31, 2021, the Company had the intention and ability to settle the exchangeable senior notes issued in 2017 in cash, therefore the 2017 Notes did not have a dilutive effect for the years ended December 31, 2021.

On December 31, 2021, the Company irrevocably elected to settle the principal of the exchangeable senior notes issued in 2020 in cash. As a result, the Company will use the if converted method for calculating any potential dilutive effect on diluted net income per share, if applicable. The conversion premium will have a dilutive impact on diluted net income per share only when the average market price of an ordinary share for a given period exceeds the conversion price of $299.19 per share. As a result, 1,537,504 shares underlying the conversion option of the exchangeable senior notes issued in 2020 are 3,457,475 and 3,457,475, respectively.not considered in the calculation of diluted net income per share in either 2021, 2022 or 2023, as the effect would be anti-dilutive.


The weighted average number of shares related to outstanding anti-dilutive options excluded from the calculations of diluted net earnings per share was 249,274, 398,5444,096, 18,161 and 561,6214,754 for thethe years 2017, 20162023, 2022 and 2015,2021, respectively.

F-27
NICE LTD. AND ITS SUBSIDIARIES
s.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting for stock-based compensation:U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

u.Accounting for stock-based compensation:
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation" ("ASC 718"), which requires the measurement and recognition of stock base compensation expenseexpenses based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model.model and account for forfeitures as they occur.


The Company recognizes compensation expenses for the value of its awards, which have graded vesting, based on the accelerated attribution method over the requisite service period of each of the awards.

F - 28
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company accounts for forfeitures as they occur.
The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model, which requires a number of assumptions: the expected volatility is based upon actual historical stock price movements; the expected term of options granted is based upon historical experience and represents the period of time that options granted are expected to be outstanding; the risk-free interest rate is based on the yield from U.S. Federal Reserve zero-coupon bonds with an equivalent term; and the expected dividend rate (an annualized dividend yield) is based on the per share dividend declared by the Company's Board of Directors. For information on the Company's dividend payments, see Note 13d.

The Company measures the fair value of restricted stock based on the market value of the underlying shares at the date of grant.

t.Fair value of financial instruments:

v.Fair value of financial instruments:
The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"). for valuing financial instruments. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. The Company measures its investments in money market funds classified as cash equivalents, marketable securities, and its foreign currency derivative contracts, exchangeable notes hedge and its contingent consideration arrangement at fair value.

In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The hierarchy is broken down into three levels based on the inputs as follows:

•Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
·Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
•Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

·Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

·•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

F - 29
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except shareValuations based on inputs that are unobservable and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

significant to the overall fair value measurement.
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other
F-28
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.

The Company's marketable securities, exchangeable senior notes and foreign currency derivative contracts are classified within Level 2 (see Notes 3, 10 and 10)15).


The fair value of the contingent consideration arrangement was classified within Level 3 and was determined using a probability-based scenario analysis approach. The resulting probability-weighted contingent consideration amounts were discounted based on the Company's estimated cost of debt.
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables and trade payables approximate their fair value due to the immediate or short-term maturities of these financial instruments. The carrying amount of the long term loan approximates its fair value due to the fact the loan bears a variable interest rate.

u.Legal contingencies:

w.Legal contingencies:
The Company is currently involved in various claims and legal proceedings.proceedings arising in the ordinary course of business. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.


v.Advertising expenses:
x.Advertising expenses:

Advertising expenses are charged to expense as incurred. Advertising expenses for the years 2017, 20162023, 2022 and 20152021 were $13,543, $9,693$50,740; $43,981 and $7,986,$31,575, respectively.

w.Treasury shares:
y.Treasury shares:
The Company repurchases its ordinary shares from time to time on the open market or in other transactions and holds such shares as treasury shares. The Company presentsaccounts for the cost to repurchase treasury stockshares as a reduction of shareholders' equity. The Company reissues treasury shares under the stock purchase plan, upon exercise of options and upon vesting of RSUs. Reissuancerestricted stock units ("RSU"). Re-issuance of treasury shares is accounted for in accordance with ASC 505-30 wherebyin which gains are credited to additional paid-in capital and losses are charged to additional paid-in capital to the extent that previous net gains are included therein;therein and otherwise to retained earnings.

F - 30

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

x.Business combination:

z.Business combination:
The Company applies the provisions of ASC 805, "Business Combination", and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.
Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

F-29
NICE LTD. AND ITS SUBSIDIARIES
y.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comprehensive income:U.S. dollars in thousands (except share and per share data)
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Contingent consideration incurred in a business combination is included as part of the acquisition price and recorded at a probability weighted assessment of the fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, with any adjustments in fair value recognized in earnings under general and administrative expenses.
The Company applies ASU No. 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with revenue from ASC 606 rather than adjust them to fair value at the acquisition date.
aa.Non-controlling interests:
The consolidated financial statements include the Company's accounts and the accounts of the Company's wholly- and majority-owned subsidiaries. Non-controlling interest positions of the Company's consolidated entities are reported as a separate component of consolidated equity from the equity attributable to the Company’s shareholders.
In case of an increase in ownership of a subsidiary, the carrying amount of the non-controlling interest is adjusted to reflect the controlling interest’s increased ownership interest in the subsidiary’s net assets. Any difference between the consideration paid by the Company to a non-controlling interest holder (or contributed by the Company to the net assets of the subsidiary) and the adjustment to the carrying amount of the non-controlling interest in the subsidiary is recognized directly in equity and attributable to the controlling interest. In 2021, the Company acquired an additional 20% in the 2020 Subsidiary (the "2020 Subsidiary") for a total consideration of approximately $14,000.
ab.Comprehensive income:
The Company accounts for comprehensive income in accordance with ASC 220, "Comprehensive Income". Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its items of otherOther comprehensive income relatefor the Company relates to gains and losses on hedging derivative instruments, and unrealized gains and losses on available for sale marketable securities and changes in foreign currency translation adjustments.

F - 31
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The following tables show the components of accumulated other comprehensive income, net of taxes, as of December 31, 20172023, 2022 and 2016:2021:

Year ended December 31, 2023
Unrealized gains (losses) on marketable securitiesUnrealized gains (losses) on cash flow hedgesForeign currency translation adjustmentTotal
Beginning balance$(34,386)$(7,102)$(69,767)$(111,255)
Other comprehensive loss before reclassifications18,029 (5,300)13,810 26,539 
Amounts reclassified from accumulated other comprehensive loss12,271 13,335 — 25,606 
Net current-period other comprehensive loss30,300 8,035 13,810 52,145 
Ending balance$(4,086)$933 $(55,957)$(59,110)
  Year ended December 31, 2017 
  Unrealized losses on marketable securities  Unrealized gains (losses) on cash flow hedges  Foreign currency translation adjustment  Total 
             
Beginning balance $(216) $(101) $(46,507) $(46,824)
                 
Other comprehensive income (loss) before reclassifications  (854)  6,821   13,529   19,496 
Amounts reclassified from accumulated other comprehensive income  -   (5,586)  -   (5,586)
                 
Net current-period other comprehensive income (loss)  (854)  1,235   13,529   13,910 
                 
Ending balance $(1,070) $1,134  $(32,978) $(32,914)
  Year ended December 31, 2016 
  Unrealized gains (losses) on marketable securities  Unrealized gains (losses) on cash flow hedges  Foreign currency translation adjustment  Total 
             
Beginning balance $(1,930) $(569) $(21,706) $(24,205)
                 
Other comprehensive income (loss) before reclassifications  5,102   600   (24,801)  (19,099)
Amounts reclassified from accumulated other comprehensive income  (3,388)  (132)  -   (3,520)
                 
Net current-period other comprehensive income (loss)  1,714   468   (24,801)  (22,619)
                 
Ending balance $(216) $(101) $(46,507) $(46,824)


F - 32
F-30

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Year ended December 31, 2022
Unrealized gains (losses) on marketable securitiesUnrealized gains (losses) on cash flow hedgesForeign currency translation adjustmentTotal
Beginning balance$(1,486)$3,932 $(42,185)$(39,739)
Other comprehensive income before reclassifications(33,319)(18,223)(27,582)(79,124)
Amounts reclassified from accumulated other comprehensive loss419 7,189 — 7,608 
Net current-period other comprehensive income(32,900)(11,034)(27,582)(71,516)
Ending balance$(34,386)$(7,102)$(69,767)$(111,255)
z.Recently adopted accounting standards:
Year ended December 31, 2021
Unrealized gains (losses) on marketable securitiesUnrealized gains (losses) on cash flow hedgesForeign currency translation adjustmentTotal
Beginning balance$13,285 $4,836 $(34,783)$(16,662)
Other comprehensive (income) loss before reclassifications(13,368)5,024 (7,402)(15,746)
Amounts reclassified from accumulated other comprehensive income(1,403)(5,928)— (7,331)
Net current-period other comprehensive income(14,771)(904)(7,402)(23,077)
Ending balance$(1,486)$3,932 $(42,185)$(39,739)


ac.Recently issued accounting standards, not yet adopted:    

In March 2016,November 2023, the FASB issued ASU 2016-09, "Compensation – Stock Compensation2023-07, Segment Reporting (Topic 718)280): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awardsReportable Segment Disclosures. This standard updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and classification in the statement of cash flows. ASU 2016-09 became effective for the Company beginning the first quarter of 2017, at which time it changed its accounting policyinformation used to account for forfeitures as they occur. The change was appliedassess segment performance on a modified retrospective basis with a cumulative effect adjustment to retained earnings of $6,208 as of January 1, 2017. In addition, historically, excess tax benefits or deficiencies from the Company’s equity awards were recorded as additional paid-in capital in its consolidated balance sheets and were classified as a financing activity in its consolidated statements of cash flows. As a result of the adoption, the Company will prospectively record any excess tax benefits or deficiencies from its equity awards as part of its provision for income taxes in its consolidated statements of operations in the reporting periods in which equity vesting occurs. Excess tax benefits for share-based payments are now presented as an operating activity in the statements of cash flows rather than financing activity. The Company elected to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities and in a decrease to cash generated by financing activities in the consolidated statements of Cash Flows of $7,868 and $7,595 for the years ended December 31, 2016 and December 31, 2015, respectively.

aa.Recently issued accounting standards, not yet adopted:

In May 2014, the FASB issued Accounting Standards Update 2014-09 ("ASU 2014-09") "Revenue from Contracts with Customers (Topic 606)". ASU 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 605)", and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Subsequently, the FASB issued several additional ASUs related to ASU. 2014-09, collectively they are referred to as the “new revenue standards,” which become effective for the Company beginning January 1, 2018. The Company has adopted the new revenue standards using the modified retrospective transition method.

The Company estimated its analysis of all potential impacts of the new revenue standards. The impacts mainly relate to arrangements that include term-based software licenses, allocation of transaction price to each performance obligation on a relative standalone selling price and capitalization of costs related to obtaining customer contracts. Based on work performed to date, on January 1, 2018 the Company expects to record a cumulative-effect of approximately $39 million attributed to Deferred Revenues and approximately $45 million attributed to costs related to obtaining customer contracts. These amounts will be recorded as adjustment to retained earnings. The impact derives from arrangements that based on "Revenue Recognition (Topic 605)" were to be recognized in future years during 2018 to 2022.
F - 33

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company for interim and annual periods beginning on or after January 1, 2018. The Company expects no material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"). The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements.basis. This update is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods; early adoption is permitted and modified retrospective application is required. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments." The guidance addresses the classification of cash flow related to (1) debt prepayment or extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance, including bank-owned life insurance, (6) distributions received from equity method investees and (7) beneficial interests in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance will generally be applied retrospectively and is effective for financial statements issued for annual reporting periods beginning after December 15, 2017. The Company expects no material impact on its statement of cash flows upon adoption.

