Revenue and Diluted EPS Come in Ahead of Guidance
World’s Leading Brands Select Verint Open Platform for Tangible
AI Business Outcomes
Raising Revenue and Diluted EPS Outlook for FYE25
Verint® (Nasdaq: VRNT), The CX Automation Company™, today
announced results for the three months ended April 30, 2024 (FYE
2025). Revenue for the three months ended April 30, 2024 was $221
million, representing 2% year-over-year growth on a reported basis
and 5% growth year-over-year as adjusted for the divestiture of our
quality managed services business on January 31, 2024. For the
three months ended April 30, 2024, diluted EPS was $0.16 on a GAAP
basis and $0.59 on a non-GAAP basis, reflecting 11% year-over-year
growth.
Dan Bodner, Verint CEO commented: “Brands are increasingly
seeking AI business outcomes to increase customer experience (CX)
automation in their contact centers. Behind our recent momentum is
the Verint open platform which was introduced last year to
transform the latest AI technology into tangible AI business
outcomes, better than any other contact center platform.”
Bodner continued: “We believe the AI business outcome
opportunity in the contact center market is early, growing and very
large, as brands are starting to deploy AI-powered bots to reduce
labor costs and elevate CX. In Q1, many of the world’s leading
brands selected our open platform and AI-powered bots to deliver
tangible AI business outcomes. We are pleased that our Q1 revenue
and non-GAAP diluted EPS came in ahead of our guidance, and with
this strong start to the year, we are raising our annual outlook to
reflect continued market demand for CX automation.”
Q1 FYE 2025 Highlights
- Revenue: Up 2% year-over-year on a reported basis and up
5% year-over-year as adjusted for the divestiture of our quality
managed services business on January 31, 2024
- Gross Margin: Up >250bps year-over-year
- SaaS Revenue: Up 20% year-over-year
- New Bundled SaaS ACV Bookings: up 25% year-over-year
with 80% including Bots
Grant Highlander, Verint CFO, added, “Our strong Q1 results were
driven by continued SaaS momentum and 20% SaaS revenue growth. I am
pleased with Q1 New Bundled SaaS ACV bookings up 25% year-over-year
and with 80% of these bookings including AI-power bots. As of the
end of Q1, our advanced stage bundled SaaS pipeline for the
remainder of the year was up more than 20% from same period last
year, reflecting the increasing market demand for tangible AI
business outcomes.”
FYE 2025 Outlook
We are raising our non-GAAP outlook for the year ending January
31, 2025.
- Revenue: $933 million +/- 2%, reflecting 5%
year-over-year growth (adjusted for the divestiture discussed
above)
- Diluted EPS: $2.90 at the midpoint of our revenue
guidance, reflecting 6% year-over-year growth
Our non-GAAP outlook for three months ending July 31, 2024 and
year ending January 31, 2025 excludes the following GAAP measure
which we are able to quantify with reasonable certainty:
- Amortization of intangible assets of approximately $5 million
and $18 million, for the three months ending July 31, 2024 and year
ending January 31, 2025, respectively.
Our non-GAAP outlook for the three months ending July 31, 2024
and year ending January 31, 2025 excludes the following GAAP
measures for which we are able to provide a range of probable
significance:
- Stock-based compensation expenses are expected to be between
approximately $18 million and $20 million, and $74 million and $78
million, for the three months ending July 31, 2024 and year ending
January 31, 2025, respectively, assuming market prices for our
common stock approximately consistent with current levels.
Our non-GAAP guidance does not include the potential impact of
any in-process business acquisitions that may close after the date
hereof, and, unless otherwise specified, reflects foreign currency
exchange rates approximately consistent with current rates.
We are unable, without unreasonable efforts, to provide a
reconciliation for other GAAP measures which are excluded from our
non-GAAP outlook, including the impact of future business
acquisitions or acquisition expenses, future restructuring
expenses, and non-GAAP income tax adjustments due to the level of
unpredictability and uncertainty associated with these items. For
these same reasons, we are unable to assess the probable
significance of these excluded items. While historical results may
not be indicative of future results, actual amounts for the three
months ended April 30, 2024 and 2023 for the GAAP measures excluded
from our non-GAAP outlook appear in Tables 2, 3, 4 and 5 of this
press release.
Q1 Conference Call
Information
We will conduct a conference call today at 4:30 p.m. ET to
discuss our results for the three months ended April 30, 2024 and
outlook. An online, real-time webcast of the conference call and
webcast slides will be available on our website at www.verint.com.
Participants may register for the call here to receive the dial-in
numbers and unique PIN to access the call. Please join the call
5-10 minutes prior to the scheduled start time.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of non-GAAP financial measures presented for
completed periods to the most directly comparable financial
measures prepared in accordance with GAAP, please see the tables
below as well as "Supplemental Information About Non-GAAP Financial
Measures and Operating Metrics" at the end of this press
release.
About Verint Systems Inc.
Verint® (Nasdaq: VRNT) is a leader in customer experience ("CX")
automation. The world’s most iconic brands – including more than 80
of the Fortune 100 companies – use the Verint Open Platform and our
team of AI-powered bots to deliver tangible AI business outcomes
across the enterprise.
