Revenue and Diluted EPS Come in Ahead of Guidance
Raising Revenue and EPS Outlook for FYE25
AI-Powered Open Platform Resonating Well in the Market Driving
Bundled SaaS Momentum
Verint® (Nasdaq: VRNT), The Customer Engagement Company™,
today announced results for the three months and year ended January
31, 2024 (FYE 2024). Revenue for the three months ended January 31,
2024 was $265 million, representing 12% year-over-year growth.
Revenue for the year ended January 31, 2024 was $910 million on a
GAAP basis and $911 million on a non-GAAP basis. For the three
months ended January 31, 2024, diluted EPS was $0.37 on a GAAP
basis and $1.07 on a non-GAAP basis. For the year ended January 31,
2024, diluted EPS was $0.28 on a GAAP basis and $2.73 on a non-GAAP
basis.
“The market today is looking to increase CX Automation, and
Verint is leading the way with an AI-powered open platform. I am
pleased to report strong Q4 results, ahead of our expectations. Our
differentiated approach to CX Automation enables Verint to deliver
tangible AI business outcomes better than any other vendor in our
market. Our customers purchase our AI innovation in Bundled SaaS,
and we are pleased with our 16% year-over-year increase in Bundled
SaaS New ACV bookings in Q4, and our over 20% year-over-year
increase in Bundled SaaS pipeline as of the end of Q4. For the
current year we are raising our outlook to reflect our AI
momentum,” said Dan Bodner, Verint CEO.
Q4 FYE 2024 Highlights
- Revenue: Up 12% year-over-year
- SaaS Revenue: Up ~28% year-over-year
- Recurring Revenue: 89% of software revenue recurring (up
~200bps year-over-year)
- Gross Margin: Up ~300bps year-over-year
- Free Cash Flow: Up 20% year-over-year for the full
year
Grant Highlander, Verint CFO, added, “As we execute our roadmap
to become a ‘Rule of 40’ company, we continue our AI investments in
the platform, ending Q4 with ~1,300 engineers in R&D and Cloud
Operations, and adding resources to our Customer Success team to
drive AI adoption by our customers. In Q4, we also aligned our
services catalog to our AI offerings by adding value realization
services and divesting a manual managed services offering that is
being replaced with AI-powered bots.”
Highlander continued, “We expect our AI innovation to drive
Bundled SaaS growth and free cash flow acceleration. For FYE 25, we
are targeting a greater than 40% increase in free cash flow, to
approximately $180 million. We expect our largest use of free cash
flow to be share buybacks, to further reduce our share count.”
FYE 2025 Outlook We are
providing our non-GAAP outlook for the year ending January 31,
2025. Our outlook reflects the divestiture of a managed service
offering on January 31, 2024 that generated $25 million in FYE 24
revenue.
- Revenue: $930 million +/- 2%, reflecting 5%
year-over-year growth (growth rate adjusted for divestiture)
- Diluted EPS: $2.89 at the midpoint of our revenue
guidance, reflecting 6% year-over-year growth
Our non-GAAP outlook for three months ending April 30, 2024 and
year ending January 31, 2025 excludes the following GAAP measure
which we are able to quantify with reasonable certainty:
- Amortization of intangible assets of approximately $4 million
and $17 million, for the three months ending April 30, 2024 and
year ending January 31, 2025, respectively.
Our non-GAAP outlook for the three months ending April 30, 2024
and year ending January 31, 2025 excludes the following GAAP
measures for which we are able to provide a range of probable
significance:
- Stock-based compensation expenses are expected to be between
approximately $17 million and $19 million, and $70 million and $74
million, for the three months ending April 30, 2024 and year ending
January 31, 2025, respectively, assuming market prices for our
common stock approximately consistent with current levels.
Our non-GAAP guidance does not include the potential impact of
any in-process business acquisitions that may close after the date
hereof, and, unless otherwise specified, reflects foreign currency
exchange rates approximately consistent with current rates.
We are unable, without unreasonable efforts, to provide a
reconciliation for other GAAP measures which are excluded from our
non-GAAP outlook, including the impact of future business
acquisitions or acquisition expenses, future restructuring
expenses, and non-GAAP income tax adjustments due to the level of
unpredictability and uncertainty associated with these items. For
these same reasons, we are unable to assess the probable
significance of these excluded items. While historical results may
not be indicative of future results, actual amounts for the three
months and year ended January 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.
Q4 Conference Call
Information
We will conduct a conference call today at 4:30 p.m. ET to
discuss our results for the three months and year ended January 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) helps
brands increase customer experience (CX) automation across the
enterprise so they can elevate the customer experience and reduce
their operating cost. For more than two decades, the world’s most
iconic brands – including approximately 85 of the Fortune 100
companies – have trusted Verint to provide innovative solutions and
domain expertise for their customer engagement operations.
