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Verint Announces Strong Third Quarter Results, Raises Guidance and Three-Year Targets

Delivers Strong Q3 Cloud Revenue Growth; Expects Strong Q4 and Raises Annual Cloud Revenue Growth Guidance

Introduces FYE 2023 Guidance Above Prior Targets and Raises FYE 2024 Targets

MELVILLE, N.Y., December 02, 2021--(BUSINESS WIRE)--Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three and nine months ended October 31, 2021 (FYE 2022). Revenue for the three months ended October 31, 2021 was $225 million on a GAAP basis representing 4% year-over-year growth and $227 million on a non-GAAP basis also representing 4% year-over-year growth. Revenue for the nine months ended October 31, 2021 was $640 million on a GAAP basis representing 6% year-over-year growth and $645 million on a non-GAAP basis representing 5% year-over-year growth. For the three months ended October 31, 2021, diluted EPS was $0.12 on a GAAP basis and, $0.69 on a non-GAAP basis. For the nine months ended October 31, 2021, diluted EPS was $0.08 on a GAAP basis and $1.71 on a non-GAAP basis.

"The momentum we experienced in the first half of the year continued in the third quarter with strong cloud revenue growth, strong new PLE bookings growth, and strong revenue and diluted EPS coming in significantly ahead of expectations. We expect to finish the year with a strong Q4 and are raising our annual outlook for total revenue, cloud revenue, and new PLE bookings. We believe our results and improved outlook reflect the differentiation of our cloud platform and our execution following the spin-off of our security business in February 2021," said Dan Bodner, Verint CEO.

Bodner continued, "At the time of the spin-off, we laid out three-year targets for accelerating growth. I am pleased to report that based on our strong PLE bookings this year across existing and new customers, we now believe we are tracking ahead of these targets. We are introducing guidance for next year of 7% revenue growth, above our prior targets. We are also increasing our targets for FYE 2024 to 10% revenue growth taking our total revenue to $1.03 billion with about $650 million in cloud revenue."

Third Quarter Key Cloud Metrics

  • Strong Cloud Revenue Growth: Up 32% year-over-year

  • Strong Software Bookings Growth: New perpetual license equivalent (PLE) bookings up 14% year-over-year

  • Large Cloud Orders: 21 orders each in excess of $1 million Total Contract Value (TCV)

FYE 2022 and FYE 2023 Outlook

We are increasing our non-GAAP annual outlook for the year ending January 31, 2022, as follows:

  • Cloud Revenue Growth: a range of 35% to 37% (up from our prior guidance of 35% last quarter and 30% at the start of the year)

  • New PLE Bookings Growth: a range of 15% to 17% (up from our prior guidance of 15% last quarter and 10% at the start of the year)

  • Revenue: $875 million +/- 1% (up from our prior guidance of $872 million last quarter and $860 million at the start of the year)

  • Diluted EPS: $2.25 at the midpoint of our revenue guidance (up from our prior guidance of $2.20 at the start of the year)

We are introducing our non-GAAP annual outlook for the year ending January 31, 2023, above our prior targets, as follows:

  • Cloud Revenue: 30% growth resulting in cloud revenue of over $500 million

  • New PLE Bookings Growth: a range of 10% to 12%

  • Revenue: $935 million +/- 2% reflecting 7% year-over-year growth

  • Diluted EPS: $2.49 at the midpoint of our revenue guidance, reflecting 11% year-year-year growth

Our non-GAAP outlook for the year ending January 31, 2022 excludes the following GAAP measures which we are able to quantify with reasonable certainty:

  • Amortization of intangible assets of approximately $47 million.

  • Expenses and losses on debt modification or retirement of approximately $2 million.

  • Favorable change in fair value of future tranche right of approximately $16 million.

  • Unrealized losses on derivatives, net of approximately $14 million.

Our non-GAAP outlook for the year ending January 31, 2022 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 $5 million and $7 million.

  • Stock-based compensation expenses are expected to be between approximately $65 million and $70 million for the year ending January 31, 2022, assuming market prices for our common stock approximately consistent with current levels.

  • Further costs associated with Verint’s February 1, 2021 separation into two independent public companies are expected to be between approximately $13 million and $15 million.

