SaaS ARR up 11% Year-Over-Year Driven by Solid Bookings and
Renewals
Positive Leading Indicators with Significant Increase in
Customer AI Adoption and SaaS Pipeline up More than 20%
year-over-year
Expect to Finish the Year Strong with 11% Non-GAAP Revenue
Growth in the Fourth Quarter
Investor Day to Be Held December 13th Focused on Verint’s AI
Differentiation and Long-Term Trends
Verint® (Nasdaq: VRNT), The Customer Engagement Company™,
today announced results for the three and nine months ended October
31, 2023 (FYE 2024). Revenue for the three months ended October 31,
2023 was $219 million, representing (3)% year-over-year change.
Revenue for the nine months ended October 31, 2023 was $645 million
on a GAAP basis and $646 million on a non-GAAP basis, representing
(3)% year-over-year change on both a GAAP and non-GAAP basis. For
the three months ended October 31, 2023, diluted EPS was $0.12 on a
GAAP basis and $0.65 on a non-GAAP basis. For the nine months ended
October 31, 2023, net loss per share was $(0.09) on a GAAP basis
and diluted EPS was $1.67 on a non-GAAP basis.
“We are pleased to have overachieved our revenue and non-GAAP
diluted EPS expectations in Q3 and believe we are on track to
complete the year with strong 11% revenue growth in Q4. Our 12
month SaaS pipeline at the end of Q3 was up more than 20%
year-over-year and we are pleased with the increase in customer AI
adoption with the majority of our Q3 new SaaS ACV bookings
including Verint AI-Powered Bots. We look forward to reviewing our
significant AI differentiation and the positive impact customer AI
adoption has on our financial model at our investor day next week,”
said Dan Bodner, Verint CEO.
Q3 FYE 2024 Highlights
- SaaS ARR: Up 11% year-over-year
- New SaaS ACV Bookings: $25 Million, or an annual
run-rate of ~$100 million
- % of New ACV Bookings Including Bots: >50%, with
customer AI adoption increasing
- Favorable Mix Shift to Recurring Revenue: 87% of
software revenue recurring year-to-date (up ~200bps
year-over-year)
- Gross Margin: Up more than 100bps year-to-date compared
to the same period last year
- GAAP Cash From Operations: Up 19% year-to-date compared
to the same period last year
Grant Highlander, Verint CFO, added, “SaaS ARR is becoming an
important metric to understand our SaaS growth trends as customers
shift to the Verint cloud, and I am pleased that SaaS ARR increased
11% in Q3 year-over-year. I am also pleased with our strong margins
and 19% year-over-year increase in GAAP cash from operations
year-to-date, which provides us with financial flexibility as we
continue to execute on our previously announced $200 million stock
buyback program. Going forward, Verint is well positioned for the
market shift to more bots and fewer contact center agents. Verint
deploying more bot licenses with fewer agent licenses will increase
our TAM overall, and provide us the opportunity to accelerate SaaS
revenue growth.”
FYE 2024 Outlook
We are providing our non-GAAP outlook for the year ending
January 31, 2024 as follows:
- Revenue: $910 million +/- 2%
- SaaS Revenue: 15% year-over-year growth
- Diluted EPS: $2.65 at the midpoint of our revenue
guidance, reflecting 5% year-over-year growth
Our non-GAAP outlook for year ending January 31, 2024 excludes
the following GAAP measure which we are able to quantify with
reasonable certainty:
- Amortization of intangible assets of approximately $33
million.
Our non-GAAP outlook for the year ending January 31, 2024
excludes the following GAAP measures for which we are able to
provide a range of probable significance:
- Revenue adjustments are expected to be between approximately $1
million and $2 million.
- Stock-based compensation expenses are expected to be between
approximately $67 million and $69 million, assuming market prices
for our common stock approximately consistent with current
levels.
- Costs associated with modifying our workplace in response to
our decision to move to a hybrid work environment, including
assumed lease terminations and abandonments, IT facilities and
infrastructure costs, and other nonrecurring charges are expected
to be between approximately $26 million and $28 million.
Our non-GAAP guidance does not include the potential impact of
any in-process business acquisitions that may close after the date
hereof, and, unless otherwise specified, reflects foreign currency
exchange rates approximately consistent with current rates.
We are unable, without unreasonable efforts, to provide a
reconciliation for other GAAP measures which are excluded from our
non-GAAP outlook, including the impact of future business
acquisitions or acquisition expenses, future restructuring
expenses, and non-GAAP income tax adjustments due to the level of
unpredictability and uncertainty associated with these items. For
these same reasons, we are unable to assess the probable
significance of these excluded items. While historical results may
not be indicative of future results, actual amounts for the three
and nine months ended October 31, 2023 and 2022 for the GAAP
measures excluded from our non-GAAP outlook appear in Tables 2, 3
and 4 of this press release.
