Q1 Results Ahead of Guidance with Strength Across All Key Cloud Metrics

Raises FYE 2023 Non-GAAP Cloud Revenue Growth Guidance to a Range of 32% to 34%

MELVILLE, N.Y.–(BUSINESS WIRE)–Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three months ended April 30, 2022 (FYE 2023). Revenue for the three months ended April 30, 2022 was $218 million on a GAAP basis representing 8.5% year-over-year growth and $219 million on a non-GAAP basis representing 8.6% year-over-year growth. For the three months ended April 30, 2022, net loss per share was $(0.08) on a GAAP basis and diluted EPS was $0.52 on a non-GAAP basis.

“I am pleased to report strong cloud momentum in the first quarter with revenue and diluted EPS coming in ahead of expectations. Our first quarter showed strength across all key metrics including New Perpetual License Equivalent (PLE) Bookings growth and mix, with our bookings continuing to shift to SaaS,” said Dan Bodner, Verint CEO.

Bodner continued, “Looking ahead, we expect our cloud momentum to continue and are raising our annual guidance for cloud revenue growth to a range of 32% to 34%. Behind our strong momentum is our focus on helping brands close the engagement capacity gap with our highly differentiated customer engagement cloud platform.”

First Quarter Highlights

  • Strong Cloud Revenue Growth: Cloud revenue increased 38% year-over-year
  • Non-GAAP Revenue and Diluted EPS: Ahead of our guidance
  • Favorable Mix Shift: 58% of New PLE bookings came from SaaS (up from 51% in Q1 of the prior year)
  • Strong Cash Flow Generation: Operating cash flow up 43% year-over-year to $54 million

Verint Investor Day (Virtual)

  • Day: Thursday, June 9, 2022
  • Time: 10:30am ET
  • Registration Link: Click here

Bodner concluded, “On Thursday of this week, we will hold our annual investor day, and we will do a deep dive into our platform differentiation.”

FYE 2023 Outlook

Our non-GAAP annual outlook for the year ending January 31, 2023 is as follows:

  • Revenue: $940 million +/- 2%, reflecting 7% year-over-year growth
  • Cloud Revenue Growth: 32% to 34% year-over-year
  • Diluted EPS: $2.50 at the midpoint of our revenue guidance, reflecting 10% year-over-year growth

Our non-GAAP outlook for the three months ending July 31, 2022 and year ending January 31, 2023 excludes the following GAAP measure which we are able to quantify with reasonable certainty:

  • Amortization of intangible assets of approximately $10 million and $40 million, for the three months ending July 31, 2022 and year ending January 31, 2023, respectively.

Our non-GAAP outlook for the three months ending July 31, 2022 and year ending January 31, 2023 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 $0 million and $1 million, and $2 million and $3 million, for the three months ending July 31, 2022 and year ending January 31, 2023, respectively.
  • Stock-based compensation expenses are expected to be between approximately $25 million and $29 million, and $81 million and $87 million, for the three months ending July 31, 2022 and year ending January 31, 2023, respectively, assuming market prices for our common stock approximately consistent with current levels.
  • Costs associated with modifying our workplace following the spin-off of our former cyber intelligence business and in response to our decision to move to a hybrid work environment, including assumed lease terminations and abandonments, IT infrastructure costs, and other charges are expected to be between approximately $7 million and $9 million, and $21 million and $25 million, for the three months ending July 31, 2022 and year ending January 31, 2023, respectively.

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, 2022 and 2021 for the GAAP measures excluded from our non-GAAP outlook appear in Tables 2, 3 and 4 of this press release.

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, 2022 and outlook. An online, real-time webcast of the conference call and webcast slides will be available on our website at www.verint.com. The webcast slides will be available on our website until at least July 31, 2022. The conference call can also be accessed live via telephone at 1-844-309-0615 (United States and Canada) and 1-661-378-9462 (international) and the passcode is 4465914. Please dial in 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) helps the world’s most iconic brands – including over 85 of the Fortune 100 companies – build enduring customer relationships by connecting work, data, and experiences across the enterprise. The Verint Customer Engagement portfolio draws on the latest advancements in AI and analytics, an open cloud architecture, and The Science of Customer Engagement™ to help customers close The Engagement Capacity Gap™.

