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Written by Keith Noonan for The Motley Fool->
Nice's profit in the first quarter came in far lower than Wall Street expected.
The company's full-year guidance looked solid, but investors weren't happy with its Q2 targets.
Nice (NASDAQ: NICE) stock got hit hard in Wednesday's trading. The company's share price fell 22.5% in the daily session despite a bullish backdrop for the broader market. The S&P 500 gained 1.4% in the session, and the Nasdaq Composite was up 2%.
Nice published its first quarter results before the market opened this morning, and the business saw a substantial miss on earnings despite posting sales that were above Wall Street's expectations. While shares had rallied heading into earnings, the stock is now down roughly 14% year to date.
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Nice recorded non-GAAP (adjusted) earnings per share of $0.77 on sales of $768.6 million in the first quarter. Even though revenue topped the average analyst estimate by roughly $7.7 million, adjusted earnings per share came in $1.75 below the average analyst target. Investors had been banking on stronger demand from artificial intelligence (AI) projects, and the stock saw a big pullback in response to softer-than-expected momentum.
In addition to the company's big earnings miss in Q1, investors also seem to be disappointed with the company's forward guidance. Management is guiding for adjusted revenue between $761 million and $771 million in the current quarter, falling short of the previous average analyst estimate's call for sales of roughly $777.4 million.
With its new guidance, management is calling for year-over-year sales growth of roughly 5.5%. Meanwhile, the company is targeting adjusted earnings per share between $2.60 and $2.70.
Looking further out, full-year sales are projected to come in between $3.17 billion and $3.19 billion. Adjusted earnings per share for the year are expected to be between $10.98 and $11.18.
Even though the company's targets for the full-year period narrowly beat Wall Street's expectations, investors seem to be focusing on softer-than-expected guidance for Q2. On the heels of today's big pullback, Nice could warrant a closer look from tech investors.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nice. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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