In October 2016, the FASB issued Accounting Standards Update 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory" ("ASU 2016-16"), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory. ASU 2016-16 will be effective for the Company for interim and annual periods beginning after December 15, 2017. The Company expects no material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment" ("ASU 2017-04"). ASU 2017-04 eliminates step 2 of the goodwill impairment test, which requires the calculation of the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements.

F - 34

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which provides guidance to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. ASU 2017-01 is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those periods. The Company expects no material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" ("ASU 2016-13"). The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be of greater use to users of the financial statements. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is allowed as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still evaluating the effect that this guidance will have on the Company’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The objectives of this ASU are to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and to make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 is effective for fiscal years beginning after December 15, 20182023, and interim periods within those fiscal years.years beginning after December 15, 2024. Early adoption is permitted. The Companyadoption of ASU 2023-07 is currently evaluatingnot expected to have a significant impact on the effect that this guidance will have on itsCompany's consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures", which expands the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. This guidance is effective for the fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of ASU 2023-09 is not expected to have a significant impact on the Company’s consolidated financial statements.

F

NOTE 3:-    35

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 3:-SHORT-TERM AND LONG-TERM INVESTMENTS

Short-term and long-term investments include marketable securities in the amount of $196,771$873,976 and $129,013$1,012,286 as of December 31, 20172023 and 2016,2022, respectively and short-term bank deposits in the amounts of $22,068 and $29,657 as of December 31, 2023 and 2022, respectively.

F-31
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:- SHORT-TERM INVESTMENTS (Cont.)



The following table summarizes amortized costs, gross unrealized gains and losses and estimated fair values of available-for-sale marketable securities as of December 31, 20172023 and 2016:2022:
  Amortized cost  Gross unrealized gains  Gross unrealized losses  Estimated fair value (Level 2 within the fair value hierarchy) 
  December 31,  December 31,  December 31,  December 31, 
  2017  2016  2017  2016  2017  2016  2017  2016 
                         
Corporate debentures $189,836  $122,335  $9  $91  $908  $225  $188,937  $122,201 
U.S. Treasuries  7,007   7,008   -   -   170   196   6,837   6,812 
U.S. Government Agencies  998   -   -   -   1   -   997   - 
                                 
  $197,841  $129,343  $9  $91  $1,079  $421  $196,771  $129,013 

Amortized costGross unrealized gainsGross unrealized lossesEstimated fair value (Level 2 within the fair value hierarchy)
December 31,December 31,December 31,December 31,
20232022202320222023202220232022
Corporate debentures$835,856 $986,803 $1,299 $180 $(16,582)$(37,408)$820,573 $949,574 
U.S. Treasuries51,207 42,317 93 96 (741)(984)50,559 41,428 
U.S. Government Agencies2,841 22,238 3 12 — (968)2,844 21,284 
$889,904 $1,051,358 $1,395 $288 $(17,323)$(39,360)$873,976 $1,012,286 
The scheduled maturities of available-for-sale marketable securities as of December 31, 2017 were2023 are as follows:

  Amortized  Estimated 
  cost  fair value 
       
Due within one year $64,055  $63,951 
Due after one year through five years  133,786   132,820 
         
  $197,841  $196,771 

Amortized
cost		Estimated
fair value
Due within one year$531,021 $518,153 
Due after one year through five years358,883 355,823 
$889,904 $873,976 
Investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values as of December 31, 20172023 and 2016 were2022 are as indicated in the following tables:


  December 31, 2017 
  Investments with continuous unrealized losses for less than 12 months  Investments with continuous unrealized losses for 12 months or greater  Total Investments with continuous unrealized losses 
  
Fair
value
  Unrealized losses  
Fair
value
  Unrealized losses  
Fair
value
  Unrealized losses 
                   
Corporate debentures $135,252  $(711) $49,076  $(198) $184,328  $(909)
U.S. treasuries  -   -   6,837   (170)  6,837   (170)
U.S. Government agencies  997   -   -   -   997   - 
                         
  $136,249  $(711) $55,913  $(368) $192,162  $(1,079)

December 31, 2023
Investments with continuous unrealized losses for less than 12 monthsInvestments with continuous unrealized losses for 12 months or greaterTotal Investments with continuous unrealized losses
Fair
value		Unrealized lossesFair
value		Unrealized lossesFair
value		Unrealized losses
Corporate debentures$103,904 $(993)$541,497 $(15,589)$645,401 $(16,582)
U.S. Treasuries12,369 (127)29,249 (614)41,618 (741)
$116,273 $(1,120)$570,746 $(16,203)$687,019 $(17,323)
F - 36
F-32
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:-SHORT-TERM AND LONG-TERM INVESTMENTS (Cont.)


  December 31, 2016 
  Investments with continuous unrealized losses for less than 12 months  Investments with continuous unrealized losses for 12 months or greater  Total Investments with continuous unrealized losses 
  
Fair
value
  Unrealized losses  
Fair
value
  Unrealized losses  
Fair
value
  Unrealized losses 
                   
Corporate debentures $19,444  $(137) $56,799  $(88) $76,243  $(225)
U.S. treasuries  -   -   6,812   (196)  6,812   (196)
                         
  $19,444  $(137) $63,611  $(284) $83,055  $(421)

December 31, 2022
Investments with continuous unrealized losses for less than 12 monthsInvestments with continuous unrealized losses for 12 months or greaterTotal Investments with continuous unrealized losses
Fair
value		Unrealized lossesFair
value		Unrealized lossesFair
value		Unrealized losses
Corporate debentures$404,393 $(14,198)$508,180 $(23,210)$912,573 $(37,408)
U.S. Treasuries32,501 (984)— — 32,501 (984)
U.S. Government Agencies3,344 (157)15,195 (811)18,539 (968)
$440,238 $(15,339)$523,375 $(24,021)$963,613 $(39,360)
NOTE 4:-PREPAID EXPENSES AND OTHER CURRENT ASSETS



  December 31, 
  2017  2016 
       
Government authorities $26,275  $23,312 
Interest receivable  2,042   804 
Prepaid expenses  26,688   24,863 
Inventories  9,013   4,716 
Prepaid expenses and other current assets of discontinued operations  2,042   3,734 
Other  4,014   4,271 
  $70,074  $61,700 
NOTE 4:-    PREPAID EXPENSES AND OTHER CURRENT ASSETS
NOTE 5:-OTHER LONG-TERM ASSETS


December 31,
20232022
Government authorities$90,455 $88,790 
Interest receivable1,124 869 
Prepaid expenses90,017 95,088 
Other16,371 20,007 
$197,967 $204,754 
  December 31, 
  2017  2016 
       
Severance pay fund $14,859  $14,701 
Long-term deposits  3,637   3,000 
Investments in affiliate  1,000   1,000 
         
  $19,496  $18,701 


NOTE 5:-    PREPAID EXPENSES AND OTHER LONG-TERM ASSETS
December 31,
20232022
Deferred commission costs$129,687 $138,861 
Severance pay fund11,808 11,967 
Prepaid expenses74,421 74,819 
Other3,416 5,849 
$219,332 $231,496 

F - 37
F-33

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 6:-PROPERTY
NICE LTD. AND EQUIPMENT, NETITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 6:-    PROPERTY AND EQUIPMENT, NET
 December 31, 
 2017  2016 
December 31,December 31,
202320232022
Cost:      
Computers and peripheral equipment
Computers and peripheral equipment
Computers and peripheral equipment $212,449  $181,738 
Internal use software  37,948   9,882 
Office furniture and equipment  12,030   13,982 
Leasehold improvements  53,266   48,573 
        
  315,693   254,175 
604,105
Accumulated depreciation:        
Computers and peripheral equipment
Computers and peripheral equipment
Computers and peripheral equipment  163,162   139,066 
Internal use software  2,924   - 
Office furniture and equipment  6,614   7,847 
Leasehold improvements  24,718   19,584 
        
  197,418   166,497 
        
429,691
Depreciated cost $118,275  $87,678 


Depreciation expense totaled $37,924, $18,422$74,907; $71,460 and $15,575$65,411 for the years 2017, 2016ended December 31, 2023, 2022 and 2015,2021, respectively.

The Company recorded a reduction of $6,790$34,692 and $10,941$8,279 to the cost and accumulated depreciation of fully depreciated equipment and leasehold improvements no longer in use for the years ended December 31, 20172023 and 2016,2022, respectively.

NOTE 7:-    OTHER INTANGIBLE ASSETS, NET
a.Finite-lived other intangible assets:
December 31,
20232022
Original amounts:
Core technology$821,835 $674,729 
Customer relationships and backlog334,881 296,712 
Trademarks50,072 44,899 
1,206,788 1,016,340 
Accumulated amortization:
Core technology581,930 503,421 
Customer relationships and backlog281,032 270,280 
Trademarks38,325 33,034 
901,287 806,735 
Other intangible assets, net$305,501 $209,605 

F - 38
F-34
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 7:-OTHER INTANGIBLE ASSETS, NET (Cont.)

b.Amortization expense amounted to $92,445; $105,086 and $118,681 for the years ended December 31, 2023, 2022 and 2021, respectively.
a.         Definite-lived otherc.Estimated intangible assets:asset amortization expense:


  December 31, 
  2017  2016 
Original amounts:      
Core technology $673,291  $623,274 
Customer relationships, backlog and distribution network  382,031   372,438 
Trademarks  56,196   55,745 
         
   1,111,518   1,051,457 
Accumulated amortization:        
Core technology  315,665   238,898 
Customer relationships and distribution network  225,951   181,123 
Trademarks  18,555   12,701 
         
   560,171   432,722 
         
Other intangible assets, net $551,347  $618,735 
For the year ended December 31,
2024$110,478 
202563,243 
202657,831 
202738,658 
202834,829 
Thereafter462 
$305,501 


b.Amortization expense amounted to $118,377, $58,968 and $40,055 for the years ended December 31, 2017, 2016 and 2015, respectively.

c.The Company recorded a reduction $9,677 amounts and accumulated amortization of fully amortized other intangible assets for the years ended December 31, 2016. In 2017 there was no such reduction.

d.Estimated amortization expense:

For the year ended December 31,
   
    
2018 $102,561 
2019  99,091 
2020  93,837 
2021  85,822 
2022 and thereafter  170,036 
     
  $551,347 

F NOTE 8:-    39
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8:-GOODWILL

Following the Company's acquisitions in 2017,2023 and 2022, as described in Note 1b, the changes in the carrying amount of goodwill allocated to reportable segments for the years ended December 31, 20172023 and 20162022 are as follows:

Year ended December 31, 2023
Customer EngagementFinancial Crime and ComplianceTotal
As of January 1, 2023$1,269,610 $347,508 $1,617,118 
Acquisitions194,990 1,885 196,875 
Functional currency translation adjustments7,006 970 7,976 
As of December 31, 2023$1,471,606 $350,363 $1,821,969 
 Year ended December 31, 2017 
 Customer Engagement  Financial Crime and Compliance  Total 
         
As of January 1, 2017 $1,022,198  $262,512  $1,284,710 
            
Year ended December 31, 2022Year ended December 31, 2022
Customer EngagementCustomer EngagementFinancial Crime and ComplianceTotal
As of January 1, 2022
Acquisitions (*)  24,346   -   24,346 
Functional currency translation adjustments  7,378   1,808   9,186 
            
As of December 31, 2017 $1,053,922  $264,320  $1,318,242 
As of December 31, 2022
  Year ended December 31, 2016 
  Customer Engagement  Financial Crime and Compliance  Total 
          
As of January 1, 2016 $384,808  $266,304  $651,112 
             
Acquisitions (**)  651,892   -   651,892 
Functional currency translation adjustments  (14,502)  (3,792)  (18,294)
             
As of December 31, 2016 $1,022,198  $262,512  $1,284,710 

(*)Includes a reduction of $3,799 of goodwill in respect of 2016 acquisition resulted from a finalization of purchase price allocation.

