Revenue and Diluted EPS Ahead of Q3 Guidance; Overachievement
Driven by Early Renewal Revenue
Strong AI Momentum Drove Bundled SaaS Revenue Growth
Acceleration to 19% Year-Over-Year
Expect to Finish the Year Strong; Maintaining FYE25 Guidance
Investor Day to Be Held January 14, 2025
Verint® (Nasdaq: VRNT), The CX Automation Company™, today
announced results for the three and nine months ended October 31,
2024 (FYE 2025). Revenue for the three months ended October 31,
2024 was $224 million, representing 3% year-over-year growth on a
reported basis and 5% year-over-year growth on a non-GAAP basis as
adjusted for the divestiture of our quality managed services
business on January 31, 2024. Revenue for the nine months ended
October 31, 2024 was $656 million, representing 2% year-over-year
growth on a reported basis and 5% year-over-year growth on a
non-GAAP basis as adjusted for the divestiture. For the three
months ended October 31, 2024, diluted EPS was $0.39 on a GAAP
basis and $0.54 on a non-GAAP basis. For the nine months ended
October 31, 2024, diluted EPS was $0.58 on a GAAP basis and $1.62
on a non-GAAP basis.
Dan Bodner, Verint CEO commented, “We are pleased with our
momentum in AI innovation and in customers reporting strong,
tangible AI business outcomes with the Verint open platform. Today,
our CX Automation Platform supports a hybrid cloud model, enabling
our customers and partners to leap forward with AI-powered bots
now. We believe that our ability to deliver strong and fast AI
business outcomes is a unique and sustainable differentiator.”
Bodner continued, “In Q3, we saw strong demand for AI business
outcomes and our bundled SaaS revenue growth accelerated to 19%
year-over-year. We also saw customers taking advantage of our
hybrid cloud model and prioritizing AI projects over cloud
conversion projects. New SaaS ACV bookings for new deals, excluding
cloud conversions, increased 37% year-over-year in Q3. Behind our
momentum is our strong AI innovation, and today, we also announced
our latest AI-powered bot in the Verint platform.”
Q3 FYE 2025 Highlights
- Revenue: Up 3% year-over-year as reported and up ~5%
year-over-year adjusted for divestiture
- Gross Margin: Up ~70bps year-over-year
- Bundled SaaS Revenue: Up 19% year-over-year
- SaaS ARR: Up 11% year-over-year
Grant Highlander, Verint CFO, added, “Q3 revenue came in at $224
million, around $14 million ahead of our guidance, representing
approximately 5% year-over-year growth adjusted for last year’s
divestiture. Our revenue overachievement was driven by unbundled
SaaS renewal revenue coming in during Q3, that we previously
expected to come in Q4. In addition, gross margins expanded
approximately 70bps year-over-year in Q3 driven by our mix shift to
recurring revenue. We are pleased with the progress we have made
year to date and we maintain our full year guidance for revenue and
non-GAAP diluted EPS.”
Highlander continued, “We look forward to our upcoming investor
day on January 14th where we will showcase our AI differentiation.
Investors will hear directly from our customers on AI business
outcomes and we will review our financial model, including FYE26
guidance, and our long-term model for monetizing AI.”
FYE 2025 Outlook
Our non-GAAP outlook for the year ending January 31, 2025 is as
follows:
- 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 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 $20 million
for the year ending January 31, 2025.
Our non-GAAP outlook for the 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 $76 million and $78 million, for the year ending
January 31, 2025, 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
and nine months ended October 31, 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.