Q3 Conference Call
Information
We will conduct a conference call today at 4:30 p.m. ET to
discuss our results for the three and nine months ended October 31,
2023 and outlook. An online, real-time webcast of the conference
call and webcast slides will be available on our website at
www.verint.com. Participants may register for the call here to
receive the dial-in numbers and unique PIN to access the call.
Please join the call 5-10 minutes prior to the scheduled start
time.
Investor Day Information
We will host an Investor Day on Wednesday, December 13, 2023 at
10 a.m. ET which will focus on Verint’s AI differentiation and CX
automation opportunity. A Q&A session will follow the prepared
remarks. To register for the Investor Day, which will be hosted
virtually, please visit the event’s registration page by clicking
here.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of non-GAAP financial measures presented for
completed periods to the most directly comparable financial
measures prepared in accordance with GAAP, please see the tables
below as well as "Supplemental Information About Non-GAAP Financial
Measures and Operating Metrics" at the end of this press
release.
About Verint Systems Inc.
Verint® (Nasdaq: VRNT) helps the world’s most iconic brands
continuously elevate the customer experience (CX) and reduce
operating costs. More than 10,000 organizations in 175 countries –
including over 85 of the Fortune 100 companies – rely on Verint’s
open customer engagement platform to harness the power of data and
artificial intelligence (AI) to maximize CX automation.
Verint. The Customer Engagement Company®. Learn more at
Verint.com.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements,
including statements regarding expectations, predictions, views,
opportunities, plans, strategies, beliefs, and statements of
similar effect relating to Verint Systems Inc. These
forward-looking statements are not guarantees of future performance
and they are based on management's expectations that involve a
number of known and unknown risks, uncertainties, assumptions, and
other important factors, any of which could cause our actual
results or conditions to differ materially from those expressed in
or implied by the forward-looking statements. Some of the factors
that could cause our actual results or conditions to differ
materially from current expectations include, among others:
uncertainties regarding the impact of changes in macroeconomic
and/or global conditions, including as a result of slowdowns,
recessions, economic instability, rising interest rates, tightening
credit markets, inflation, instability in the banking sector,
actual or threatened trade wars, political unrest, armed conflicts,
natural disasters, or outbreaks of disease (such as the COVID-19
pandemic), as well as the resulting impact on spending by customers
or partners, on our business; risks that our customers or partners
delay, downsize, cancel, or refrain from placing orders or renewing
subscriptions or contracts, or are unable to honor contractual
commitments or payment obligations due to challenges or
uncertainties in their budgets, liquidity or and businesses; risks
associated with our ability to keep pace with technological
advances and challenges and evolving industry standards, including
achieving and maintaining the competitive differentiation of our
solution platform; to adapt to changing market potential from area
to area within our markets; and to successfully develop, launch,
and drive demand for new, innovative, high-quality products and
services that meet or exceed customer challenges and needs, while
simultaneously preserving our legacy businesses and migrating away
from areas of commoditization; risks due to aggressive competition
in all of our markets and our ability to keep pace with
competitors, some of whom may be able to grow faster than us or
have greater resources than us, including in areas such as sales
and marketing, branding, technological innovation and development,
and recruiting and retention; risks associated with our ability to
properly execute on our software as a service ("SaaS") transition,
including successfully transitioning customers to our cloud
platform and the increased importance of subscription renewal
rates, and risk of increased variability in our period-to-period
results based on the mix, terms, and timing of our transactions;
risks relating to our ability to properly identify and execute on
growth or strategic initiatives, manage investments in our business
and operations, and enhance our existing operations and
infrastructure, including the proper prioritization and allocation
of limited financial and other resources; risks associated with our
ability to or costs to retain, recruit , and train qualified
personnel and management in regions in which we operate either
physically or remotely, including in new markets and growth areas
we may enter, due to competition for talent, increased labor costs,
applicable regulatory requirements, or otherwise; challenges
associated with selling sophisticated solutions and cloud-based
solutions, which may incorporate newer technologies, such as
artificial intelligence, whose adoption and use-cases are still
emerging, including with respect to longer sales cycles, more
complex sales processes and customer evaluation and approval
processes, more complex contractual and information security
requirements, and assisting customers in understanding and
realizing the benefits of our solutions and technologies, as well
as with developing, offering, implementing, and maintaining an
enterprise class, broad solution portfolio; risks that we may be
unable to maintain, expand, or enable our relationships with
partners as part of our growth strategy, including partners with
whom we may overlap or compete, while avoiding excessive
concentration with one or more partners; risks associated with our
reliance on third-party suppliers, partners, or original equipment
