Verint® Systems Inc. (NASDAQ: VRNT) a
global leader in Actionable Intelligence® solutions and value-added
services, today announced its second quarter results.
“We are pleased with our strong performance in the second
quarter which we believe reflects our leadership position and
growth in the actionable intelligence market as well as an
improving economic environment. Our non-GAAP operating margin came
in strong at 25.6%, ahead of our annual target, reflecting
sustained focus on execution in the workforce optimization and
security intelligence markets. We look forward to discussing our
results and outlook during today’s conference call,” said Dan
Bodner, CEO and President of Verint Systems Inc.
Below is selected financial information for the three and six
months ended July 31, 2010 and 2009 prepared in accordance with
generally accepted accounting principles (“GAAP”) and not prepared
in accordance with GAAP (“Non-GAAP”).
(In thousands, except per share data) Selected GAAP
Information Three Months Ended July 31, Six Months Ended
July 31, 2010 2009 2010 2009 Revenue $ 180,676
$ 169,269 $ 353,289 $ 344,417 Gross Profit 120,330 110,202
235,136 228,281 Gross Margin 66.6% 65.1% 66.6% 66.3%
Operating Income 23,799 13,709 19,817 49,718 Operating Margin 13.2%
8.1% 5.6% 14.4% Diluted Net Income (Loss) per Share
Attributable to Verint Systems Inc. $ 0.23 $ (0.06) $ (0.35) $ 0.45
Selected Non-GAAP Information Three Months Ended July 31,
Six Months Ended July 31, 2010 2009 2010 2009 Revenue $
180,676 $ 169,269 $ 353,289 $ 344,417 Gross Profit 123,785
113,735 243,232 234,828 Gross Margin 68.5% 67.2% 68.8% 68.2%
Operating Income 46,323 44,639 88,602 101,808 Operating Margin
25.6% 26.4% 25.1% 29.6% Diluted Net Income per Share
Attributable to Verint Systems Inc. $ 0.69 $ 0.73 $ 1.25 $ 1.66
Outlook for the Year Ending
January 31, 2011
- We are updating our revenue
outlook from a range of $700 to $715 million to a range of $710 to
$720 million.
- We are updating our target
non-GAAP operating margin from a range of 20% to 23% to a range of
22% to 24%.
Conference Call
Information
Verint will be conducting a conference call today at 8:30 a.m.
to discuss its second quarter results and outlook for the year
ending January 31, 2011. An on-line, real-time Web cast of the
conference call will be available on our website at www.verint.com.
The conference call can also be accessed live via telephone at
1-888-277-1184 (United States) and 1-617-597-5360 (international)
and the passcode is 18560023. 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 these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
GAAP, please see Table 2 as well as "Supplemental Information About
Non-GAAP Measures" at the end of this press release. Because we do
not predict special items that might occur in the future, and our
outlook is developed at a level of detail different than that used
to prepare GAAP financial measures, we are not providing a
reconciliation to GAAP of our forward-looking financial measures
for the year ending January 31, 2011.
About Verint Systems Inc.
Verint® Systems Inc. is a global leader in Actionable
Intelligence® solutions and value-added services. Our solutions
enable organizations of all sizes to make timely and effective
decisions to improve enterprise performance and make the world a
safer place. More than 10,000 organizations in over 150
countries—including over 80 percent of the Fortune 100—use Verint
solutions to capture, distill, and analyze complex and underused
information sources, such as voice, video, and unstructured text.
Headquartered in Melville, New York, we support our customers
around the globe directly and with an extensive network of selling
and support partners. Verint is listed on the NASDAQ Stock Market
under the symbol “VRNT.” Visit us at our website
www.verint.com.
