Strong Fourth Quarter Results for Both Customer Engagement and
Cyber Intelligence (now Cognyte)
Verint Becomes Pure-Play Customer Engagement Company Following
Completion of Cognyte Spin
Customer Engagement Cloud Growth Accelerates in Q4; Raising
Outlook for FYE 22 Cloud Revenue Growth
Verint® (Nasdaq: VRNT), The Customer Engagement Company™,
today announced results for the three months and year ended January
31, 2021 (FYE 2021), including both Customer Engagement and Cyber
Intelligence. Revenue for the three months ended January 31, 2021
was $349 million on a GAAP basis and $351 million on a non-GAAP
basis. For the three months ended January 31, 2021, net loss per
share was ($0.34) on a GAAP basis, and diluted EPS was $0.98 on a
non-GAAP basis. Revenue for the year ended January 31, 2021 was
$1,274 million on a GAAP basis and $1,288 million on a non-GAAP
basis. For the year ended January 31, 2021, net loss per share was
($0.23) on a GAAP basis, and diluted EPS was $3.60 on a non-GAAP
basis. Cash flow from operations for the year was $253.8 million
compared to $237.9 million in the prior year.
“On February 1st, we completed the spin-off of our Cyber
Intelligence business into an independent public company called
Cognyte Software Ltd. (Nasdaq: CGNT). Following the spin, we are
now a pure play customer engagement company well-positioned with a
differentiated cloud platform and extensive resources – including
approximately 4,300 professionals worldwide – focused on helping
brands provide Boundless Customer Engagement™,” said Dan Bodner,
CEO.
Customer Engagement Q4
Highlights
- Large Cloud Wins Across Multiple Industries (TCV):
Including orders for $13 million (financial services), $8 million
(insurance), $7 million (banking), $7 million (consumer services),
$4 million (home services), $4 million (healthcare) and $4 million
(business services)
- Strong Cloud Revenue Growth: Cloud revenue up more than
30% year-over-year
- Strong Cloud Bookings Growth: New Perpetual License
Equivalents (PLE) bookings up 15% year-over-year with approximately
half of PLE bookings derived from SaaS
- Improving Visibility: Exited the year with strong cloud
momentum driving remaining performance obligations (RPO) to $636
million, representing backlog growth of 29% year-over-year
Bodner continued, “We are pleased with our strong performance in
Q4 across all key cloud metrics, our many competitive cloud wins
and finishing the year ahead of guidance. We believe that behind
our strong cloud momentum is our open cloud platform, expanding
partner network and our strategy to help brands with their digital
transformations. The momentum we experienced in the second half of
last year increases our confidence and we are raising our outlook
for the current year for cloud revenue growth to a range of 30% to
35%.”
Cyber Intelligence Q4
Highlights
- GAAP Revenue: $124.0 million for the quarter and $443.5 million
for the year
- Non-GAAP Revenue: $124.6 million for the quarter and $447.0
million for the year
- GAAP Estimated Fully Allocated Operating Income: $4.9 million
for the quarter and $26.7 million for the year
- Estimated Fully Allocated Adjusted EBITDA: $23.8 million for
the quarter and $89.7 million for the year
Bodner concluded, “The Cyber Intelligence business, which was
part of Verint through the end of the last fiscal year, finished
the year strong. Cognyte announced today that they will review
their results for the year ended January 31, 2021 in an earnings
call to be scheduled for the second half of April. Verint’s results
for Cyber Intelligence reflect Verint’s accounting policies.
Cognyte has indicated that they expect their results to be slightly
different based on their application of accounting allocation
methodologies.”
New Stock Repurchase
Program
We are pleased to announce a new stock repurchase program in
which we will use a portion of our strong cashflow generation to
buy back stock. We plan to buy back up to the number of shares to
be issued under our incentive equity program each year.
FYE 2022 Outlook
Our non-GAAP outlook for the year ending January 31, 2022 is as
follows:
- Revenue: $860 million with a range of +/- 2%
- Cloud Revenue Growth: 30% to 35%
- Diluted EPS: $2.20 at the midpoint of our revenue guidance
Our non-GAAP outlook for the three months ended April 30, 2021
and 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 $12 million
and $45 million, for the three months ending April 30, 2021 and
year ending January 31, 2022, respectively.
- Amortization of discount on convertible notes of approximately
$3 million and $4 million, for the three months ending April 30,
2021 and year ending January 31, 2022, respectively.