manufacturers (“OEMs”) for certain services, products, or
components, including companies that may compete with us or work
with our competitors; risks associated with our significant
international operations, including exposure to regions subject to
political or economic instability, fluctuations in foreign exchange
rates, inflation, increased financial accounting and reporting
burdens and complexities, and challenges associated with a
significant portion of our cash being held overseas; risks
associated with a significant part of our business coming from
government contracts, and associated procurement processes and
regulatory requirements; risks associated with our ability to
identify suitable targets for acquisition or investment or
successfully compete for, consummate, and implement mergers and
acquisitions, including risks associated with valuations, legacy
liabilities, reputational considerations, capital constraints,
costs and expenses, maintaining profitability levels, expansion
into new areas, management distraction, post-acquisition
integration activities, and potential asset impairments; risks
associated with complex and changing domestic and foreign
regulatory environments, including, among others, with respect to
data privacy, artificial intelligence, cyber / information
security, government contracts, anti-corruption, trade compliance,
climate change or other environmental, social and governance
matters, tax, and labor matters, relating to our own operations,
the products and services we offer, and/or the use of our solutions
by our customers; risks associated with the mishandling or
perceived mishandling of sensitive or confidential information and
data, including personally identifiable information or other
information that may belong to our customers or other third
parties, including in connection with our SaaS or other hosted or
managed services offerings or when we are asked to perform service
or support; risks associated with our reliance on third parties to
provide certain cloud hosting or other cloud-based services to us
or our customers, including the risk of service disruption, data
breaches, or data loss or corruption; risks that our solutions or
services, or those of third-party suppliers, partners, or OEMs
which we use in or with our offerings or otherwise rely on,
including third-party hosting platforms, may contain defects,
vulnerabilities, or develop operational problems; risk that we or
our solutions maybe subject to security vulnerabilities or lapses,
including cyber-attacks, information technology system breaches,
failures, or disruptions; risks that our intellectual property
rights may not be adequate to protect our business or assets or
that others may make claims on our intellectual property, claim
infringement on their intellectual property rights, or claim a
violation of their license rights, including relative to free or
open source components we may use; risks associated with leverage
resulting from our current debt position or our ability to incur
additional debt, including with respect to liquidity
considerations, covenant limitations and compliance, fluctuations
in interest rates, dilution considerations (with respect to our
convertible notes), and our ability to maintain our credit ratings;
risks that we may experience liquidity or working capital issues
and related risks that financing sources may be unavailable to us
on reasonable terms or at all; risks arising as a result of
contingent or other obligations or liabilities assumed in our
acquisition of our former parent company, Comverse Technology, Inc.
(“CTI”), or associated with formerly being consolidated with, and
part of a consolidated tax group with, CTI, or as a result of the
successor to CTI's business operations, Mavenir Inc., being
unwilling or unable to provide us with certain indemnities to which
we are entitled; risks associated with changing accounting
principles or standards, tax laws and regulations, tax rates, and
the continuing availability of expected tax benefits; risks
relating to the adequacy of our existing infrastructure, systems,
processes, policies, procedures, internal controls, and personnel,
and our ability to successfully implement and maintain enhancements
to the foregoing, for our current and future operations and
reporting needs, including related risks of financial statement
omissions, misstatements, restatements, or filing delays; risks
associated with market volatility in the prices of our common stock
and convertible notes based on our performance, third-party
publications or speculation, or other factors and risks associated
with actions of activist stockholders; risks associated with Apax
Partners' significant ownership position and potential that its
interests will not be aligned with those of our common
stockholders; and risks associated with the February 1, 2021
spin-off of our former Cyber Intelligence Solutions business,
including the possibility that the spin-off transaction does not
achieve the benefits anticipated, does not qualify as a tax-free
transaction, or exposes us to unexpected claims or liabilities. We
assume no obligation to revise or update any forward-looking
statement, except as otherwise required by law. For a detailed
discussion of these risk factors, see our Annual Report on Form
10-K for the fiscal year ended January 31, 2023, our Quarterly
Report on Form 10-Q for the quarter ended April 30, 2023, our
Quarterly Report on Form 10-Q for the quarter ended July 31, 2023,
our Quarterly Report on Form 10-Q for the quarter ended October 31,
2023, when filed, and other filings we make with the SEC.
VERINT, VERINT DA VINCI, VERINT OPEN CCAAS, THE CUSTOMER
ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT and THE
ENGAGEMENT CAPACITY GAP are trademarks of Verint Systems Inc. or
its subsidiaries. Verint and other parties may also have trademark
rights in other terms used herein.