Verint. The CX Automation Company™, is proud to be Certified™ by
Great Place To Work®. Learn more at Verint.com.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements,
including statements regarding expectations, predictions, views,
opportunities, plans, strategies, beliefs, and statements of
similar effect relating to Verint Systems Inc. These
forward-looking statements are not guarantees of future performance
and they are based on management's expectations that involve a
number of known and unknown risks, uncertainties, assumptions, and
other important factors, any of which could cause our actual
results or conditions to differ materially from those expressed in
or implied by the forward-looking statements. Some of the factors
that could cause our actual results or conditions to differ
materially from current expectations include, among others:
uncertainties regarding the impact of changes in macroeconomic
and/or global conditions, including as a result of slowdowns,
recessions, economic instability, rising interest rates, tightening
credit markets, inflation, instability in the banking sector,
actual or threatened trade wars, political unrest, armed conflicts,
natural disasters, or outbreaks of disease (including global
epidemics or pandemics), as well as the resulting impact on
spending by customers or partners, on our business; risks that our
customers or partners delay, downsize, cancel, or refrain from
placing orders or renewing subscriptions or contracts, or are
unable to honor contractual commitments or payment obligations due
to challenges or uncertainties in their budgets, liquidity, or
businesses; risks associated with our ability to keep pace with
technological advances and challenges and evolving industry
standards, including achieving and maintaining the competitive
differentiation of our solution platform; to adapt to changing
market potential from area to area within our markets; and to
successfully develop, launch, and drive demand for new, innovative,
high-quality products and services that meet or exceed customer
challenges and needs, while simultaneously preserving our legacy
businesses and migrating away from areas of commoditization; risks
due to aggressive competition in all of our markets and our ability
to keep pace with competitors, some of whom may be able to grow
faster than us or have greater resources than us, including in
areas such as sales and marketing, branding, technological
innovation and development, and recruiting and retention; risks
associated with our ability to properly execute on our software as
a service ("SaaS") transition, including successfully transitioning
customers to our cloud platform and the increased importance of
subscription renewal rates, and risk of increased variability in
our period-to-period results based on the mix, terms, and timing of
our transactions; risks relating to our ability to properly
identify and execute on growth or strategic initiatives, manage
investments in our business and operations, and enhance our
existing operations and infrastructure, including the proper
prioritization and allocation of limited financial and other
resources; risks associated with our ability to or costs to retain,
recruit, and train qualified personnel and management in regions in
which we operate either physically or remotely, including in new
markets and growth areas we may enter, due to competition for
talent, increased labor costs, applicable regulatory requirements,
or otherwise; challenges associated with selling sophisticated
solutions and cloud-based solutions, which may incorporate newer
technologies, such as artificial intelligence ("AI"), whose
adoption and use-cases are still emerging (and may present risks of
their own), including with respect to longer sales cycles, more
complex sales processes and customer evaluation and approval
processes, more complex contractual and information security
requirements, and assisting customers in understanding and
realizing the benefits of our solutions and technologies, as well
as with developing, offering, implementing, and maintaining an
enterprise-class, broad solution portfolio; risks that we may be
unable to maintain, expand, or enable our relationships with
partners as part of our growth strategy, including partners with
whom we may overlap or compete, while avoiding excessive
concentration with one or more partners; risks associated with our
reliance on third-party suppliers, partners, or original equipment
manufacturers (“OEMs”) for certain services, products, or
components, including companies that may compete with us or work
with our competitors; risks associated with our significant
international operations, including exposure to regions subject to
political or economic instability, fluctuations in foreign exchange
rates, inflation, increased financial accounting and reporting
burdens and complexities, and challenges associated with a
significant portion of our cash being held overseas; risks
associated with a significant part of our business coming from
government contracts, and associated procurement processes and
regulatory requirements; risks associated with our ability to
identify suitable targets for acquisition or investment or
successfully compete for, consummate, and implement mergers and
acquisitions, including risks associated with valuations, legacy
liabilities, reputational considerations, capital constraints,
costs and expenses, maintaining profitability levels, expansion
into new areas, management distraction, post-acquisition
integration activities, and potential asset impairments; risks
associated with complex and changing domestic and foreign
regulatory environments, including, among others, with respect to
data privacy, AI, cyber/information security, government contracts,
anti-corruption, trade compliance, climate change or other
environmental, social and governance matters, tax, and labor
matters, relating to our own operations, the products and services
we offer, and/or the use of our solutions by our customers; risks
associated with the mishandling or perceived mishandling of
sensitive or confidential information and data, including
personally identifiable information or other information that may
belong to our customers or other third parties, including in
connection with our SaaS or other hosted or managed services
offerings or when we are asked to perform service or support; risks
associated with our reliance on third parties to provide certain
cloud hosting or other cloud-based services to us or our customers,
including the risk of service disruptions, data breaches, or data
loss or corruption; risks that our solutions or services, or those
of third-party suppliers, partners, or OEMs which we use in or with
our offerings or otherwise rely on, including third-party hosting
platforms, may contain defects, vulnerabilities, or develop
operational problems; risk that we or our solutions may be subject
to security vulnerabilities or lapses, including cyber-attacks,
information technology system breaches, failures, or disruptions;
risks that our intellectual property ("IP") rights may not be
adequate to protect our business or assets or that others may make
claims on our IP, claim infringement on their IP rights, or claim a
violation of their license rights, including relative to free or
open source components we may use; risks associated with leverage
resulting from our current debt position or our ability to incur
additional debt, including with respect to liquidity
considerations, covenant limitations and compliance, fluctuations
in interest rates, dilution considerations (with respect to our
convertible notes), and our ability to maintain our credit ratings;
risks that we may experience liquidity or working capital issues
and related risks that financing sources may be unavailable to us
on reasonable terms or at all; risks arising as a result of
contingent or other obligations or liabilities assumed in our
acquisition of our former parent company, Comverse Technology, Inc.