(**)Including a goodwill balance of $559,372 related to the acquisition of inContact.

(*)Including adjustment of ($276) resulting from finalization of purchase price allocations with respect to 2021.
F - 40
F-35
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9:-ACCRUED EXPENSES
NICE LTD. AND OTHER LIABILITIESITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 9:-    ACCRUED EXPENSES AND OTHER LIABILITIES
 December 31, 
 2017  2016 
      
Employees and payroll accruals $142,182  $118,599 
December 31,December 31,
202320232022
Payroll and related expenses
Accrued expenses  80,893   86,236 
Government authorities  79,515   67,218 
Accrued expenses and other liabilities of discontinued operations  189   3,077 
Other  6,571   1,081 
        
 $309,350  $276,211 
$

NOTE 10:-
NOTE 10:-    DERIVATIVE INSTRUMENTS

The Company's risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates.

ASC 815, "Derivatives and Hedging" ("ASC 815"), requires the Company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a companyan entity must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

For derivativeGains and losses on derivatives instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that isare attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component ofare recorded in accumulated other comprehensive income (loss) and reclassified into earningsthe statement of income in the line item associated with the hedged transactionsame accounting period in the period or periods during which the designated forecasted transaction or hedged transactionitem affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item representing the ineffective portion of the derivative, if any, is recognized in financial income (expense) in the period of change.

The Company entered into option and forward contracts to hedge a portion of anticipated New Israeli Shekel ("NIS") and, Indian Rupee (INR)("INR") and Philippine peso ("PHP") payroll and benefit payments as well as facilities related payments. These derivative instruments are designated as cash flow hedges, as defined by ASC 815 and accordingly are measured inat fair value. These transactions are effective and, as a result, gain or loss on the derivative instruments are reported as a component of accumulated other comprehensive income (loss) and reclassified as payroll expenses, facility expenses or finance expenses, respectively, at the time that the hedged income/expense is recorded.

Notional amountFair value
(Level 2 within the fair value hierarchy)
December 31,December 31,
2023202220232022
Forward contracts
expenses NIS107,940 111,253 253 (7,862)
expenses INR62,023 46,406 147 (1,379)
expenses PHP11,577 11,235 302 651 
$181,540 $168,894 $702 $(8,590)

F - 41
F-36

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10:-DERIVATIVE INSTRUMENTS (Cont.)

  Notional amount  
Fair value
(Level 2 within the fair value hierarchy)
 
  December 31,  December 31, 
  2017  2016  2017  2016 
             
Option contracts to hedge payroll            
  expenses ILS $4,000  $43,600   46  $107 
  expenses INR  17,800   12,000   232   4 
Option contracts to hedge facility expenses INR  1,846   -   19   - 
Forward contracts to hedge payroll                
  expenses ILS  30,000   52,000   947   (212)
  expenses INR  400   -   6   - 
Forward contracts to hedge facility expenses ILS  -   2,549   -   10 
                 
  $54,046  $110,149  $1,250  $(91)

The Company currently hedges its exposure to the variability in future cash flows, generally for a maximum period of one year. As of December 31, 2017,2023, the Company expects to reclassify all of its unrealized gains and losses from accumulated other comprehensive income to earnings during the next twelvefifteen months.

The fair value of the Company's outstanding derivative instruments at December 31, 20172023 and 20162022 is summarized below:

    Fair value of derivative instruments 
    December 31, 
 
Balance sheet line item
 2017  2016 
Derivative assets:       
Foreign exchange option contractsPrepaid expenses and other current assets $297  $111 
Foreign exchange forward contractsPrepaid expenses and other current assets $953  $10 
          
Derivative liabilities:         
Foreign exchange option contractsAccrued expenses and other liabilities $-  $- 
Foreign exchange forward contractsAccrued expenses and other liabilities $-  $(212)
F - 42
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10:-DERIVATIVE INSTRUMENTS (Cont.)

Fair value of derivative instruments
December 31,
Balance sheet line item20232022
Derivative assets:
Foreign exchange forward contractsPrepaid expenses and other current assets$702 $651 
Derivative liabilities:
Foreign exchange forward contractsAccrued expenses and other liabilities$— $(9,241)
The effect of derivative instruments in cash flow hedging relationship on income and other comprehensive income for the years ended December 31, 2017, 20162023, 2022 and 20152021 is summarized below:

  
Amount of gain (loss) recognized in
other comprehensive income
on derivative (effective portion)
 
  Year ended December 31, 
  2017  2016  2015 
Derivatives in foreign exchange cash flow hedging relationships:         
Forward contracts $160  $202  $- 
Option contracts  1,075   (802)  954 
             
  $1,235  $(600) $954 

Amount of gain (loss) recognized in
other comprehensive income
on derivative, net of tax (effective portion)
Year Ended December 31,
202320222021
Derivatives in foreign exchange cash flow hedging relationships:
Forward contracts$(5,300)$(18,223)$4,993 
Option contracts— — 31 
$(5,300)$(18,223)$5,024 
Derivatives in foreign exchange cash flow hedging relationships:

 
Amount of gain (loss) reclassified from other comprehensive income into income (expenses)
(effective portion)
 
 Year ended December 31, 
Statements of income lime item 2017  2016  2015 
Option contractsCost of revenues, operating expenses and discontinued operations $(2,429) $(132) $4,010 
Forward contracts to hedge payroll expensesCost of revenues and operating expenses  (3,157)      - 
    $(5,586) $(132) $4,010 
NOTE 11:-COMMITMENTS AND CONTINGENT LIABILITIES

a.Lease commitments:

The Company leases office space, office equipment and various motor vehicles under operating leases.

1.The Company's office space and office equipment are rented under several operating leases.

F - 43

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 11:-COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

Future minimum lease commitments under non-cancelable operating leasesrelationships for the years ended December 31, 2023, 2022 and 2021 is summarized below:
Amount of gain (loss) reclassified from other comprehensive income
into income (expenses),
net of tax (effective portion)
Year Ended December 31,
Statements of income line item
202320222021
Option contracts to hedge payroll and facility expensesCost of revenues and operating expenses$— $— $(771)
Forward contracts to hedge payroll and facility expensesCost of revenues, operating expenses and financial expenses13,335 7,189 (5,157)
$13,335 $7,189 $(5,928)

F-37
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 11:-    LEASES
The Company has entered into various non-cancelable operating lease agreements for certain office spaces and motor vehicles. The leases have original lease periods expiring between 2024 and 2037. The Company does not assume renewals in its determination of the lease term unless the renewals are considered as reasonably assured.
The operating lease cost for the year ended December 31, 2023 was $23,053.    
Supplemental cash flow information related to leases was as follows:    
Year ended December 31, 2023
Cash payments related to operating lease$18,469 
New right-of-use assets obtained in exchange for operating lease obligations11,257 
Maturities of lease liabilities were as follows:
Operating Leases
2024$17,962 
202516,430 
202616,477 
202715,521 
202813,634 
Thereafter66,758 
Total lease payments146,782
Less imputed interest(30,126)
Total$116,656 
2018 $18,150 
2019  17,060 
2020  14,879 
2021  13,207 
2022  14,379 
2023 and thereafter  19,392 
     
  $97,067 
Rent expenses for the years 2017, 2016 and 2015 were approximately $14,103, $23,669 and $15,880, respectively.

On October 30, 2015, the Company entered into an agreementSupplemental balance sheet information related to rent new office space in Hoboken NJ, USA. Consequently, in November 2016, the Company ceased using its offices in Paramus, NJ and Manhattan, NY, USA prior to their original contractual termination date, and the Company set to sub-lease its two former facilities in New Jersey and New York for the remainder of their respective lease terms. As a result, the Company recorded an exit activity liabilityleases was as of December 31, 2016 and recognized rent expenses in the amount of $6,457. In 2017, the Company managed to sub-lease additional space of its former facilities, and as a result, the Company recognized rent income in the amount of $3,067.

follows:
Year ended December 31, 2023
Current maturities of operating leases2.13,747 The Company
Long-term operating leases its motor vehicles under cancelable102,909 
Total operating lease agreements.liabilities$116,656 
Weighted-average remaining operating lease term9.80
Weighted-average discount rate of operating leases5.2 %


The minimum payment under these operating leases, upon cancellation of these lease agreements was $ 671 as of December 31, 2017.
F-38

Lease expenses for motor vehicles for the years 2017, 2016 and 2015 were $2,656, $2,747 and $5,103, respectively.

NICE LTD. AND ITS SUBSIDIARIES
b.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other commitments:U.S. dollars in thousands (except share and per share data)

NOTE 12:-    COMMITMENTS AND CONTINGENT LIABILITIES
a.Commitments:
The Company is also obligated under certain agreements with its suppliers to purchase licenses and hosting services. These non-cancelable obligations as of December 31, 2017 and 2016 were $30,831 and $22,207, respectively.2023 are $425,702.

F - 44
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 11:-COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

c.          b.Legal proceedings:
From time to time the Company or its subsidiaries may be involved in legal proceedings and/or litigation arising in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, the Company does not believe it will have a material effect on its consolidated financial position, results of operations, or cash flows.
c.Bank Guarantees:
The Company obtained bank guarantees as of December 31, 2023 of $2,986, primarily in connection with office lease agreements.
1.In May 2009, inContact was served a lawsuit titled California College, Inc., et al., v. UCN, Inc., et al. in connection with the sale of services with those Insidesales.com, Inc. California College originally sought damages in excess of $20,000. Insidesales.com and inContact filed cross-claims against one another, which they subsequently agreed to dismiss with prejudice. In October 2011, California College reached a settlement with Insidesales.com, the terms of which have not been disclosed and remain confidential. In June of 2013, California College amended its damages claim to $14,400, of which approximately $5,000 was alleged to be pre-judgment interest. On September 10, 2013, the court issued an order on inContact's Motion for Partial Summary Judgment. The court determined that factual disputes exist as to several of the claims, but dismissed California College's cause of action for intentional interference with prospective economic relations and the claim for prejudgment interest. Dismissing the claim for prejudgment interest effectively reduced the claim for damages to approximately $9,200. The trial court granted inContact’s motion to stay the trial without date pending an interlocutory appeal to the Utah Supreme Court of the trial court’s ruling with respect to allowing California College’s experts to testify at trial. The briefs were filed in the matter and oral arguments were made in August 2017. The Utah Court of Appeals has yet to rule on the matter. At this stage we are unable to evaluate the probability of a favorable or unfavorable outcome in this litigation.