Table 1
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands, except per share data)
2023
2022
2023
2022
Revenue:
Recurring
$
161,117
$
174,222
$
488,555
$
500,029
Nonrecurring
57,430
50,971
156,723
165,969
Total revenue
218,547
225,193
645,278
665,998
Cost of revenue:
Recurring
38,883
38,834
118,093
120,714
Nonrecurring
25,046
28,013
79,213
90,781
Amortization of acquired technology
1,609
3,550
5,511
10,742
Total cost of revenue
65,538
70,397
202,817
222,237
Gross profit
153,009
154,796
442,461
443,761
Operating expenses:
Research and development, net
32,084
32,941
97,923
97,844
Selling, general and administrative
87,879
93,757
297,532
302,344
Amortization of other acquired intangible
assets
6,328
6,420
19,028
19,887
Total operating expenses
126,291
133,118
414,483
420,075
Operating income
26,718
21,678
27,978
23,686
Other income (expense), net:
Interest income
1,650
1,045
5,440
1,742
Interest expense
(2,609
)
(2,147
)
(7,994
)
(5,511
)
Other income, net
59
1,045
59
3,186
Total other expense, net
(900
)
(57
)
(2,495
)
(583
)
Income before provision for income
taxes
25,818
21,621
25,483
23,103
Provision for income taxes
12,953
17,395
14,772
20,539
Net income
12,865
4,226
10,711
2,564
Net income attributable to noncontrolling
interests
253
150
804
614
Net income attributable to Verint
Systems Inc.
12,612
4,076
9,907
1,950
Dividends on preferred stock
(5,200
)
(5,200
)
(15,600
)
(15,600
)
Net income (loss) attributable to
Verint Systems Inc. common shares
$
7,412
$
(1,124
)
$
(5,693
)
$
(13,650
)
Net income (loss) per common share
attributable to Verint Systems Inc.:
Basic
$
0.12
$
(0.02
)
$
(0.09
)
$
(0.21
)
Diluted
$
0.12
$
(0.02
)
$
(0.09
)
$
(0.21
)
Weighted-average common shares
outstanding:
Basic
63,887
65,583
64,411
65,161
Diluted
64,144
65,583
64,411
65,161
Table 2
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP SaaS
Metrics
(Unaudited)
SaaS
Revenue
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
Bundled SaaS revenue - GAAP
$
63,251
$
57,041
$
184,770
$
161,005
Unbundled SaaS revenue - GAAP
52,400
58,746
161,470
152,066
SaaS revenue - GAAP
115,651
115,787
346,240
313,071
Estimated bundled SaaS revenue
adjustments
117
374
960
2,323
Estimated unbundled SaaS revenue
adjustments
—
—
—
—
Estimated SaaS revenue
adjustments
117
374
960
2,323
Bundled SaaS revenue - non-GAAP
63,368
57,415
185,730
163,328
Unbundled SaaS revenue - non-GAAP
52,400
58,746
161,470
152,066
SaaS revenue - non-GAAP
$
115,768
$
116,161
$
347,200
$
315,394
New SaaS ACV
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
New SaaS ACV
$
25,389
$
26,833
$
67,838
$
78,178
New SaaS ACV – Last Twelve Months
91,713
108,466
SaaS
ARR
Three Months Ended
October 31,
(in thousands)
2023
2022
SaaS ARR
$
512,304
$
460,812
Table 3
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited)
Revenue
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
Recurring revenue - GAAP
$
161,117
$
174,222
$
488,555
$
500,029
Nonrecurring revenue - GAAP
57,430
50,971
156,723
165,969
Total GAAP revenue
218,547
225,193
645,278
665,998
Recurring revenue adjustments
120
423
989
2,498
Nonrecurring revenue adjustments
—
—
—
—
Total revenue adjustments
120
423
989
2,498
Recurring revenue - non-GAAP
161,237
174,645
489,544
502,527
Nonrecurring revenue - non-GAAP
57,430
50,971
156,723
165,969
Total non-GAAP revenue
218,667
225,616
646,267
668,496
Gross Profit and
Gross Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
Recurring cost of revenues
$
38,883
$
38,834
$
118,093
$
120,714
Nonrecurring cost of revenues
25,046
28,013
79,213
90,781
Amortization of acquired technology
1,609
3,550
5,511
10,742
Total GAAP cost of revenue
65,538
70,397
202,817
222,237
GAAP gross profit
153,009
154,796
442,461
443,761
GAAP gross margin
70.0
%
68.7
%
68.6
%
66.6
%
Revenue adjustments
120
423
989
2,498
Amortization of acquired technology
1,609
3,550
5,511
10,742
Stock-based compensation expenses
1,093
1,329
2,905
4,245
Acquisition expenses, net
31
—
353
176
Restructuring (benefit) expenses, net
(2
)
593
1,447
969
Non-GAAP gross profit
$
155,860
$
160,691
$
453,666
$
462,391
Non-GAAP gross margin
71.3
%
71.2
%
70.2
%
69.2
%
Research and
Development, net
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP research and development,