(“CTI”), or associated with formerly being consolidated with, and
part of a consolidated tax group with, CTI, or as a result of the
successor to CTI's business operations, Mavenir Inc., being
unwilling or unable to provide us with certain indemnities to which
we are entitled; risks associated with changing accounting
principles or standards, tax laws and regulations, tax rates, and
the continuing availability of expected tax benefits; risks
relating to the adequacy of our existing infrastructure, systems,
processes, policies, procedures, internal controls, and personnel,
and our ability to successfully implement and maintain enhancements
to the foregoing, for our current and future operations and
reporting needs, including related risks of financial statement
omissions, misstatements, restatements, or filing delays; risks
associated with market volatility in the prices of our common stock
and convertible notes based on our performance, third-party
publications or speculation, or other factors, and risks associated
with actions of activist stockholders; risks associated with Apax
Partners' significant ownership position and potential that its
interests will not be aligned with those of our common
stockholders; and risks associated with the February 1, 2021
spin-off of our former Cyber Intelligence Solutions business,
including the possibility that the spin-off transaction does not
achieve the benefits anticipated, does not qualify as a tax-free
transaction, or exposes us to unexpected claims or liabilities. We
assume no obligation to revise or update any forward-looking
statement, except as otherwise required by law. For a detailed
discussion of these risk factors, see our Annual Report on Form
10-K for the fiscal year ended January 31, 2024, our Quarterly
Report on Form 10-Q for the quarter ended April 30, 2024, when
filed, and other filings we make with the SEC.
VERINT, VERINT DA VINCI, VERINT OPEN CCAAS, THE CX AUTOMATION
COMPANY, THE CUSTOMER ENGAGEMENT COMPANY, and THE ENGAGEMENT
CAPACITY GAP are trademarks of Verint Systems Inc. or its
subsidiaries. Verint and other parties may also have trademark
rights in other terms used herein.
Table 1
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
April 30,
(in thousands, except per share data)
2024
2023
Revenue:
Recurring
$
173,528
$
166,439
Nonrecurring
47,749
50,127
Total revenue
221,277
216,566
Cost of revenue:
Recurring
35,923
39,643
Nonrecurring
26,480
26,795
Amortization of acquired technology
1,358
1,965
Total cost of revenue
63,761
68,403
Gross profit
157,516
148,163
Operating expenses:
Research and development, net
36,730
31,782
Selling, general and administrative
93,276
101,279
Amortization of other acquired intangible
assets
3,065
6,330
Total operating expenses
133,071
139,391
Operating income
24,445
8,772
Other income (expense), net:
Interest income
1,978
1,982
Interest expense
(2,591
)
(2,781
)
Other (expense) income, net
(498
)
24
Total other expense, net
(1,111
)
(775
)
Income before provision for income
taxes
23,334
7,997
Provision for income taxes
7,955
4,363
Net income
15,379
3,634
Net income attributable to noncontrolling
interests
138
339
Net income attributable to Verint
Systems Inc.
15,241
3,295
Dividends on preferred stock
(5,200
)
(5,200
)
Net income (loss) attributable to
Verint Systems Inc. common shares
$
10,041
$
(1,905
)
Net income (loss) per common share
attributable to Verint Systems Inc.:
Basic
$
0.16
$
(0.03
)
Diluted
$
0.16
$
(0.03
)
Weighted-average common shares
outstanding:
Basic
62,335
64,940
Diluted
62,845
64,940
Table 2
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP SaaS
Metrics
(Unaudited)
SaaS
Revenue
Three Months Ended
April 30,
(in thousands)
2024
2023
Bundled SaaS revenue - GAAP
$
65,695
$
59,453
Unbundled SaaS revenue - GAAP
75,288
57,695
SaaS revenue - GAAP
140,983
117,148
Estimated bundled SaaS revenue
adjustments
—
612
Estimated unbundled SaaS revenue
adjustments
—
—
Estimated SaaS revenue
adjustments
—
612
Bundled SaaS revenue - non-GAAP
65,695
60,065
Unbundled SaaS revenue - non-GAAP
75,288
57,695
SaaS revenue - non-GAAP
$
140,983
$
117,760
New SaaS
ACV
Three Months Ended
April 30,
(in thousands)
2024
2023
New SaaS ACV
$
19,783
$
15,990
New SaaS ACV - bundled SaaS component
14,872
11,863
New SaaS ACV - unbundled SaaS
component
4,911
4,127
New SaaS ACV - Last Twelve Months
97,074
93,977
SaaS
ARR
Three Months Ended
April 30,
(in thousands)
2024
2023
SaaS ARR
$
537,664
$
493,677
Table 3
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited)
Revenue
Three Months Ended
April 30,
(in thousands)
2024
2023
Recurring revenue - GAAP
$
173,528
$
166,439
Nonrecurring revenue - GAAP
47,749
50,127
Total GAAP revenue
221,277
216,566
Recurring revenue adjustments
—
627
Nonrecurring revenue adjustments
—
—
Total revenue adjustments
—
627
Recurring revenue - non-GAAP
173,528
167,066
Nonrecurring revenue - non-GAAP
47,749
50,127
Total non-GAAP revenue
$
221,277
$
217,193
Gross Profit and
Gross Margin
Three Months Ended
April 30,
(in thousands)
2024
2023
Recurring cost of revenues
$
35,923
$
39,643
Nonrecurring cost of revenues
26,480
26,795
Amortization of acquired technology
1,358
1,965
Total GAAP cost of revenue
63,761
68,403
GAAP gross profit
157,516
148,163
GAAP gross margin
71.2
%
68.4
%
Revenue adjustments
—
627
Amortization of acquired technology
1,358
1,965
Stock-based compensation expenses
1,082
436
Acquisition and divestitures expenses,
net
—
56
Restructuring expenses
182
258
Non-GAAP gross profit
$
160,138
$
151,505
Non-GAAP gross margin
72.4
%
69.8
%