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, inflation, economic instability, political unrest, armed conflicts (such as the Russian invasion of Ukraine), natural disasters, climate change or other environmental issues, or outbreaks of disease, such as the COVID-19 pandemic, as well as the resulting impact on information technology spending by enterprises or government customers, on our business; risks that our customers delay, cancel, or refrain from placing orders, refrain from renewing subscriptions or service contracts, or are unable to honor contractual commitments or payment obligations due to liquidity issues or other challenges in their budgets and business; risks that restrictions resulting from the COVID-19 pandemic or actions taken in response to the pandemic adversely impact our operations or our ability to fulfill orders, complete implementations, or recognize revenue; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; 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 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 have greater resources than us, including in areas such as sales and marketing, branding, technological innovation and development, recruiting and retention, and growth; risks associated with our ability to properly execute on our cloud transition, including 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 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 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, increasing labor costs, applicable regulatory requirements such as vaccination mandates, or otherwise; challenges associated with selling sophisticated solutions, including with respect to longer sales cycles, more complex sales processes, and assisting customers in understanding and realizing the benefits of our solutions, as well as with developing, offering, implementing, and maintaining a broad solution portfolio; risks that we may be unable to maintain, expand, and enable our relationships with partners as part of our growth strategy; risks associated with our reliance on cloud hosting providers and other 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, exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, 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; 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 and protection, government contracts, anti-corruption, trade compliance, 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 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, develop operational problems, or be vulnerable to cyber-attacks; risk of 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 significant 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 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, 2022, our Quarterly Report on Form 10-Q for the quarter ended April 30, 2022, when filed, and other filings we make with the SEC.

VERINT, VERINT DA VINCI, THE CUSTOMER ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT, THE ENGAGEMENT CAPACITY GAP and THE SCIENCE OF CUSTOMER ENGAGEMENT 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)

 

2022

 

2021

Revenue:

 

 

 

 

Recurring

 

$

159,367

 

 

$

144,453

 

Nonrecurring

 

 

58,539

 

 

 

56,451

 

Total revenue

 

 

217,906

 

 

 

200,904

 

Cost of revenue:

 

 

 

 

Recurring

 

 

41,028

 

 

 

38,076

 

Nonrecurring

 

 

32,068

 

 

 

29,880

 

Amortization of acquired technology

 

 

3,639

 

 

 

4,384

 

Total cost of revenue

 

 

76,735

 

 

 

72,340

 

Gross profit

 

 

141,171

 

 

 

128,564

 

Operating expenses:

 

 

 

 

Research and development, net

 

 

30,947

 

 

 

29,148

 

Selling, general and administrative

 

 

102,882

 

 

 

87,646

 

Amortization of other acquired intangible assets

 

 

6,844

 

 

 

7,328

 

Total operating expenses

 

 

140,673

 

 

 

124,122

 

Operating income

 

 

498

 

 

 

4,442

 

Other income (expense), net:

 

 

 

 

Interest income

 

 

199

 

 

 

23

 

Interest expense

 

 

(1,501

)

 

 

(5,019

)

Losses on early retirements of debt

 

 

 

 

 

(2,474

)

Other income, net

 

 

1,674

 

 

 

4,050

 

Total other income (expense), net

 

 

372

 

 

 

(3,420

)

Income before provision for (benefit from) income taxes

 

 

870

 

 

 

1,022

 

Provision for (benefit from) income taxes

 

 

296

 

 

 

(72

)

Net income

 

 

574

 

 

 

1,094

 

Net income attributable to noncontrolling interests

 

 

288

 

 

 

295

 

Net income attributable to Verint Systems Inc.

 

 

286

 

 

 

799

 

Dividends on preferred stock

 

 

(5,200

)

 

 

(3,322

)

Net loss attributable to Verint Systems Inc. common shares

 

$

(4,914

)

 

$

(2,523

)

 

 

 

 

 

Net loss per common share attributable to Verint Systems Inc.:

 

 

 

 

Basic

 

$

(0.08

)

 

$

(0.04

)

Diluted

 

$

(0.08

)

 

$

(0.04

)

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

Basic

 

 

64,947

 

 

 

65,661

 

Diluted

 

 

64,947

 

 

 

65,661

 

Table 2

VERINT SYSTEMS INC. AND SUBSIDIARIES

GAAP to Non-GAAP Cloud Metrics

(Unaudited)

Cloud Revenue

 

 

Three Months Ended

April 30,

(in thousands)

 

2022

 

2021

SaaS revenue – GAAP

 

$

94,730

 

 

$

63,592

 

Bundled SaaS revenue – GAAP

 

 

49,285

 

 

 

39,309

 

Unbundled SaaS revenue – GAAP

 

 

45,445

 

 