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,
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, elevated 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, demonstrating, 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 term lengths, 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, value, 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 (including
versus those of our competitors), 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; 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,
our Quarterly Report on Form 10-Q for the quarter ended July 31,
2024, our Quarterly Report on Form 10-Q for the quarter ended
October 31, 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
October 31,
Nine Months Ended
October 31,
(in thousands, except per share data)
2024
2023
2024
2023
Revenue:
Recurring
$
179,858
$
161,117
$
516,615
$
488,555
Nonrecurring
44,335
57,430
139,025
156,723
Total revenue
224,193
218,547
655,640
645,278
Cost of revenue:
Recurring
38,742
38,883
110,968
118,093
Nonrecurring
25,324
25,046
78,604
79,213
Amortization of acquired technology
1,500
1,609
4,499
5,511
Total cost of revenue
65,566
65,538
194,071
202,817
Gross profit
158,627
153,009
461,569
442,461
Operating expenses:
Research and development, net
37,736
32,084
109,824
97,923
Selling, general and administrative
95,987
87,879
282,441
297,532
Amortization of other acquired intangible
assets
3,156
6,328
9,241
19,028
Total operating expenses
136,879
126,291
401,506
414,483
Operating income
21,748
26,718
60,063
27,978
Other income (expense), net:
Interest income
1,674
1,650
5,248
5,440
Interest expense
(2,539
)
(2,609
)
(7,723
)
(7,994
)
Other (expense) income, net
(2,542
)
59
(5,936
)
59
Total other expense, net
(3,407
)
(900
)
(8,411
)
(2,495
)
Income before (benefit from) provision
for income taxes
18,341
25,818
51,652
25,483
(Benefit from) provision for income
taxes
(10,676
)
12,953
1,533
14,772
Net income
29,017
12,865
50,119
10,711
Net income attributable to noncontrolling
interests
301
253
631
804
Net income attributable to Verint
Systems Inc.
28,716
12,612
49,488
9,907
Dividends on preferred stock
(4,000
)
(5,200
)
(13,280
)
(15,600
)
Net income (loss) attributable to
Verint Systems Inc. common shares
$
24,716
$
7,412
$
36,208
$
(5,693
)
Net income (loss) per common share
attributable to Verint Systems Inc.:
Basic
$
0.40
$
0.12
$
0.58
$
(0.09
)
Diluted
$
0.39
$
0.12
$
0.58
$
(0.09
)
Weighted-average common shares
outstanding:
Basic
62,143
63,887
62,116
64,411
Diluted
62,803
64,144
62,761
64,411
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)
2024
2023
2024
2023
Bundled SaaS revenue - GAAP
$
75,220
$
63,251
$
212,508
$
184,770
Unbundled SaaS revenue - GAAP
73,442
52,400
208,241
161,470
SaaS revenue - GAAP
148,662
115,651
420,749
346,240
Estimated bundled SaaS revenue
adjustments
—
117
—
960
Estimated unbundled SaaS revenue
adjustments
—
—
—
—
Estimated SaaS revenue
adjustments
—
117
—
960
Bundled SaaS revenue - non-GAAP
75,220
63,368
212,508
185,730
Unbundled SaaS revenue - non-GAAP
73,442
52,400
208,241
161,470
SaaS revenue - non-GAAP
$
148,662
$
115,768
$
420,749
$
347,200
New SaaS
ACV
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
New SaaS ACV
$
27,929
$
25,389
$
68,775
$
67,838
New SaaS ACV - bundled SaaS
component
18,514
22,265
48,221
55,132
New deals ACV
17,811
16,740
45,318
36,562
Conversion ACV
703
5,525
2,903
18,570
New SaaS ACV - unbundled SaaS
component
9,415
3,124
20,554
12,706
SaaS
ARR
Three Months Ended
October 31,
(in thousands)
2024
2023
SaaS ARR
$
570,130
$
512,304
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)
2024
2023
2024
2023
Recurring revenue - GAAP
$
179,858
$
161,117
$
516,615
$
488,555
Nonrecurring revenue - GAAP
44,335
57,430
139,025
156,723
Total GAAP revenue
224,193
218,547
655,640
645,278
Recurring revenue adjustments
—
120
—
989
Nonrecurring revenue adjustments
—
—
—
—
Total revenue adjustments
—
120
—
989
Recurring revenue - non-GAAP
179,858
161,237
516,615
489,544
Nonrecurring revenue - non-GAAP
44,335
57,430
139,025
156,723
Total non-GAAP revenue
$
224,193
$
218,667
$
655,640
$
646,267
Gross Profit and
Gross Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
Recurring cost of revenues
$
38,742
$
38,883
$
110,968
$
118,093
Nonrecurring cost of revenues
25,324
25,046
78,604
79,213
Amortization of acquired technology
1,500
1,609
4,499
5,511
Total GAAP cost of revenue
65,566
65,538
194,071
202,817
GAAP gross profit
158,627
153,009
461,569