Cautions About Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, 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 risks and uncertainties, any of which could cause actual
results to differ materially from those expressed in or implied by
the forward-looking statements. Some of the factors that could
cause actual future results or conditions to differ materially from
current expectations include: risks relating to the filing of our
SEC reports, including the occurrence of known contingencies or
unforeseen events that could delay our future filings, management
distractions, and significant expense; risks that our credit rating
could be downgraded or placed on a credit watch based on, among
other things, our financial results or delays in the filing of our
periodic reports; risks associated with being a consolidated,
controlled subsidiary of Comverse Technology, Inc. (“Comverse”) and
formerly part of Comverse’s consolidated tax group, including risk
of any future impact on us resulting from Comverse’s special
committee investigation and restatement or related effects, and
risks related to our dependence on Comverse to provide us with
accurate financial information, including with respect to
stock-based compensation expense and net operating loss
carryforwards (“NOLs”), for our financial statements; uncertainties
regarding the impact of general economic conditions, particularly
in information technology spending, on our business; risks that our
financial results will cause us not to be compliant with the
leverage ratio covenant under our credit facility or that any
delays in the filing of future SEC reports could cause us not to be
compliant with the financial statement delivery covenant under our
credit facility; risks that customers or partners delay or cancel
orders or are unable to honor contractual commitments due to
liquidity issues, challenges in their business, or otherwise; risks
that we will experience liquidity or working capital issues and
related risk that financing sources will be unavailable to us on
reasonable terms or at all; uncertainties regarding the future
impact on our business of our now concluded internal investigation,
restatement, and extended filing delay, including customer,
partner, employee, and investor concern, and potential customer and
partner transaction deferrals or losses; risks relating to the
remediation or inability to adequately remediate material
weaknesses in our internal controls over financial reporting and
relating to the proper application of highly complex accounting
rules and pronouncements in order to produce accurate SEC reports
on a timely basis; risks relating to our implementation and
maintenance of adequate systems and internal controls for our
current and future operations and reporting needs; risks of
possible future restatements if the processes used to produce the
financial statements contained in our SEC reports are inadequate;
risks associated with future regulatory actions or private
litigations relating to our internal investigation, restatement, or
previous delays in filing required SEC reports; risk that we will
be unable maintain our listing on the NASDAQ Global Market; risks
associated with Comverse controlling our board of directors and a
majority of our common stock (and therefore the results of any
significant stockholder vote); risks associated with significant
leverage resulting from our current debt position; risks due to
aggressive competition in all of our markets, including with
respect to maintaining margins and sufficient levels of investment
in the business and with respect to introducing quality products
which achieve market acceptance; risks created by continued
consolidation of competitors or introduction of large competitors
in our markets with greater resources than us; risks associated
with significant foreign and international operations, including
exposure to fluctuations in exchange rates; risks associated with
complex and changing local and foreign regulatory environments;
risks associated with our ability to recruit and retain qualified
personnel in all geographies in which we operate; challenges in
accurately forecasting revenue and expenses; risks associated with
acquisitions and related system integrations; risks relating to our
ability to improve our infrastructure to support growth; risks that
our intellectual property rights may not be adequate to protect our
business or that others may make claims on our intellectual
property or claim infringement on their intellectual property
rights; risks associated with a significant amount of our business
coming from domestic and foreign government customers; risks that
we improperly handle sensitive or confidential information or
perception of such mishandling; risks associated with dependence on
a limited number of suppliers for certain components of our
products; risks that we are unable to maintain and enhance
relationships with key resellers, partners, and systems
integrators; and risks that use of our tax benefits may be
restricted or eliminated in the future. 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, 2010.
VERINT, the VERINT logo, ACTIONABLE INTELLIGENCE, POWERING
ACTIONABLE INTELLIGENCE, INTELLIGENCE IN ACTION, ACTIONABLE
INTELLIGENCE FOR A SMARTER WORKFORCE, VERINT VERIFIED, WITNESS
ACTIONABLE SOLUTIONS, STAR-GATE, RELIANT, VANTAGE, X-TRACT,
NEXTIVA, EDGEVR, ULTRA, AUDIOLOG, WITNESS, the WITNESS logo, IMPACT
360, the IMPACT 360 logo, IMPROVE EVERYTHING, EQUALITY,
CONTACTSTORE, and CLICK2STAFF are trademarks or registered
trademarks of Verint Systems Inc. or its subsidiaries. Other
trademarks mentioned are the property of their respective
owners.