net
$
32,084
$
32,941
$
97,923
$
97,844
As a percentage of GAAP revenue
14.7
%
14.6
%
15.2
%
14.7
%
Stock-based compensation expenses
(3,025
)
(3,533
)
(8,818
)
(10,371
)
Acquisition expenses, net
(20
)
—
(96
)
(198
)
Restructuring expenses
(1
)
(509
)
(316
)
(646
)
IT facilities and infrastructure
realignment
—
—
(1,648
)
—
Other adjustments
—
(17
)
—
(67
)
Non-GAAP research and development,
net
$
29,038
$
28,882
$
87,045
$
86,562
As a percentage of non-GAAP
revenue
13.3
%
12.8
%
13.5
%
12.9
%
Selling, General
and Administrative Expenses
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP selling, general and
administrative expenses
$
87,879
$
93,757
$
297,532
$
302,344
As a percentage of GAAP revenue
40.2
%
41.6
%
46.1
%
45.4
%
Stock-based compensation expenses
(12,068
)
(15,037
)
(38,563
)
(49,346
)
Acquisition benefit (expenses), net
207
(1,172
)
(5,671
)
(2,661
)
Restructuring expenses
(483
)
(1,324
)
(3,337
)
(7,807
)
Separation expenses
(240
)
(291
)
(605
)
(1,142
)
Accelerated lease costs
(98
)
(725
)
(5,262
)
(7,831
)
IT facilities and infrastructure
realignment
(1,937
)
(1,095
)
(16,816
)
(3,526
)
Impairment charges
—
—
—
(1,799
)
Other adjustments
(1
)
(900
)
(212
)
(2,511
)
Non-GAAP selling, general and
administrative expenses
$
73,259
$
73,213
$
227,066
$
225,721
As a percentage of non-GAAP
revenue
33.5
%
32.5
%
35.1
%
33.8
%
Operating Income
and Operating Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP operating income
$
26,718
$
21,678
$
27,978
$
23,686
GAAP operating margin
12.2
%
9.6
%
4.3
%
3.6
%
Revenue adjustments
120
423
989
2,498
Amortization of acquired technology
1,609
3,550
5,511
10,742
Amortization of other acquired intangible
assets
6,328
6,420
19,028
19,887
Stock-based compensation expenses
16,186
19,899
50,286
63,962
Acquisition (benefit) expenses, net
(156
)
1,172
6,120
3,035
Restructuring expenses
482
2,426
5,100
9,422
Separation expenses
240
291
605
1,142
Accelerated lease costs
98
725
5,262
7,831
IT facilities and infrastructure
realignment
1,937
1,095
18,464
3,526
Impairment charges
—
—
—
1,799
Other adjustments
1
917
212
2,578
Non-GAAP operating income
$
53,563
$
58,596
$
139,555
$
150,108
Non-GAAP operating margin
24.5
%
26.0
%
21.6
%
22.5
%
Other Expense,
Net
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP other expense, net
$
(900
)
$
(57
)
$
(2,495
)
$
(583
)
Losses on early retirements of debt
—
—
237
—
Acquisition benefit, net
—
—
(156
)
—
Separation expenses
(113
)
—
(232
)
—
Non-GAAP other expense, net(1)
$
(1,013
)
$
(57
)
$
(2,646
)
$
(583
)
Provision for
Income Taxes
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP provision for income taxes
$
12,953
$
17,395
$
14,772
$
20,539
GAAP effective income tax rate
50.2
%
80.5
%
58.0
%
88.9
%
Non-GAAP income tax adjustments
(8,640
)
(11,296
)
(2,786
)
(5,204
)
Non-GAAP provision for income
taxes
$
4,313
$
6,099
$
11,986
$
15,335
Non-GAAP effective income tax
rate
8.2
%
10.4
%
8.8
%
10.3
%
Net Income (Loss)
Attributable to Verint Systems Inc. Common Shares
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP net income (loss) attributable to
Verint Systems Inc. common shares
$
7,412
$
(1,124
)
$
(5,693
)
$
(13,650
)
Revenue adjustments
120
423
989
2,498
Amortization of acquired technology
1,609
3,550
5,511
10,742
Amortization of other acquired intangible
assets
6,328
6,420
19,028
19,887
Stock-based compensation expenses
16,186
19,899
50,286
63,962
Losses on early retirements of debt
—
—
237
—
Acquisition (benefit) expenses, net
(156
)
1,172
5,964
3,035
Restructuring expenses
482
2,425
5,100
9,422
Separation expenses
127
291
373
1,142
Accelerated lease costs
98
725
5,262
7,831
IT facilities and infrastructure
realignment
1,937
1,095
18,464
3,526
Impairment charges
—
—
—
1,799
Other adjustments
1
917
212
2,578
Non-GAAP tax adjustments
8,640
11,296
2,786
5,204
Dividends, reversed due to assumed
conversion of preferred stock(3)
5,200
5,200
15,600
15,600
Total adjustments
40,572
53,413
129,812
147,226
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
47,984
$
52,289
$
124,119
$
133,576
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)
2023
2022
2023
2022
GAAP diluted net income (loss) per common
share attributable to Verint Systems Inc.