NOTE 13:-    TAXES ON INCOME
2.From time to time the Company or its subsidiaries may be involved in legal proceedings and/or litigation arising in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, the Company does not believe it will have a material effect on its consolidated financial position, results of operations, or cash flows.
a.Israeli taxation:
NOTE 12:-TAXES ON INCOME

a.Israeli taxation:

1.Corporate tax:

1.Corporate tax:
Commencing 2012, NICE Ltd. and its Israeli subsidiary elected the Preferred Enterprise regime to apply under the Law for the Encouragement of Capital Investments (the “Investment Law”"Investment Law"). The election is irrevocable. Under the Preferred Enterprise Regime, from 2015 through 2016, NICE Ltd. and its Israeli subsidiary's entire preferred income was subject to the tax rate of 16%.

F - 45

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 12:-TAXES ON INCOME (Cont.)

In December 2016, the Israeli Knesset passed a number of changes to the Investments Law regimes. These changes came into law in May 2017, retroactively effective beginning January 1, 2017, upon the passing into law of Regulations promulgated by the Finance Ministry to implement the “Nexus Principles”"Nexus Principles" based on OECD guidelines published as part of the Base Erosion and Profit Shifting (BEPS) project. Such Regulations provide rules for implementation of the new beneficial Preferred Technology Enterprise tax regime.

The Company believes it qualifies in tax year 2017 as a Preferred Technology Enterprise and accordingly beis eligible for a tax rate of 12% on its qualifying preferred technology income, as defined in such regulations, beginning from tax year 2017 and onwards. The Company expects that it will continue to qualify as a Preferred Technology Enterprise in 2018 and subsequent tax years.

Income not eligible for Preferred Enterprise or Preferred Technology Enterprise benefits is taxed at the regular corporate tax rate, which is 24% in 2017, was 25% in 2016 and 26.5% in 2015. This rate is further scheduled to be reduced toremains 23% in 20182023 (23% in 2022 and thereafter.2021).

Prior to 2012, most of NICE Ltd. and its Israeli subsidiary's income was exempt from tax or subject to reduced tax rates under the Investment Law. Upon distribution of exempt income, the distributing company was subject to reduced corporate tax rates ordinarily applicable to such income under the Investment Law. Currently, income subjected to a reduced tax rate under the Preferred Enterprise and Preferred Technology Enterprise Regime will be freely distributable as dividends, subject to a 20% withholding tax (or lower, under an applicable tax treaty). However, upon the distribution of a dividend from such Preferred Income to an Israeli company, no withholding tax will be imposed.

Pursuant to a temporary tax relief initiated by the Israeli government, a company that elected by November 11, 2013 to pay a reduced corporate tax rate as set forth in the temporary tax relief with respect to undistributed exempt income generated under the Investment Law accumulated by the company until December 31, 2011 is entitled to distribute a dividend from such income without being required to pay additional corporate tax with respect to such dividend. A company that has so elected must make certain qualified investments in Israel over a five-year period. A company that has elected to apply the temporary tax relief cannot withdraw from its election. The election did not require the actual distribution of these previously tax-exempted earnings.

In September 2013, the Company made the election and duly released all of NICE and its Israeli subsidiary’s tax-exempted income through 2011 related to their various pre 2012 programs under the Investment Law. As a result of the election and the related settlement of a routine multi-year tax audit, the Company recorded an expense of $19,200 and paid an amount of approximately $32,000. The Company believes that it has fulfilled its commitment to make certain investments in "industrial projects" (as defined in the Law), as was required to be completed by December 31, 2017. Additionally, the Company believes that this commitment has already been fulfilled during 2013 as part of its existing investment plans. Further to the election, NICE no longer has a tax liability upon future distributions of its tax-exempted earnings, while the Israeli subsidiary may have a tax liability upon future distributions only with respect to its 2012 tax-exempted earnings.

F - 46

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 12:-TAXES ON INCOME (Cont.)

2.Foreign Exchange Regulations:

2.Foreign Exchange Regulations:
Under the Foreign Exchange Regulations, NICE Ltd. and its Israeli subsidiary calculate their tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars, is translated into New Israeli ShekelsNIS according to the exchange rate as of December 31st of each year.

F-39
NICE LTD. AND ITS SUBSIDIARIES
3.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tax benefits under the Israeli Law for the Encouragement of Industry (Taxation), 1969:U.S. dollars in thousands (except share and per share data)
NOTE 13:- TAXES ON INCOME (Cont.)

3.Tax benefits under the Israeli Law for the Encouragement of Industry (Taxation), 1969:
NICE Ltd. and its Israeli subsidiary believe they each currently qualify as an "Industrial Company" as defined by the above lawInvestment Law and, as such, isare entitled to certain tax benefits including accelerated depreciation, deduction of public offering expenses in three equal annual installments and amortization of cost of purchased know-how and patents for tax purposes over 8 years.

b.Income taxes on non-Israeli subsidiaries:

b.Income taxes on non-Israeli subsidiaries:
Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of residence. The Company's consolidated tax rate depends on the geographical mix of where its profits are earned. Primarily, in 2017,In 2023, the Company's U.S. subsidiaries are subject to combined federal and state income taxes of approximately 39%25.1% and its subsidiaries in the U.K. and India are subject to corporation tax at a rate of approximately 19%.23.5% and 34.9%, respectively. Neither Israeli income taxes, foreign withholding taxes nor deferred income taxes were provided in relation to undistributed earnings of the Company's foreign subsidiaries. This is because the Company has the intent and ability to reinvest these earnings indefinitely in the foreign subsidiaries and therefore those earnings are continually redeployed in those jurisdictions. As of December 31, 2017,2023, the amount of undistributed earnings of non-Israeli subsidiaries, which is considered indefinitely reinvested, was $ 349,888$1,767,539 with a corresponding unrecognized deferred tax liability of $ 64,144.$227,648. If these earnings were distributed to Israel in the form of dividends or otherwise, the Company would be subject to additional Israeli income taxes, (subjectsubject to an adjustment for foreign tax credits)credits, and foreign withholding taxes.

c.U.S. Tax:
c.U.S. Tax Reform:

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “U.S."U.S. Tax Reform”Reform" or "TCJA");, a comprehensive tax legislation that includes significantseveral key tax changes to the taxation of business entities,. These changes include several key tax provisions among which is the change to IRS Section 174, that might impact the Company, among others: (i) a permanent reduction to the statutory federal corporate income tax rate from 35% to 21% effectivewent into effect for taxtaxable years beginning after December 31, 2017; (ii)2021, requiring research and development expenses to be capitalized and amortized over a partial limitation onperiod of either five or fifteen years. Prior to this change, the research and development expenses could be fully expensed, as incurred, for tax deductibility of business interest expense; (iii) a shiftpurposes.

The final impact of the U.S. taxation of multinational corporations from a tax on worldwide incomeTCJA may differ due to, a territorial system (along with certain rules designed to prevent erosion ofamong other things, possible changes in the U.S. income tax base)interpretations and (iv) a one-time deemed repatriation tax on accumulated offshore earnings held in cash and illiquid assets, with the latter taxed at a lower rate.

F - 47
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12:-TAXES ON INCOME (Cont.)

Due to the timing of the enactment and the complexity involved in applying the provisions of the U.S. Tax Reform,assumptions made by the Company has made reasonable estimates of the effects and recorded provisional amounts in the financial statements as of December 31, 2017. As the Company collects and prepares necessary data, and interprets the U.S. Tax Reform and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts. Those adjustments may impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the U.S. Tax Reform will be completed in 2018 with accordance with SAB 118.

Provisional amounts for the following income tax effects of the U.S. Tax Reform have been recorded as of December 31, 2017 and are subject to change during 2018.

Deferred tax effects

As a result of the U.S. Tax Reform and the reduced U.S. corporate income tax rate, the Company has remeasured its deferred taxes as of December 31, 2017 to reflect the reduced rate that will apply in future periods, when these deferred taxes are settled or realized. The remeasurement resulted in the Company’s recognition of a deferred tax benefit of $31,000.

As the Company completes its analysis of the U.S. Tax Reform and incorporatesadditional information, additional guidance or finalization of law and regulations that maywill be issued by the U.S. Department of Treasury, Department, the IRS or other standard-setting bodies, and which may impact the Company may identify additional effects not reflected as of December 31, 2017.Company's future financial statements, and will be accounted for when such guidance is issued.


d.Net operating loss carryforward:

d.Net operating loss carryforward:
As of December 31, 2017,2023, the Company and certain of its subsidiaries had tax loss carry-forwards totaling in aggregate approximately $335,360$316,962, which can be carried forward and offset against taxable income. Approximately $69,053$238,065 of these carry-forward tax losses have no expiration date, with the balance expiring between 2018the years 2023 and 2037.

2041.
Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses increasing taxes before utilization.



F-40
NICE LTD. AND ITS SUBSIDIARIES
e.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assetsU.S. dollars in thousands (except share and liabilities:per share data)
NOTE 13:- TAXES ON INCOME (Cont.)

e.Deferred tax assets and liabilities:
Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts recorded for tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:follows :

December 31,
20232022
Deferred tax assets:
Net operating losses carryforward and tax credits$96,079 $51,924 
Intra-entity transfer of certain intangible assets (*)14,563 17,252 
Operating leases liabilities18,820 22,878 
Share based payments37,110 38,206 
Research and development costs112,311 62,695 
Reserves, allowances and other55,124 54,774 
Deferred tax assets before valuation allowance334,007 247,729 
Valuation allowance(19,818)(12,569)
Deferred tax assets314,189 235,160 
Deferred tax liabilities:
Acquired intangibles(75,396)(43,385)
Operating lease right-of-use assets(15,813)(20,160)
Acquired deferred revenue— (565)
Internal use software and other fixed assets(18,650)(24,766)
Prepaid compensation expenses(33,936)(36,724)
Other(19)(7)
Deferred tax liabilities(143,814)(125,607)
Deferred tax assets, net$170,375 $109,553 
F - 48
(*) During the years ended December 31, 2023 and 2022, the Company completed intra-entity transfers of certain intangible assets to a different tax jurisdiction. As a result of the transfers, the Company utilized net operating losses carried forward, incurred a tax expense on capital gain, released valuation allowances and recorded a deferred tax asset.


NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 12:-TAXES ON INCOME (Cont.)