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, including global epidemics or pandemics,
as well as the resulting impact on spending by customers or
partners, on our business; risks that our customers or partners
delay, downsize, cancel, or refrain from placing orders or renewing
subscriptions or contracts, or are unable to honor contractual
commitments or payment obligations due to challenges or
uncertainties in their budgets, liquidity, or businesses; risks
associated with our ability to keep pace with technological
advances and challenges and evolving industry standards, including
achieving and maintaining the competitive differentiation of our
solution platform; to adapt to changing market potential from area
to area within our markets; and to successfully develop, launch,
and drive demand for new, innovative, high-quality products and
services that meet or exceed customer challenges and needs, while
simultaneously preserving our legacy businesses and migrating away
from areas of commoditization; risks due to aggressive competition
in all of our markets and our ability to keep pace with
competitors, some of whom may be able to grow faster than us or
have greater resources than us, including in areas such as sales
and marketing, branding, technological innovation and development,
and recruiting and retention; risks associated with our ability to
properly execute on our software as a service ("SaaS") transition,
including successfully transitioning customers to our cloud
platform and the increased importance of subscription renewal
rates, and risk of increased variability in our period-to-period
results based on the mix, terms, and timing of our transactions;
risks relating to our ability to properly identify and execute on
growth or strategic initiatives, manage investments in our business
and operations, and enhance our existing operations and
infrastructure, including the proper prioritization and allocation
of limited financial and other resources; risks associated with our
ability to or costs to retain, recruit , and train qualified
personnel and management in regions in which we operate either
physically or remotely, including in new markets and growth areas
we may enter, due to competition for talent, increased labor costs,
applicable regulatory requirements, or otherwise; challenges
associated with selling sophisticated solutions and cloud-based
solutions, which may incorporate newer technologies, such as
artificial intelligence ("AI"), whose adoption and use-cases are
still emerging (and may present risks of their own), including with
respect to longer sales cycles, more complex sales processes and
customer evaluation and approval processes, more complex
contractual and information security requirements, and assisting
customers in understanding and realizing the benefits of our
solutions and technologies, as well as with developing, offering,
implementing, and maintaining an enterprise class, broad solution
portfolio; risks that we may be unable to maintain, expand, or
enable our relationships with partners as part of our growth
strategy, including partners with whom we may overlap or compete,
while avoiding excessive concentration with one or more partners;
risks associated with our reliance on third-party suppliers,
partners, or original equipment manufacturers (“OEMs”) for certain
services, products, or components, including companies that may
compete with us or work with our competitors; risks associated with
our significant international operations, including exposure to
regions subject to political or economic instability, fluctuations
in foreign exchange rates, inflation, increased financial
accounting and reporting burdens and complexities, and challenges
associated with a significant portion of our cash being held
overseas; risks associated with a significant part of our business
coming from government contracts, and associated procurement
processes and regulatory requirements; risks associated with our
ability to identify suitable targets for acquisition or investment
or successfully compete for, consummate, and implement mergers and
acquisitions, including risks associated with valuations, legacy
liabilities, reputational considerations, capital constraints,
costs and expenses, maintaining profitability levels, expansion
into new areas, management distraction, post-acquisition
integration activities, and potential asset impairments; risks
associated with complex and changing domestic and foreign
regulatory environments, including, among others, with respect to
data privacy, AI, cyber/information security, government contracts,
anti-corruption, trade compliance, climate change or other
environmental, social and governance matters, tax, and labor
matters, relating to our own operations, the products and services
we offer, and/or the use of our solutions by our customers; risks
associated with the mishandling or perceived mishandling of
sensitive or confidential information and data, including
personally identifiable information or other information that may
belong to our customers or other third parties, including in
connection with our SaaS or other hosted or managed services
offerings or when we are asked to perform service or support; risks
associated with our reliance on third parties to provide certain
cloud hosting or other cloud-based services to us or our customers,
including the risk of service disruptions, data breaches, or data
loss or corruption; risks that our solutions or services, or those
of third-party suppliers, partners, or OEMs which we use in or with
our offerings or otherwise rely on, including third-party hosting
platforms, may contain defects, vulnerabilities, or develop
operational problems; risk that we or our solutions may be subject
to security vulnerabilities or lapses, including cyber-attacks,
information technology system breaches, failures, or disruptions;
risks that our intellectual property ("IP") rights may not be
adequate to protect our business or assets or that others may make
claims on our IP, claim infringement on their IP rights, or claim a
violation of their license rights, including relative to free or
open source components we may use; risks associated with leverage
resulting from our current debt position or our ability to incur
additional debt, including with respect to liquidity
considerations, covenant limitations and compliance, fluctuations
in interest rates, dilution considerations (with respect to our
convertible notes), and our ability to maintain our credit ratings;
risks that we may experience liquidity or working capital issues
and related risks that financing sources may be unavailable to us
on reasonable terms or at all; risks arising as a result of
contingent or other obligations or liabilities assumed in our
acquisition of our former parent company, Comverse Technology, Inc.