442,461
GAAP gross margin
70.8
%
70.0
%
70.4
%
68.6
%
Revenue adjustments
—
120
—
989
Amortization of acquired technology
1,500
1,609
4,499
5,511
Stock-based compensation expenses
899
1,093
4,155
2,905
Acquisition and divestitures expenses,
net
38
31
38
353
Restructuring expenses (benefit)
247
(2
)
846
1,447
Non-GAAP gross profit
$
161,311
$
155,860
$
471,107
$
453,666
Non-GAAP gross margin
72.0
%
71.3
%
71.9
%
70.2
%
Research and
Development, net
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP research and development,
net
$
37,736
$
32,084
$
109,824
$
97,923
As a percentage of GAAP revenue
16.8
%
14.7
%
16.8
%
15.2
%
Stock-based compensation expenses
(3,097
)
(3,025
)
(11,104
)
(8,818
)
Acquisition and divestitures expenses,
net
(166
)
(20
)
(201
)
(96
)
Restructuring expenses
(377
)
(1
)
(1,993
)
(316
)
IT facilities and infrastructure
realignment
—
—
—
(1,648
)
Non-GAAP research and development,
net
$
34,096
$
29,038
$
96,526
$
87,045
As a percentage of non-GAAP
revenue
15.2
%
13.3
%
14.7
%
13.5
%
Selling, General
and Administrative Expenses
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP selling, general and
administrative expenses
$
95,987
$
87,879
$
282,441
$
297,532
As a percentage of GAAP revenue
42.8
%
40.2
%
43.1
%
46.1
%
Stock-based compensation expenses
(14,084
)
(12,068
)
(44,588
)
(38,563
)
Acquisition and divestitures (expenses)
benefit, net
(1,047
)
207
(2,097
)
(5,671
)
Restructuring expenses
(449
)
(483
)
(2,010
)
(3,337
)
Accelerated lease costs
—
(98
)
—
(5,262
)
IT facilities and infrastructure
realignment
—
(1,937
)
—
(16,816
)
Other adjustments
(108
)
(241
)
(316
)
(817
)
Non-GAAP selling, general and
administrative expenses
$
80,299
$
73,259
$
233,430
$
227,066
As a percentage of non-GAAP
revenue
35.8
%
33.5
%
35.6
%
35.1
%
Operating Income
and Operating Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP operating income
$
21,748
$
26,718
$
60,063
$
27,978
GAAP operating margin
9.7
%
12.2
%
9.2
%
4.3
%
Revenue adjustments
—
120
—
989
Amortization of acquired technology
1,500
1,609
4,499
5,511
Amortization of other acquired intangible
assets
3,156
6,328
9,241
19,028
Stock-based compensation expenses
18,080
16,186
59,847
50,286
Acquisition and divestitures expenses
(benefit), net
1,251
(156
)
2,336
6,120
Restructuring expenses
1,073
482
4,849
5,100
Accelerated lease costs
—
98
—
5,262
IT facilities and infrastructure
realignment
—
1,937
—
18,464
Other adjustments
108
241
316
817
Non-GAAP operating income
$
46,916
$
53,563
$
141,151
$
139,555
Non-GAAP operating margin
20.9
%
24.5
%
21.5
%
21.6
%
Other Expense,
Net
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP other expense, net
$
(3,407
)
$
(900
)
$
(8,411
)
$
(2,495
)
Losses on early retirements of debt
—
—
—
237
Acquisition and divestitures expenses,
net
—
—
—
(156
)
Other adjustments
(9
)
(113
)
453
(232
)
Non-GAAP other expense, net(1)
$
(3,416
)
$
(1,013
)
$
(7,958
)
$
(2,646
)
(Benefit from)
Provision for Income Taxes
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP (benefit from) provision for
income taxes
$
(10,676
)
$
12,953
$
1,533
$
14,772
GAAP effective income tax rate
(58.2
)%
50.2
%
3.0
%
58.0
%
Non-GAAP income tax adjustments
14,677
(8,640
)
13,724
(2,786
)
Non-GAAP provision for income
taxes
$
4,001
$
4,313
$
15,257
$
11,986
Non-GAAP effective income tax
rate
9.2
%
8.2
%
11.5
%
8.8
%
Net Income (Loss)
Attributable to Verint Systems Inc. Common Shares
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP net income (loss) attributable to
Verint Systems Inc. common shares
$
24,716
$
7,412
$
36,208
$
(5,693
)
Revenue adjustments
—
120
—
989
Amortization of acquired technology
1,500
1,609
4,499
5,511
Amortization of other acquired intangible
assets
3,156
6,328
9,241
19,028
Stock-based compensation expenses
18,080
16,186
59,847
50,286
Losses on early retirements of debt
—
—
—
237
Acquisition and divestitures expenses
(benefit), net
1,251
(156
)
2,336
5,964
Restructuring expenses
1,073
482
4,849
5,100
Accelerated lease costs
—
98
—
5,262
IT facilities and infrastructure
realignment
—
1,937
—
18,464
Other adjustments
99
128
769
585
Non-GAAP tax adjustments
(14,677
)
8,640
(13,724
)
2,786
Dividends, reversed due to assumed
conversion of preferred stock(3)
4,000
5,200
13,280
15,600
Total adjustments
14,482
40,572
81,097
129,812
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
39,198
$
47,984
$
117,305
$
124,119
Diluted Net
Income (Loss) Per Common Share Attributable to Verint Systems
Inc.