Our initial non-GAAP outlook for the year ending January 31, 2023 excludes the following GAAP measures which we are able to quantify with reasonable certainty:

  • Amortization of intangible assets of approximately $41 million.

Our initial non-GAAP outlook for the year ending January 31, 2023 excludes the following GAAP measures for which we are able to provide a range of probable significance:

  • Revenue adjustments are expected to be between approximately $2 million and $4 million.

  • Stock-based compensation expenses are expected to be between approximately $67 million and $73 million for the year ending January 31, 2023, assuming market prices for our common stock approximately consistent with current levels.

  • Costs associated with modifying our workplace in response to the post-spin and COVID work environment, including assumed lease terminations and abandonments, IT infrastructure costs, and other charges are expected to be between approximately $20 million and $30 million.

Our non-GAAP FYE 2024 targets exclude any GAAP revenue adjustments.

Our non-GAAP guidance and targets do 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 and targets, 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, 2021 and 2020 for the GAAP measures excluded from our non-GAAP outlook appear in Tables 2, 3 and 4 of this press release.

Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the three and nine months ended October 31, 2021, outlook, and long-term targets. An online, real-time webcast of the conference call and webcast slides will be available on our website at www.verint.com. The webcast slides will be available on our website until at least January 31, 2022. The conference call can also be accessed live via telephone at 1-844-309-0615 (United States and Canada) and 1-661-378-9462 (international) and the passcode is 7551616. Please dial in 5-10 minutes prior to the scheduled start time.

About Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of non-GAAP financial measures presented for completed periods to the most directly comparable financial measures prepared in accordance with GAAP, please see the tables below as well as "Supplemental Information About Non-GAAP Financial Measures and Operating Metrics" at the end of this press release.

About Verint Systems Inc.

Verint® (Nasdaq: VRNT) helps the world’s most iconic brands – including over 85 of the Fortune 100 companies – build enduring customer relationships by connecting work, data, and experiences across the enterprise. The Verint Customer Engagement portfolio draws on the latest advancements in AI and analytics, an open cloud architecture, and The Science of Customer Engagement to help customers close The Engagement Capacity Gap™.

Verint. The Customer Engagement Company. Learn more at Verint.com.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Verint Systems Inc. These forward-looking statements are not guarantees of future performance and they are based on management's expectations that involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, any of which could cause our actual results or conditions to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual results or conditions to differ materially from current expectations include, among others: uncertainties regarding the impact of changes in macroeconomic and/or global conditions, including as a result of slowdowns, recessions, economic instability, political unrest, armed conflicts, natural disasters, or outbreaks of disease, such as the COVID-19 pandemic, as well as the resulting impact on information technology spending by enterprises and government customers, on our business; risks that our customers delay, cancel, or refrain from placing orders, refrain from renewing subscriptions or service contracts, or are unable to honor contractual commitments or payment obligations due to liquidity issues or other challenges in their budgets and business, due to the COVID-19 pandemic or otherwise; risks that restrictions resulting from the COVID-19 pandemic or actions taken in response to the pandemic adversely impact our operations or our ability to fulfill orders, complete implementations, or recognize revenue; challenges associated with our cloud transition, including increased importance of subscription renewal rates, and risk of increased variability in our period-to-period results based on the mix, terms, and timing of our transactions; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; to adapt to changing market potential from area to area within our markets; and to successfully develop, launch, and drive demand for new, innovative, high-quality products that meet or exceed customer challenges and needs in both existing and new areas, while simultaneously preserving our legacy businesses and migrating away from areas of commoditization; risks due to aggressive competition in all of our markets, including with respect to maintaining revenue, margins, and sufficient levels of investment in our business and operations, and competitors with greater resources than we have; risks relating to our ability to properly manage investments in our business and operations, execute on growth or strategic initiatives, 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 identify suitable targets for acquisition or investment or successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with valuations, reputational considerations, capital constraints, costs and expenses, maintaining profitability levels, expansion into new areas, management distraction, post-acquisition integration activities, and potential asset impairments; challenges associated with selling sophisticated solutions, including with respect to longer sales cycles, more complex sales processes, and assisting customers in understanding and realizing the benefits of our solutions, as well as with developing, offering, implementing, and maintaining a broad solution portfolio; risks that we may be unable to maintain, expand, and enable our relationships with partners as part of our growth strategy; risks associated with our reliance on third-party suppliers, partners, or original equipment manufacturers ("OEMs") for certain components, products, or services, including companies that may compete with us or work with our competitors, as well as cloud hosting providers; risks associated with our ability to retain, recruit, and train qualified personnel in regions in which we operate, including in new markets and growth areas we may enter or due to applicable regulatory requirements such as vaccination mandates; risks associated with our significant international operations, exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, and challenges associated with a significant portion of our cash being held overseas; risks associated with a significant part of our business coming from government contracts and associated procurement processes; risks associated with complex and changing domestic and foreign regulatory environments, relating to our own operations, the products and services we offer, and/or the use of our solutions by our customers, including, among others, with respect to data privacy and protection, government contracts, anti-corruption, trade compliance, tax, and labor matters; 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 service offerings or when we are asked to perform service or support; risks that our solutions or services, or those of third-party suppliers, partners, or OEMs which we use in or with our offerings or otherwise rely on, including third-party hosting platforms, may contain defects, develop operational problems, or be vulnerable to cyber-attacks; risk of security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions; risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property, claim infringement on their intellectual property rights, or claim a violation of their license rights, including relative to free or open source components we may use; risks associated with 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 recent spin-off of our Cyber Intelligence Solutions business, including the possibility that it 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, 2021, our Quarterly Report on Form 10-Q for the quarter ended April 30, 2021, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended October 31, 2021, when filed, and other filings we make with the SEC.