Table 1 Verint Systems Inc. and Subsidiaries Condensed Consolidated
Statements of Operations (Unaudited) (In thousands, except per
share data) Three Months
Ended July 31, Six Months Ended July 31, 2010 2009 2010 2009
Revenue: Product $ 93,103 $ 88,107 $ 185,173 $ 185,178
Service and support 87,573 81,162
168,116 159,239
Total revenue
180,676 169,269 353,289
344,417
Cost of revenue: Product 31,909 30,900
60,255 62,957 Service and support 26,217 26,190 53,445 49,103
Amortization of acquired technology and backlog 2,220
1,977 4,453 4,076
Total cost of revenue 60,346 59,067
118,153 116,136
Gross
profit 120,330 110,202
235,136 228,281
Operating expenses:
Research and development, net 22,049 20,638 48,481 39,539 Selling,
general and administrative 69,144 70,258 156,161 127,484
Amortization of other acquired intangible assets 5,338 5,586 10,677
11,516 Restructuring - 11 -
24
Total operating expenses
96,531 96,493 215,319
178,563
Operating income 23,799
13,709 19,817 49,718
Other
income (expense), net Interest income 117 98 200 245 Interest
expense (5,936 ) (6,369 ) (11,884 ) (12,722 ) Other expense, net
(2,448 ) (3,106 ) (6,146 ) (8,069 )
Total other expense, net (8,267 ) (9,377 )
(17,830 ) (20,546 )
Income before provision for
income taxes 15,532 4,332 1,987 29,172 Provision for income
taxes 3,141 2,850 5,212
7,118
Net income (loss) 12,391 1,482 (3,225 )
22,054 Net income (loss) attributable to noncontrolling interest
916 (116 ) 1,508 822
Net income (loss) attributable to Verint Systems Inc.
11,475 1,598 (4,733 ) 21,232 Dividends on preferred stock
(3,554 ) (3,406 ) (6,957 ) (6,668 )
Net
income (loss) attributable to Verint Systems Inc. common shares
$ 7,921 $ (1,808 )
$ (11,690 ) $ 14,564
Net income (loss) per share attributable to Verint
Systems Inc. Basic $ 0.24 $ (0.06 ) $ (0.35 ) $ 0.45
Diluted $ 0.23 $ (0.06 ) $ (0.35 ) $ 0.45
Weighted-average common shares outstanding Basic
33,272 32,465 32,972
32,462 Diluted 35,006 32,465
32,972 32,606
Table 2 Verint Systems Inc. and Subsidiaries Reconciliation of GAAP
to Non-GAAP Results (Unaudited) (In thousands, except per share
data) Three Months Ended July 31, Six
Months Ended July 31, 2010 2009 2010 2009
Table of Reconciliation from GAAP Gross Profit
to Non-GAAP Gross Profit
GAAP gross profit $ 120,330 $ 110,202 $ 235,136 $ 228,281
Amortization of acquired technology and backlog 2,220 1,977 4,453
4,076 Stock-based compensation expenses 1,235
1,556 3,643 2,471 Non-GAAP gross
profit $ 123,785 $ 113,735 $ 243,232 $ 234,828
Table of Reconciliation from GAAP Operating
Income to Non-GAAP Operating Income
GAAP operating income $ 23,799 $ 13,709 $ 19,817 $ 49,718
Amortization of acquired technology and backlog 2,220 1,977 4,453
4,076 Amortization of other acquired intangible assets 5,338 5,586
10,677 11,516 Restructuring costs - 9 - 22 Stock-based compensation
expenses 8,035 13,138 26,004 19,694 Other adjustments 864 - 1,371 -
Expenses related to our filing delay 6,067
10,220 26,280 16,782 Non-GAAP
operating income $ 46,323 $ 44,639 $ 88,602 $
101,808
Table of Reconciliation from GAAP Other Expense,
Net to Non-GAAP Other Expense, Net
GAAP other expense, net $ (8,267 ) $ (9,377 ) $ (17,830 ) $
(20,546 ) Unrealized gains on derivatives, net (3,796 )
(1,381 ) (7,763 ) (3,843 ) Non-GAAP other
expense, net $ (12,063 ) $ (10,758 ) $ (25,593 ) $ (24,389 )
Table of Reconciliation from GAAP Provision for
Income Taxes to Non-GAAP Provision for Income Taxes
