Verint Announces Q3 FYE 2024 Results

SaaS ARR up 11% Year-Over-Year Driven by Solid Bookings and Renewals

Positive Leading Indicators with Significant Increase in Customer AI Adoption and SaaS Pipeline up More than 20% year-over-year

Expect to Finish the Year Strong with 11% Non-GAAP Revenue Growth in the Fourth Quarter

Investor Day to Be Held December 13^th Focused on Verint’s AI Differentiation and Long-Term Trends

MELVILLE, N.Y.–(BUSINESS WIRE)–Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three and nine months ended October 31, 2023 (FYE 2024). Revenue for the three months ended October 31, 2023 was $219 million, representing (3)% year-over-year change. Revenue for the nine months ended October 31, 2023 was $645 million on a GAAP basis and $646 million on a non-GAAP basis, representing (3)% year-over-year change on both a GAAP and non-GAAP basis. For the three months ended October 31, 2023, diluted EPS was $0.12 on a GAAP basis and $0.65 on a non-GAAP basis. For the nine months ended October 31, 2023, net loss per share was $(0.09) on a GAAP basis and diluted EPS was $1.67 on a non-GAAP basis.

“We are pleased to have overachieved our revenue and non-GAAP diluted EPS expectations in Q3 and believe we are on track to complete the year with strong 11% revenue growth in Q4. Our 12 month SaaS pipeline at the end of Q3 was up more than 20% year-over-year and we are pleased with the increase in customer AI adoption with the majority of our Q3 new SaaS ACV bookings including Verint AI-Powered Bots. We look forward to reviewing our significant AI differentiation and the positive impact customer AI adoption has on our financial model at our investor day next week,” said Dan Bodner, Verint CEO.

Q3 FYE 2024 Highlights

• SaaS ARR: Up 11% year-over-year
• New SaaS ACV Bookings: $25 Million, or an annual run-rate of ~$100 million
• % of New ACV Bookings Including Bots: >50%, with customer AI adoption increasing
• Favorable Mix Shift to Recurring Revenue: 87% of software revenue recurring year-to-date (up ~200bps year-over-year)
• Gross Margin: Up more than 100bps year-to-date compared to the same period last year
• GAAP Cash From Operations: Up 19% year-to-date compared to the same period last year

Grant Highlander, Verint CFO, added, “SaaS ARR is becoming an important metric to understand our SaaS growth trends as customers shift to the Verint cloud, and I am pleased that SaaS ARR increased 11% in Q3 year-over-year. I am also pleased with our strong margins and 19% year-over-year increase in GAAP cash from operations year-to-date, which provides us with financial flexibility as we continue to execute on our previously announced $200 million stock buyback program. Going forward, Verint is well positioned for the market shift to more bots and fewer contact center agents. Verint deploying more bot licenses with fewer agent licenses will increase our TAM overall, and provide us the opportunity to accelerate SaaS revenue growth.”

FYE 2024 Outlook

We are providing our non-GAAP outlook for the year ending January 31, 2024 as follows:

• Revenue: $910 million +/- 2%
• SaaS Revenue: 15% year-over-year growth
• Diluted EPS: $2.65 at the midpoint of our revenue guidance, reflecting 5% year-over-year growth

Our non-GAAP outlook for year ending January 31, 2024 excludes the following GAAP measure which we are able to quantify with reasonable certainty:

• Amortization of intangible assets of approximately $33 million.

Our non-GAAP outlook for the year ending January 31, 2024 excludes the following GAAP measures for which we are able to provide a range of probable significance:

• Revenue adjustments are expected to be between approximately $1 million and $2 million.
• Stock-based compensation expenses are expected to be between approximately $67 million and $69 million, assuming market prices for our common stock approximately consistent with current levels.
• Costs associated with modifying our workplace in response to our decision to move to a hybrid work environment, including assumed lease terminations and abandonments, IT facilities and infrastructure costs, and other nonrecurring charges are expected to be between approximately $26 million and $28 million.

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 and nine months ended October 31, 2023 and 2022 for the GAAP measures excluded from our non-GAAP outlook appear in Tables 2, 3 and 4 of this press release.

Q3 Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the three and nine months ended October 31, 2023 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.

Investor Day Information

We will host an Investor Day on Wednesday, December 13, 2023 at 10 a.m. ET which will focus on Verint’s AI differentiation and CX automation opportunity. A Q&A session will follow the prepared remarks. To register for the Investor Day, which will be hosted virtually, please visit the event’s registration page by clicking here.