(“CTI”), or associated with formerly being consolidated with, and
part of a consolidated tax group with, CTI, or as a result of the
successor to CTI's business operations, Mavenir Inc., being
unwilling or unable to provide us with certain indemnities to which
we are entitled; risks associated with changing accounting
principles or standards, tax laws and regulations, tax rates, and
the continuing availability of expected tax benefits; risks
relating to the adequacy of our existing infrastructure, systems,
processes, policies, procedures, internal controls, and personnel,
and our ability to successfully implement and maintain enhancements
to the foregoing, for our current and future operations and
reporting needs, including related risks of financial statement
omissions, misstatements, restatements, or filing delays; risks
associated with market volatility in the prices of our common stock
and convertible notes based on our performance, third-party
publications or speculation, or other factors and risks associated
with actions of activist stockholders; risks associated with Apax
Partners' significant ownership position and potential that its
interests will not be aligned with those of our common
stockholders; and risks associated with the February 1, 2021
spin-off of our former Cyber Intelligence Solutions business,
including the possibility that the spin-off transaction does not
achieve the benefits anticipated, does not qualify as a tax-free
transaction, or exposes us to unexpected claims or liabilities. We
assume no obligation to revise or update any forward-looking
statement, except as otherwise required by law. For a detailed
discussion of these risk factors, see our Annual Report on Form
10-K for the fiscal year ended January 31, 2024, 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
January 31,
Year Ended January
31,
(in thousands, except per share data)
2024
2023
2024
2023
Revenue:
Recurring
$
210,693
$
185,508
$
699,248
$
685,537
Nonrecurring
54,416
50,739
211,139
216,708
Total revenue
265,109
236,247
910,387
902,245
Cost of revenue:
Recurring
44,775
41,633
162,868
162,347
Nonrecurring
27,897
28,749
107,110
119,530
Amortization of acquired technology
1,623
2,449
7,134
13,191
Total cost of revenue
74,295
72,831
277,112
295,068
Gross profit
190,814
163,416
633,275
607,177
Operating expenses:
Research and development, net
35,881
32,800
133,804
130,644
Selling, general and administrative
108,383
90,595
405,915
392,939
Amortization of other acquired intangible
assets
6,343
6,351
25,371
26,238
Total operating expenses
150,607
129,746
565,090
549,821
Operating income
40,207
33,670
68,185
57,356
Other income (expense), net:
Interest income
1,504
1,559
6,944
3,301
Interest expense
(2,340
)
(2,366
)
(10,334
)
(7,877
)
Other (expense) income, net
(3,582
)
(1,204
)
(3,523
)
1,982
Total other expense, net
(4,418
)
(2,011
)
(6,913
)
(2,594
)
Income before provision for income
taxes
35,789
31,659
61,272
54,762
Provision for income taxes
6,866
18,564
21,638
39,103
Net income
28,923
13,095
39,634
15,659
Net income attributable to noncontrolling
interests
220
147
1,024
761
Net income attributable to Verint
Systems Inc.
28,703
12,948
38,610
14,898
Dividends on preferred stock
(5,200
)
(5,200
)
(20,800
)
(20,800
)
Net income (loss) attributable to
Verint Systems Inc. common shares
$
23,503
$
7,748
$
17,810
$
(5,902
)
Net income (loss) per common share
attributable to Verint Systems Inc.:
Basic
$
0.37
$
0.12
$
0.28
$
(0.09
)
Diluted
$
0.37
$
0.12
$
0.28
$
(0.09
)
Weighted-average common shares
outstanding:
Basic
62,739
65,760
63,990
65,332
Diluted
63,080
66,131
64,318
65,332
Table 2
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP SaaS
Metrics
(Unaudited)
SaaS
Revenue
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
Bundled SaaS revenue - GAAP
$
65,756
$
61,555
$
250,526
$
222,560
Unbundled SaaS revenue - GAAP
102,832
69,579
264,302
221,645
SaaS revenue - GAAP
168,588
131,134
514,828
444,205
Estimated bundled SaaS revenue
adjustments
109
490
1,069
2,813
Estimated unbundled SaaS revenue
adjustments
—
—
—
—
Estimated SaaS revenue
adjustments
109
490
1,069
2,813
Bundled SaaS revenue - non-GAAP
65,865
62,045
251,595
225,373
Unbundled SaaS revenue - non-GAAP
102,832
69,579
264,302
221,645
SaaS revenue - non-GAAP
$
168,697
$
131,624
$
515,897
$
447,018
New SaaS
ACV
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