GAAP provision for income taxes $ 3,141 $ 2,850 $ 5,212 $
7,118 Non-cash tax adjustments (948 ) (146 )
143 (940 ) Non-GAAP provision for income taxes $
2,193 $ 2,704 $ 5,355 $ 6,178
Table of Reconciliation from GAAP Net Income
(Loss) Attributable to Verint Systems Inc. Common Shares to
Non-GAAP Net Income Attributable to Verint Systems Inc. Common
Shares
GAAP net income (loss) attributable to Verint Systems Inc.
common shares $ 7,921 $ (1,808 ) $ (11,690 ) $ 14,564 Amortization
of acquired technology and backlog 2,220 1,977 4,453 4,076
Amortization of other acquired intangible assets 5,338 5,586 10,677
11,516 Restructuring costs - 9 - 22 Stock-based compensation
expenses 8,035 13,138 26,004 19,694 Other adjustments 864 - 1,371 -
Expenses related to our filing delay 6,067 10,220 26,280 16,782
Unrealized gains on derivatives, net (3,796 ) (1,381 ) (7,763 )
(3,843 ) Non-cash tax adjustments 948 146
(143 ) 940 Non-GAAP net income
attributable to Verint Systems Inc. common shares $ 27,597 $
27,887 $ 49,189 $ 63,751
Table Comparing GAAP Diluted Net Income (Loss)
Per Share Attributable to Verint Systems Inc. to Non-GAAP Diluted
Net Income Per Share Attributable to Verint Systems Inc.
GAAP diluted net income (loss) per share $ 0.23 $
(0.06 ) $ (0.35 ) $ 0.45 Non-GAAP diluted net income
per share $ 0.69 $ 0.73 $ 1.25 $ 1.66
Shares used in computing GAAP diluted net income (loss) per
share (in thousands) 35,006 32,465
32,972 32,606 Shares used in
computing non-GAAP diluted net income per share (in thousands)
45,178 42,682 45,071
42,346 Table 3 Verint Systems Inc. and
Subsidiaries Segment Revenue (Unaudited) (In thousands)
Three Months Ended July
31, Six Months Ended July 31, 2010 2009 2010 2009 Revenue By
Segment Workforce Optimization Segment $ 94,795 $ 88,289 $ 191,675
$ 173,603 Video Intelligence Segment 37,060 40,885 68,605
82,563 Communications Intelligence Segment 48,821
40,095 93,009 88,251 Total Video and Communications
Intelligence 85,881 80,980 161,614 170,814
Total Revenue $ 180,676 $ 169,269 $ 353,289 $ 344,417
Table 4 Verint Systems Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (Unaudited) (In thousands, except share
and per share data)
July 31,2010
January 31,2010
Assets Current Assets: Cash and cash
equivalents $ 128,199 $ 184,335 Restricted cash and bank time
deposits 14,893 5,206 Accounts receivable, net 132,553 127,826
Inventories 16,271 14,373 Deferred cost of revenue 8,536 11,232
Prepaid expenses and other current assets 59,263
64,554
Total current assets 359,715
407,526 Property and equipment, net 22,683
24,453 Goodwill 733,046 724,670 Intangible assets, net 164,716
173,833 Capitalized software development costs, net 7,148 8,530
Deferred cost of revenue 25,702 33,019 Other assets 29,134
24,306
Total assets $
1,342,144 $ 1,396,337
Liabilities, Preferred Stock, and Stockholders' Equity
(Deficit) Current Liabilities: Accounts payable $ 45,923
$ 46,570 Accrued expenses and other liabilities 153,311 155,422
Current maturities of long-term debt - 22,678 Deferred revenue
153,203 183,719 Liabilities to affiliates 1,751
1,709
Total current liabilities 354,188
410,098 Long-term debt 598,234 598,234
Deferred revenue 44,724 51,412 Other liabilities 57,814
65,618
Total liabilities
1,054,960 1,125,362
Preferred Stock - $0.001 par
value; authorized 2,500,000 shares. Series Aconvertible preferred
stock; 293,000 shares issued and outstanding;aggregate liquidation
preference and redemption value of $332,196 at July31, 2010.
