Focus on CX Automation Category Leadership and AI Monetization
Strategy
Showcase Customers Reporting Significant AI Business
Outcomes
Discuss Simplification of Business and Introduce Subscription
ARR and Cash Generation Metrics
Provide FYE 2026 Outlook for ARR and Free Cash Flow Growth
Verint® (Nasdaq: VRNT), The CX Automation Company™, today
announced highlights that will be discussed at today’s Investor Day
to be held at 10:30 a.m. ET.
“We are delighted to be hosting our investor day today, where we
will discuss the CX market evolution, Verint’s CX Automation
category leadership and Verint’s AI monetization strategy. In
addition to hearing from Verint’s management, Verint customers will
discuss the significant AI business outcomes they are achieving
with the Verint CX platform. The presentations will be followed by
a Q&A session, and we look forward to speaking with you later
today,” said Verint CEO Dan Bodner.
CX Market Evolution
The primary challenge for brands in their CX initiatives is the
unsustainable cost of labor. Today, brands are using many workflows
in their efforts to delight customers with superior customer
experience. Because these CX workflows are mostly manual, any time
brands want to improve CX, they are required to increase what is
already a large and expensive CX workforce.
The recent advances in AI-powered automation make it possible to
fully or partially automate CX workflows. Because the economic
benefits for brands are so significant, CX Automation is now an
important solution category in the CX market and an integral part
of the enterprise technology ecosystem.
CX Automation Category Leadership
Our platform currently offers more than 50 different AI-powered
bots. Each bot is uniquely designed to fully or partially automate
specific steps of a manual CX workflow. We invented a
differentiated approach to CX Automation based on automating these
micro-workflows with bots that are uniquely designed for each
specific task. As a result, each of the Verint bots automates a
specific micro-workflow and does it very well. Due to the high
precision of the bots, we are able to drive the desired AI business
outcome for customers. This best-of-breed approach to AI-powered
bots is resonating well with our customers.
Today, our platform is highly differentiated in its ability to
deliver stronger AI business outcomes than any other CX vendor, and
its ability to deliver into a customer’s existing ecosystem,
without disrupting their operations.
AI Monetization Strategy
Our AI monetization strategy is based on our customers’
preference to start with a low level of automation consumption and
increase automation over time, as they see business outcomes. This
drives incremental consumption and revenue growth over time for
Verint. Our open platform architecture, specifically our hybrid
cloud approach, is a tremendous accelerator for customer adoption
and enables us to deliver outcomes faster than any competitive
offering.
Introducing Subscription ARR (ARR) and Cash Generation
Metrics
We have completed our transition to a subscription model with
approximately 80% of our total revenue this year coming from our
subscription offerings. With the completion of our transition to
subscription, we will begin to report Subscription ARR, which
covers all streams within our subscription business, including
Bundled SaaS, Unbundled SaaS, Support, and Optional Managed
Services. ARR represents the annualized quarterly run-rate value of
active or signed subscription contracts, as of the end of a period.
For unbundled SaaS deals, we use a ratable view in our ARR
calculation.
We believe that ARR is a useful metric for investors, since it
represents the true growth of our subscription business, avoiding
any variability associated with ASC 606 revenue accounting. Due to
this volatility, we will also begin to report cash contribution
margin and operating efficiency metrics annually.
Verint Chief Financial Officer, Grant Highlander, added, “We are
pleased that our business has been greatly simplified with a
subscription model. Looking forward, we are optimistic about our AI
monetization strategy, which gives customers the ability to adopt
AI without disruption and increase usage over time, as they see
value. We expect demand for our CX Automation solutions to
accelerate the growth of our subscription business. For fiscal 26,
we are targeting our ARR growth to improve to 8%, and with
operating leverage, free cash flow will grow by double digits.”
FYE 2025 and FYE 2026 ARR
Outlook
Our ARR outlook is as follows:
- For Q4 January 31, 2025: $704 Million, reflecting 4%
year-over-year growth (adjusted for prior year divesture)
- For Q4 January 31, 2026: $760 million, reflecting 8%
year-over-year growth
Please see our Investor Dashboard on our website for historical
ARR Data.
FYE 2025 Revenue and Diluted EPS
Outlook
Our revenue and non-GAAP diluted EPS outlook for the year ending
January 31, 2025 is as follows:
- Revenue: $933 million +/- 2%, reflecting 5%
year-over-year growth (adjusted for the divestiture)
- Diluted EPS: $2.90 at the midpoint of our revenue
guidance, reflecting 6% year-over-year growth.