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands, except per share data)
2024
2023
2024
2023
GAAP diluted net income (loss) per common
share attributable to Verint Systems Inc.
$
0.39
$
0.12
$
0.58
$
(0.09
)
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.(3)
$
0.54
$
0.65
$
1.62
$
1.67
GAAP weighted-average shares used in
computing diluted net income (loss) per common share attributable
to Verint Systems Inc.
62,803
64,144
62,761
64,411
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
9,477
9,478
9,478
9,802
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.(3)
72,280
73,622
72,239
74,213
GAAP Net Income
to Adjusted EBITDA
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP net income
$
29,017
$
12,865
$
50,119
$
10,711
As a percentage of GAAP revenue
12.9
%
5.9
%
7.6
%
1.7
%
(Benefit from) provision for income
taxes
(10,676
)
12,953
1,533
14,772
Other expense, net
3,407
900
8,411
2,495
Depreciation and amortization(2)
11,221
13,874
32,907
55,394
Revenue adjustments
—
120
—
989
Stock-based compensation expenses
18,080
16,186
59,847
50,286
Acquisition and divestitures expenses
(benefit), net
1,253
(156
)
2,336
6,120
Restructuring expenses
1,058
476
4,828
5,007
Accelerated lease costs
—
98
—
5,262
IT facilities and infrastructure
realignment
—
1,679
—
6,657
Other adjustments
108
241
316
817
Adjusted EBITDA
$
53,468
$
59,236
$
160,297
$
158,510
As a percentage of non-GAAP
revenue
23.8
%
27.1
%
24.4
%
24.5
%
Gross Debt to Net
Debt
(in thousands)
October 31,
2024
January 31,
2024
Long-term debt
$
412,242
$
410,965
Unamortized debt discounts and issuance
costs
2,758
4,035
Gross debt
415,000
415,000
Less:
Cash and cash equivalents
182,823
241,400
Restricted cash and cash equivalents, and
restricted bank time deposits
486
1,269
Short-term investments
779
686
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
230,912
171,645
Long-term restricted cash, cash
equivalents, time deposits, and investments
182
181
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
230,730
171,464
(1) For the three months ended October 31,
2024, other expense, net of $3.4 million was comprised of $1.0
million of interest and other expense, net and $2.4 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 and nine months ended October
31, 2024 and 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 and
Nonrecurring Revenue
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
Recurring revenue:
Bundled SaaS revenue
$
75,220
$
63,251
$
212,508
$
184,770
Unbundled SaaS revenue
73,442
52,400
208,241
161,470
Total SaaS revenue
148,662
115,651
420,749
346,240
Optional managed services revenue
5,739
11,842
16,476
36,872
Support revenue
25,457
33,624
79,390
105,443
Total recurring revenue
179,858
161,117
516,615
488,555
Nonrecurring revenue:
Perpetual revenue
23,471
24,557
72,205
74,103
Professional services and other
revenue
20,864
32,873
66,820
82,620
Total nonrecurring revenue
44,335
57,430
139,025
156,723
Total revenue
$
224,193
$
218,547
$
655,640
$
645,278
Recurring Gross
Profit
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP recurring revenue
$
179,858
$
161,117
$
516,615
$
488,555
GAAP recurring cost of revenues
38,742
38,883
110,968
118,093
GAAP recurring gross profit
141,116
122,234
405,647
370,462
GAAP recurring gross margin
78.5
%
75.9
%
78.5
%
75.8
%
Recurring revenue adjustments
—
120
—
989
Recurring stock-based compensation
expenses
542
523
2,234
1,505
Recurring acquisition and divestitures
expenses, net
38
31
38
353
Recurring restructuring expenses
(benefit)
20
(14
)
26
933
Non-GAAP recurring gross profit
$
141,716
$
122,894
$
407,945
$
374,242
Non-GAAP recurring gross margin
78.8
%
76.2
%
79.0
%
76.4
%
Nonrecurring
Gross Profit
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2024
2023
2024
2023
GAAP nonrecurring revenue
$
44,335
$
57,430
$
139,025
$
156,723
GAAP nonrecurring cost of revenues
25,324
25,046
78,604
79,213
GAAP nonrecurring gross profit
19,011
32,384
60,421
77,510
