Morningstar | Nice Is a Leader in Customer Engagement and Financial Crime and Compliance Technology
After divesting its intelligence and defense businesses, Nice has become a leading vendor of customer engagement and financial crime and compliance technology. The firm is shifting to a recurring revenue model and we see Nice as poised to benefit from its software products serving sticky verticals and use cases. Nice’s products are critical to enterprise call centers globally, with its forecasting and optimization tools becoming increasingly complex as the firm integrates speech analytics and nascent artificial intelligence technology into its products. In totality, our thesis is that Nice’s product quality and growth prospects are well understood by the market, giving the firm a price/earnings ratio above peers.On the customer engagement side, we think the firm will benefit from integrated workforce engagement management, or WEM, and contact center infrastructure, or CCI, solutions, the latter of which it acquired through the inContact acquisition. WEM products allow the firm to forecast call center volumes and improve workforce efficiency, while CCI tools manage the infrastructure and call routing. We see Nice as a WEM and contact center as a service, or CCaaS, leader, and the firm’s CXone platform, introduced in 2017, represents the culmination of these two technologies. CXone offers the routing, analytics, workforce optimization, and automation tools that the firm has built internally and brought in through acquisitions and we expect cloud platforms like CXone to continually represent a great piece of Nice's total revenue.We expect Nice to benefit from its high-growth assets acquired through the inContact purchase, but it remains to be seen if its integrated WEM and CCI technologies hold up well against open platform WEM products and other end-to-end platforms being pushed by legacy CCI vendors.On the financial crime and compliance side, we expect the firm’s back-office tools for financial institutions to hold up well over the coming years. Nice counts several of the largest global investment banks as customers for the financial crime and compliance business and we believe that quality manifests itself in above 30% operating margins.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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