Company Says Nominations Not Warranted Given
Strong Business Momentum Driven by Current Board
Chairman Issues Letter Highlighting Operational
and Financial Performance; Discusses Growth Strategy
Verint® Systems Inc. (Nasdaq:VRNT) today
announced that it has filed a preliminary proxy statement with the
Securities and Exchange Commission disclosing that Neuberger
Berman, a Verint stockholder holding approximately 2.6% of the
Company’s outstanding shares, has nominated three board candidates
for election at Verint’s 2019 Annual Meeting of Stockholders.
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the full release here:
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Annual Revenue (Graphic: Business
Wire)
In response to the nominations, Verint issued the below
statement. The Company also issued a letter from its Chairman to
stockholders that outlines the strong performance of the Company
and its growth strategy (see letter below).
“Over the last two years, Verint’s Board has developed a new
growth strategy centered on accelerating our pace of innovation in
cloud and automation. This strategy has driven strong financial
performance, including accelerating revenue growth with expanding
margins, and the Board believes the strategy will continue to
deliver significant growth. This momentum is driving strong
shareholder returns with Verint’s stock price increasing
approximately 56% over the last 12 months – strongly outperforming
both the Russell 2000 and NASDAQ indices, which have increased 5%
and 15%, respectively, over the same period. Given this momentum,
the Board believes that Neuberger Berman’s nomination of directors
is demonstrably unwarranted.”
“We believe our Board, which is comprised of eight highly
qualified individuals with a balance of experiences and skills, is
highly capable of evaluating strategic decisions and providing
management oversight to ensure we maximize the Company’s potential.
Verint continuously assesses the composition of the Board, and in
just the last three years we have added three new directors,
including one Board member who was added in 2017 at the
recommendation of Neuberger Berman. We are committed to continuing
to refresh our Board with qualified directors focused on driving
incremental shareholder value, including with candidates proposed
by our stockholders, but we are doing this as part of a long-term
and orderly process to find the best candidates.”
The Board has carefully reviewed Neuberger Berman’s candidates,
and determined that none of these candidates’ skills are additive
to the current Board.
Verint’s preliminary proxy, which includes information relating
to its interactions with Neuberger Berman, is available at
http://www.sec.gov.
Jones Day is acting as legal advisor to Verint.
Letter from our Chairman
April 9, 2019
Dear Verint Stockholder:
As we discussed during our earnings call in March, I am pleased
with our accelerating revenue growth and expanding margins both on
a GAAP and non-GAAP basis for the year ended January 31, 2019 (“FYE
19”), overachieving both our internal goals for key performance
metrics and our guidance for both revenue and EPS. I am also
pleased with our GAAP cash from operations of $215 million, a 22%
year-over-year increase. With the momentum we experienced
throughout last year and improving visibility, we recently raised
our guidance for the second time for the year ending January 31,
2020 (“FYE 20”). We believe that our overachievement, as well as
our improved guidance, reflect the successful execution of the
growth strategy we started to implement approximately two years
ago. This growth strategy -- which we have been sharing with
investors in our regular quarterly earning calls -- has been
focused on accelerating our pace of innovation while simultaneously
creating greater operational agility across Verint.
Accelerating our Pace of
Innovation
We estimate the size of our Actionable Intelligence market to be
approximately $10 billion and growing at a double-digit rate. With
about 2,000 R&D professionals, we believe we have one of the
strongest Actionable Intelligence R&D teams in the industry.
And, by leveraging that team, we have increased the pace of our
innovation in automation and cloud, differentiating Verint as the
vendor of choice in our market. Our Actionable Intelligence
platform is backed by close to 1,000 patents and applications
worldwide across data capture, unstructured data analytics,
artificial intelligence, and automation. We believe the strength of
our platform and the investments we have made in automation and
cloud are behind our momentum and improved outlook.
Actionable Intelligence for a Smarter
World
In our Customer Engagement segment, I am pleased with our
continued momentum, particularly in the areas of automation and
cloud. Our strategy is to leverage our Actionable Intelligence
platform to help organizations, simplify, modernize, and automate
their customer engagement operations. We believe the market is at
an inflection point looking for new automation technology to
elevate customer experience while reducing operating costs. Our
broad portfolio brings automation across the enterprise, makes
employees more productive, enables an emerging hybrid workforce in
which humans and robots work together, and captures the voice of
the customer distilling it into actionable insights.
