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Verint (VRNT) Q2 Earnings and Revenues Surpass Estimates

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Verint Systems VRNT reported second-quarter fiscal 2022 non-GAAP earnings of 58 cents per share, which beat the Zacks Consensus Estimate by 31.8%. On a year-over-year basis, the bottom line deteriorated 25.6%.

Non-GAAP revenues increased 4% year over year to $216 million and beat the Zacks Consensus Estimate by 3.2%. GAAP revenues of $215 million increased 5% year over year. The top line was driven by strength in the cloud business.

Following the earnings announcement, shares of Verint dropped 1.9% and closed at $43.25 on Sep 10. In the past year, shares have declined 12.4% compared with the industry’s growth of 36.7%.

Verint Systems Inc. Price, Consensus and EPS Surprise

Verint Systems Inc. Price, Consensus and EPS Surprise
Verint Systems Inc. Price, Consensus and EPS Surprise

Verint Systems Inc. price-consensus-eps-surprise-chart | Verint Systems Inc. Quote

Quarter Details

Non-GAAP recurring revenues (72.9% of total non-GAAP revenues) increased 10.4% year over year to $157.2 million.

Non-GAAP nonrecurring revenues (27.1%) declined 9.8% year over year to $58.4 million.

On a non-GAAP basis, the company’s cloud revenues were up 43.7% to $94.3 million. Non-GAAP software-as-a-service (SaaS) revenue increased 51.5% to $77.3 million.

The company’s new perpetual license equivalent (PLE) bookings soared 17.4% year over year to $73.1 million. Percentage of new perpetual license equivalent bookings from SaaS stood at 52.6% in the fiscal second quarter compared with 43.1% reported in the prior-year quarter.

New SaaS annual contract value (or ACV) increased 59.1% to $26.6 million

Operating Details

Non-GAAP gross profit increased 1.9% year over year to $149 million. Non-GAAP gross margin contracted 150 basis points (bps) to 69.1%.

Total operating expenses increased 12.9% year over year to $130.5 million.

As a percentage of non-GAAP revenues, non-GAAP research and development expenses as well as non-GAAP selling, general and administrative expenses stood at 13.7% and 31.4%, respectively in the fiscal second quarter.

Adjusted EBITDA declined 18% year over year to $57.8 million. Adjusted EBIDTA margin contracted 730 bps to 26.8%.

Non-GAAP operating income fell 18.6% year over year to $51.8 million and operating margin contracted 670 bps to 24%.

Balance Sheet and Cash Flow

As of Jul 31, 2021, Verint had cash and cash equivalents of $320.4 million compared with $359.4 million as of Apr 30, 2021. The company’s long-term debt stood at $405.9 million as of Jul 31, 2021 compared with $405.6 million as of Apr 30, 2021.

Remaining performance obligations were $627 million, up 29% on a year over year basis.

Guidance

For fiscal 2022 (ending on Jan 31, 2022), the company now expects cloud revenues to increase 35% compared with the earlier projected range of 30-35% rise. New PLE bookings growth is now expected to be 15% compared with the earlier guidance of 10% growth.

Non-GAAP revenue guidance has been revised to $872 (+/-2%) from $860 million projected earlier.

Additionally, non-GAAP earnings per share are expected to be $2.25 compared with the earlier projection of $2.23.

For the fiscal third quarter (ending on Oct 31, 2021), the company projects non-GAAP revenues in the range of $215-$220 million. Non-GAAP earnings per share are expected to be 53 cents.

Zacks Rank & Stocks to Consider

Currently, Verint carries a Zacks Rank #3 (Hold).

Some other better-ranked stocks in the Computer Technology sector include Microsoft MSFT, Cadence Design Systems CDNS and PTC PTC. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings growth rate for Microsoft, Cadence and PTC is pegged at 11.1%, 11.7% and 23.2%, respectively.


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