New SaaS ACV
$
25,444
$
23,875
$
93,282
$
102,053
New SaaS ACV - bundled SaaS component
18,069
15,599
73,201
64,682
New SaaS ACV - unbundled SaaS
component
7,375
8,276
20,081
37,371
SaaS
ARR
Three Months Ended
January 31,
(in thousands)
2024
2023
SaaS ARR
$
534,438
$
497,982
Table 3
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited)
Revenue
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
Recurring revenue - GAAP
$
210,693
$
185,508
$
699,248
$
685,537
Nonrecurring revenue - GAAP
54,416
50,739
211,139
216,708
Total GAAP revenue
265,109
236,247
910,387
902,245
Recurring revenue adjustments
111
504
1,100
3,002
Nonrecurring revenue adjustments
—
—
—
—
Total revenue adjustments
111
504
1,100
3,002
Recurring revenue - non-GAAP
210,804
186,012
700,348
688,539
Nonrecurring revenue - non-GAAP
54,416
50,739
211,139
216,708
Total non-GAAP revenue
265,220
236,751
911,487
905,247
Gross Profit and
Gross Margin
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
Recurring cost of revenues
$
44,775
$
41,633
$
162,868
$
162,347
Nonrecurring cost of revenues
27,897
28,749
107,110
119,530
Amortization of acquired technology
1,623
2,449
7,134
13,191
Total GAAP cost of revenue
74,295
72,831
277,112
295,068
GAAP gross profit
190,814
163,416
633,275
607,177
GAAP gross margin
72.0
%
69.2
%
69.6
%
67.3
%
Revenue adjustments
111
504
1,100
3,002
Amortization of acquired technology
1,623
2,449
7,134
13,191
Stock-based compensation expenses
1,226
1,417
4,131
5,662
Acquisition and divestitures (benefit)
expenses, net
(236
)
—
117
176
Restructuring expenses
4,665
1,478
6,112
2,447
Non-GAAP gross profit
$
198,203
$
169,264
$
651,869
$
631,655
Non-GAAP gross margin
74.7
%
71.5
%
71.5
%
69.8
%
Research and
Development, net
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP research and development,
net
$
35,881
$
32,800
$
133,804
$
130,644
As a percentage of GAAP revenue
13.5
%
13.9
%
14.7
%
14.5
%
Stock-based compensation expenses
(3,100
)
(2,205
)
(11,918
)
(12,576
)
Acquisition and divestitures expenses,
net
(20
)
—
(116
)
(198
)
Restructuring expenses
(2
)
(1,458
)
(318
)
(2,104
)
IT facilities and infrastructure
realignment
(28
)
—
(1,676
)
—
Other adjustments
—
(53
)
—
(120
)
Non-GAAP research and development,
net
$
32,731
$
29,084
$
119,776
$
115,646
As a percentage of non-GAAP
revenue
12.3
%
12.3
%
13.1
%
12.8
%
Selling, General
and Administrative Expenses
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP selling, general and
administrative expenses
$
108,383
$
90,595
$
405,915
$
392,939
As a percentage of GAAP revenue
40.9
%
38.3
%
44.6
%
43.6
%
Stock-based compensation expenses
(12,987
)
(8,530
)
(51,550
)
(57,876
)
Acquisition and divestitures (expenses)
benefit, net(4)
(10,072
)
1,346
(15,743
)
(1,315
)
Restructuring expenses
(1,243
)
(2,990
)
(4,580
)
(10,797
)
Separation expenses
(169
)
(174
)
(774
)
(1,316
)
Accelerated lease costs
(145
)
(448
)
(5,407
)
(8,279
)
IT facilities and infrastructure
realignment
(1,377
)
(931
)
(18,193
)
(4,457
)
Impairment charges
—
—
—
(1,799
)
Other adjustments
(9
)
(399
)
(221
)
(2,910
)
Non-GAAP selling, general and
administrative expenses
$
82,381
$
78,469
$
309,447
$
304,190
As a percentage of non-GAAP
revenue
31.1
%
33.1
%
33.9
%
33.6
%
Operating Income
and Operating Margin
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP operating income
$
40,207
$
33,670
$
68,185
$
57,356
GAAP operating margin
15.2
%
14.3
%
7.5
%
6.4
%
Revenue adjustments
111
504
1,100
3,002
Amortization of acquired technology
1,623
2,449
7,134
13,191
Amortization of other acquired intangible
assets
6,343
6,351
25,371
26,238
Stock-based compensation expenses
17,313
12,152
67,599
76,114
Acquisition and divestitures expenses
(benefit), net(4)
9,856
(1,346
)
15,976
1,689
Restructuring expenses
5,910
5,926
11,010
15,348
Separation expenses
169
174
774
1,316
Accelerated lease costs
145
448
5,407
8,279
IT facilities and infrastructure
realignment
1,405
931
19,869
4,457
Impairment charges
—
—
—
1,799
Other adjustments
9
452
221
3,030
Non-GAAP operating income
$
83,091
$
61,711
$
222,646
$
211,819
Non-GAAP operating margin
31.3
%
26.1
%
24.4
%
23.4
%
Other Expense,
Net
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP other expense, net
$
(4,418
)
$
(2,011
)
$
(6,913
)
$
(2,594
)
Losses on early retirements of debt
—
—
237
—
Acquisition and divestitures benefit,
net
—
—
(156
)
—
Separation expenses
5,072