As we discussed during our recent earnings call, our cloud
growth accelerated last year and, we expect non-GAAP cloud revenue
in the current year to increase to nearly $250 million. Based on
our cloud leadership, increased market cloud adoption, the level of
growth we have recently achieved, and the potential for our
installed base to migrate to the cloud, we are targeting strong
non-GAAP cloud revenue growth over the next three years with a
compound annual growth rate (CAGR) of 30-40%. With a broad and
highly scalable customer engagement portfolio offered in the cloud,
Verint is well positioned to address the needs of both large
enterprise and SMB customers. Our strong customer relationships
drive high renewal rates and the opportunity to land and expand
with our broad portfolio. In addition to our success in the
enterprise market, we see an opportunity for growth in the SMB
market and have expanded our partner program with a growing set of
cloud partners that sell our products to both SMB and enterprise
customers. For FYE 20, as we discussed during our recent earnings
call, we expect continued momentum with 10% non-GAAP revenue growth
and margin expansion in our Customer Engagement segment driven by
strong cloud growth.
Actionable Intelligence for a Safer
World
In our Cyber Intelligence segment, I am also pleased with our
continued momentum, particularly with the progress we have made in
our transition to more of a software business model, driving
significant margin expansion. Our strategy is to leverage our
Actionable Intelligence platform to introduce advanced data mining
software that can further automate and shorten the investigative
processes for our customers, reducing dependency on large numbers
of intelligence analysts and data scientists.
Today, we offer organizations a broad solution portfolio across
three security domains: cyber intelligence, cyber security, and
situational intelligence. Over the last two years, we have invested
to transition our cyber intelligence segment to more of a software
business model. As we discussed during our recent earnings call, we
have already achieved accelerating adjusted EBITDA margin
improvement over the last two years, and over the next three years,
we are targeting an additional five percentage points of margin
expansion. We now have more than 1,000 customers globally,
including a diversified set of 400 government agencies across more
than 100 countries, and 600 enterprise customers across many
verticals, such as telecom service providers, financial services,
retail, and critical infrastructure. For FYE20, as we discussed
during our recent earnings call, we expect continued momentum with
10% non-GAAP revenue growth and margin expansion in our cyber
intelligence segment driven by our on-going transition to more of a
software business model.
Well Positioned for Sustained Growth
and Market Leadership
As I noted above, we believe our results and overachievement
reflect the successful execution of the growth strategy that we
launched approximately two years ago. With this strategy we have
accelerated our pace of innovation to further differentiate Verint
in a market that is increasingly embracing Actionable Intelligence
solutions. We are experiencing momentum driven by automation and
cloud adoption and recently provided investors with additional
metrics that we are using to track our progress. Looking ahead, we
believe that our addressable market is growing at a double-digit
rate and that we are well positioned for sustained growth and
market leadership.
Enhanced Stockholder
Engagement
From a corporate governance perspective, we further enhanced the
stockholder engagement program that we initiated in the prior year,
deepening the level of engagement we had with our stockholders on
strategy, compensation, and governance related topics. We greatly
value the feedback we receive from our stockholders through this
process and incorporate their input. Finally, we continued to
refresh the composition of our Board of Directors with another new
director in 2018, our third new director in three years.
On behalf of the Board of Directors, I would
like to express our appreciation for your continued support of
Verint.
Sincerely,
Dan Bodner
Chairman and Chief Executive Officer
SUPPLEMENTAL INFORMATION REGARDING NON-GAAP FINANCIAL
MEASURES
This document contains non-GAAP financial measures and non-GAAP
forward looking statements. The tables below reconcile the non-GAAP
financial measures to the most directly comparable financial
measures prepared in accordance with Generally Accepted Accounting
Principles (“GAAP”).
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP, and may be different from non-GAAP financial
measures used by other companies. In addition, non-GAAP financial
measures have limitations in that they do not reflect all of the
amounts associated with our results of operations as determined in
accordance with GAAP.