Research and
Development, net
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP research and development,
net
$
36,730
$
31,782
As a percentage of GAAP revenue
16.6
%
14.7
%
Stock-based compensation expenses
(3,543
)
(2,327
)
Acquisition and divestitures expenses,
net
—
(56
)
Restructuring expenses
(1,464
)
(138
)
Other adjustments
—
(5
)
Non-GAAP research and development,
net
$
31,723
$
29,256
As a percentage of non-GAAP
revenue
14.3
%
13.5
%
Selling, General
and Administrative Expenses
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP selling, general and
administrative expenses
$
93,276
$
101,279
As a percentage of GAAP revenue
42.2
%
46.8
%
Stock-based compensation expenses
(13,396
)
(12,216
)
Acquisition and divestitures expenses,
net
(205
)
(7,703
)
Restructuring expenses
(1,133
)
(1,004
)
Accelerated lease costs
—
(288
)
IT facilities and infrastructure
realignment
—
(2,779
)
Other adjustments
(109
)
(170
)
Non-GAAP selling, general and
administrative expenses
$
78,433
$
77,119
As a percentage of non-GAAP
revenue
35.4
%
35.5
%
Operating Income
and Operating Margin
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP operating income
$
24,445
$
8,772
GAAP operating margin
11.0
%
4.1
%
Revenue adjustments
—
627
Amortization of acquired technology
1,358
1,965
Amortization of other acquired intangible
assets
3,065
6,330
Stock-based compensation expenses
18,021
14,979
Acquisition and divestitures expenses
(benefit), net
205
7,815
Restructuring expenses
2,779
1,400
Accelerated lease costs
—
288
IT facilities and infrastructure
realignment
—
2,779
Other adjustments
109
175
Non-GAAP operating income
$
49,982
$
45,130
Non-GAAP operating margin
22.6
%
20.8
%
Other Expense,
Net
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP other expense, net
$
(1,111
)
$
(775
)
Losses on early retirements of debt
—
237
Acquisition and divestitures benefit,
net
—
(156
)
Other adjustments
—
(9
)
Non-GAAP other expense, net(1)
$
(1,111
)
$
(703
)
Provision for
Income Taxes
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP provision for income taxes
$
7,955
$
4,363
GAAP effective income tax rate
34.1
%
54.6
%
Non-GAAP income tax adjustments
(1,778
)
(282
)
Non-GAAP provision for income
taxes
$
6,177
$
4,081
Non-GAAP effective income tax
rate
12.6
%
9.2
%
Net Income (Loss)
Attributable to Verint Systems Inc. Common Shares
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP net income (loss) attributable to
Verint Systems Inc. common shares
$
10,041
$
(1,905
)
Revenue adjustments
—
627
Amortization of acquired technology
1,358
1,965
Amortization of other acquired intangible
assets
3,065
6,330
Stock-based compensation expenses
18,021
14,979
Losses on early retirements of debt
—
237
Acquisition and divestitures expenses,
net
205
7,659
Restructuring expenses
2,780
1,400
Accelerated lease costs
—
288
IT facilities and infrastructure
realignment
—
2,779
Other adjustments
109
166
Non-GAAP tax adjustments
1,778
282
Dividends, reversed due to assumed
conversion of preferred stock(3)
5,200
—
Total adjustments
32,516
36,712
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
42,557
$
34,807
Diluted Net
Income (Loss) Per Common Share Attributable to Verint Systems
Inc.
Three Months Ended
April 30,
(in thousands, except per share data)
2024
2023
GAAP diluted net income (loss) per common
share attributable to Verint Systems Inc.
$
0.16
$
(0.03
)
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.(3)
$
0.59
$
0.53
GAAP weighted-average shares used in
computing diluted net income (loss) per common share attributable
to Verint Systems Inc.
62,845
64,940
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
9,477
447
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.(3)
72,322
65,387
GAAP Net Income
to Adjusted EBITDA
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP net income
$
15,379
$
3,634
As a percentage of GAAP revenue
7.0
%
1.7
%
Provision for income taxes
7,955
4,363
Other expense, net
1,111
775
Depreciation and amortization(2)
10,748
16,857
Revenue adjustments
—
627
Stock-based compensation expenses
18,021
14,979
Acquisition and divestitures expenses,
net
204
7,815
Restructuring expenses
2,779
1,324
Accelerated lease costs
—
288
IT facilities and infrastructure
realignment
—
1,027
Other adjustments
109
175
Adjusted EBITDA
$
56,306
$
51,864
As a percentage of non-GAAP
revenue
25.4
%
23.9
%
Gross Debt to Net
Debt
(in thousands)
April 30,
2024
January 31,
2024
Long-term debt
$
411,365
$
410,965
Unamortized debt discounts and issuance
costs
3,635
4,035
Gross debt
415,000
415,000
Less:
Cash and cash equivalents
236,592
241,400
Restricted cash and cash equivalents, and
restricted bank time deposits
1,074
1,269
Short-term investments
785
686
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
176,549
171,645
Long-term restricted cash, cash
equivalents, time deposits, and investments
179
181
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
176,370
171,464
(1) For the three months ended April 30,
2024, other expense, net of $1.1 million was comprised of $0.6
million of interest and other expense, net and $0.5 million of
foreign exchange charges primarily related to balance sheet
revaluations.
(2) Adjusted for financing fee
amortization.
(3) EPS calculation includes the more
dilutive of either preferred stock dividends or conversion of
preferred stock shares. Conversion of the outstanding preferred
shares was more dilutive in the three months ended April 30, 2024.
Dividends on the preferred stock was more dilutive in the three
months ended April 30, 2023.