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) helps the world’s most iconic brands continuously elevate the customer experience (CX) and reduce operating costs. More than 10,000 organizations in 175 countries – including over 85 of the Fortune 100 companies – rely on Verint’s open customer engagement platform to harness the power of data and artificial intelligence (AI) to maximize CX automation.

Verint. The Customer Engagement Company^®. 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 (such as the COVID-19 pandemic), 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 and 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, whose adoption and use-cases are still emerging, 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, artificial intelligence, 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 disruption, 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 maybe subject to security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions; risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property, claim infringement on their intellectual property 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, 2023, our Quarterly Report on Form 10-Q for the quarter ended April 30, 2023, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2023, our Quarterly Report on Form 10-Q for the quarter ended October 31, 2023, when filed, and other filings we make with the SEC.

VERINT, VERINT DA VINCI, VERINT OPEN CCAAS, THE CUSTOMER ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT 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 October 31,								Nine Months Ended October 31,
(in thousands, except per share data)		2023				2022				2023				2022
Revenue:
Recurring		$	161,117			$	174,222			$	488,555			$	500,029
Nonrecurring			57,430				50,971				156,723				165,969
Total revenue			218,547				225,193				645,278				665,998
Cost of revenue:
Recurring			38,883				38,834				118,093				120,714
Nonrecurring			25,046				28,013				79,213				90,781
Amortization of acquired technology			1,609				3,550				5,511				10,742
Total cost of revenue			65,538				70,397				202,817				222,237
Gross profit			153,009				154,796				442,461				443,761
Operating expenses:
Research and development, net			32,084				32,941				97,923				97,844
Selling, general and administrative			87,879				93,757				297,532				302,344
Amortization of other acquired intangible assets			6,328				6,420				19,028				19,887
Total operating expenses			126,291				133,118				414,483				420,075
Operating income			26,718				21,678				27,978				23,686
Other income (expense), net:
Interest income			1,650				1,045				5,440				1,742
Interest expense			(2,609	)			(2,147	)			(7,994	)			(5,511	)
Other income, net			59				1,045				59				3,186
Total other expense, net			(900	)			(57	)			(2,495	)			(583	)
Income before provision for income taxes			25,818				21,621				25,483				23,103
Provision for income taxes			12,953				17,395				14,772				20,539
Net income			12,865				4,226				10,711				2,564
Net income attributable to noncontrolling interests			253				150				804				614
Net income attributable to Verint Systems Inc.			12,612				4,076				9,907				1,950
Dividends on preferred stock			(5,200	)			(5,200	)			(15,600	)			(15,600	)
Net income (loss) attributable to Verint Systems Inc. common shares		$	7,412			$	(1,124	)		$	(5,693	)		$	(13,650	)
Net income (loss) per common share attributable to Verint Systems Inc.:
Basic		$	0.12			$	(0.02	)		$	(0.09	)		$	(0.21	)
Diluted		$	0.12			$	(0.02	)		$	(0.09	)		$	(0.21	)
Weighted-average common shares outstanding:
Basic			63,887				65,583				64,411				65,161
Diluted			64,144				65,583				64,411				65,161

Table 2 VERINT SYSTEMS INC. AND SUBSIDIARIES GAAP to Non-GAAP SaaS Metrics (Unaudited)
SaaS Revenue
	Three Months Ended October 31,						Nine Months Ended October 31,
(in thousands)	2023			2022			2023			2022
Bundled SaaS revenue – GAAP	$	63,251		$	57,041		$	184,770		$	161,005
Unbundled SaaS revenue – GAAP		52,400			58,746			161,470			152,066
SaaS revenue – GAAP		115,651			115,787			346,240			313,071
Estimated bundled SaaS revenue adjustments		117			374			960			2,323
Estimated unbundled SaaS revenue adjustments		—			—			—			—
Estimated SaaS revenue adjustments		117			374			960			2,323
Bundled SaaS revenue – non-GAAP		63,368			57,415			185,730			163,328
Unbundled SaaS revenue – non-GAAP		52,400			58,746			161,470			152,066
SaaS revenue – non-GAAP	$	115,768		$	116,161		$	347,200		$	315,394
New SaaS ACV
		Three Months Ended October 31,						Nine Months Ended October 31,
(in thousands)		2023			2022			2023			2022
New SaaS ACV	$	25,389		$	26,833		$	67,838		$	78,178
New SaaS ACV – Last Twelve Months		91,713			108,466
SaaS ARR
		Three Months Ended October 31,
(in thousands)		2023			2022
SaaS ARR	$	512,304		$	460,812