  December 31, 
  2017  2016 
Deferred tax assets:      
Net operating losses carryforward and tax credits $79,196  $82,243 
Share based payments  16,142   17,299 
Research and development costs  3,606   4,246 
Reserves, allowances and other  8,915   8,507 
         
Deferred tax assets before valuation allowance  107,859   112,295 
Valuation allowance  (8,853)  (8,839)
         
Deferred tax assets  99,006   103,456 
         
Deferred tax liabilities:        
Acquired intangibles  (142,352)  (231,645)
Acquired deferred revenue  (2,600)  (4,670)
         
Deferred tax liabilities  (144,952)  (236,315)
         
Deferred tax liabilities, net $(45,946) $(132,859)
  December 31, 
  2017  2016 
       
Deferred tax assets $11,850  $14,093 
Deferred tax liabilities  (57,796)  (146,952)
         
Deferred tax liabilities, net $(45,946) $(132,859)

December 31,
20232022
Deferred tax assets$178,971 $116,889 
Deferred tax liabilities(8,596)(7,336)
Deferred tax assets, net$170,375 $109,553 
The Company has provided valuation allowances in respect of certain deferred tax assets resulting from tax loss carry forwards and other reserves and allowances due to uncertainty concerning their realization.

F - 49
F-41
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12:13:-TAXES ON INCOME (Cont.)

f.A reconciliation of the Company's effective tax rate to the statutory tax rate in Israel is as follows:
Year Ended December 31,
202320222021
Income before taxes on income, as reported in the consolidated statements of income$457,700$345,332$240,619
Statutory tax rate in Israel23.0 %23.0 %23.0 %
Preferred Enterprise / Preferred Technology Enterprise benefits (*)(6.8)%(3.3)%(2.2)%
Changes in valuation allowance1.6 %0.5 %1.0 %
Earnings taxed under foreign law(0.9)%0.7 %0.2 %
Tax settlements and prior years adjustments4.4 %0.4 %(1.8)%
Intangible assets transfer— %— %(1.7)%
Other4.7 %1.7 %(1.3)%
Effective tax rate26.1 %23.0 %17.2 %
(*) The effect of the benefit resulting from the "Preferred Enterprise/Preferred Technology Enterprise benefits" status on net earnings per ordinary share is as follows
Year Ended December 31,
202320222021
Basic$0.49 $0.18 $0.08 
Diluted$0.47 $0.19 $0.08 
g.Income before taxes on income is comprised as follows:
Year Ended December 31,
202320222021
Domestic$195,203 $102,500 $53,703 
Foreign262,497 242,832 186,916 
$457,700 $345,332 $240,619 

F-42
NICE LTD. AND ITS SUBSIDIARIES
f.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the Company's effective tax rate to the statutory tax rateU.S. dollars in Israel is as follows:thousands (except share and per share data)

  Year ended December 31, 
  2017  2016  2015 
          
Income before taxes on income, as reported in the consolidated statements of income $129,660  $144,481  $171,410 
             
Statutory tax rate in Israel  24.0%  25.0%  26.5%
Preferred Enterprise benefits (*)  (16.8%)  (8.9%)  (6.1%)
Changes in valuation allowance  0.0%  1.0%  (0.4%)
Earnings taxed under foreign law  (4.6%)  (7.7%)  (4.0%)
Tax settlements and other adjustments  14.3%  5.8%  1.1%
U.S. Tax Reform one-time adjustment  (23.9%)  -   - 
Other  (3.5%)  (0.4%)  0.9%
             
Effective tax rate  (10.5%)  14.8%  18.0%

(*)The effect of the benefit resulting from the "Preferred Enterprise" status on net earnings per ordinary share is as follows:

  Year ended December 31, 
  2017  2016  2015 
          
Basic $0.36  $0.22  $0.18 
             
Diluted $0.35  $0.21  $0.17 

g.Income before taxes on income is comprised as follows:

  Year ended December 31, 
  2017  2016  2015 
          
Domestic $188,070  $131,111  $122,952 
Foreign  (58,410)  13,370   48,458 
             
  $129,660  $144,481  $171,410 

F NOTE 13:- 50

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 12:-TAXES ON INCOME (Cont.)

h.Taxes on income (tax benefit) are comprised as follows:

  Year ended December 31, 
  2017  2016  2015 
          
Current $57,174  $47,318  $23,978 
Deferred  (70,805)  (25,906)  6,854 
             
  $(13,631) $21,412  $30,832 
             
Domestic $27,673  $28,097  $24,812 
Foreign  (41,304)  (6,685)  6,020 
             
  $(13,631) $21,412  $30,832 

Year Ended December 31,
202320222021
  Current$182,789 $132,129 $80,903 
 Deferred(63,390)(52,742)(39,507)
119,399 79,387 41,396 
Domestic51,334 28,853 16,171 
Foreign68,065 50,534 25,225 
$119,399 $79,387 $41,396 
Of which:

Year Ended December 31,
202320222021
Domestic taxes:
Current$50,414 $29,576 $27,400 
Deferred920 (723)(11,229)
51,334 28,853 16,171 
Foreign taxes:
Current132,375 102,553 53,503 
Deferred(64,310)(52,019)(28,278)
68,065 50,534 25,225 
Taxes on income$119,399 $79,387 $41,396 
  Year ended December 31, 
  2017  2016  2015 
          
Domestic taxes:         
Current $22,808  $27,932  $14,860 
Deferred  4,865   165   9,952 
             
   27,673   28,097   24,812 
Foreign taxes:            
Current  34,366   19,386   9,118��
Deferred  (75,670)  (26,071)  (3,098)
             
   (41,304)  (6,685)  6,020 
             
Taxes on income (tax benefit) $(13,631) $21,412  $30,832 


F - 51
F-43
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12:13:-TAXES ON INCOME (Cont.)

i.Uncertain tax positions:

A reconciliation of the beginning and ending balances of the total amounts of unrecognizeduncertain tax benefitsposition is as follows:


 December 31, 
 2017  2016 
      
December 31,December 31,
202320232022
Uncertain tax positions, beginning of year $26,659  $18,236 
Increases in tax positions for prior years  5,105   2,147 
Increases in tax positions for current year  15,140   9,926 
Settlements  -   (1,331)
Expiry of the statute of limitations  (2,920)  (2,319)
        
Uncertain tax positions, end of year $43,984  $26,659 
Uncertain tax positions, end of year
Uncertain tax positions, end of year

All the Company's unrecognized tax benefits would, if recognized, reduce the Company's annual effective tax rate. The Company has further accrued $1,262$38,347 and $206$22,285 due to interest and penalties related to uncertain tax positions as of December 31, 20172023 and 20162022, respectively.

During 2017, prior tax years in the US andcourse of 2019, upon receipt of an information letter, the Company's United Kingdom Subsidiary Group elected to register for the United Kingdom were closed by way ofProfits Diversion Compliance Facility, covering the expiration ofyears 2015-2018. During December 2021 and 2022, this was extended to include the statute of limitations. The Company is currentlyyears 2019 and 2020 respectively.

NICE Ltd. and its foreign affiliates in Hungary and in the process ofUnited Kingdom (“Foreign Affiliates”) are undergoing routine Israeli income tax audits for the tax years 20132011 through 2015. The U.S. subsidiaries2021. On December 30, 2020, February 28, 2022 and on February 20, 2023 NICE Ltd. received a final assessments by way of Tax Decrees (“Tax Decrees”) from the Israel Tax Authority (“ITA”) with respect to its fiscal years 2014 through 2016 for an aggregate amount of tax of approximately NIS 154,869 (equivalent to approximately $43,127). On March 22, 2023, August 20, 2023, and on December 7, 2023 NICE Ltd.’s Foreign Affiliates received Tax Decrees from the ITA with respect to its fiscal years 2011 through 2015, for an aggregate amount of tax of approximately NIS 399,891 (equivalent to approximately $111,360). On December 28, 2022, NICE Ltd. received an assessment from the ITA with respect to its fiscal years 2017 (“Assessment”), for an aggregate amount of tax of approximately NIS 53,033 (equivalent to approximately $14,769) On December 6, 2023, NICE Ltd. received an assessment from the ITA with respect to its fiscal years 2018 through 2021, for an aggregate amount of tax of approximately NIS 47,320 (equivalent to approximately $13,177). Nice Ltd. and its affiliates had filed number of appeals and objections in relation to the different assessments and decrees mentioned above with the district court of Tel Aviv. In addition, the ITA, NICE Ltd and NICE Ltd.’s Foreign Affiliates are currently in discussions in an effort to resolve these matters in a mutually agreeable manner. We believe our recorded unrecognized tax benefits are sufficient to cover the process of a routine Internal Revenue Service auditresolution of the tax year 2014 consolidated U.S. Federal tax return. ITA’s Tax Decreases and the Assessments.
As of December 31, 2017,2023, U.S. federal income tax returns filed by the Company's U.S. subsidiaries for the tax years prior to 2020 are no longer subject to general audit. To the extent the Company or its subsidiaries generated net operating losses or tax credits in closed tax years, future use of the net operating loss or tax credit carry forward balance would be subject to examination within the relevant statute of limitations for the year in which it was utilized. The Company and its subsidiaries are still subject to U.S. federal income tax audits for the tax years of 2014 through 2016 and to other income tax audits for the tax years of 20122011 through 2016.2022.
F-44
NOTE 13:-
NICE LTD. AND ITS SUBSIDIARIES
SHAREHOLDERS' EQUITY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 14:-    SHAREHOLDERS' EQUITY
a.The Ordinary shares of the Company are traded on the Tel-Aviv Stock Exchange and its American Depositary Shares (“ADSs”), each representing one fully paid ordinary share, par value NIS 1.00 per share of the Company are traded on NASDAQ.
a.The ordinary shares, par value NIS 1.0 per share, of the Company are traded on the Tel-Aviv Stock Exchange and its American Depositary Shares ("ADSs"), each representing one fully paid ordinary share, are traded on The NASDAQ Stock Market.

b.Share option plans:plan:

2008 and 2016 Share Incentive Plan

In June 2008 the Company adopted the 2008 Share Incentive Plan (the “2008 Plan”) and in February 2016 the Company adopted the 2016 Share Incentive Plan (the “2016 Plan” and together with the 2008 Plan the “Plans”)."2016 Plan" ). The Company adopted the Plans2016 Plan to provide incentives to employees, directors, consultants and/or contractors by rewarding performance and encouraging behavior that will improve the Company’s profitability.

F - 52
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:-SHAREHOLDERS' EQUITY (Cont.)

Under each of the Plans,2016 Plan, the Company's employees, directors, consultants and/or contractors may be granted any equity-related award, includingincluding: any type of an option to acquire the CompanyCompany's ordinary shares; share appreciation right; share and/or restricted share award (“RSA”("RSA"); restricted stock unit (“RSU”("RSU") and/or other share unit; and/or other share-based award and/or other right or benefit under the Plans,2016 Plan, including any such equity-related award that is a performance basedperformance-based award (each an "Award").