$
0.12
$
(0.02
)
$
(0.09
)
$
(0.21
)
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.(3)
$
0.65
$
0.69
$
1.67
$
1.77
GAAP weighted-average shares used in
computing diluted net income (loss) per common share attributable
to Verint Systems Inc.
64,144
65,583
64,411
65,161
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
9,478
10,004
9,802
10,364
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.(3)
73,622
75,587
74,213
75,525
GAAP Net Income
to Adjusted EBITDA
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP net income
$
12,865
$
4,226
$
10,711
$
2,564
As a percentage of GAAP revenue
5.9
%
1.9
%
1.7
%
0.4
%
Provision for income taxes
12,953
17,395
14,772
20,539
Other expense, net
900
57
2,495
583
Depreciation and amortization(2)
13,874
16,158
55,394
50,199
Revenue adjustments
120
423
989
2,498
Stock-based compensation expenses
16,186
19,899
50,286
63,962
Acquisition (benefit) expenses, net
(156
)
1,172
6,120
3,035
Restructuring expenses
476
2,348
5,007
9,090
Separation expenses
240
291
605
1,142
Accelerated lease costs
98
725
5,262
7,831
IT facilities and infrastructure
realignment
1,679
1,095
6,657
3,526
Impairment charges
—
—
—
1,799
Other adjustments
1
917
212
2,578
Adjusted EBITDA
$
59,236
$
64,706
$
158,510
$
169,346
As a percentage of non-GAAP
revenue
27.1
%
28.7
%
24.5
%
25.3
%
Gross Debt to Net
Debt
(in thousands)
October 31,
2023
January 31,
2023
Long-term debt
$
410,461
$
408,908
Unamortized debt discounts and issuance
costs
4,539
6,092
Gross debt
415,000
415,000
Less:
Cash and cash equivalents
209,647
282,099
Restricted cash and cash equivalents, and
restricted bank time deposits
1,763
300
Short-term investments
684
697
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
202,906
131,904
Long-term restricted cash, cash
equivalents, time deposits, and investments
175
287
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
202,731
$
131,617
(1) For the three months ended October 31,
2023, non-GAAP other expense, net of $1.0 million was primarily
comprised of interest and other expense.
(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, 2023 and 2022.
Table 4
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Recurring and
Nonrecurring Revenue and Gross Profit
(Unaudited)
Recurring and
Nonrecurring Revenue
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
Recurring revenue - GAAP
$
161,117
$
174,222
$
488,555
$
500,029
SaaS revenue - GAAP
115,651
115,787
346,240
313,071
Optional managed services revenue -
GAAP
11,842
15,436
36,872
47,127
Support revenue - GAAP
33,624
42,999
105,443
139,831
Nonrecurring revenue - GAAP
57,430
50,971
156,723
165,969
Perpetual revenue - GAAP
24,557
24,425
74,103
88,473
Professional services revenue - GAAP
32,873
26,546
82,620
77,496
Total revenue - GAAP
218,547
225,193
645,278
665,998
Estimated recurring revenue
adjustments
120
423
989
2,498
Estimated SaaS revenue adjustments
117
374
960
2,323
Estimated optional managed services
revenue
3
49
29
161
Estimated support revenue adjustments
—
—
—
14
Estimated nonrecurring revenue
adjustments
—
—
—
—
Estimated perpetual revenue
adjustments
—
—
—
—
Estimated professional services revenue
adjustments
—
—
—
—
Total estimated revenue
adjustments
120
423
989
2,498
Recurring revenue - non-GAAP
161,237
174,645
489,544
502,527
SaaS revenue - non-GAAP
115,768
116,161
347,200
315,394
Optional managed services revenue -
non-GAAP
11,845
15,485
36,901
47,288
Support revenue - non-GAAP
33,624
42,999
105,443
139,845
Nonrecurring revenue - non-GAAP
57,430
50,971
156,723
165,969
Perpetual revenue - non-GAAP
24,557
24,425
74,103
88,473
Professional services revenue -
non-GAAP
32,873
26,546
82,620
77,496
Total revenue - non-GAAP
$
218,667
$
225,616
$
646,267
$
668,496
Recurring Gross
Profit
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP recurring revenue
$
161,117
$
174,222
$
488,555
$
500,029
GAAP recurring cost of revenues
38,883
38,834
118,093
120,714
GAAP recurring gross profit
122,234
135,388
370,462
379,315
GAAP recurring gross margin
75.9
%
77.7
%
75.8
%
75.9
%
Recurring revenue adjustments
120
423
989
2,498
Recurring stock-based compensation
expenses
523
729
1,505
2,187
Recurring acquisition expenses, net
31
—
353
22
Recurring restructuring (benefit)
expenses, net
(14
)
459
933
588
Non-GAAP recurring gross profit
$
122,894
$
136,999
$
374,242
