NICE revenue grows 10% as heavy AI investment impact margins

NICE (NASDAQ:NICE) reported a steady increase in top-line revenue for the first quarter of 2026, driven by continued demand for its cloud-native customer experience and financial crime platforms.

However, the company’s bottom-line results reflected a period of significant capital reallocation and shifting margin profiles.

Total revenues for the quarter ended March 31, 2026, reached $768.6 million, a 9.8% increase compared to the $700.2 million reported in the first quarter of 2025.

This growth underscores the resilience of the company’s transition to a subscription-heavy cloud model.

Gross profit for the period was $494.8 million, though the gross margin contracted slightly to 64.4% from 66.9% a year ago, reflecting the changing mix of service and software delivery.

Operational profitability saw a more pronounced decline.

Operating income for the first quarter was $126.8 million, down from $148.2 million in the prior year, with operating margins narrowing to 16.5% from 21.2%.

The contraction in margins was largely attributed to increased strategic investments in generative AI capabilities and expanded go-to-market efforts for its "CXone" platform.

Net income for the quarter stood at $46.8 million, or $0.77 per fully diluted share, compared to $129.3 million, or $2.01 per share, in the first quarter of 2025.

Despite the decrease in reported net income, the company’s cash-generative capabilities remained strong, with operating cash flow reaching $179.2 million for the quarter.

NICE’s management took an aggressive stance on shareholder returns during the period, utilizing $253.3 million for share repurchases.

This significant buyback activity left the company with a total cash and short-term investment balance of $304.1 million as of March 31, 2026.

Notably, the company maintains a clean balance sheet with no outstanding debt.