NICE CEO Barak Eilam to step down after 10 years
NICE CEO Barak Eilam to step down after 10 years
Eilam will remain in his position as CEO until the end of the year and will actively participate in the search for his replacement
NICE announced on Thursday the planned retirement of the company's CEO, Barak Eilam, and the initiation of a search for his successor. Eilam informed the board of directors of his decision to step down on December 31, 2024, at the end of his 10-year term.
Eilam will remain in his position as CEO until the end of the year to ensure continuity. He will actively participate in the search for his replacement alongside the board of directors and will work closely with the new CEO. Additionally, Eilam will continue to advise and support the company's strategy during the first half of 2025.
The board of directors has established a committee to find a new CEO in partnership with a leading recruitment firm. NICE stated that it "will consider both internal and external candidates to ensure the best fit for NICE."
"The Board extends its gratitude for the remarkable achievements NICE has accomplished under Barak’s ten-year leadership," said David Kostman, Chairman of the Board at NICE. "The company is well positioned for the future as a leader in cloud, digital and AI. We deeply appreciate Barak’s unwavering commitment to NICE and look forward to continuing our work with him toward executing our 2024 plan, setting the company up for future success, and collaborating with him throughout the CEO search to ensure a smooth leadership handover.”
Despite excellent financial reports that surpassed forecasts and the company raising its annual forecast, NICE shares fell in pre-opening trading on Wall Street. The decline was attributed to Barak Eilam’s announcement of his decision to retire. Eilam, appointed CEO of NICE before turning 40, became one of the most respected managers on Wall Street. He led NICE to its largest acquisition, purchasing InContach for a billion dollars, which enabled its entry into the cloud sector before most competitors.
Eilam also steered NICE away from its traditional activity in the security market, where it sold surveillance systems. The success of his decisions is evident in the substantial market value difference between NICE, which trades at $14 billion, and Cognite, which trades at only half a billion dollars.
Under Eilam's leadership, NICE made significant gains in all parameters, ending 2023 with revenues of $2.37 billion and an operating profit of $435 million. During his decade-long tenure, Eilam doubled Nice's revenue and significantly increased its profitability, with the expected profit in 2024 projected to be four times higher than in 2014.
It appears that Eilam (49) decided to retire when NICE is at its peak and before it began suffering from the impact of generative artificial intelligence technologies on the customer relationship management software and marketing systems market.
In the first quarter, NICE exceeded forecasts with revenues of $659.3 million, a 15% increase compared to the corresponding quarter. Cloud revenues grew at a faster rate of 27% and reached $468.4 million, representing more than 70% of the total turnover. The operating profit margin rose to 30.3% compared to 28.6% in the corresponding period (excluding one-time items) and 18.6% according to accounting rules. The operating profit amounted to $121.4 million, and net profit reached $106 million, or $1.6 per share, a jump of 38%. Cash flow from current operations reached a quarter of a billion dollars.
Following the strong performance in the first quarter, NICE slightly raised its annual forecasts. It now expects revenue of about $2.7 billion in 2024, a 15% increase over last year. Net profit is expected to reach $10.53-10.73 per share before accounting items, reflecting a 21% increase compared to 2023.
One of the significant challenges Eilam's successor will face is the accelerated adoption of AI-based solutions in the fields of sales, marketing, and customer service, which NICE's solutions address. Although NICE's share has shown a positive return of 18% since the beginning of the year, it suffered from weakness last year amid investors' concerns about its ability to continue growing.
A few days before the outbreak of the war in Gaza, NICE announced the purchase of the American company LiveVox for $350 million to expand its capabilities in artificial intelligence and leverage them for proactive customer contact. While LiveVox is currently loss-making, it has annual revenues of approximately $150 million, which became evident for the first time in the first quarter with the completion of the transaction at the end of 2023. From Eilam's recent statements, it seems NICE has more plans for acquisitions to integrate AI functions into its products, similar to the significant move it made into the cloud shortly after Eilam took office. With $1.5 billion in cash, Nice is well-positioned to make a substantial acquisition.
“Leading NICE for the past decade has been the pinnacle of my career. It is an honor to work alongside a team of 8,500 talented and dedicated NICErs around the globe. While my team and NICE’s mission continues to inspire me daily, after 25 years at NICE and with the company poised for continued leadership and success, it's the right time to transition the helm of the company to a new leader," said Eilam. "I remain laser focused to deliver our 2024 plan, support the success of our customers and partners and work closely with our product teams on our exciting innovations. NICE has a bright future ahead, and I'm committed to ensuring a seamless transition.”