Table 4
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Quarterly Revenue of Divested
Quality Managed Service Offering ("Divested Offering")
Reconciliation of Non-GAAP
Divestiture Revenue
(Unaudited)
Three Months Ended
Year Ended
(in thousands)
April 30,
2023
July 31,
2023
October 31,
2023
January 31,
2024
January 31,
2024
Total GAAP revenue
$
216,566
$
210,165
$
218,547
$
265,109
$
910,387
Revenue from divested offering
6,759
6,429
6,114
$
5,946
25,248
Total GAAP revenue without divested
offering
$
209,807
$
203,736
$
212,433
$
259,163
$
885,139
Total non-GAAP revenue
$
217,193
$
210,407
$
218,667
$
265,220
$
911,487
Revenue from divested offering
6,759
6,429
6,114
5,946
25,248
Total non-GAAP revenue without divested
offering
$
210,434
$
203,978
$
212,553
$
259,274
$
886,239
Table 5
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Recurring and
Nonrecurring Gross Profit
(Unaudited)
Recurring Gross
Profit
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP recurring revenue
$
173,528
$
166,439
GAAP recurring cost of revenues
35,923
39,643
GAAP recurring gross profit
137,605
126,796
GAAP recurring gross margin
79.3
%
76.2
%
Recurring revenue adjustments
—
627
Recurring stock-based compensation
expenses
549
296
Recurring acquisition and divestitures
expenses, net
—
56
Recurring restructuring expenses
7
105
Non-GAAP recurring gross profit
$
138,161
$
127,880
Non-GAAP recurring gross margin
79.6
%
76.5
%
Nonrecurring
Gross Profit
Three Months Ended
April 30,
(in thousands)
2024
2023
GAAP nonrecurring revenue
$
47,749
$
50,127
GAAP nonrecurring cost of revenues
26,480
26,795
GAAP nonrecurring gross profit
21,269
23,332
GAAP nonrecurring gross margin
44.5
%
46.5
%
Nonrecurring stock-based compensation
expenses
533
140
Nonrecurring restructuring expenses
175
153
Non-GAAP nonrecurring gross
profit
$
21,977
$
23,625
Non-GAAP nonrecurring gross
margin
46.0
%
47.1
%
Table 6
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Calculation of Change in
Revenue on a Constant Currency Basis
(Unaudited)
GAAP Revenue(2)
Non-GAAP Revenue(3)
(in thousands, except percentages)
Three Months
Ended
Three Months
Ended
Revenue for the three months ended April
30, 2023
$
216,566
$
217,193
Revenue for the three months ended April
30, 2024
$
221,277
$
221,277
Revenue for the three months ended April
30, 2024 at constant currency(1)
$
221,000
$
221,000
Reported period-over-period revenue
growth
2.2
%
1.9
%
% impact from change in foreign currency
exchange rates
(0.2
)%
(0.1
)%
Constant currency period-over-period
revenue growth
2.0
%
1.8
%
(1) Revenue for the three months ended
April 30, 2024 at constant currency is calculated by translating
current-period GAAP or non-GAAP foreign currency revenue (as
applicable) into U.S. dollars using average foreign currency
exchange rates for the three months ended April 30, 2023 rather
than actual current-period foreign currency exchange rates.
(2) GAAP revenue denominated in non-U.S.
dollars was 18% and 20% of our total GAAP revenue for the three
months ended April 30, 2024 and 2023, respectively. Our combined
GAAP cost of revenue and operating expenses denominated in non-U.S.
dollars was 32% and 31% of our total combined GAAP cost of revenue
and operating expenses for the three months ended April 30, 2024
and 2023, respectively.
(3) Non-GAAP revenue denominated in non-U.S. dollars was 18%
and 21% of our total non-GAAP revenue for the three months ended
April 30, 2024 and 2023, respectively. Our combined non-GAAP cost
of revenue and operating expenses denominated in non-U.S. dollars
was 34% and 35% of our total combined non-GAAP cost of revenue and
operating expenses for the three months ended April 30, 2024 and
2023, respectively.
For further information see "Supplemental
Information About Constant Currency" at the end of this press
release.
Table 7
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Unaudited)
April 30,
January 31,
(in thousands, except share and per share
data)
2024
2024
Assets
Current Assets:
Cash and cash equivalents
$
236,592
$
241,400
Short-term investments
785
686
Accounts receivable, net of allowance for
credit losses of $1.3 million and $1.2 million, respectively
155,903
190,461
Contract assets, net
71,490
66,913
Inventories
16,589
14,209
Prepaid expenses and other current
assets
48,775
59,505
Total current assets
530,134
573,174
Property and equipment, net
48,689
47,704
Operating lease right-of-use assets
28,836
30,118
Goodwill
1,354,933
1,352,715
Intangible assets, net
58,450
57,466
Other assets
168,970
165,247
Total assets
$
2,190,012
$
2,226,424
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
29,327
$
26,301
Accrued expenses and other current
liabilities
122,391
137,433
Contract liabilities
242,478
254,437
Total current liabilities
394,196
418,171
Long-term debt
411,365
410,965
Long-term contract liabilities
9,394
10,581
Operating lease liabilities
30,933
32,100
Other liabilities
88,892
85,620
Total liabilities
934,780
957,437
Commitments and Contingencies
Temporary Equity:
Preferred Stock — $0.001 par value;
authorized 2,207,000 shares
Series A Preferred Stock; 200,000 shares
issued and outstanding at April 30, 2024 and January 31, 2024,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at April 30, 2024 and January 31, 2024,
respectively.
200,628
200,628
Series B Preferred Stock; 200,000 shares
issued and outstanding at April 30, 2024 and January 31, 2024,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at April 30, 2024 and January 31, 2024,
respectively.
235,693
235,693
Total temporary equity
436,321
436,321
Stockholders' Equity:
Common stock — $0.001 par value;
authorized 240,000,000 shares; issued 61,914,000 and 62,738,000
shares; outstanding 61,914,000 and 62,738,000 shares at April 30,
2024 and January 31, 2024, respectively.