$
384,610
Non-GAAP recurring gross margin
76.2
%
78.4
%
76.4
%
76.5
%
Nonrecurring
Gross Profit
Three Months Ended
October 31,
Nine Months Ended
October 31,
(in thousands)
2023
2022
2023
2022
GAAP nonrecurring revenue
$
57,430
$
50,971
$
156,723
$
165,969
GAAP nonrecurring cost of revenues
25,046
28,013
79,213
90,781
GAAP nonrecurring gross profit
32,384
22,958
77,510
75,188
GAAP nonrecurring gross margin
56.4
%
45.0
%
49.5
%
45.3
%
Nonrecurring revenue adjustments
—
—
—
—
Nonrecurring stock-based compensation
expenses
570
600
1,400
2,058
Nonrecurring acquisition expenses, net
—
—
—
154
Nonrecurring restructuring expenses
12
134
514
381
Non-GAAP nonrecurring gross
profit
$
32,966
$
23,692
$
79,424
$
77,781
Non-GAAP nonrecurring gross
margin
57.4
%
46.5
%
50.7
%
46.9
%
Table 5
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, 2022
$
225,193
$
665,998
$
225,616
$
668,496
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, 2023 at constant currency(1)
$
217,000
$
646,000
$
217,000
$
647,000
Reported period-over-period revenue
change
(3.0
)%
(3.1
)%
(3.1
)%
(3.3
)%
% impact from change in foreign currency
exchange rates
(0.6
)%
0.1
%
(0.7
)%
0.1
%
Constant currency period-over-period
revenue change
(3.6
)%
(3.0
)%
(3.8
)%
(3.2
)%
(1) Revenue for the three and nine months
ended October 31, 2023 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, 2022 rather than actual current-period foreign currency
exchange rates.
(2) GAAP revenue denominated in non-U.S.
dollars was 20% and 19% of our total GAAP revenue for the three
months ended October 31, 2023 and 2022, respectively. GAAP revenue
denominated in non-U.S. dollars was 21% of our total GAAP revenue
for each of the nine months ended October 31, 2023 and 2022. Our
combined GAAP cost of revenue and operating expenses denominated in
non-U.S. dollars was 32% and 29% of our total combined GAAP cost of
revenue and operating expenses for the three months ended October
31, 2023 and 2022, respectively. Our combined GAAP cost of revenue
and operating expenses denominated in non-U.S. dollars was 31% and
30% of our total combined GAAP cost of revenue and operating
expenses for the nine months ended October 31, 2023 and 2022,
respectively.
(3) Non-GAAP revenue denominated in
non-U.S. dollars was 20% and 19% of our total non-GAAP revenue for
the three months ended October 31, 2023 and 2022, respectively.
Non-GAAP revenue denominated in non-U.S. dollars was 21% of our
total non-GAAP revenue for each of the nine months ended October
31, 2023 and 2022. Our combined Non-GAAP cost of revenue and
operating expenses denominated in non-U.S. dollars was 36% and 33%
of our total combined Non-GAAP cost of revenue and operating
expenses for the three months ended October 31, 2023 and 2022,
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 nine months ended October 31, 2023 and 2022, respectively.
For further information see "Supplemental Information About
Constant Currency" at the end of this press release.
Table 6
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Unaudited)
October 31,
January 31,
(in thousands, except share and per share
data)
2023
2023
Assets
Current Assets:
Cash and cash equivalents
$
209,647
$
282,099
Short-term investments
684
697
Accounts receivable, net of allowance for
credit losses of $1.5 million and $1.3 million, respectively
173,592
188,414
Contract assets, net
50,338
60,444
Inventories
13,042
12,628
Prepaid expenses and other current
assets
56,316
75,374
Total current assets
503,619
619,656
Property and equipment, net
47,556
64,810
Operating lease right-of-use assets
28,533
37,649
Goodwill
1,343,449
1,347,213
Intangible assets, net
64,219
85,272
Other assets
147,258
159,001
Total assets
$
2,134,634
$
2,313,601
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
22,172
$
43,631
Accrued expenses and other current
liabilities
110,261
155,944
Contract liabilities
237,668
271,476
Total current liabilities
370,101
471,051
Long-term debt
410,461
408,908
Long-term contract liabilities
12,067
18,047
Operating lease liabilities
31,466
40,744
Other liabilities
68,853
80,381
Total liabilities
892,948
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 October 31, 2023 and January 31, 2023,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at October 31, 2023 and January 31, 2023,
respectively.