285,542 285,542
Commitments and
Contingencies Stockholders' Equity (Deficit):
Common stock - $0.001 par value;
authorized 120,000,000 shares. Issued34,911,000 and 32,687,000
shares, respectively; outstanding 34,651,000and 32,584,000 shares,
as of July 31, 2010 and January 31, 2010,respectively.
35 33 Additional paid-in capital 478,031 451,166
Treasury stock, at cost - 260,000
and 103,000 shares as of July 31, 2010and January 31, 2010,
respectively.
(6,639 ) (2,493 ) Accumulated deficit (425,071 ) (420,338 )
Accumulated other comprehensive loss (46,432 )
(43,134 )
Total Verint Systems Inc. stockholders' deficit
(76 ) (14,766 ) Noncontrolling interest 1,718
199
Total liabilities stockholders' equity (deficit)
1,642 (14,567 )
Total liabilities,
preferred stock, and stockholders' equity (deficit) $
1,342,144 $ 1,396,337
Table 5 Verint Systems Inc. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Six Months Ended July 31, 2010 2009
Cash flows from operating activities: Net income
(loss) $ (3,225 ) $ 22,054
Adjustments to reconcile net
income (loss) to net cash provided by
operatingactivities:
Depreciation and amortization 23,952 25,507 Stock-based
compensation 15,636 15,532 Non-cash losses on derivative financial
instruments, net 3,347 7,035 Other non-cash items, net 867 (1,816 )
Changes in operating assets and liabilities, net of effects of
business combinations: Accounts receivable (5,447 ) (2,513 )
Inventories (2,124 ) 3,430 Deferred cost of revenue 9,273 6,165
Accounts payable and accrued expenses (3,798 ) (11,321 ) Deferred
revenue (33,273 ) (518 ) Prepaid expenses and other assets 2,936
(8,759 ) Other, net (2,632 ) (2,616 )
Net cash
provided by operating activities 5,512
52,180
Cash flows from investing activities:
Cash paid for business
combination, net of cash acquired, and payments of
contingentconsideration associated with business combinations in
prior periods
(15,292 ) (96 ) Purchases of property and equipment (3,550 ) (2,019
) Settlements of derivative financial instruments not designated as
hedges (11,997 ) (8,261 ) Cash paid for capitalized software
development costs (858 ) (1,258 ) Other investing activities
(9,720 ) 223
Net cash used in investing
activities (41,417 ) (11,411 )
Cash
flows from financing activities: Repayments of borrowings and
other financing obligations (22,679 ) (5,988 ) Proceeds from
exercises of stock 11,650 - Dividends paid to noncontrolling
interest - (2,142 ) Purchases of treasury stock (4,146 ) - Other
financing activities (3,688 ) (202 )
Net cash used
in financing activities (18,863 ) (8,332 )
Effect of exchange rate changes on cash and cash equivalents
(1,368 ) 5,349
Net increase (decrease) in
cash and cash equivalents (56,136 ) 37,786
Cash and cash
equivalents, beginning of period 184,335
115,928
Cash and cash equivalents, end of period $
128,199 $ 153,714
Supplemental disclosures
of cash flow information: Cash paid for interest $ 10,236
$ 13,184 Cash paid for income taxes $ 3,244 $
4,991
Non-cash investing and financing transactions:
Accrued but unpaid purchases of property and equipment $ 936
$ 329 Inventory transfers to property and equipment $ 87
$ 347 Stock options exercised, proceeds received
subsequent to period end $ 285 $ - Accrued but unpaid
debt fees $ 310 $ - Supplier financing arrangements $
1,480 $ -
Verint Systems Inc. and
SubsidiariesSupplemental Information About Non-GAAP
Measures
This press release contains non-GAAP financial measures. Table 2
includes a reconciliation of each non-GAAP financial measure
presented in this press release to the most directly comparable
GAAP financial measure. Non-GAAP financial measures should not be
considered in isolation or as a substitute for 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 the adjustments made in these
non-GAAP financial measures.