VERINT, THE CUSTOMER ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT, THE ENGAGEMENT CAPACITY GAP and THE SCIENCE OF CUSTOMER ENGAGEMENT are trademarks of Verint Systems Inc. or its subsidiaries. Verint and other parties may also have trademark rights in other terms used herein.

Table 1

VERINT SYSTEMS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended
October 31,

Nine Months Ended
October 31,

(in thousands, except per share data)

2021

2020

2021

2020

Revenue:

Recurring

$

158,811

$

150,233

$

459,442

$

418,570

Nonrecurring

66,009

64,989

180,899

186,597

Total revenue

224,820

215,222

640,341

605,167

Cost of revenue:

Recurring

36,811

35,388

112,523

103,252

Nonrecurring

30,524

34,440

90,909

95,835

Amortization of acquired technology

4,749

4,044

13,559

12,589

Total cost of revenue

72,084

73,872

216,991

211,676

Gross profit

152,736

141,350

423,350

393,491

Operating expenses:

Research and development, net

31,029

33,293

91,969

95,853

Selling, general and administrative

89,778

80,167

268,800

234,733

Amortization of other acquired intangible assets

7,261

7,833

21,934

23,316

Total operating expenses

128,068

121,293

382,703

353,902

Operating income

24,668

20,057

40,647

39,589

Other income (expense), net:

Interest income

101

314

147

1,217

Interest expense

(1,502

)

(9,718

)

(8,720

)

(30,530

)

Losses on early retirements of debt

(2,474

)

(143

)

Other (expense) income, net

(417

)

(11,670

)

3,789

(26,246

)

Total other expense, net

(1,818

)

(21,074

)

(7,258

)

(55,702

)

Income (loss) from continuing operations before provision for income taxes

22,850

(1,017

)

33,389

(16,113

)

Provision for income taxes

9,349

1,084

13,478

9,776

Net income (loss) from continuing operations

13,501

(2,101

)

19,911

(25,889

)

Net income from discontinued operations

13,928

44,328

Net income

13,501

11,827

19,911

18,439

Net income from continuing operations attributable to noncontrolling interests

264

309

875

876

Net income from discontinued operations attributable to noncontrolling interests

1,343

4,908

Net income attributable to Verint Systems Inc.