200,628
200,628
Series B Preferred Stock; 200,000 shares
issued and outstanding at October 31, 2023 and January 31, 2023,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at October 31, 2023 and January 31, 2023,
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 63,465,000 and 65,404,000
shares; outstanding 63,465,000 and 65,404,000 shares at October 31,
2023 and January 31, 2023, respectively.
63
65
Additional paid-in capital
999,634
1,055,157
Accumulated deficit
(35,426
)
(45,333
)
Accumulated other comprehensive loss
(161,579
)
(154,099
)
Total Verint Systems Inc. stockholders'
equity
802,692
855,790
Noncontrolling interest
2,673
2,359
Total stockholders' equity
805,365
858,149
Total liabilities, temporary equity,
and stockholders' equity
$
2,134,634
$
2,313,601
Table 7
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended
October 31,
(in thousands)
2023
2022
Cash flows from operating
activities:
Net income
$
10,711
$
2,564
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
57,287
52,166
Stock-based compensation, excluding
cash-settled awards
50,286
63,957
Losses on early retirements of debt
237
—
Other, net
5,676
8,072
Changes in operating assets and
liabilities, net of effects of business combinations and
divestitures:
Accounts receivable
13,545
22,079
Contract assets
9,943
(8,256
)
Inventories
(415
)
(5,452
)
Prepaid expenses and other assets
32,609
(16,274
)
Accounts payable and accrued expenses
(50,080
)
(9,542
)
Contract liabilities
(39,299
)
(38,513
)
Deferred income taxes
1,788
(1,489
)
Other, net
(10,609
)
(701
)
Net cash provided by operating
activities
81,679
68,611
Cash flows from investing
activities:
Cash paid for asset acquisitions and
business combinations, including adjustments, net of cash
acquired
(3,173
)
(3,828
)
Purchases of property and equipment
(12,839
)
(17,920
)
Maturities and sales of investments
3,168
250
Purchases of investments
(3,180
)
(10,168
)
Cash paid for capitalized software
development costs
(7,109
)
(5,703
)
Change in restricted bank time deposits,
and other investing activities, net
(1,200
)
(107
)
Net cash used in investing
activities
(24,333
)
(37,476
)
Cash flows from financing
activities:
Proceeds from borrowings
100,000
—
Repayments of borrowings and other
financing obligations
(102,430
)
(3,025
)
Payments of debt-related costs
(232
)
(224
)
Purchases of treasury stock and common
stock for retirement
(99,263
)
(106,137
)
Preferred stock dividend payments
(20,800
)
(20,800
)
Distributions paid to noncontrolling
interest
(490
)
(637
)
Payments of contingent consideration for
business combinations (financing portion), and other financing
activities
(4,182
)
(3,518
)
Net cash used in financing
activities
(127,397
)
(134,341
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(700
)
(3,510
)
Net decrease in cash, cash equivalents,
restricted cash, and restricted cash equivalents
(70,751
)
(106,716
)
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of period
282,161
358,868
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of period
$
211,410
$
252,152
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
$
209,647
$
252,073
Restricted cash and cash equivalents
included in prepaid expenses and other current assets
1,763
22
Restricted cash and cash equivalents
included in other assets
—
57
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
211,410
$
252,152
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
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 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. 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 ending
January 31, 2024 is currently approximately 9% 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.
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, GAAP and non-GAAP recurring revenue,
GAAP and non-GAAP SaaS revenue, cost of revenue, and operating
expenses on both an as-reported basis and a constant currency
basis, allowing for comparison of results between periods as if
foreign currency exchange rates had remained constant. We perform
our constant currency calculations by translating current-period
results into U.S. dollars using prior-period average foreign
currency exchange rates or hedge rates, as applicable, rather than
current period exchange rates. We believe that constant currency
measures, which exclude the impact of changes in foreign currency
exchange rates, facilitate the assessment of underlying business
trends.
Unless otherwise indicated, our financial outlook, which is
provided on a non-GAAP basis, reflects foreign currency exchange
rates approximately consistent with rates in effect when the
outlook is provided.
We also incur foreign exchange gains and losses resulting from
the revaluation and settlement of monetary assets and liabilities
that are denominated in currencies other than the entity’s
functional currency. Our financial outlook for diluted earnings per
share includes net foreign exchange gains or losses incurred to
date, if any, but does not include potential future gains or
losses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231206754927/en/
Investor Relations Contact
Matthew Frankel, CFA Verint Systems Inc. (631) 962-9672
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
Historical Stock Chart
From May 2024 to Jun 2024
Verint Systems (NASDAQ:VRNT)
Historical Stock Chart
From Jun 2023 to Jun 2024