We believe that the non-GAAP financial measures we present
provide meaningful supplemental information regarding our operating
results primarily because they exclude certain non-cash charges or
items that we do not believe are reflective of our ongoing
operating results when budgeting, planning and forecasting,
determining compensation, and when assessing the performance of our
business with our individual operating segments or our senior
management. We believe that these non-GAAP financial measures also
facilitate the comparison by management and investors of results
between periods and among our peer companies. However, those
companies may calculate similar non-GAAP financial measures
differently than we do, limiting their usefulness as comparative
measures.
Adjustments to Non-GAAP
Measures
Amortization of acquired intangible assets, including acquired
technology and backlog. When we acquire an entity, we are required
under GAAP to record the fair value of the intangible assets of the
acquired entity and amortize them over their useful lives. We
exclude the amortization of acquired intangible assets, including
acquired technology and backlog, from our non-GAAP financial
measures. These expenses are excluded from our non-GAAP financial
measures because they are non-cash charges. In addition, these
amounts are inconsistent in amount and frequency and are
significantly impacted by the timing and size of acquisitions.
Thus, we also exclude these amounts to provide better comparability
of pre- and post-acquisition operating results.
Restructuring costs. We exclude from our non-GAAP financial
measures expense associated with the restructuring of our
operations due to internal or external market factors. These
expenses are excluded from our non-GAAP financial measures because
we believe that they are not reflective of our ongoing
operations.
Stock-based compensation expenses. We exclude stock-based
compensation expenses related to stock options, restricted stock
awards, and units and phantom stock from our non-GAAP financial
measures. These expenses are excluded from our non-GAAP financial
measures because they are primarily non-cash charges. In recent
periods we also incurred significant cash-settled stock
compensation due to our extended filing delay and restrictions on
our ability to issue new shares to our employees.
Other adjustments. We exclude from our non-GAAP financial
measures legal and other professional fees associated with
acquisitions and certain extraordinary transactions. These expenses
are excluded from our non-GAAP financial measures because we
believe that they are not reflective of our ongoing operations.
Expenses related to our filing delay. We exclude from our
non-GAAP financial measures expenses associated with our
restatement of previously filed financial statements and our
extended filing delay. These expenses included professional fees
and related expenses as well as expenses associated with a special
cash retention program. These expenses are excluded from our
non-GAAP financial measures because we believe that they are not
reflective of our ongoing operations.
Unrealized gains on derivatives, net. We exclude from our
non-GAAP financial measures unrealized gains on interest rate swaps
and foreign currency derivatives. These gains are excluded from our
non-GAAP financial measures because they are non-cash gains.
Non-cash tax adjustments. Non-cash tax adjustments represent the
difference between the amount of taxes we actually paid and our
GAAP tax provision on an annual basis. On a quarterly basis, this
adjustment reflects our expected annual effective tax rate on a
cash basis.
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