1,251
4,840
1,251
Non-GAAP other income (expense),
net(1)
$
654
$
(760
)
$
(1,992
)
$
(1,343
)
Provision for
Income Taxes
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP provision for income taxes
$
6,866
$
18,564
$
21,638
$
39,103
GAAP effective income tax rate
19.2
%
58.6
%
35.3
%
71.4
%
Non-GAAP income tax adjustments
(800
)
(14,723
)
(3,586
)
(19,927
)
Non-GAAP provision for income
taxes
$
6,066
$
3,841
$
18,052
$
19,176
Non-GAAP effective income tax
rate
7.2
%
6.3
%
8.2
%
9.1
%
Net Income (Loss)
Attributable to Verint Systems Inc. Common Shares
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP net income (loss) attributable to
Verint Systems Inc. common shares
$
23,503
$
7,748
$
17,810
$
(5,902
)
Revenue adjustments
111
504
1,100
3,002
Amortization of acquired technology
1,623
2,449
7,134
13,191
Amortization of other acquired intangible
assets
6,343
6,351
25,371
26,238
Stock-based compensation expenses
17,313
12,152
67,599
76,114
Losses on early retirements of debt
—
—
237
—
Acquisition and divestitures expenses
(benefit), net(4)
9,856
(1,346
)
15,820
1,689
Restructuring expenses
5,911
5,926
11,011
15,348
Separation expenses
5,241
1,425
5,614
2,567
Accelerated lease costs
145
448
5,407
8,279
IT facilities and infrastructure
realignment
1,405
931
19,869
4,457
Impairment charges
—
—
—
1,799
Other adjustments
9
452
221
3,030
Non-GAAP tax adjustments
800
14,723
3,586
19,927
Dividends, reversed due to assumed
conversion of preferred stock(3)
5,200
5,200
20,800
20,800
Total adjustments
53,957
49,215
183,769
196,441
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
77,460
$
56,963
$
201,579
$
190,539
Diluted Net
Income (Loss) Per Common Share Attributable to Verint Systems
Inc.
Three Months Ended
January 31,
Year Ended January
31,
(in thousands, except per share data)
2024
2023
2024
2023
GAAP diluted net income (loss) per common
share attributable to Verint Systems Inc.
$
0.37
$
0.12
$
0.28
$
(0.09
)
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.(3)
$
1.07
$
0.75
$
2.73
$
2.52
GAAP weighted-average shares used in
computing diluted net income (loss) per common share attributable
to Verint Systems Inc.
63,080
66,131
64,318
65,332
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
9,478
9,478
9,478
10,235
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.(3)
72,558
75,609
73,796
75,567
GAAP Net Income
to Adjusted EBITDA
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP net income
$
28,923
$
13,095
$
39,634
$
15,659
As a percentage of GAAP revenue
10.9
%
5.5
%
4.4
%
1.7
%
Provision for income taxes
6,866
18,564
21,638
39,103
Other expense, net
4,418
2,011
6,913
2,594
Depreciation and amortization(2)
13,576
15,134
68,970
65,333
Revenue adjustments
111
504
1,100
3,002
Stock-based compensation expenses
17,313
12,152
67,599
76,114
Acquisition and divestitures expenses
(benefit), net(4)
9,851
(1,346
)
15,971
1,689
Restructuring expenses
5,914
5,849
10,921
14,939
Separation expenses
169
174
774
1,316
Accelerated lease costs
145
448
5,407
8,279
IT facilities and infrastructure
realignment
1,405
931
8,062
4,457
Impairment charges
—
—
—
1,799
Other adjustments
9
452
221
3,030
Adjusted EBITDA
$
88,700
$
67,968
$
247,210
$
237,314
As a percentage of non-GAAP
revenue
33.4
%
28.7
%
27.1
%
26.2
%
Gross Debt to Net
Debt
(in thousands)
January 31,
2024
January 31,
2023
Long-term debt
$
410,965
$
408,908
Unamortized debt discounts and issuance
costs
4,035
6,092
Gross debt
415,000
415,000
Less:
Cash and cash equivalents
241,400
282,099
Restricted cash and cash equivalents, and
restricted bank time deposits
1,269
300
Short-term investments
686
697
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
171,645
131,904
Long-term restricted cash, cash
equivalents, time deposits, and investments
181
287
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
171,464
$
131,617
(1) For the three months ended January 31,
2024, non-GAAP other income, net of $0.7 million was comprised of
$1.3 million of interest and other income, net and $0.6 million of
foreign exchange charges primarily related to balance sheet
revaluations.
(2) Adjusted for financing fee
amortization.
(3) EPS calculation includes the more
dilutive of either preferred stock dividends or conversion of
preferred stock shares. Conversion of the outstanding preferred
shares was more dilutive in the three months and year ended January
31, 2024 and 2023.