 

24,283

 

Optional managed services revenue – GAAP

 

 

15,913

 

 

 

16,458

 

Cloud revenue – GAAP

 

$

110,643

 

 

$

80,050

 

 

 

 

 

 

Estimated SaaS revenue adjustments

 

$

1,269

 

 

$

844

 

Estimated bundled SaaS revenue adjustments

 

 

1,269

 

 

 

782

 

Estimated unbundled SaaS revenue adjustments

 

 

 

 

 

62

 

Estimated optional managed services revenue adjustments

 

 

60

 

 

 

187

 

Estimated cloud revenue adjustments

 

$

1,329

 

 

$

1,031

 

 

 

 

 

 

SaaS revenue – non-GAAP

 

$

95,999

 

 

$

64,436

 

Bundled SaaS revenue – non-GAAP

 

 

50,554

 

 

 

40,091

 

Unbundled SaaS revenue – non-GAAP

 

 

45,445

 

 

 

24,345

 

Optional managed services revenue – non-GAAP

 

 

15,973

 

 

 

16,645

 

Cloud revenue – non-GAAP

 

$

111,972

 

 

$

81,081

 

New SaaS ACV

 

 

Three Months Ended

April 30,

(in thousands)

 

2022

 

2021

New SaaS ACV

 

$

24,066

 

 

$

18,804

 

New SaaS ACV Growth YoY

 

 

28.0

%

 

 

58.1

%

New Perpetual License Equivalent Bookings

 

 

Three Months Ended

April 30,

(in thousands)

 

2022

 

2021

New perpetual license equivalent bookings

 

$

77,691

 

 

$

60,982

 

New perpetual license equivalent bookings change YoY

 

 

27.4

%

 

 

27.9

%

% of new perpetual license equivalent bookings from SaaS

 

 

57.9

%

 

 

51.2

%

Table 3

VERINT SYSTEMS INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures

(Unaudited)

Revenue

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

Recurring revenue – GAAP

 

$

159,367

 

 

$

144,453

 

Nonrecurring revenue – GAAP

 

 

58,539

 

 

 

56,451

 

Total GAAP revenue

 

 

217,906

 

 

 

200,904

 

Recurring revenue adjustments

 

 

1,343

 

 

 

1,039

 

Nonrecurring revenue adjustments

 

 

 

 

 

 

Total revenue adjustments

 

 

1,343

 

 

 

1,039

 

Recurring revenue – non-GAAP

 

 

160,710

 

 

 

145,492

 

Nonrecurring revenue – non-GAAP

 

 

58,539

 

 

 

56,451

 

Total non-GAAP revenue

 

$

219,249

 

 

$

201,943

 

Gross Profit and Gross Margin

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

Recurring costs

 

$

41,028

 

 

$

38,076

 

Nonrecurring costs

 

 

32,068

 

 

 

29,880

 

Amortization of acquired technology

 

 

3,639

 

 

 

4,384

 

Total GAAP cost of revenue

 

 

76,735

 

 

 

72,340

 

GAAP gross profit

 

 

141,171

 

 

 

128,564

 

GAAP gross margin

 

 

64.8

%

 

 

64.0

%

Revenue adjustments

 

 

1,343

 

 

 

1,039

 

Amortization of acquired technology

 

 

3,639

 

 

 

4,384

 

Stock-based compensation expenses

 

 

1,165

 

 

 

1,262

 

Acquisition expenses, net

 

 

251

 

 

 

25

 

Restructuring expenses

 

 

338

 

 

 

462

 

Separation expenses

 

 

 

 

 

78

 

Non-GAAP gross profit

 

$

147,907

 

 

$

135,814

 

Non-GAAP gross margin

 

 

67.5

%

 

 

67.3

%

Research and Development, net

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP research and development, net

 

$

30,947

 

 

$

29,148

 

As a percentage of GAAP revenue

 

 

14.2

%

 

 

14.5

%

Stock-based compensation expenses

 

 

(2,419

)

 

 

(1,773

)

Acquisition expenses, net

 

 

(198

)

 

 

(24

)

Restructuring expenses

 

 

(137

)

 

 

(184

)

Separation expenses

 

 

 

 

 

(457

)

Other adjustments

 

 

(25

)

 

 

 

Non-GAAP research and development, net

 

$

28,168

 

 

$

26,710

 

As a percentage of non-GAAP revenue

 

 

12.8

%

 

 

13.2

%

Selling, General and Administrative Expenses

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP selling, general and administrative expenses