GAAP nonrecurring gross margin
42.9
%
56.4
%
43.5
%
49.5
%
Nonrecurring stock-based compensation
expenses
357
570
1,921
1,400
Nonrecurring restructuring expenses
227
12
820
514
Non-GAAP nonrecurring gross
profit
$
19,595
$
32,966
$
63,162
$
79,424
Non-GAAP nonrecurring gross
margin
44.2
%
57.4
%
45.4
%
50.7
%
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
Nine Months
Ended
Three Months
Ended
Nine Months
Ended
Revenue for the three and nine months
ended October 31, 2023
$
218,547
$
645,278
$
218,667
$
646,267
Revenue for the three and nine months
ended October 31, 2024
$
224,193
$
655,640
$
224,193
$
655,640
Revenue for the three and nine months
ended October 31, 2024 at constant currency(1)
$
223,000
$
654,000
$
223,000
$
654,000
Reported period-over-period revenue
growth
2.6
%
1.6
%
2.5
%
1.5
%
% impact from change in foreign currency
exchange rates
(0.6
)%
(0.2
)%
(0.5
)%
(0.3
)%
Constant currency period-over-period
revenue growth
2.0
%
1.4
%
2.0
%
1.2
%
(1) Revenue for the three and nine months
ended October 31, 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 and nine months ended October
31, 2023 rather than actual current-period foreign currency
exchange rates.
(2) GAAP revenue denominated in non-U.S.
dollars was 19% and 20% of our total GAAP revenue for each of the
three months ended October 31, 2024 and 2023, respectively. Our
combined GAAP cost of revenue and operating expenses denominated in
non-U.S. dollars was 32% of our total combined GAAP cost of revenue
and operating expenses for the three months ended October 31, 2024
and 2023. GAAP revenue denominated in non-U.S. dollars was 20% and
21% of our total GAAP revenue for the nine months ended October 31,
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 nine months ended October 31, 2024 and 2023,
respectively.
(3) Non-GAAP revenue denominated in
non-U.S. dollars was 19% and 20% of our total non-GAAP revenue for
each of the three months ended October 31, 2024 and 2023,
respectively. Our combined non-GAAP cost of revenue and operating
expenses denominated in non-U.S. dollars was 34% and 36% of our
total combined non-GAAP cost of revenue and operating expenses for
the three months ended October 31, 2024 and 2023, respectively.
Non-GAAP revenue denominated in non-U.S. dollars was 20% and 21% of
our total non-GAAP revenue for the nine months ended October 31,
2024 and 2023, respectively. Our combined non-GAAP cost of revenue
and operating expenses denominated in non-U.S. dollars was 35% of
our total combined non-GAAP cost of revenue and operating expenses
for each of the nine months ended October 31, 2024 and 2023.
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)
October 31,
January 31,
(in thousands, except share and per share
data)
2024
2024
Assets
Current Assets:
Cash and cash equivalents
$
182,823
$
241,400
Short-term investments
779
686
Accounts receivable, net of allowance for
credit losses of $1.5 million and $1.2 million, respectively
152,898
190,461
Contract assets, net
94,046
66,913
Inventories
13,747
14,209
Prepaid expenses and other current
assets
65,997
59,505
Total current assets
510,290
573,174
Property and equipment, net
49,171
47,704
Operating lease right-of-use assets
27,776
30,118
Goodwill
1,404,806
1,352,715
Intangible assets, net
85,145
57,466
Other assets
171,131
165,247
Total assets
$
2,248,319
$
2,226,424
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
28,438
$
26,301
Accrued expenses and other current
liabilities
128,397
137,433
Contract liabilities
230,145
254,437
Total current liabilities
386,980
418,171
Long-term debt
412,242
410,965
Long-term contract liabilities
12,156
10,581
Operating lease liabilities
29,647
32,100
Other liabilities
89,156
85,620
Total liabilities
930,181
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 October 31, 2024 and January 31, 2024,
respectively; aggregate liquidation preference and redemption value
of $202,667 and $206,067 at October 31, 2024 and January 31, 2024,
respectively.