Generally, under the terms of the 2016 Plan, and unless determined otherwise by the Board of Directors, 25% of the restricted share units and par value options granted become vested on each of the four consecutive annual anniversaries following the date of grant. Specifically with respect to options (other than options granted at an exercise price equal to their nominal value), unless determined otherwise by the administrator of the 2016 Plan, 25% of an Award granted becomes exercisable on the first anniversary of the date of grant and 6.25% becomes exercisable once every quarter during the subsequent three years. Specifically with respect to RSUs and options granted with an exercise price equal to the nominal value of an ordinary share ("par value options"), unless determined otherwise by the Board of Directors, 25% of the RSUs and the par value options granted become vested on each of the four consecutive annual anniversaries following the date of grant. Certain executive officers are entitled to acceleration of vesting of awardsAwards in the event of a change of control, subject to certain conditions.
Awards with a vesting period expire six years after the date of grant. OptionsPursuant to a resolution of the Company's Board of Directors dated February 4, 2014, options that are performance-based and that were granted during calendar year 2014 and thereafter shall expire seven years following the date of grant. The 2016 Plan provides that themaximum number of shares that may be subject to Awards granted under each of the 2016 Plan shall be an amount perPlans is calculated each calendar year equal to 3.5%as 3% of the CompanyCompany’s issued and outstanding share capital as of December 31 of the preceding calendar year.year (pursuant to an amendment of the 2016 Plan approved by the Board of Directors on October 2, 2019). Such amount is reset for each calendar year. Awards are non-transferable except by will or the laws of descent and distribution.

Options would begranted under the 2016 Plan are granted at an exercise price equal to the average of the closing prices of one ADR as quoted on the NASDAQ market during the 30 consecutive calendar days preceding the date of grant, unless determined otherwise by the administrator of the 2016 Plan (including in some cases options granted with an exercise price equal to the nominalpar value of an ordinary share)options).

The CompanyCompany’s Board of Directors also adopted an addendum to the 2016 Plan for Awards granted to grantees who are residents of Israel (the "Addendum") and resolved to elect the "Capital Gains Route" (as defined in Section 102(b)(2)) of the Israeli Income Tax OrdinanceOrdinance-5721-1961 ("Tax Ordinance") for the grant of Awards to Israeli grantees. TheThere is also a U.S. addendum ofunder the 2016 Plan provides only forthat applies to non-qualified stock options for purposes of U.S. tax laws. The 2016 Plan is generally administered by our Board of Directors and compensation committee.

During 2017, we2023, the Company granted 1,099,1411,171,880 options and restricted share units under the 2016 Plan (which constituted 1.83%1.86% of the Company issued and outstanding share capital as of December 31, 2016)2023).

F - 53
F-45
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:14:-SHAREHOLDERS' EQUITY (Cont.)

Pursuant to the terms of thecertain acquisitions, of Actimize Ltd., e-Glue Software Technologies Inc., Fizzback, Merced Causata, Nexidia and inContact, the Company assumed or replaced unvested options, RSAs and RSUs and converted them or replaced them with NICEthe Company's options, RSAs and RSUs, as applicable, based on an agreed exchange ratio. Each assumed or replaced option, RSA and RSU is subject to the same terms and conditions, including vesting, exercisability and expiration, as originally applied to any such option, RSA and RSU immediately prior to the acquisition.

The fair value of the Company's stock options granted to employees and directors for the years ended December 31, 2017, 20162023, 2022 and 20152021 was estimated using the following assumptions:

  2017 2016 2015
       
Expected volatility 21.69%-22.90% 21.05%-25.92% 23.02%-27.55%
Risk free interest rate 1.53%-2.00% 0.58%-2.04% 0.76%-1.18%
Expected dividend 0% 0%-1.00% 0%-1.29%
Expected term (in years) 3.5 3.5 3.5

202320222021
Expected volatility33.35%-35.67%29.45%-34.11%26.21%-27.87%
Risk free interest rate3.6%-4.68%1.78%-4.15%0.3%-0.93%
Expected dividend— — — 
Expected term (in years)3.53.53.5
A summary of the Company's stock options activity and related information for the year ended December 31, 2017,2023, is as follows:
  Number of options  Weighted-average exercise price  
Weighted- average remaining contractual term
(in years)
  
Aggregate intrinsic
value
 
             
Outstanding at January 1, 2017  2,273,664   23.61   4.46   102,652 
Granted  444,826   20.75         
Exercised  (813,787)  23.35         
Forfeited  (224,289)  22.85         
Cancelled  (4,284)  15.00         
                 
Outstanding at December 31, 2017  1,676,130   23.07   4.45   115,390 
                 
Exercisable at December 31, 2017  598,843   33.38   3.45   35,049 

Number of optionsWeighted-average exercise priceWeighted- average remaining contractual term
(in years)		Aggregate intrinsic
value
Outstanding at January 1, 20231,179,972 23.76 4.31200,905
Granted344,450 13.40
Exercised(217,760)11.18
Cancelled(761)2.80
Forfeited(52,107)0.30
Outstanding at December 31, 20231,253,794 24.08 4.25221,610 
Exercisable at December 31, 2023461,353 57.61 2.9667,013 
The weighted-average grant-date fair value of options granted during the years 2017, 20162023, 2022 and 20152021 was $61.54, $46.24$171.43; $198.41 and $32.58,$243.34, respectively.

F - 54
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:-SHAREHOLDERS' EQUITY (Cont.)

The total intrinsic value of options exercised, and restricted shares vested during the years 2017, 20162023, 2022 and 20152021 was $42,592, $35,664$138,202; $178,693 and $40,519,$189,408, respectively.

F-46
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:- SHAREHOLDERS' EQUITY (Cont.)
The options outstanding under the Company's stock option plans as of December 31, 20172023, have been separated into ranges of exercise price as follows:

               Weighted 
   Options  Weighted     Options  average 
   outstanding  average  Weighted  exercisable  exercise 
   as of  remaining  average  as of  price of 
Ranges of  December 31,  contractual  exercise  December 31,  options 
exercise price  2017  term  price  2017  exercisable 
      (Years)  $      $ 
                   
$0.29   922,427   4.46   0.29   197,933   0.29 
$0.69   1,888   1.90   0.69   1,888   0.69 
$6.72-9.89   8,861   6.66   7.03   6,655   7.12 
$11.40-15.16   3,301   2.73   14.09   3,301   14.09 
$17.72   934   3.20   17.72   934   17.72 
$28.64-42.92   339,873   4.12   39.15   200,777   38.61 
$43.01-64.06   211,186   4.52   52.79   90,409   59.11 
$64.61-85.14   187,660   4.83   73.63   96,946   69.36 
                       
     1,676,130   4.45   23.07   598,843   33.38 

Ranges of
exercise price		Options outstanding as of December 31, 2023Weighted
average
remaining
contractual
term		Weighted
Average
Exercise
Price		Options Exercisable as of December 31, 2023Weighted
average
exercise
price of
options
exercisable
(Years)$$
$0.25 - 0.321,088,7014.450.29312,7190.29
$6.72 -6.953811.076.843816.84
$20.44 - 24.992,1173.9821.692,11721.69
$38.06 - 54.512,4703.0247.702,46947.70
$96.74 - 151.6358,0321.27133.4458,032133.44
$197.42 - 232.2102,0933.92215.2585,635216.93
1,253,794 4.2524.08 461,353 57.61 
A summary of the Company's RSU and the Company's RSA activities and related information for the year ended December 31, 2017,2023, is as follows:
Number of RSU and
RSA (*)
Outstanding at January 1, 201720231,524,223 1,498,643
Granted827,430 654,315
Vested(515,712)(456,807)
CancelledForfeited(132,792)(250)
Forfeited(170,889)
Outstanding at December 31, 201720231,703,149 1,525,012
(*) NIS 1.0 par value, which represents approximately $0.27.
(*)NIS 1 par value which represents approximately $0.29

The weighted-average grant-date fair value of restricted shares granted during the year 2023 was $187.73.
As of December 31, 2017, there was approximately $92,650 of unrecognized2023, the total compensation expensecost related to non-vested stock options, RSUs and RSAs,awards not yet recognized was approximately $254,834, which is expected to be recognized over a period of up to four years.


F - 55
F-47
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 13:14:-SHAREHOLDERS' EQUITY (Cont.)

The total equity-based compensation expense related to all of the Company's equity-based awards recognized for the years ended December 31, 2017, 20162023, 2022 and 2015,2021 was comprised as follows:
Year ended
December 31,
202320222021
Cost of revenues$18,904 $18,535 $17,879 
Research and development, net38,047 39,747 28,558 
Selling and marketing48,022 57,114 42,021 
General and administrative78,329 73,492 67,914 
Total stock-based compensation expenses$183,302 $188,888 $156,372 
  Year ended December 31, 
  2017  2016  2015 
          
Cost of revenues $11,337  $7,878  $3,712 
Research and development, net  9,038   5,676   2,161 
Selling and marketing  23,107   16,403   11,266 
General and administrative  13,498   10,590   10,521 
             
Total stock-based compensation expenses $56,980  $40,547  $27,660 

c.Treasury shares:

c.Treasury shares:
On May 6, 2015 the Company'sFebruary 12, 2020, our Board of Directors authorized a program to repurchase up to $100,000$200,000 of the Company's issued and outstanding Ordinary shares and ADRs. On January 10, 2017 the Company announced that the Board of Directors authorized a program to repurchase up to an additional $150,000 of the Company's issued and outstanding ordinary shares and ADRs. This share repurchase programADRs, which commenced on April 7, 2017 following completion of the prior program. repurchase program that was authorized by the Company Board of Directors in 2017. On November 9, 2022, the Company Board of Directors authorized an additional program to repurchase up to $250,000 of the Company issued and outstanding ordinary shares and ADRs, which commenced following completion of the program that was authorized in 2020. On November 15, 2023, the Company Board of Directors authorized an additional program to repurchase up to $300,000 of the Company issued and outstanding ordinary shares and ADRs, which commenced following completion of the repurchase program that was authorized by the Company Board of Directors in 2022.
Repurchases may be made from time to time in the open market or in privately negotiated transactions and will be in accordance with applicable securities laws and regulations. The timing and amount of the repurchase transactions will be determined by management and may depend on a variety of factors including market conditions, alternative investment opportunities and other considerations. The
These programs do not obligate the Companyus to acquire any particular amount of ordinary shares and ADRs and theeach program may be modified or discontinued at any time without prior notice.
d.         Dividends:

On February 13, 2013, the Company announced that the Board of Directors had approved a dividend policy under which the Company intended to pay quarterly cash dividends to holders of its ordinary shares and ADRs subject to declaration by the Board from non-taxable approved enterprise earning. Under Israeli law, dividends may be paid only out of total accumulated retained profits and other surplus (as defined in the law) as of the most recent financial statements or as accrued over a period of the last two years, whichever is higher, provided that there is no reasonable concern that the dividend distribution will prevent the Company from meeting its existing and foreseeable obligations as they come due. Dividends are generally declared and paid in U.S. dollars, although the Company may pay such dividends in Israeli currency.

On January 10, 2017 the Company announced its capital return strategy to optimize the Company’s long term growth profile. In connection with adopting this strategy, the Board of Directors eliminated the dividend policy effective in the first quarter of 2017.
The total amount of annual dividend declared and paid in 2017 and 2016 was $0.16, $0.64 per share.

F NOTE 15:-    56
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:-LONG TERM DEBT

In connection with financing the acquisition of inContact (refer to Note 1b) which closed on November 14, 2016, the Company entered into a Credit Agreement with certain lenders, according to which the following credit facilities were issued: 1) a long term loan of $475,000, and 2) a revolving credit loan of up to $75,000.