Our non-GAAP outlook for the three months ending April 30, 2021
and 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 $1
million and $2 million, and $3 million and $4 million, for the
three months ending April 30, 2021 and year ending January 31,
2022, respectively.
- Stock-based compensation is expected to be between
approximately $15 million and $18 million, and $65 million and $75
million, for the three months ending April 30, 2021 and year ending
January 31, 2022, respectively, 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 $3 million and $5 million, and $8 million and
$12 million, for the three months ending April 30, 2021 and year
ending January 31, 2022, respectively.
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 three
months and year ended January 31, 2021 and 2020 for the GAAP
measures excluded from our non-GAAP outlook appear in Tables 2 and
3 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 months and year ended January 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 April 30,
2021. 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 7559326. 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 or 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; 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, 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; 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 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;
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, including, among others, with respect to
data privacy and protection, government contracts, anti-corruption,
trade compliance, tax, and labor matters, relating to our own
operations, the products and services that 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 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 significant 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 the issuance of preferred stock
to an affiliate of Apax Partners, including with respect to
completion of the second tranche of the investment and Apax's
significant ownership position and potential that its interests
will not be aligned with those of our common stockholders; and
risks associated with the recently completed spin-off of our 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, 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
January 31,
Year Ended January
31,
(in thousands, except per share data)
2021
2020
2021
2020
Revenue:
Product
$
127,029
$
124,337
$
406,254
$
454,875
Service and support
222,071
214,866
867,451
848,759
Total revenue
349,100
339,203
1,273,705
1,303,634
Cost of revenue:
Product
28,223
39,106
96,161
127,183
Service and support
78,145
75,037
300,528
312,599
Amortization of acquired technology
5,598
5,722
18,905
23,984
Total cost of revenue
111,966
119,865
415,594
463,766
Gross profit
237,134
219,338
858,111
839,868
Operating expenses:
Research and development, net
64,794
58,135
240,169
231,683
Selling, general and administrative
143,101
124,579
478,242
488,871
Amortization of other acquired intangible
assets
6,766
8,328
30,995
31,458
Total operating expenses
214,661
191,042
749,406
752,012
Operating income
22,473
28,296
108,705
87,856
Other (expense) income, net:
Interest income
416
1,103
2,808
5,620
Interest expense
(9,283)
(10,235)
(39,975)
(40,378)
Other (expense) income, net
(32,312)
(996)
(55,315)
205
Total other expense, net
(41,179)
(10,128)
(92,482)
(34,553)
(Loss) income before (benefit)
provision for income taxes
(18,706)
18,168
16,223
53,303
(Benefit) provision for income taxes
(160)
11,500
16,330
17,620
Net (loss) income
(18,546)
6,668
(107)
35,683
Net income attributable to noncontrolling
interests