(4) For the three months and year ended
January 31, 2024, acquisition and divestitures (expenses) benefit,
net included a loss on the sale of our manual quality managed
services business of $9.7 million, which was recorded as part of
selling, general, and administrative expenses in our consolidated
statement of operations. Today, our platform includes an AI-powered
solution for automating the quality process. We expect our
customers to adopt AI over time and believe that a people-centric
managed services offering is no longer core to our offering.
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
On January 31, 2024, we divested our manual quality managed
service offering, which is being replaced by an AI-powered bot. The
divested offering generated $25.2 million of revenue in FYE 24.
Table 5
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Recurring and
Nonrecurring Revenue and Gross Profit
(Unaudited)
Recurring and
Nonrecurring Revenue
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
Recurring revenue - GAAP
$
210,693
$
185,508
$
699,248
$
685,537
SaaS revenue - GAAP
168,588
131,134
514,828
444,205
Optional managed services revenue -
GAAP
10,846
14,261
47,718
61,388
Support revenue - GAAP
31,259
40,113
136,702
179,944
Nonrecurring revenue - GAAP
54,416
50,739
211,139
216,708
Perpetual revenue - GAAP
25,750
28,138
99,853
116,611
Professional services and other revenue -
GAAP
28,666
22,601
111,286
100,097
Total revenue - GAAP
265,109
236,247
910,387
902,245
Estimated recurring revenue
adjustments
111
504
1,100
3,002
Estimated SaaS revenue adjustments
109
490
1,069
2,813
Estimated optional managed services
revenue
2
14
31
175
Estimated support revenue adjustments
—
—
—
14
Estimated nonrecurring revenue
adjustments
—
—
—
—
Estimated perpetual revenue
adjustments
—
—
—
—
Estimated professional services and other
revenue adjustments
—
—
—
—
Total estimated revenue
adjustments
111
504
1,100
3,002
Recurring revenue - non-GAAP
210,804
186,012
700,348
688,539
SaaS revenue - non-GAAP
168,697
131,624
515,897
447,018
Optional managed services revenue -
non-GAAP
10,848
14,275
47,749
61,563
Support revenue - non-GAAP
31,259
40,113
136,702
179,958
Nonrecurring revenue - non-GAAP
54,416
50,739
211,139
216,708
Perpetual revenue - non-GAAP
25,750
28,138
99,853
116,611
Professional services and other revenue -
non-GAAP
28,666
22,601
111,286
100,097
Total revenue - non-GAAP
$
265,220
$
236,751
$
911,487
$
905,247
Recurring Gross
Profit
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP recurring revenue
$
210,693
$
185,508
$
699,248
$
685,537
GAAP recurring cost of revenues
44,775
41,633
162,868
162,347
GAAP recurring gross profit
165,918
143,875
536,380
523,190
GAAP recurring gross margin
78.7
%
77.6
%
76.7
%
76.3
%
Recurring revenue adjustments
111
504
1,100
3,002
Recurring stock-based compensation
expenses
609
669
2,114
2,856
Recurring acquisition and divestitures
(benefit) expenses, net
(236
)
—
117
22
Recurring restructuring expenses
4,076
677
5,009
1,265
Non-GAAP recurring gross profit
$
170,478
$
145,725
$
544,720
$
530,335
Non-GAAP recurring gross margin
80.9
%
78.3
%
77.8
%
77.0
%
Nonrecurring
Gross Profit
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2024
2023
2024
2023
GAAP nonrecurring revenue
$
54,416
$
50,739
$
211,139
$
216,708
GAAP nonrecurring cost of revenues
27,897
28,749
107,110
119,530
GAAP nonrecurring gross profit
26,519
21,990
104,029
97,178
GAAP nonrecurring gross margin
48.7
%
43.3
%
49.3
%
44.8
%
Nonrecurring revenue adjustments
—
—
—
—
Nonrecurring stock-based compensation
expenses
617
748
2,017
2,806
Nonrecurring acquisition and divestitures
expenses, net
—
—
—
154
Nonrecurring restructuring expenses
589
801
1,103
1,182
Non-GAAP nonrecurring gross
profit
$
27,725
$
23,539
$
107,149
$
101,320
Non-GAAP nonrecurring gross
margin
51.0
%
46.4
%
50.7
%
46.8
%
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
Year Ended
Three Months
Ended
Year Ended
Revenue for the three months and year
ended January 31, 2023
$
236,247
$
902,245
$
236,751
$
905,247
Revenue for the three months and year
ended January 31, 2024
$
265,109
$
910,387
$
265,220
$
911,487
Revenue for the three months and year
ended January 31, 2024 at constant currency(1)
$
264,000
$
910,000
$
264,000
$
911,000
Reported period-over-period revenue
change
12.2
%
0.9
%
12.0
%
0.7
%
% impact from change in foreign currency
exchange rates
(0.5
)%
—
%
(0.5
)%
(0.1
)%
Constant currency period-over-period
revenue change
11.7
%
0.9
%
11.5
%
0.6
%
(1) Revenue for the three months and year
ended January 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 months and year ended January
31, 2023 rather than actual current-period foreign currency
exchange rates.