13,237

10,175

19,036

12,655

Dividends on preferred stock

(5,200

)

(2,658

)

(13,722

)

(5,142

)

Net income attributable to Verint Systems Inc. common shares

$

8,037

$

7,517

$

5,314

$

7,513

Net income (loss) attributable to Verint Systems Inc. common shares

Net income (loss) from continuing operations attributable to Verint Systems Inc. common shares

$

8,037

$

(5,068

)

$

5,314

$

(31,907

)

Net income from discontinued operations attributable to Verint Systems Inc. common shares

$

$

12,585

$

$

39,420

Basic net income (loss) per common share attributable to Verint Systems Inc.:

Continuing operations

$

0.12

$

(0.08

)

$

0.08

$

(0.49

)

Discontinued operations

0.19

0.61

Total basic net income per common share attributable to Verint Systems Inc.

$

0.12

$

0.11

$

0.08

$

0.12

Diluted net income (loss) per common share attributable to Verint Systems Inc.:

Continuing operations

$

0.12

$

(0.08

)

$

0.08

$

(0.48

)

Discontinued operations

0.19

0.59

Total diluted net income per common share attributable to Verint Systems Inc.

$

0.12

$

0.11

$

0.08

$

0.11

Weighted-average common shares outstanding:

Basic

65,570

65,571

65,474

64,973

Diluted

66,328

66,234

67,268

66,000

Table 2

VERINT SYSTEMS INC. AND SUBSIDIARIES

GAAP to Non-GAAP Cloud Metrics

(Unaudited)

Three Months Ended
October 31,

Nine Months Ended
October 31,

(in thousands)

2021

2020

2021

2020

Table of Reconciliation from GAAP Cloud Revenue to Non-GAAP Cloud Revenue

SaaS revenue - GAAP

$

82,103

$

58,983

$

222,079

$

148,100

Bundled SaaS revenue - GAAP

48,390

37,406

130,639

106,617

Unbundled SaaS revenue - GAAP

33,713

21,577

91,440

41,483

Optional managed services revenue - GAAP

16,358

14,884

49,688

43,344

Cloud revenue - GAAP

$

98,461

$

73,867

$

271,767

$

191,444

Estimated SaaS revenue adjustments

$

1,985

$

1,944

$

3,701

$

7,620

Estimated bundled SaaS revenue adjustments

1,984

1,897

3,638

7,485

Estimated unbundled SaaS revenue adjustments

1

47

63

135

Estimated optional managed services revenue adjustments

112

223

431

772

Estimated cloud revenue adjustments

$

2,097

$

2,167

$

4,132

$

8,392

SaaS revenue - non-GAAP

$

84,088

$

60,927

$

225,780

$

155,720

Bundled SaaS revenue - non-GAAP

50,374

39,303

134,277

114,102

Unbundled SaaS revenue - non-GAAP

33,714

21,624

91,503

41,618

Optional managed services revenue - non-GAAP

16,470

15,107

50,119

44,116

Cloud revenue - non-GAAP

$

100,558

$

76,034

$

275,899

$

199,836

Table of New SaaS ACV

New SaaS ACV

$

18,312

$

15,659

$

63,684

$

44,248

New SaaS ACV Growth YoY

16.9

%

0.3

%

43.9

%

30.4

%

Table of New Perpetual License Equivalent Bookings

New perpetual license equivalent bookings

$

75,438

$

66,084

$

209,479

$

175,994

New perpetual license equivalent bookings change YoY

14.2

%

(12.3

)

%

19.0

%

(11.7

)

%

% of new perpetual license equivalent bookings from SaaS

43.7

%

44.8

%

49.0

%

43.0

%

Table 3

VERINT SYSTEMS INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures

(Unaudited)

Three Months Ended
October 31,

Nine Months Ended
October 31,

(in thousands, except per share data)

2021

2020

2021

2020

REVENUE

Recurring revenue - GAAP

$

158,811

$

150,233

$

459,442

$

418,570

Nonrecurring revenue - GAAP

66,009

64,989

180,899

186,597

Total GAAP revenue

224,820

215,222

640,341

605,167

Recurring revenue adjustments

2,108

2,227

4,160

8,555

Nonrecurring revenue adjustments

Total revenue adjustments

2,108

2,227

4,160

8,555

Recurring revenue - non-GAAP

160,919

152,460

463,602

427,125

Nonrecurring revenue - non-GAAP

66,009

64,989

180,899

186,597