1,376
1,799
7,160
6,999
Net (loss) income attributable to
Verint Systems Inc.
(19,922)
4,869
(7,267)
28,684
Dividends on preferred stock
(2,514)
—
(7,656)
—
Net (loss) income attributable to
Verint Systems Inc. common shares
$
(22,436)
$
4,869
$
(14,923)
$
28,684
Net (loss) income per common share
attributable to Verint Systems Inc.:
Basic
$
(0.34)
$
0.07
$
(0.23)
$
0.43
Diluted
$
(0.34)
$
0.07
$
(0.23)
$
0.43
Weighted-average common shares
outstanding:
Basic
65,753
65,994
65,173
66,129
Diluted
65,753
66,999
65,173
67,355
Table 2
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures by Segment
(Unaudited)
Three Months Ended
January 31,
2021
2020
(in thousands)
Customer Engagement
Cyber Intelligence
Consolidated
Customer Engagement
Cyber Intelligence
Consolidated
REVENUE
Total GAAP revenue
$
225,080
$
124,020
$
349,100
$
210,058
$
129,145
$
339,203
Revenue adjustments
1,781
547
2,328
4,702
5,557
10,259
Total non-GAAP revenue
$
226,861
$
124,567
$
351,428
$
214,760
$
134,702
$
349,462
ESTIMATED GROSS PROFIT AND GROSS
MARGIN
Segment products costs
$
10,089
$
16,369
$
26,458
$
9,710
$
26,694
$
36,404
Segment service expenses
57,682
18,732
76,414
54,377
16,642
71,019
Amortization of acquired technology
5,373
225
5,598
5,361
361
5,722
Stock-based compensation expenses (1)
270
79
349
2,301
679
2,980
Shared support expenses allocation (3)
2,058
1,089
3,147
2,438
1,302
3,740
Total GAAP estimated fully allocated
cost of revenue
75,472
36,494
111,966
74,187
45,678
119,865
GAAP estimated fully allocated gross
profit
149,608
87,526
237,134
135,871
83,467
219,338
GAAP estimated fully allocated gross
margin
66.5
%
70.6
%
67.9
%
64.7
%
64.6
%
64.7
%
Revenue adjustments
1,781
547
2,328
4,702
5,557
10,259
Amortization of acquired technology
5,373
225
5,598
5,361
361
5,722
Stock-based compensation expenses (1)
270
79
349
2,301
679
2,980
Acquisition expenses, net (4)
12
6
18
38
20
58
Restructuring expenses (4)
282
149
431
235
125
360
Separation expenses (4)
33
17
50
—
—
—
Impairment charges (4)
233
124
357
—
—
—
Non-GAAP estimated fully allocated
gross profit
$
157,592
$
88,673
$
246,265
$
148,508
$
90,209
$
238,717
Non-GAAP estimated fully allocated
gross margin
69.5
%
71.2
%
70.1
%
69.2
%
67.0
%
68.3
%
ESTIMATED RESEARCH AND DEVELOPMENT,
NET
Segment expenses
$
25,372
$
30,838
$
56,210
$
22,548
$
23,552
$
46,100
Stock-based compensation expenses (2)
879
465
1,344
2,935
1,566
4,501
Shared support expenses allocation (3)
4,735
2,505
7,240
4,913
2,621
7,534
GAAP estimated fully allocated research
and development, net
30,986
33,808
64,794
30,396
27,739
58,135
As a percentage of GAAP revenue
13.8
%
27.3
%
18.6
%
14.5
%
21.5
%
17.1
%
Stock-based compensation expenses (2)
(879)
(465)
(1,344)
(2,935)
(1,566)
(4,501)
Acquisition expenses, net (4)
(24)
(13)
(37)
(202)
(108)
(310)
Restructuring expenses (4)
(135)
(72)
(207)
(270)
(144)
(414)
Separation expenses (4)
(178)
(94)
(272)
—
—
—
Other adjustments (4)
(15)
(7)
(22)
—
—
—
Non-GAAP estimated fully allocated
research and development, net
$
29,755
$
33,157
$
62,912
$
26,989
$
25,921
$
52,910
As a percentage of non-GAAP
revenue
13.1
%
26.6
%
17.9
%
12.6
%
19.2
%
15.1
%
ESTIMATED SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Segment expenses
$
45,020
$
22,302
$
67,322
$
41,011
$
25,002
$
66,013
Stock-based compensation expenses (2)
5,529
3,623
9,152
12,390
6,614
19,004
Shared support expenses allocation (3)
44,031
22,596
66,627
25,794
13,768
39,562
GAAP estimated fully allocated selling,
general and administrative expenses
94,580
48,521
143,101
79,195
45,384
124,579
As a percentage of GAAP revenue
42.0
%
39.1
%
41.0
%
37.7
%
35.1
%
36.7
%