Year Ended January 31, (in thousands)
2019 2018 2017
Segment
Revenue
GAAP Revenue by Segment Customer Engagement $ 796,287
$ 740,067 $ 705,897 Cyber Intelligence 433,460 395,162
356,209
GAAP Total Revenue $ 1,229,747
$ 1,135,229 $ 1,062,106
Revenue Adjustments Customer Engagement $ 15,059 $ 14,971 $
10,266 Cyber Intelligence 293 258 324
Total Revenue
Adjustments $ 15,352 $
15,229 $ 10,590 Non-GAAP Revenue by
Segment Customer Engagement $ 811,346 $ 755,038 $ 716,163 Cyber
Intelligence 433,753 395,420 356,533
Non-GAAP Total
Revenue $ 1,245,099 $
1,150,458 $ 1,072,696 Year
Ended January 31, (in thousands)
2019 2018
Table of Reconciliation from GAAP Cloud Revenue to
Non-GAAP Cloud Revenue
Customer
Engagement
Cloud revenue - GAAP $ 150,743 $
122,043 Estimated revenue adjustments 14,690 12,976
Cloud
revenue - non-GAAP $ 165,433 $
135,019
Financial Outlook for FY2020 (Year
Ending January 31, 2020)
Our non-GAAP outlook for revenue and EPS for the year ending
January 31, 2020 is as follows:
- Revenue: Increasing by $25 million to
$1.37 billion with a range of +/- 2%
- Reflects 10% year-over-year growth
- EPS: Increasing by 10 cents to $3.60 at
the midpoint of our revenue guidance
- Reflects 12% year-over-year growth
Our non-GAAP outlook for the year ending January 31, 2020
excludes the following GAAP measures which we are able to quantify
with reasonable certainty:
- Amortization of intangible assets of
approximately $56 million for the year ending January 31,
2020.
- Amortization of discount on convertible
notes of approximately $12 million for the year ending January 31,
2020.
Our non-GAAP outlook for the year ending January 31, 2020
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 $21 million and $25 million for the year
ending January 31, 2020.
- Stock-based compensation is expected to
be between approximately $66 million and $70 million for the year
ending January 31, 2020, assuming market prices for our common
stock approximately consistent with current levels.
Our non-GAAP outlook 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 year
ended January 31, 2019 and 2018 for the GAAP measures excluded from
our non-GAAP outlook appear in Table 3 to our earnings press
release filed on March 27, 2019.
About Verint Systems Inc.
Verint® (Nasdaq: VRNT) is a global leader in Actionable
Intelligence® solutions with a focus on customer engagement
optimization and cyber intelligence. Today, over 10,000
organizations in more than 180 countries—including over 85 percent
of the Fortune 100—count on intelligence from Verint solutions to
make more informed, effective and timely decisions. Learn more
about how we’re creating A Smarter World with Actionable
Intelligence® at www.verint.com.
VERINT, ACTIONABLE INTELLIGENCE, THE CUSTOMER ENGAGEMENT
COMPANY, NEXT IT, FORESEE, OPINIONLAB, KIRAN ANALYTICS, TERROGENCE,
SENSECY, CUSTOMER ENGAGEMENT SOLUTIONS, CYBER INTELLIGENCE
SOLUTIONS, EDGEVR, RELIANT, VANTAGE, STAR-GATE, SUNTECH, and VIGIA
are trademarks or registered trademarks of Verint Systems Inc. or
its subsidiaries. Other trademarks mentioned are the property of
their respective owners.
Important Information
In connection with its 2019 Annual Meeting, Verint Systems Inc.
(“Verint”) has filed a preliminary proxy statement and other
documents, and will file a definitive proxy statement, with the
Securities and Exchange Commission (“SEC”). Verint will mail
solicitation materials, including a WHITE proxy card, to
stockholders of record entitled to vote at the 2019 Annual Meeting.
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER
RELEVANT DOCUMENTS FILED BY VERINT WITH THE SEC IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Stockholders will be able to obtain free copies of
these documents through the website maintained by the SEC at
http://www.sec.gov and through the website maintained by Verint at
http://www.verint.com/investor-relations.
Certain Information Regarding Participants
Verint, its directors and certain of its officers and other
employees will be deemed to be participants in the solicitation of
Verint’s stockholders in connection with Verint’s 2019 Annual
Meeting. Information regarding the names, affiliations and direct
and indirect interests (by security holdings or otherwise) of these
persons is set forth in the proxy statement filed with the SEC in
connection with Verint’s 2019 Annual Meeting. Additional
information regarding the interests of participants of Verint in
the solicitation of proxies in respect of Verint’s 2019 Annual
Meeting will be filed with the SEC when they become available.
Stockholders will be able to obtain a free copy of the proxy
statement and other documents filed by Verint with the SEC from the
sources listed above.
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 risks, uncertainties and assumptions, any of which could
cause actual results to differ materially from those expressed in
or implied by the forward-looking statements. For a detailed
discussion of these risk factors, see our Annual Report on Form
10-K for the fiscal year ended January 31, 2019, and other filings
we make with the SEC. The forward-looking statements contained in
this press release are made as of the date of this press release
and, except as required by law, Verint assumes no obligation to
update or revise them or to provide reasons why actual results may
differ.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190409005675/en/
InvestorAlan RodenVerint Systems
Inc.alan.roden@verint.com
MediaJim Barron/David MillarSard Verbinnen & Co.212
687 8080
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