Our non-GAAP outlook for 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 $20 million
for the year ending January 31, 2025.
Our non-GAAP outlook for the 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 $76 million and $78 million, for the year ending
January 31, 2025, 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.
Investor Day Conference Call
Information Date: January 14, 2025 Time:
10:30am ET – 12:30pm ET Location: Virtual
Registration: Click here to receive your dial-in number and
unique PIN to access the event. The live event may be accessed on
Verint’s Investor Relations webcast page.
About Verint Systems Inc.
Verint® (Nasdaq: VRNT) is a leader in customer experience ("CX")
automation. The world’s most iconic brands – including more than 80
of the Fortune 100 companies – use the Verint Open Platform and our
team of AI-powered bots to deliver tangible AI business outcomes
across the enterprise.
Verint. The CX Automation Company™, is proud to be Certified™ by
Great Place To Work®. 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, elevated 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, demonstrating, 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 term lengths, 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, value, 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 (including
versus those of our competitors), 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; 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, our
Quarterly Report on Form 10-Q for the quarter ended April 30, 2024,
our Quarterly Report on Form 10-Q for the quarter ended July 31,
2024, our Quarterly Report on Form 10-Q for the quarter ended
October 31, 2024, and other filings we make with the SEC.
VERINT, VERINT DA VINCI, VERINT OPEN CCAAS, THE CX AUTOMATION
COMPANY, THE CUSTOMER ENGAGEMENT COMPANY, 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.
Revenue Metrics and Operating
Metrics
SaaS Annual Contract Value (ACV) (formerly known as New SaaS
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 SaaS ACV with a
completed customer contract signed by both parties before the end
of the period. Unbundled SaaS ACV includes only the ACV of the
unbundled SaaS contracts included in SaaS ACV. Bundled SaaS ACV
includes only the ACV of the bundled SaaS contracts included in
SaaS ACV and is comprised of two components:
New Deals ACV, which represents the annual contract value of new
bundled SaaS contracts, received within the period. This includes
purchases of new applications by both new and existing customers as
well as expansions of entitlements to applications already in use
by existing customers, other than if in connection with a
conversion. AI booking from new deals represents the portion of New
Deals ACV attributable specifically to AI applications.
Conversion ACV, which represents the bundled SaaS annual
contract value sold to a customer who is converting from an
on-premises application to the Verint Cloud within the period. This
metric also includes the value of incremental licenses or expansion
of entitlements as part of the conversion, including for AI
applications.
Subscription Annual Recurring Revenue (ARR) represents the
annualized quarterly run-rate of our active subscription agreements
at the end of the period and is comprised of the ARR calculated for
our SaaS, Support, and Optional Managed Services contracts. Under
ASC Topic 606, Revenue from Contracts with Customers, we are
required to recognize a significant portion of our Unbundled SaaS
contracts at a point in time when the software is first made
available to the customer, or at the beginning of the subscription
term, despite the fact that our contracts typically call for
billing these amounts annually or more frequently over the life of
the subscription. This point-in-time recognition of a portion of
our recurring revenue creates significant variability in the
revenue recognized period to period based on the timing of the
subscription start date and the subscription term and can create a
significant difference between the timing of our revenue
recognition and the actual customer billing under the contract. We
use ARR to measure the underlying performance of our
subscription-based contracts and mitigate the impact of this
variability as ARR reduces fluctuations due to seasonality,
contract term, and the sales mix of subscriptions. 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.
ARR is not intended to be a replacement for forecasts of revenue
and does not include revenue reported as nonrecurring revenue in
our consolidated statement of operations.
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. In the case of acquired contracts that allow
for early termination, SaaS ARR will reflect the annualized amount
of committed contracts in the first quarter and then proportionally
increase to the remaining amount of annualized ARR in the
subsequent three quarters during the first year post acquisition.
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.
Cash Generation represents the sum of ARR and perpetual and
professional services and other revenue and provides an estimate of
the cash-producing potential of our entire business.
Cash Contribution Margin is defined as Cash Generation less cost
of revenue and operating expenses and helps assess how effectively
we convert our revenue streams into cash.
Operating Efficiency Percentage is the result of dividing Cash
Contribution Margin by Cash Generation and helps assess the rate at
which we convert our revenue streams into cash.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20250114163841/en/
Investor Relations Matthew
Frankel, CFA Verint Systems Inc. (631) 962-9600
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
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