The Credit Agreement contains a number of covenants and restrictions that among other things, and subject to certain agreed upon exceptions, require the Company and its subsidiaries to satisfy certain financial covenants and restricts the ability of the Company and its subsidiaries to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, declare dividends or redeem or repurchase capital stock, prepay, redeem or purchase subordinated debt and amend or otherwise alter debt agreements, in each case, subject to certain agreed upon exceptions. A failure to comply with these covenants could permit the lenders under the Credit Agreement to declare all amounts borrowed under the Credit Agreement, together with accrued interest and fees, to be immediately due and payable. As of December 31, 2017, the Company was in compliance with all covenants and requirements outlined in the Credit Agreement.

Long term loan

In January 2017, the Company prepaid a principal amount of $260,000 of the amount outstanding under the long term loan. As a result, the remaining principal of $215,000 are due on the final maturity date of the term loan facility.

As of December 31, 2017, the contractual principal payments for the long term loan are $215,000 which are due at December 31, 2021.

The long term loan bears interest through maturity at a variable rate based upon, at the Company's option every interest period, either (a) the LIBOR rate for Eurocurrency borrowing or (b) an Alternate Base Rate ("ABR"), which is the highest of (i) the administrative agent's prime rate, (ii) one-half of 1.00% in excess of the overnight U.S. Federal Funds rate, and (iii) 1.00% in excess of the one-month LIBOR), plus in each case, an applicable margin. The applicable margin for Eurocurrency loans ranges, based on the applicable total net leverage ratio, from 1.25% to 2.00% per annum and the applicable margin for ABR loans ranges, based on the applicable total net leverage ratio, from 0.25% to 1.00% per annum.

Debt issuance costs of $10,158 attributable to the long term loan are amortized as interest expense over the contractual term of the loan using the effective interest rate. Upon pre-payment of the principal $260,000 as mentioned above, the Company amortized $5,300 of debt issuance costs in addition to $1,034 amortization expenses related to debt issuance costs recorded in 2017.
F - 57
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:-LONG TERM DEBT (Cont.)

The carrying values of the liability's components are reflected in the Company's accompanying consolidated balance sheets as follows:
  December 31, 
  2017  2016 
       
Principal $215,000  $475,000 
Less: Debt issuance costs, net of amortization  (3,486)  (9,820)
         
Net liability carrying amount $211,514  $465,180 

Interest expense related to the liability is reflected on the accompanying consolidated statements of operations for the years ended December 31:

  December 31, 
  2017  2016 
       
Amortization of debt issuance costs $
6,334
  $338 
Interest expense  5,558   1,266 
         
Total interest expense recognized $11,892  $1,604 
         
 Effective interest rate  3.30%   2.84% 
Revolving credit loan

Pursuant to the Credit Agreement, the Company has also been granted a revolving credit facility that entitles the Company to borrow up to $75,000 through December 2021 with interest payable on the borrowed amount set at the same terms as the term loan, as well as a quarterly commitment fee on unfunded amounts ranging from 0.25% to 0.5%, subject to the achievement of certain leverage levels. As of December 31, 2017, no amounts had been funded.

Debt issuance costs of $1,667 attributable to the revolving credit loan are capitalized and amortized as interest expense over the contractual term of the agreement on a straight line basis.


F - 58
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 14:-LONG TERM DEBT (Cont.)
Exchangeable Senior Notes and Hedging Transactions

Exchangeable Senior2017 Notes

In January 2017, the Company issued $287,500 aggregate principal amount of Exchangeable Senior2017 Notes (the “Notes”) due 2024. The following table summarizes some key facts and terms regarding
In the outstanding exchangeable senior notes:
  Due 2024 
Issuance date January 18, 2017 
Maturity date January 15, 2024 
Principal amount $287,500 
Cash coupon rate (per annum)  1.25%
Conversion rate effective September 15, 2023 (per $1000 principal amount)  12.026 
Effective conversion price effective September 15, 2023 (per ADS) $83.15 

Subjectevent that the last reported sale price of the company’s ADS for at least 20 trading days (whether consecutive or not) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the exchange price ("Share Price Condition") or in the event of the satisfaction of certain other conditions, and during certainset periods, as defined in the
F-48
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
indenture governing the notes,Notes, the holders of the exchangeable senior notes will have the option to exchange the notesNotes for (at the Company's election) (i) cash, (ii) ADSs or (iii) a combination thereof, atthereof.
As of December 31, 2022, the Company’s election.Share Price Condition for the 2017 Notes was triggered and, accordingly, the net carrying amount of these 2017 Notes was presented in current liabilities.

NICEThe Company may provide additional ADSs upon conversion if there is a "Make-Whole Fundamental Change" in the businessCompany as defined in the indenture governing the notes.

2017 Notes. The 2017 Notes are not redeemable by the Company prior to the maturity date apart from certain cases as definedset forth in the indenture governing the Notes.notes.

On December 31, 2021, the Company entered into the First Supplemental Indenture. In accordance with the First Supplemental Indenture, the Company irrevocably elected cash settlement for the principal and any premium due upon conversion (as defined in the 2017 Indenture) to apply to all conversions of 2017 Notes with an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021.
As a result of the requirement to deliver cash to settle the principal and any premium due upon conversion, on December 31, 2021, the Company reclassified from equity to liability the conversion option (a derivative) fair value of $292,940. The conversion option will be no longer eligible for ASC 815 scope exception. Therefore, a derivative accounting for the conversion option was required.
Debt issuance costs of $5,791 attributable to the long term loan2017 Notes are amortized as interest expense over the contractual term of the loannotes using the effective interest rate.

The carrying values of the liability and equity components of the exchangeable senior notes are reflected in the Company's accompanying consolidated balance sheets as follows:
  December 31, 
  2017 
    
Principal $287,500 
Less:    
Debt issuance costs, net of amortization  (5,182)
Unamortized discount  (46,190)
Net liability carrying amount $236,128 
Equity component - net carrying value $51,176 
Interest is payable on the debentures semi-annually at the cash coupon rate;rate, however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company's estimated nonconvertible debt borrowing rate at the time of issuance.

The Company received notices for conversion of $2,039 and $2,626 of principal amount of the 2017 Notes in 2022 and 2023, respectively, for which $20,132 and $2,623 were settled in 2022 and 2023, respectively. The Company paid the note holders the conversion value of the notes in cash. The cash conversion premium payment upon conversion of the 2017 Notes was offset by cash under the convertible bond hedge transaction (a derivative) entered into in connection with the offering of the 2017 Notes. As a result of the conversions, the Company recorded in 2022 and 2023, respectively a $1,206 and $53 loss on extinguishment of debt.

The 2017 Notes fully matured on January 15, 2024 and were settled in cash (see Note 19 "Subsequent Events").
2020 Notes
On August 2020, the Company issued $460,000 aggregate principal amount of exchangeable senior notes (the "2020 Notes" and together with the 2017 Notes, the "Notes") due 2025.
In the event that the Share Price Condition is satisfied or in the event of the satisfaction of certain other conditions, during set periods, set forth in the indenture governing the 2020 Notes, the holders of the exchangeable senior notes will have the option to exchange the Notes for (at the Company's election) (i) cash, (ii) ADSs or (iii) a combination thereof.
On December 31, 2021, the Company irrevocably elected that all conversions occurring on or after December 31, 2021, will be settled pursuant to a Combination Settlement (as defined in the 2020 Indenture) with a Specified Dollar Amount (as defined in the 2020 Indenture) no less than $1,000 per $1,000 principal amount of 2020 Notes. Generally, under this settlement method, the conversion value corresponding to the principal amount will be converted in cash, and the conversion value over the principal amount will be settled, at the Company’s election, in cash or shares or a combination thereof.
F - 59
F-49

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 14:15:-LONG TERM DEBT (Cont.)

The 2020 Notes are redeemable by the Company on or after September 21, 2023 upon the fulfillment of the Share Price Condition for cash in relation to the principal amount, and the conversion value over the principal amount will be settled, at the Company's election, in (i) cash, (ii) ADSs or (iii) a combination thereof, apart from certain cases as set forth in the indenture governing the Notes.
The 2020 Notes do not bear interest, however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate.
Debt issuance costs of $8,574 attributable to the 2020 Notes are amortized as interest expense over the contractual term of the 2020 Notes using the effective interest rate.
The Company may provide additional ADSs upon conversion if there is a "Make-Whole Fundamental Change" in the Company as defined in the indenture governing the 2020 Notes.
The following table summarizes some key facts and terms regarding the outstanding Notes as of December 31, 2023:
Due 2025Due 2024
Issuance dateAugust 27, 2020January 18, 2017
Maturity dateSeptember 15, 2025January 15, 2024
Effective conversion dateJune 15, 2025September 15, 2023
Principal amount$460,000$87,432
Cash coupon rate (per annum)—%1.25%
Conversion rate effective (per $1000 principal amount)3.3412.05
Effective conversion price (per ADS)$299.19$82.96
The carrying values of the liability of the Notes are reflected in the Company's accompanying consolidated balance sheets as follows:
2020 Notes2017 Notes
December 31,December 31,
2023202220232022
Principal$460,000 $460,000 $87,432 $90,055 
Conversion option (Level 2)— 121,922 $122,323 
Less:
Debt issuance costs, net of amortization(2,919)(4,618)(14)(335)
Unamortized discount— (111)(2,751)
Net liability carrying amount$457,081 $455,382 $209,229 $209,292 
As of December 31, 2023, the estimated fair value of the 2017 Notes and the 2020 Notes which the Company has classified as Level 2 financial instruments are $208,833 ($207,169 as of December 31, 2022) and $437,368 ($433,113 as of December 31, 2022), respectively.
F-50
NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:- DEBT (Cont.)
The estimated fair value was determined based on the quoted bid price of the exchangeable senior notes in an over-the-counter market on the last trading day of the reporting period. As of December 31, 2023, the difference between the net carrying amount of the 2020 Notes and estimated fair value is mainly due to the interest increase in global markets.
Interest expense related to the notesNotes is reflected on the accompanying consolidated statements of operations for the year ended December 31:income as follows:
2020 Notes2017 Notes
Year Ended December 31,Year Ended December 31,
202320222021202320222021
Amortization of debt issuance costs$1,699 $1,693 $1,485 $316 $303 $608 
Non-cash amortization of debt discount— — 6,471 2,600 2,587 5,986 
Interest expense— — — 1,101 1,127 1,891 
Loss in respect of convertible loan extinguishment— — — 53 1,206 13,969 
Total interest expense recognized$1,699 $1,693 $7,956 $4,070 $5,223 $22,454 
Effective interest rate0.37 %0.37 %1.87 %4.65 %4.65 %4.68 %
  
Year Ended
December 31,
 
  2017 
    
Amortization of debt issuance costs $609 
Non-cash amortization of debt discount  6,278 
Interest expense  3,414 
Net liability carrying amount $10,301 
     
 Equity component - net carrying value  4.68% 
Exchangeable notes hedge transactions

In connection with the pricing of the 2017 Notes, the Company has entered into privately negotiated exchangeable note hedge transactions with some of the initial purchasers and/or their respective affiliates (the “option counterparties”"Option Counterparties").

Subject to customary anti-dilution adjustments substantially similar to those applicable to the 2017 Notes, the exchangeable note hedge transactions cover the same number of ADSs thatwill initially underlinedunderline the 2017 Notes.

The note hedge transactions are expected generally to reduce potential dilution to the ADSs and/or offset potential cash payments the Company is required to make in excess of the principal amount, in each case, upon any exchange of the Exchangeable2017 Notes.