 

$

102,882

 

 

$

87,646

 

As a percentage of GAAP revenue

 

 

47.2

%

 

 

43.6

%

Stock-based compensation expenses

 

 

(14,785

)

 

 

(13,366

)

Acquisition expenses, net

 

 

(1,375

)

 

 

(1,644

)

Restructuring expenses

 

 

(2,674

)

 

 

(593

)

Separation expenses

 

 

(591

)

 

 

(5,527

)

Accelerated lease costs

 

 

(5,548

)

 

 

(16

)

Other adjustments

 

 

(2,009

)

 

 

(44

)

Non-GAAP selling, general and administrative expenses

 

$

75,900

 

 

$

66,456

 

As a percentage of non-GAAP revenue

 

 

34.6

%

 

 

32.9

%

Operating Income and Operating Margin

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP operating income

 

$

498

 

 

$

4,442

 

GAAP operating margin

 

 

0.2

%

 

 

2.2

%

Revenue adjustments

 

 

1,343

 

 

 

1,039

 

Amortization of acquired technology

 

 

3,639

 

 

 

4,384

 

Amortization of other acquired intangible assets

 

 

6,844

 

 

 

7,328

 

Stock-based compensation expenses

 

 

18,369

 

 

 

16,401

 

Acquisition expenses, net

 

 

1,824

 

 

 

1,693

 

Restructuring expenses

 

 

3,149

 

 

 

1,239

 

Separation expenses

 

 

591

 

 

 

6,062

 

Accelerated lease costs

 

 

5,548

 

 

 

16

 

Other adjustments

 

 

2,034

 

 

 

44

 

Non-GAAP operating income

 

$

43,839

 

 

$

42,648

 

Non-GAAP operating margin

 

 

20.0

%

 

 

21.1

%

Other Income (Expense), Net

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP other income (expense), net

 

$

372

 

 

$

(3,420

)

Unrealized losses on derivatives, net

 

 

 

 

 

14,305

 

Expenses and losses on debt modification or retirement

 

 

 

 

 

2,474

 

Change in fair value of future tranche right

 

 

 

 

 

(15,810

)

Acquisition benefit, net

 

 

 

 

 

(3,200

)

Non-GAAP other income (expense), net(1)

 

 

372

 

 

 

(5,651

)

Provision for (Benefit from) Income Taxes

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP provision for (benefit from) income taxes

 

$

296

 

 

$

(72

)

GAAP effective income tax rate

 

 

34.0

%

 

 

(7.1

) %

Non-GAAP tax adjustments

 

 

4,222

 

 

 

3,740

 

Non-GAAP provision for income taxes

 

$

4,518

 

 

$

3,668

 

Non-GAAP effective income tax rate

 

 

10.2

%

 

 

9.9

%

Net (Loss) Income Attributable to Verint Systems Inc. Common Shares

 

 

Three Months Ended

April 30,

(in thousands, except per share data)

 

2022

 

2021

GAAP net loss attributable to Verint Systems Inc. common shares

 

$

(4,914

)

 

$

(2,523

)

Revenue adjustments

 

 

1,343

 

 

 

1,039

 

Amortization of acquired technology

 

 

3,639

 

 

 

4,384

 

Amortization of other acquired intangible assets

 

 

6,844

 

 

 

7,328

 

Stock-based compensation expenses

 

 

18,369

 

 

 

16,401

 

Unrealized losses on derivatives, net

 

 

 

 

 

14,305

 

Expenses and losses on debt modification or retirement

 

 

 

 

 

2,474

 

Change in fair value of future tranche right

 

 

 

 

 

(15,810

)

Acquisition expenses, net

 

 

1,824

 

 

 

(1,507

)

Restructuring expenses

 

 

3,149

 

 

 

1,239

 

Separation expenses

 

 

591

 

 

 

6,062

 

Accelerated lease costs

 

 

5,548

 

 

 

16

 

Other adjustments

 

 

2,034

 

 

 

44

 

Non-GAAP tax adjustments

 

 

(4,222

)

 

 

(3,740

)

Dividends, reversed due to assumed conversion of preferred stock(3)

 

 

 

 

 

3,322

 

Total adjustments

 

 

39,119

 

 

 

35,557

 

Non-GAAP net income attributable to Verint Systems Inc. common shares

 

$

34,205

 

 

$

33,034

 

Contacts

Investor Relations
Matthew Frankel, CFA

Verint Systems Inc.

(631) 962-9672

matthew.frankel@verint.com

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