(2) GAAP revenue denominated in non-U.S.
dollars was 17% and 20% of our total GAAP revenue for the three
months ended January 31, 2024 and 2023, respectively. GAAP revenue
denominated in non-U.S. dollars was 20% of our total GAAP revenue
for each of the years ended January 31, 2024 and 2023. Our combined
GAAP cost of revenue and operating expenses denominated in non-U.S.
dollars was 35% and 32% of our total combined GAAP cost of revenue
and operating expenses for the three months ended January 31, 2024
and 2023, respectively. Our combined GAAP cost of revenue and
operating expenses denominated in non-U.S. dollars was 32% and 30%
of our total combined GAAP cost of revenue and operating expenses
for the year ended January 31, 2024 and 2023, respectively.
(3) Non-GAAP revenue denominated in
non-U.S. dollars was 18% and 20% of our total non-GAAP revenue for
the three months ended January 31, 2024 and 2023, respectively.
Non-GAAP revenue denominated in non-U.S. dollars was 20% of our
total non-GAAP revenue for each of the years ended January 31, 2024
and 2023. Our combined Non-GAAP cost of revenue and operating
expenses denominated in non-U.S. dollars was 36% and 34% of our
total combined Non-GAAP cost of revenue and operating expenses for
the three months ended January 31, 2024 and 2023, respectively. Our
combined Non-GAAP cost of revenue and operating expenses
denominated in non-U.S. dollars was 35% and 34% of our total
combined Non-GAAP cost of revenue and operating expenses for the
year ended January 31, 2024 and 2023, respectively.
For further information see "Supplemental Information About
Constant Currency" at the end of this press release.
Table 7
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Unaudited)
January 31,
(in thousands, except share and per share
data)
2024
2023
Assets
Current Assets:
Cash and cash equivalents
$
241,400
$
282,099
Short-term investments
686
697
Accounts receivable, net of allowance for
credit losses of $1.2 million and $1.3 million, respectively
190,461
188,414
Contract assets, net
66,913
60,444
Inventories
14,209
12,628
Prepaid expenses and other current
assets
59,505
75,374
Total current assets
573,174
619,656
Property and equipment, net
47,704
64,810
Operating lease right-of-use assets
30,118
37,649
Goodwill
1,352,715
1,347,213
Intangible assets, net
57,466
85,272
Long-term deferred income taxes
25,697
10,719
Other assets
139,550
148,282
Total assets
$
2,226,424
$
2,313,601
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
26,301
$
43,631
Accrued expenses and other current
liabilities
137,433
155,944
Contract liabilities
254,437
271,476
Total current liabilities
418,171
471,051
Long-term debt
410,965
408,908
Long-term contract liabilities
10,581
18,047
Operating lease liabilities
32,100
40,744
Long-term deferred income taxes
9,555
11,749
Other liabilities
76,065
68,632
Total liabilities
957,437
1,019,131
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 January 31, 2024 and 2023, respectively;
aggregate liquidation preference and current redemption value of
$206,067 at January 31, 2024 and 2023, respectively.
200,628
200,628
Series B Preferred Stock; 200,000 shares
issued and outstanding at January 31, 2024 and 2023, respectively;
aggregate liquidation preference and current redemption value of
$206,067 at January 31, 2024 and 2022, respectively.
235,693
235,693
Total temporary equity
436,321
436,321
Stockholders' Equity:
Common stock — $0.001 par value;
authorized 240,000,000; issued 62,738,000 and 65,404,000;
outstanding 62,738,000 and 65,404,000 shares at January 31, 2024
and 2023, respectively.