Stock-based compensation expenses (2)
(5,529)
(3,623)
(9,152)
(12,390)
(6,614)
(19,004)
Acquisition expenses, net (4)
(2,625)
(1,390)
(4,015)
(1,298)
(693)
(1,991)
Restructuring expenses (4)
(2,607)
(1,380)
(3,987)
(422)
(226)
(648)
Separation expenses (4)
(12,761)
(6,752)
(19,513)
(2,336)
(1,247)
(3,583)
Other adjustments (4)
(276)
(147)
(423)
(1,449)
(773)
(2,222)
Non-GAAP estimated fully allocated
selling, general and administrative expenses
$
70,782
$
35,229
$
106,011
$
61,300
$
35,831
$
97,131
As a percentage of non-GAAP
revenue
31.2
%
28.3
%
30.2
%
28.5
%
26.6
%
27.8
%
OPERATING INCOME, OPERATING MARGIN, AND
ADJUSTED EBITDA
GAAP estimated fully allocated
operating income
$
17,582
$
4,891
$
22,473
$
18,165
$
10,131
$
28,296
GAAP estimated fully allocated
operating margin
7.8
%
3.9
%
6.4
%
8.6
%
7.8
%
8.3
%
Revenue adjustments
1,781
547
2,328
4,702
5,557
10,259
Amortization of acquired technology
5,373
225
5,598
5,361
361
5,722
Amortization of other acquired intangible
assets
6,460
306
6,766
8,115
213
8,328
Stock-based compensation expenses (2)
6,678
4,167
10,845
17,626
8,859
26,485
Acquisition expenses, net (4)
2,661
1,409
4,070
1,538
821
2,359
Restructuring expenses (4)
3,024
1,601
4,625
927
495
1,422
Separation expenses (4)
12,972
6,863
19,835
2,336
1,247
3,583
Impairment charges (4)
233
124
357
—
—
—
Other adjustments (4)
291
154
445
1,449
773
2,222
Non-GAAP estimated fully allocated
operating income
57,055
20,287
77,342
60,219
28,457
88,676
Depreciation and amortization (5)
6,686
3,537
10,223
5,803
3,097
8,900
Estimated fully allocated adjusted
EBITDA
$
63,741
$
23,824
$
87,565
$
66,022
$
31,554
$
97,576
Non-GAAP estimated fully allocated
operating margin
25.1
%
16.3
%
22.0
%
28.0
%
21.1
%
25.4
%
Estimated fully allocated adjusted
EBITDA margin
28.1
%
19.1
%
24.9
%
30.7
%
23.4
%
27.9
%
Year Ended January
31,
2021
2020
(in thousands)
Customer Engagement
Cyber Intelligence
Consolidated
Customer Engagement
Cyber Intelligence
Consolidated
REVENUE
Total GAAP revenue
$
830,247
$
443,458
$
1,273,705
$
846,525
$
457,109
$
1,303,634
Revenue adjustments
10,336
3,569
13,905
26,675
5,708
32,383
Total non-GAAP revenue
$
840,583
$
447,027
$
1,287,610
$
873,200
$
462,817
$
1,336,017
ESTIMATED GROSS PROFIT AND GROSS
MARGIN
Segment products costs
$
34,518
$
56,519
$
91,037
$
35,455
$
83,291
$
118,746
Segment service expenses
218,919
68,499
287,418
226,555
70,768
297,323
Amortization of acquired technology
17,963
942
18,905
21,578
2,406
23,984
Stock-based compensation expenses (1)
4,159
1,215
5,374
6,318
1,866
8,184
Shared support expenses allocation (3)
8,410
4,450
12,860
10,125
5,404
15,529
Total GAAP estimated fully allocated
cost of revenue
283,969
131,625
415,594
300,031
163,735
463,766
GAAP estimated fully allocated gross
profit
546,278
311,833
858,111
546,494
293,374
839,868
GAAP estimated fully allocated gross
margin
65.8
%
70.3
%
67.4
%
64.6
%
64.2
%
64.4
%
Revenue adjustments
10,336
3,569
13,905
26,675
5,708
32,383
Amortization of acquired technology
17,963
942
18,905
21,578
2,406
23,984
Stock-based compensation expenses (1)
4,159
1,215
5,374
6,318
1,866
8,184
Acquisition expenses, net (4)
230
122
352
81
43
124
Restructuring expenses (4)
1,432
757
2,189
1,644
877
2,521
Separation expenses (4)
84
44
128
—
—
—
Impairment charges (4)
328
174
502
—
—
—
Non-GAAP estimated fully allocated
gross profit
$
580,810
$
318,656
$
899,466
$
602,790
$
304,274
$
907,064
Non-GAAP estimated fully allocated
gross margin
69.1
%
71.3
%
69.9
%
69.0
%
65.7
%
67.9
%
ESTIMATED RESEARCH AND DEVELOPMENT,
NET
Segment expenses
$
95,785
$
105,867
$
201,652
$
101,002
$
90,708
$
191,710
Stock-based compensation expenses (2)
6,237