A portion of the call-options can be settled upon a surrender of the same amountamounts of Exchangeable Senior Notes by a Holder. Settlement canholder. As stated above, the Company irrevocably elected cash settlement to apply to all conversions of 2017 Notes with an Exchange Date (as defined in the 2017 Indenture) that occurs on or after December 31, 2021.
Conversion notices received on and after December 31, 2021 relating to the 2017 Notes will be donefully settled in cash, ADSs or a combinationand amounts paid in excess of both, at NICE’s election.

the principal amount will be offset by an equal receipt of cash under the convertible bond hedge.
Concurrently with the Company’sCompany's entry into the exchangeable note hedge transactions, the Company has entered into warrant transactions with the option counterpartiesOption Counterparties relating to the same number of ADSs (3,457,475), with a strike price of $101.82 per ADS, subject to customary anti‑dilution adjustments.

The warrants are exercisable for a period of 3three months as of the notes 2017 Notes' maturity date.
The Company has recorded a net decrease of $20,281 in additional paid in capital, due to its equity components.

F - 60
F-51

NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NICE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:-REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION DEBT (Cont.)

The warrants are classified to equity in accordance with U.S. GAAP. The warrants have a dilutive effect as the market price per ordinary share exceeds the applicable exercise price of the warrants, as measured under the terms of the warrant transactions.
a.Reportable segments:
As a result of the irrevocable cash election, on December 31, 2021, the Company reclassified from equity to derivative asset the remaining bond hedge fair value of $292,940 (Level 2).


NOTE 16:-    REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION
a.Reportable segments:
ASC 280, Segment Reporting,"Segment Reporting"' establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is its Chief Executive Officer.

During 2015, Selected reportable segment data includes the Company divested its Physical Security as well as its Cyber and Intelligence operations,results of companies which were a major part of the Security Solutions segment, to allow it to focus on its core markets as part of the execution of its long-term strategy. Following this divestiture, the Company operatesacquired in the following operation-based segments: Customer Engagement provide data driven insights that enable businesses to deliver consistentyears 2023, 2022 and personalized experience to customers, and Financial Crime and Compliance provide real time and cross-channel fraud prevention, anti-money laundering, brokerage compliance and enterprise-wide case management.2021 respectively in the applicable segment.

Year ended December 31, 2023
Customer EngagementFinancial Crime and ComplianceNot
allocated		Total
Revenues$1,974,090 $403,418 $— 2,377,508 
Operating income$456,793 $129,023 $(150,589)435,227 
 Year ended December 31, 2017 
 
Customer Engagement
(1) (2)
  Financial Crime and Compliance  
Not
allocated
  Total 
            
Year ended December 31, 2022Year ended December 31, 2022
Customer EngagementCustomer EngagementFinancial Crime and ComplianceNot
allocated		Total
Revenues $1,051,350  $280,802  $-  $1,332,152 
                
Operating income $175,247  $101,774  $(126,951) $150,071 
Operating income
Operating income
Year ended December 31, 2021
Customer EngagementFinancial Crime and ComplianceNot
allocated		Total
Revenues$1,572,176 $348,974 $— $1,921,150 
Operating income$316,760 $104,080 $(156,931)$263,909 
  Year ended December 31, 2016 
  
Customer Engagement
(1) (2)
  Financial Crime and Compliance  
Not
allocated
  Total 
             
Revenues $754,398  $261,144  $-  $1,015,542 
                 
Operating income $202,893  $89,990  $(158,707) $134,176 
  Year ended December 31, 2015 
  
Customer Engagement
(1) (2)
  Financial Crime and Compliance  
Not
allocated
  Total 
             
Revenues $688,060  $238,807  $-  $926,867 
                 
Operating income $206,994  $73,131  $(114,019) $166,106 

(1)Includes the results of a certain operation (formerly part of the Security Solutions segment), which was retained following the above mentioned divestiture and integrated within the Customer Engagement operating segment.

                            
F-52
NICE LTD. AND ITS SUBSIDIARIES
(2)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Includes the results of companies which were acquiredU.S. dollars in 2017thousands (except share and 2016 and are being integrated within the Customer Engagement segment.per share data)
NOTE 16:- REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.)
F - 61
NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 15:-     REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.)
The following table presents property and equipment as of December 31, 20172023 and 2016,2022, based on operational segments:
December 31,
20232022
Customer Engagement$132,824 $125,781 
Financial Crime and Compliance39,943 32,070 
Non-allocated1,647 1,434 
174,414 $159,285 
  December 31, 
  2017  2016 
       
Customer Engagement $104,981  $68,935 
Financial Crime and Compliance  9,636   13,192 
Non-allocated  3,658   5,551 
         
  $118,275  $87,678 

b.Geographical information:

b.Geographical information:
Total revenues from external customers on the basis of the Company's geographical areas are as follows:
  Year ended December 31, 
  2017  2016  2015 
          
Americas, principally the US $1,035,871  $720,520  $630,096 
EMEA (*)  186,268   189,223   192,640 
Israel  3,693   4,295   4,231 
Asia Pacific  106,320   101,504   99,900 
             
  $1,332,152  $1,015,542  $926,867 

Year Ended December 31,
202320222021
Americas, principally the US$1,986,634 $1,802,192 $1,566,807 
EMEA (*)244,523 245,198 236,122 
Israel3,508 4,484 3,839 
Asia Pacific142,843 129,420 114,382 
$2,377,508 $2,181,294 $1,921,150 
The following presents property and equipment and operating lease right-of-use assets as of December 31, 20172023 and 2016,2022, based on geographical areas:
December 31,
20232022
Americas, principally the US$128,065 $127,289 
EMEA (*)10,145 4,669 
Israel122,940 112,702 
Asia Pacific17,829 17,518 
$278,979 $262,178 
  December 31, 
  2017  2016 
       
Americas, principally the US $70,404  $49,175 
EMEA (*)  3,557   3,398 
Israel  37,571   28,237 
Asia Pacific  6,743   6,868 
         
  $118,275  $87,678 
(*) Includes Europe, the Middle East (excluding Israel) and Africa.


(*)Includes Europe, the Middle East (excluding Israel) and Africa.




F - 62
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NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 16:-SELECTED STATEMENTS OF INCOME DATA

a.Research and development, net:

  Year ended December 31, 
  2017  2016  2015 
          
Total costs $211,406  $151,698  $132,039 
Less - grants and participations  (2,363)  (1,668)  (2,174)
Less - capitalization of software development costs  (27,936)  (8,502)  (1,380)
             
  $181,107  $141,528  $128,485 

b.Financial income (expenses) and other, net:

  Year ended December 31, 
  2017  2016  2015 
Financial income:         
Interest and amortization/accretion of premium/discount on marketable securities, net $2,537  $5,607  $6,844 
Exchange rates differences  241   3,961   - 
Realized gain on marketable securities  -   3,388   32 
Interest  1,149   953   430 
             
   3,927   13,909   7,306 
Financial expenses:            
Interest  
(9,580
)  (1,861)  (66)
Debt issuance costs amortization  
(6,943
)  (338)  - 
Exchangeable Senior Notes amortization of discount  (6,278)  -   - 
Exchange rates differences  -   -   (731)
Other  (1,518)  (925)  (780)
             
   (24,319)  (3,124)  (1,577)
             
Other expenses, net  (19)  (480)  (425)
             
  $(20,411) $10,305  $5,304 

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NICE LTD. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 16:-
NICE LTD. AND ITS SUBSIDIARIES
SELECTED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF INCOME DATA (Cont.)
U.S. dollars in thousands (except share and per share data)

NOTE 17:-    SELECTED STATEMENTS OF INCOME DATA
c.Net earnings per share:
a.Research and development, net:

Year Ended December 31,
202320222021
Total costs$386,745 $364,654 $319,083 
Less - grants and participations(2,441)(2,414)(2,118)
Less - capitalization of software development costs(61,596)(56,167)(45,778)
$322,708 $306,073 $271,187 
b.Financial expenses and other, net:
Year Ended December 31,
202320222021
Financial income:
Interest and amortization/accretion of premium/discount on marketable securities, net$13,813 $13,659 $13,751 
Interest income20,260 4,720 200 
34,073 18,379 13,951 
Financial expenses:
Interest expense(1,101)(1,127)(10,061)
Loss in respect of debt extinguishment(53)(1,206)(13,969)
Debt issuance costs amortization(2,015)(1,996)(610)
Exchangeable senior notes amortization of discount(2,600)(2,587)(5,708)
Exchange rates differences(3,297)(301)(4,131)
Other(2,412)(2,774)(2,958)
(11,478)(9,991)(37,437)
Other (expenses) Income, net(122)1,771 196 
$22,473 $10,159 $(23,290)
c.Net earnings per share:
The following table sets forth the computation of basic and diluted net earnings per share:




F-54
NICE LTD. AND ITS SUBSIDIARIES
1.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Numerator:U.S. dollars in thousands (except share and per share data)
NOTE 17:-    SELECTED STATEMENTS OF INCOME DATA (Cont.)

1.Numerator:
  Year ended December 31, 
  2017  2016  2015 
          
Net income from continuing operations available to ordinary shareholders $143,291  $123,069  $140,578 
Net income from discontinued operations available to ordinary shareholders  -   (6,149)  118,253 
             
Net income to Ordinary shareholders $143,291  $116,920  $258,831 
Year Ended December 31,
202320222021
Net income to ordinary shareholders$338,301 $265,945 $199,223 
2.Denominator (in thousands):
2.Denominator (in thousands):
Year Ended December 31,
202320222021
Denominator for basic net earnings per share:
Weighted average number of shares (thousand)63,590 63,790 63,189 
Effect of dilutive securities:
Add - employee stock options and RSU995 894 1,605 
Warrants issued in the exchangeable notes transaction1,680 1,781 2,102 
Denominator for diluted net earnings per share - adjusted weighted average shares (thousand)$66,265 66,465 66,896 

  Year ended December 31, 
  2017  2016  2015 
          
Denominator for basic net earnings per share:         
Weighted average number of shares  60,444   59,667   59,552 
Effect of dilutive securities:            
Add - employee stock options and RSU  1,675   1,368   1,729 
             
Denominator for diluted net earnings per share - adjusted weighted average shares  62,119   61,035   61,281 

NOTE 18:-    RELATED PARTY BALANCES AND TRANSACTIONS
In 2021, the Company acquired an additional 20% in the 2020 Subsidiary for a total consideration of approximately $14,000. The amount paid to the 2020 Subsidiary's CEO in connection with this purchase was $4,850. As of December 31, 2023 and 2022, the 2020 Subsidiary's CEO holds 12.04% of the 2020 Subsidiary, which reflects $5,385 and $5,373 of the non-controlling amount on the balance sheet as of December 31, 2023 and 2022, respectively.

NOTE 19:-    SUBSEQUENT EVENTS
On January 2024, the Company settled in cash the entire 2017 Notes in an aggregate principal amount of $87,432 (See Note 15 "Debt" for further information regarding the 2017 Notes).


F - 64
F-55

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



NICE LTD.
By:By:/s/ Barak Eilam
Barak Eilam
Chief Executive Officer
Date:  March 27, 2024
Date:  March 30, 2018
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