200,628
200,628
Series B Preferred Stock; 200,000 shares
issued and outstanding at October 31, 2024 and January 31, 2024,
respectively; aggregate liquidation preference and redemption value
of $202,667 and $206,067 at October 31, 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 62,285,000 and 62,738,000
shares; outstanding 62,285,000 and 62,738,000 shares at October 31,
2024 and January 31, 2024, respectively.
62
63
Additional paid-in capital
980,586
979,671
Retained earnings (accumulated
deficit)
33,085
(6,723
)
Accumulated other comprehensive loss
(134,652
)
(142,962
)
Total Verint Systems Inc. stockholders'
equity
879,081
830,049
Noncontrolling interest
2,736
2,617
Total stockholders' equity
881,817
832,666
Total liabilities, temporary equity,
and stockholders' equity
$
2,248,319
$
2,226,424
Table 8
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended
October 31,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net income
$
50,119
$
10,711
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
34,780
57,287
Stock-based compensation, excluding
cash-settled awards
59,863
50,286
Losses on early retirements of debt
—
237
Other, net
634
5,676
Changes in operating assets and
liabilities, net of effects of business combinations and
divestitures:
Accounts receivable
43,970
13,545
Contract assets
(26,809
)
9,943
Inventories
544
(415
)
Prepaid expenses and other assets
(13,771
)
32,609
Accounts payable and accrued expenses
(10,088
)
(50,080
)
Contract liabilities
(33,195
)
(39,299
)
Deferred income taxes
(1,176
)
1,788
Other, net
(6,644
)
(10,609
)
Net cash provided by operating
activities
98,227
81,679
Cash flows from investing
activities:
Cash paid for asset acquisitions and
business combinations, including adjustments, net of cash
acquired
(55,864
)
(3,173
)
Divestitures, net of cash divested
3,189
—
Purchases of property and equipment
(12,173
)
(12,839
)
Purchases of investments
(330
)
(3,180
)
Maturities and sales of investments
228
3,168
Cash paid for capitalized software
development costs
(9,056
)
(7,109
)
Change in restricted bank time deposits,
and other investing activities, net
(1
)
(1,200
)
Net cash used in investing
activities
(74,007
)
(24,333
)
Cash flows from financing
activities:
Proceeds from borrowings
—
100,000
Repayments of borrowings and other
financing obligations
(1,712
)
(102,430
)
Purchases of treasury stock and common
stock for retirement
(58,600
)
(99,263
)
Preferred stock dividend payments
(20,080
)
(20,800
)
Distributions paid to noncontrolling
interest
(512
)
(490
)
Payments of contingent consideration for
business combinations (financing portion)
(3,459
)
(4,192
)
Cash received for contingent consideration
for business divestitures (financing portion) and other financing
activities
(20
)
(222
)
Net cash used in financing
activities
(84,383
)
(127,397
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
803
(700
)
Net decrease in cash, cash equivalents,
restricted cash, and restricted cash equivalents
(59,360
)
(70,751
)
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
$
183,309
$
211,410
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
$
182,823
$
209,647
Restricted cash and cash equivalents
included in prepaid expenses and other current assets
486
1,763
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
183,309
$
211,410
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 11% 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. New Unbundled SaaS
ACV includes only the ACV of the unbundled SaaS contracts included
in New SaaS ACV. New Bundled SaaS ACV includes only the ACV of the
bundled SaaS contracts included in New SaaS ACV and is comprised of
two components:
- New Deals ACV, which represents the annual contract value of
new bundled SaaS contracts, received within the period. This
includes purchases of new applications by both new and existing
customers as well as expansions of entitlements to applications
already in use by existing customers, other than if in connection
with a conversion. AI booking from new deals represents the portion
of New Deals ACV attributable specifically to AI applications.
- Conversion ACV, which represents the bundled SaaS annual
contract value sold to a customer who is converting from an
on-premises application to the Verint Cloud within the period. This
metric also includes the value of incremental licenses or expansion
of entitlements as part of the conversion, including for AI
applications.
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. In the case of acquired contracts that allow
for early termination, SaaS ARR will reflect the annualized amount
of committed contracts in the first quarter and then proportionally
increase to the remaining amount of annualized ARR in the
subsequent three quarters during the first year post acquisition.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20241204118055/en/
Investor Relations Matthew
Frankel, CFA Verint Systems Inc. (631) 962-9600
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
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