62
63
Additional paid-in capital
958,062
979,671
Retained earnings (accumulated
deficit)
8,518
(6,723
)
Accumulated other comprehensive loss
(150,241
)
(142,962
)
Total Verint Systems Inc. stockholders'
equity
816,401
830,049
Noncontrolling interest
2,510
2,617
Total stockholders' equity
818,911
832,666
Total liabilities, temporary equity,
and stockholders' equity
$
2,190,012
$
2,226,424
Table 8
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended
April 30,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net income
$
15,379
$
3,634
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
11,367
17,503
Stock-based compensation, excluding
cash-settled awards
18,009
14,814
Losses on early retirements of debt
—
237
Other, net
179
45
Changes in operating assets and
liabilities, net of effects of business combinations and
divestitures:
Accounts receivable
33,802
31,124
Contract assets
(4,776
)
1,923
Inventories
(2,372
)
(937
)
Prepaid expenses and other assets
1,404
21,278
Accounts payable and accrued expenses
(2,410
)
(6,821
)
Contract liabilities
(12,418
)
(19,245
)
Deferred income taxes
775
90
Other, net
1,778
(3,638
)
Net cash provided by operating
activities
60,717
60,007
Cash flows from investing
activities:
Cash paid for asset acquisitions and
business combinations, including adjustments, net of cash
acquired
(9,206
)
—
Divestitures, net of cash divested
1,300
—
Purchases of property and equipment
(3,591
)
(4,923
)
Maturities and sales of investments
228
232
Purchases of investments
(330
)
(3,180
)
Cash paid for capitalized software
development costs
(2,538
)
(1,868
)
Change in restricted bank time deposits,
and other investing activities, net
2
(1,019
)
Net cash used in investing
activities
(14,135
)
(10,758
)
Cash flows from financing
activities:
Proceeds from borrowings
—
100,000
Repayments of borrowings and other
financing obligations
(553
)
(100,530
)
Purchases of treasury stock and common
stock for retirement
(37,095
)
(60,294
)
Preferred stock dividend payments
(10,400
)
(10,400
)
Distributions paid to noncontrolling
interest
(245
)
(245
)
Payments of contingent consideration for
business combinations (financing portion)
(2,658
)
(18
)
Cash received for contingent consideration
for business divestitures (financing portion) and other financing
activities
214
1
Net cash used in financing
activities
(50,737
)
(71,486
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(848
)
859
Net decrease in cash, cash equivalents,
restricted cash, and restricted cash equivalents
(5,003
)
(21,378
)
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of period
242,669
282,161
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of period
$
237,666
$
260,783
Reconciliation of cash, cash
equivalents, restricted cash, and restricted cash equivalents at
end of period to the condensed consolidated balance sheets:
Cash and cash equivalents
$
236,592
$
260,719
Restricted cash and cash equivalents
included in prepaid expenses and other current assets
1,074
6
Restricted cash and cash equivalents
included in other assets
—
58
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
237,666
$
260,783
Verint Systems Inc. and
Subsidiaries Supplemental Information About Non-GAAP
Financial Measures and Operating Metrics
This press release contains non-GAAP financial measures,
consisting of non-GAAP revenue, non-GAAP recurring revenue,
non-GAAP nonrecurring revenue, non-GAAP SaaS revenue, non-GAAP
bundled SaaS revenue, non-GAAP unbundled SaaS revenue, non-GAAP
revenue from divested manual quality managed services, non-GAAP
recurring gross profit and gross margins, non-GAAP nonrecurring
gross profit and gross margins, non-GAAP gross profit and gross
margins, non-GAAP research and development, net, non-GAAP selling,
general and administrative expenses, non-GAAP operating income and
operating margins, non-GAAP other income (expense), net, non-GAAP
provision for (benefit from) income taxes and non-GAAP effective
income tax rate, non-GAAP net income (loss) attributable to Verint
Systems Inc. common shares, non-GAAP diluted net income (loss) per
common share attributable to Verint Systems Inc., adjusted EBITDA
and adjusted EBITDA as a percentage of non-GAAP revenue, net debt
and constant currency measures. The tables above include a
reconciliation of each non-GAAP financial measure for completed
periods presented in this press release to the most directly
comparable GAAP financial measure.
We believe these non-GAAP financial measures, used in
conjunction with the corresponding GAAP measures, provide investors
with useful supplemental information about the financial
performance of our business by:
- facilitating the comparison of our financial results and
business trends between periods, by excluding certain items that
either can vary significantly in amount and frequency, are based
upon subjective assumptions, or in certain cases are unplanned for
or difficult to forecast,
- facilitating the comparison of our financial results and
business trends with other technology companies who publish similar
non-GAAP measures, and
- allowing investors to see and understand key supplementary
metrics used by our management to run our business, including for
budgeting and forecasting, resource allocation, and compensation
matters.
We also make these non-GAAP financial measures available because
a number of our investors have informed us that they find this
supplemental information useful.
Non-GAAP financial measures should not be considered in
isolation, as substitutes for, or superior to, comparable GAAP
financial measures. The non-GAAP financial measures we present have
limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP, and these non-GAAP financial measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP financial measures. These non-GAAP
financial measures do not represent discretionary cash available to
us to invest in the growth of our business, and we may in the
future incur expenses similar to or in addition to the adjustments
made in these non-GAAP financial measures. Other companies may
calculate similar non-GAAP financial measures differently than we
do, limiting their usefulness as comparative measures.