63
65
Additional paid-in capital
979,671
1,055,157
Accumulated deficit
(6,723
)
(45,333
)
Accumulated other comprehensive loss
(142,962
)
(154,099
)
Total Verint Systems Inc. stockholders'
equity
830,049
855,790
Noncontrolling interests
2,617
2,359
Total stockholders' equity
832,666
858,149
Total liabilities, temporary equity,
and stockholders' equity
$
2,226,424
$
2,313,601
Table 8
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Year Ended January 31,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net income
$
39,634
$
15,659
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
71,485
67,960
Provision for credit losses
2,162
629
Stock-based compensation, excluding
cash-settled awards
67,622
76,051
Benefit from deferred income taxes
(17,639
)
(9,544
)
Losses on early retirements of debt
237
—
Net losses on divested businesses
9,541
—
Other non-cash items, net
5,347
9,652
Changes in operating assets and
liabilities, net of effects of business combinations and
divestitures:
Accounts receivable
(9,409
)
3,060
Contract assets
(6,351
)
(18,762
)
Inventories
(1,812
)
(7,753
)
Prepaid expenses and other assets
35,027
(44,247
)
Accounts payable and accrued expenses
(25,343
)
6,394
Contract liabilities
(26,068
)
5,395
Other liabilities
13,762
40,852
Other, net
(7,553
)
(5,530
)
Net cash provided by operating
activities
150,642
139,816
Cash flows from investing
activities:
Cash paid for business combinations,
including adjustments, net of cash acquired
(3,997
)
(21,928
)
Divestitures, net of cash divested
(6,278
)
—
Purchases of property and equipment
(16,114
)
(27,950
)
Purchases of investments
(4,094
)
(10,627
)
Maturities and sales of investments
4,083
10,709
Cash paid for capitalized software
development costs
(9,623
)
(7,595
)
Other investing activities
(1,356
)
808
Net cash used in investing
activities
(37,379
)
(56,583
)
Cash flows from financing
activities:
Proceeds from borrowings
100,000
—
Repayments of borrowings and other
financing obligations
(103,084
)
(3,658
)
Payments of equity issuance, debt
issuance, and other debt-related costs
(232
)
(224
)
Distributions paid to noncontrolling
interest
(766
)
(787
)
Purchases of treasury stock and common
stock for retirement
(124,290
)
(128,985
)
Preferred stock dividend payments
(20,800
)
(20,800
)
Payments of contingent consideration for
business combinations (financing portion) and other financing
activities
(4,182
)
(3,453
)
Net cash used in financing
activities
(153,354
)
(157,907
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
599
(2,033
)
Net decrease in cash, cash equivalents,
restricted cash, and restricted cash equivalents
(39,492
)
(76,707
)
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of year
282,161
358,868
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of year
$
242,669
$
282,161
Reconciliation of cash, cash
equivalents, restricted cash, and restricted cash equivalents at
end of year to the consolidated balance sheets:
Cash and cash equivalents
$
241,400
$
282,099
Restricted cash and cash equivalents
included in prepaid expenses and other current assets
1,269
5
Restricted cash and cash equivalents
included in other assets
—
57
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
242,669
$
282,161
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 perpetual revenue, non-GAAP
support revenue, non-GAAP professional services revenue, non-GAAP
SaaS revenue, non-GAAP bundled SaaS revenue, non-GAAP unbundled
SaaS revenue, non-GAAP optional managed services 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.
Separation expenses. On February 1, 2021, we completed the
spin-off of our former Cyber Intelligence Solutions business. We
exclude from our non-GAAP financial measures expenses incurred in
connection with the spin-off, 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 (which are included in Separation expenses
to the extent not capitalized). 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 are
incremental to our normal operating expenses and are being incurred
solely as a result of the separation transaction. Accordingly, we
are excluding these separation expenses from our non-GAAP financial
measures in order to evaluate our performance on a comparable
basis.
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.
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 ended
January 31, 2024 is 8% and was 9% for the year ended January 31,
2023. 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.
Optional Managed Services are recurring services that are
intended to improve our customers' operations and reduce
expenses.
Percentage of software revenue that is recurring revenue is
calculated as the sum of SaaS revenue, optional managed services
revenue and support revenue as a percentage of total SaaS revenue,
optional managed services revenue, support revenue, and perpetual
revenue.
New SaaS Annual Contract Value (ACV) includes the annualized
contract value of all new SaaS contracts received within the
period; new unbundled SaaS contracts only include the license
portion of those orders. In cases where SaaS is offered to partners
through usage-based contracts, we include the incremental value of
usage contracts over a rolling four quarters. Orders are only
included in New SaaS ACV with a completed customer contract signed
by both parties before the end of the period.
SaaS Annual Recurring Revenue (SaaS ARR) represents the
annualized quarterly run-rate value of active or signed SaaS
contracts as of the end of a period. For unbundled SaaS contracts,
the amount included in SaaS ARR is generally consistent with the
amount that we invoice the customer annually for the term-based
license transaction. We use SaaS ARR to identify the annual
recurring value of customer contracts at the end of a reporting
period and to monitor the growth of our recurring business as we
shift to SaaS. SaaS ARR reduces fluctuations due to seasonality,
contract term, and the sales mix of subscriptions for bundled SaaS
and unbundled SaaS. SaaS ARR should be viewed independently of
revenue, and does not represent our revenue under ASC 606 on an
annualized basis, as it is an operating metric that is impacted by
contract start and end dates and renewal rates. SaaS ARR is not
intended to be a replacement for forecasts of SaaS revenue.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure defined as net income
(loss) before interest expense, interest income, income taxes,
depreciation expense, amortization expense, stock-based
compensation expenses, revenue adjustments, restructuring expenses,
acquisition expenses, separation 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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Investor Relations Contact
Matthew Frankel, CFA Verint Systems Inc. (631) 962-9600
matthew.frankel@verint.com
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