Table 3 VERINT SYSTEMS INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Revenue
		Three Months Ended October 31,						Nine Months Ended October 31,
(in thousands)		2023			2022			2023			2022
Recurring revenue – GAAP		$	161,117		$	174,222		$	488,555		$	500,029
Nonrecurring revenue – GAAP			57,430			50,971			156,723			165,969
Total GAAP revenue			218,547			225,193			645,278			665,998
Recurring revenue adjustments			120			423			989			2,498
Nonrecurring revenue adjustments			—			—			—			—
Total revenue adjustments			120			423			989			2,498
Recurring revenue – non-GAAP			161,237			174,645			489,544			502,527
Nonrecurring revenue – non-GAAP			57,430			50,971			156,723			165,969
Total non-GAAP revenue			218,667			225,616			646,267			668,496

Gross Profit and Gross Margin
		Three Months Ended October 31,								Nine Months Ended October 31,
(in thousands)		2023				2022				2023				2022
Recurring cost of revenues		$	38,883			$	38,834			$	118,093			$	120,714
Nonrecurring cost of revenues			25,046				28,013				79,213				90,781
Amortization of acquired technology			1,609				3,550				5,511				10,742
Total GAAP cost of revenue			65,538				70,397				202,817				222,237
GAAP gross profit			153,009				154,796				442,461				443,761
GAAP gross margin			70.0	%			68.7	%			68.6	%			66.6	%
Revenue adjustments			120				423				989				2,498
Amortization of acquired technology			1,609				3,550				5,511				10,742
Stock-based compensation expenses			1,093				1,329				2,905				4,245
Acquisition expenses, net			31				—				353				176
Restructuring (benefit) expenses, net			(2	)			593				1,447				969
Non-GAAP gross profit		$	155,860			$	160,691			$	453,666			$	462,391
Non-GAAP gross margin			71.3	%			71.2	%			70.2	%			69.2	%

Research and Development, net
		Three Months Ended October 31,								Nine Months Ended October 31,
(in thousands)		2023				2022				2023				2022
GAAP research and development, net		$	32,084			$	32,941			$	97,923			$	97,844
As a percentage of GAAP revenue			14.7	%			14.6	%			15.2	%			14.7	%
Stock-based compensation expenses			(3,025	)			(3,533	)			(8,818	)			(10,371	)
Acquisition expenses, net			(20	)			—				(96	)			(198	)
Restructuring expenses			(1	)			(509	)			(316	)			(646	)
IT facilities and infrastructure realignment			—				—				(1,648	)			—
Other adjustments			—				(17	)			—				(67	)
Non-GAAP research and development, net		$	29,038			$	28,882			$	87,045			$	86,562
As a percentage of non-GAAP revenue			13.3	%			12.8	%			13.5	%			12.9	%

Selling, General and Administrative Expenses
		Three Months Ended October 31,								Nine Months Ended October 31,
(in thousands)		2023				2022				2023				2022
GAAP selling, general and administrative expenses		$	87,879			$	93,757			$	297,532			$	302,344
As a percentage of GAAP revenue			40.2	%			41.6	%			46.1	%			45.4	%
Stock-based compensation expenses			(12,068	)			(15,037	)			(38,563	)			(49,346	)
Acquisition benefit (expenses), net			207				(1,172	)			(5,671	)			(2,661	)
Restructuring expenses			(483	)			(1,324	)			(3,337	)			(7,807	)
Separation expenses			(240	)			(291	)			(605	)			(1,142	)
Accelerated lease costs			(98	)			(725	)			(5,262	)			(7,831	)
IT facilities and infrastructure realignment			(1,937	)			(1,095	)			(16,816	)			(3,526	)
Impairment charges			—				—				—				(1,799	)
Other adjustments			(1	)			(900	)			(212	)			(2,511	)
Non-GAAP selling, general and administrative expenses		$	73,259			$	73,213			$	227,066			$	225,721
As a percentage of non-GAAP revenue			33.5	%			32.5	%			35.1	%			33.8	%

Contacts

Investor Relations Contact
Matthew Frankel, CFA

Verint Systems Inc.

(631) 962-9672

matthew.frankel@verint.com

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