Our non-GAAP financial measures are calculated by making the
following adjustments to our GAAP financial measures:
Revenue adjustments. For acquisitions completed prior to
February 1, 2023, we exclude from our non-GAAP revenue the impact
of fair value adjustments required under previous GAAP guidance
relating to SaaS services, optional managed services and customer
support contracts acquired in a business acquisition, which would
have otherwise been recognized on a stand-alone basis. Beginning
February 1, 2023, we adopted accounting guidance which eliminates
the fair value provision that resulted in the accounting adjustment
on a prospective basis. We believe that it is useful for investors
to understand the total amount of revenue that we and the acquired
company would have recognized on a stand-alone basis under GAAP,
absent the accounting adjustment associated with the business
acquisition under prior accounting guidance. Our non-GAAP revenue
also reflects certain adjustments from aligning an acquired
company’s revenue recognition policies to our policies. We believe
that our non-GAAP revenue measure helps management and investors
understand our revenue trends and serves as a useful measure of
ongoing business performance.
Amortization of acquired technology and other acquired
intangible assets. When we acquire an entity, we are required under
GAAP to record the fair values of the intangible assets of the
acquired entity and amortize those assets over their useful lives.
We exclude the amortization of acquired intangible assets,
including acquired technology, from our non-GAAP financial measures
because they are inconsistent in amount and frequency and are
significantly impacted by the timing and size of acquisitions. We
also exclude these amounts to provide easier comparability of pre-
and post-acquisition operating results.
Stock-based compensation expenses. We exclude stock-based
compensation expenses related to restricted stock unit and
performance stock unit awards, stock bonus programs, bonus share
programs, and other stock-based awards from our non-GAAP financial
measures. We evaluate our performance both with and without these
measures because stock-based compensation is typically a non-cash
expense and can vary significantly over time based on the timing,
size and nature of awards granted, and is influenced in part by
certain factors which are generally beyond our control, such as the
volatility of the price of our common stock. In addition,
measurement of stock-based compensation is subject to varying
valuation methodologies and subjective assumptions, and therefore
we believe that excluding stock-based compensation from our
non-GAAP financial measures allows for meaningful comparisons of
our current operating results to our historical operating results
and to other companies in our industry.
Losses on early retirements of debt. We exclude from our
non-GAAP financial measures losses on early retirements of debt
attributable to refinancing or repaying our debt because we believe
they are not reflective of our ongoing operations.
Acquisition and divestitures expenses (benefit), net. In
connection with acquisition activity (including with respect to
acquisitions that are not consummated), we incur expenses
(benefits), including legal, accounting, and other professional
fees, integration costs, changes in the fair value of contingent
consideration obligations, and other costs. Integration costs may
consist of information technology expenses as systems are
integrated across the combined entity, consulting expenses,
marketing expenses, and professional fees, as well as non-cash
charges to write-off or impair the value of redundant assets. In
connection with divestiture activity, we exclude the gain or loss
on divestiture as well as any expenses incurred, including legal,
accounting, and other professional fees. We exclude these expenses
from our non-GAAP financial measures because they are
unpredictable, can vary based on the size and complexity of each
transaction, and are unrelated to our continuing operations or to
the continuing operations of the acquired businesses.
Restructuring expenses (benefit). We exclude restructuring
expenses (benefit) from our non-GAAP financial measures, which
include employee termination costs, facility exit costs (except as
included in accelerated lease costs and IT facilities and
infrastructure realignment described below), certain professional
fees, asset impairment charges (except as included in acquisition
or IT facilities and infrastructure realignment), and other costs
directly associated with resource realignments incurred in reaction
to changing strategies or business conditions. All of these costs
can vary significantly in amount and frequency based on the nature
of the actions as well as the changing needs of our business and we
believe that excluding them provides easier comparability of pre-
and post-restructuring operating results.
Accelerated lease costs. We exclude from our non-GAAP financial
measures accelerated facility costs and associated accelerated
lease expenses, including losses on terminations, due to the early
termination or abandonment of certain office leases as a result of
our move to a hybrid work model because these charges are not
reflective of our ongoing business and operating results.
IT facilities and infrastructure realignment. We exclude from
our non-GAAP financial measures nonrecurring IT facilities and
infrastructure realignment costs and other IT charges associated
with modifying the workplace, including consolidating and/or
migrating data centers and labs to the cloud, simplifying the
corporate network, and one-time costs for implementing
collaboration tools to enable our work from anywhere strategy, as
well as asset impairment charges, accelerated depreciation and IT
facility exit costs.
Impairment charges and other adjustments. We exclude from our
non-GAAP financial measures asset impairment charges (other than
those already included within restructuring, acquisition, or IT
facilities and realignment activity), rent expense for redundant
facilities, gains or losses on sales of property, gains or losses
on settlements of certain legal matters, and certain professional
fees unrelated to our ongoing operations, all of which are unusual
in nature and can vary significantly in amount and frequency. We
also exclude from our non-GAAP financial measures separation
expenses incurred in connection with the spin-off of our former
Cyber Intelligence Solutions business, including third-party
advisory, accounting, legal, tax, consulting, and other similar
services related to the separation as well as costs associated with
the operational separation of the two businesses, including those
related to human resources, brand management, real estate, and
information technology. Separation expenses also include
incremental cash income taxes related to the reorganization of
legal entities and operations in order to effect the separation and
other expense adjustments associated with a tax-related
indemnification asset as a result of the spin-off. These costs were
incremental to our normal operating expenses and were incurred
solely as a result of the separation transaction.
Non-GAAP income tax adjustments. We exclude from our non-GAAP
measures of net income attributable to Verint Systems Inc., our
GAAP provision for (benefit from) income taxes and instead include
a non-GAAP provision for income taxes, determined by applying a
non-GAAP effective income tax rate to our income before provision
for income taxes, as adjusted for the non-GAAP items described
above. The non-GAAP effective income tax rate is generally based
upon the income taxes we expect to pay in the reporting year. Our
GAAP effective income tax rate can vary significantly from year to
year as a result of tax law changes, settlements with tax
authorities, changes in the geographic mix of earnings including
acquisition activity, changes in the projected realizability of
deferred tax assets, and other unusual or period-specific events,
all of which can vary in size and frequency. We believe that our
non-GAAP effective income tax rate removes much of this variability
and facilitates meaningful comparisons of operating results across
periods. Our non-GAAP effective income tax rate for the year ending
January 31, 2025 is currently approximately 13% and was 8% for the
year ended January 31, 2024. We evaluate our non-GAAP effective
income tax rate on an ongoing basis, and it can change from time to
time. Our non-GAAP income tax rate can differ materially from our
GAAP effective income tax rate.
Revenue Metrics and Operating
Metrics
Recurring revenue, on both a GAAP and non-GAAP basis, is the
portion of our revenue that we believe is likely to be renewed in
the future, and primarily consists of SaaS revenue, optional
managed services revenue and initial and renewal post contract
support.
Nonrecurring revenue, on both a GAAP and non-GAAP basis,
primarily consists of our perpetual licenses, consulting,
implementation and installation services, hardware, training and
patent license royalties.
SaaS revenue includes bundled SaaS, software with standard
managed services and unbundled SaaS (including associated support)
that we account for as term licenses where managed services are
purchased separately.
Percentage of software revenue that is recurring revenue is
calculated as the sum of SaaS revenue, optional managed services
revenue and support revenue as a percentage of total SaaS revenue,
optional managed services revenue, support revenue, and perpetual
revenue.
New SaaS Annual Contract Value (ACV) includes the annualized
contract value of all new SaaS contracts received within the
period; new unbundled SaaS contracts only include the license
portion of those orders. In cases where SaaS is offered to partners
through usage-based contracts, we include the incremental value of
usage contracts over a rolling four quarters. Orders are only
included in New SaaS ACV with a completed customer contract signed
by both parties before the end of the period.
SaaS Annual Recurring Revenue (SaaS ARR) represents the
annualized quarterly run-rate value of active or signed SaaS
contracts as of the end of a period. For unbundled SaaS contracts,
the amount included in SaaS ARR is generally consistent with the
amount that we invoice the customer annually for the term-based
license transaction. We use SaaS ARR to identify the annual
recurring value of customer contracts at the end of a reporting
period and to monitor the growth of our recurring business as we
shift to SaaS. SaaS ARR reduces fluctuations due to seasonality,
contract term, and the sales mix of subscriptions for bundled SaaS
and unbundled SaaS. SaaS ARR should be viewed independently of
revenue, and does not represent our revenue under ASC 606 on an
annualized basis, as it is an operating metric that is impacted by
contract start and end dates and renewal rates. SaaS ARR is not
intended to be a replacement for forecasts of SaaS revenue.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure defined as net income
(loss) before interest expense, interest income, income taxes,
depreciation expense, amortization expense, stock-based
compensation expenses, revenue adjustments, restructuring expenses,
acquisition expenses, accelerated lease costs, IT facilities and
infrastructure realignment, and other expenses excluded from our
non-GAAP financial measures as described above. We believe that
adjusted EBITDA is also commonly used by investors to evaluate
operating performance between companies because it helps reduce
variability caused by differences in capital structures, income
taxes, stock-based compensation expenses, accounting policies, and
depreciation and amortization policies. Adjusted EBITDA is also
used by credit rating agencies, lenders, and other parties to
evaluate our creditworthiness.
Net Debt
Net Debt is a non-GAAP measure defined as the sum of long-term
and short-term debt on our consolidated balance sheet, excluding
unamortized discounts and issuance costs, less the sum of cash and
cash equivalents, restricted cash, restricted cash equivalents,
restricted bank time deposits, and restricted investments
(including long-term portions), and short-term investments. We use
this non-GAAP financial measure to help evaluate our capital
structure, financial leverage, and our ability to reduce debt and
to fund investing and financing activities and believe that it
provides useful information to investors.
Free Cash Flow
Free Cash Flow is defined as GAAP cash provided by operating
activities less our capital expenditures, which include purchases
of property and equipment and capitalized software development
costs.
Supplemental Information About Constant
Currency
Because we operate on a global basis and transact business in
many currencies, fluctuations in foreign currency exchange rates
can affect our consolidated U.S. dollar operating results. To
facilitate the assessment of our performance excluding the effect
of foreign currency exchange rate fluctuations, we calculate our
GAAP and non-GAAP revenue, cost of revenue, and operating expenses
on both an as-reported basis and a constant currency basis,
allowing for comparison of results between periods as if foreign
currency exchange rates had remained constant. We perform our
constant currency calculations by translating current-period
results into U.S. dollars using prior-period average foreign
currency exchange rates or hedge rates, as applicable, rather than
current period exchange rates. We believe that constant currency
measures, which exclude the impact of changes in foreign currency
exchange rates, facilitate the assessment of underlying business
trends.
Unless otherwise indicated, our financial outlook, which is
provided on a non-GAAP basis, reflects foreign currency exchange
rates approximately consistent with rates in effect when the
outlook is provided.
We also incur foreign exchange gains and losses resulting from
the revaluation and settlement of monetary assets and liabilities
that are denominated in currencies other than the entity’s
functional currency. Our financial outlook for diluted earnings per
share includes net foreign exchange gains or losses incurred to
date, if any, but does not include potential future gains or
losses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240604055107/en/
Investor Relations Matthew
Frankel, CFA Verint Systems Inc. (631) 962-9600
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
Historical Stock Chart
From May 2024 to Jun 2024
Verint Systems (NASDAQ:VRNT)
Historical Stock Chart
From Jun 2023 to Jun 2024