3,299
9,536
8,754
4,672
13,426
Shared support expenses allocation (3)
18,954
10,027
28,981
17,309
9,238
26,547
GAAP estimated fully allocated research
and development, net
120,976
119,193
240,169
127,065
104,618
231,683
As a percentage of GAAP revenue
14.6
%
26.9
%
18.9
%
15.0
%
22.9
%
17.8
%
Stock-based compensation expenses (2)
(6,237)
(3,299)
(9,536)
(8,754)
(4,672)
(13,426)
Acquisition expenses, net (4)
(313)
(166)
(479)
(546)
(292)
(838)
Restructuring expenses (4)
(1,119)
(592)
(1,711)
(853)
(455)
(1,308)
Separation expenses (4)
(239)
(127)
(366)
—
—
—
Other adjustments (4)
(22)
(11)
(33)
—
—
—
Non-GAAP estimated fully allocated
research and development, net
$
113,046
$
114,998
$
228,044
$
116,912
$
99,199
$
216,111
As a percentage of non-GAAP
revenue
13.4
%
25.7
%
17.7
%
13.4
%
21.4
%
16.2
%
ESTIMATED SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Segment expenses
$
159,417
$
83,133
$
242,550
$
179,440
$
91,452
$
270,892
Stock-based compensation expenses (2)
30,624
16,899
47,523
39,829
21,259
61,088
Shared support expenses allocation (3)
123,519
64,650
188,169
102,293
54,598
156,891
GAAP estimated fully allocated selling,
general and administrative expenses
313,560
164,682
478,242
321,562
167,309
488,871
As a percentage of GAAP revenue
37.8
%
37.1
%
37.5
%
38.0
%
36.6
%
37.5
%
Stock-based compensation expenses (2)
(30,624)
(16,899)
(47,523)
(39,829)
(21,259)
(61,088)
Acquisition expenses, net (4)
(836)
(443)
(1,279)
(6,503)
(3,471)
(9,974)
Restructuring expenses (4)
(5,472)
(2,895)
(8,367)
(1,786)
(954)
(2,740)
Separation expenses (4)
(30,877)
(16,336)
(47,213)
(3,448)
(1,840)
(5,288)
Other adjustments (4)
508
268
776
(6,609)
(3,528)
(10,137)
Non-GAAP estimated fully allocated
selling, general and administrative expenses
$
246,259
$
128,377
$
374,636
$
263,387
$
136,257
$
399,644
As a percentage of non-GAAP
revenue
29.3
%
28.7
%
29.1
%
30.2
%
29.4
%
29.9
%
OPERATING INCOME, OPERATING MARGIN, AND
ADJUSTED EBITDA
GAAP estimated fully allocated
operating income
$
81,966
$
26,739
$
108,705
$
67,004
$
20,852
$
87,856
GAAP estimated fully allocated
operating margin
9.9
%
6.0
%
8.5
%
7.9
%
4.6
%
6.7
%
Revenue adjustments
10,336
3,569
13,905
26,675
5,708
32,383
Amortization of acquired technology
17,963
942
18,905
21,578
2,406
23,984
Amortization of other acquired intangible
assets
29,776
1,219
30,995
30,863
595
31,458
Stock-based compensation expenses (2)
41,020
21,413
62,433
54,901
27,797
82,698
Acquisition expenses, net (4)
1,379
731
2,110
7,130
3,806
10,936
Restructuring expenses (4)
8,023
4,244
12,267
4,283
2,286
6,569
Separation expenses (4)
31,200
16,507
47,707
3,448
1,840
5,288
Impairment charges (4)
328
174
502
—
—
—
Other adjustments (4)
(486)
(257)
(743)
6,609
3,528
10,137
Non-GAAP estimated fully allocated
operating income
221,505
75,281
296,786
222,491
68,818
291,309
Depreciation and amortization (5)
27,254
14,419
41,673
21,737
11,602
33,339
Estimated fully allocated adjusted
EBITDA
$
248,759
$
89,700
$
338,459
$
244,228
$
80,420
$
324,648
Non-GAAP estimated fully allocated
operating margin
26.4
%
16.8
%
23.0
%
25.5
%
14.9
%
21.8
%
Estimated fully allocated adjusted
EBITDA margin
29.6
%
20.1
%
26.3
%
28.0
%
17.4
%
24.3
%
(1) Represents the stock-based compensation expenses applicable
to cost of revenue, allocated approximately proportional to our
annual operations and service expense wages for each segment for
years ended January 31, 2020 and 2019, respectively, which we
believe provides a reasonable approximation for purposes of
understanding the relative GAAP and non-GAAP gross margins of the
two businesses.
(2) Represents the stock-based compensation expenses applicable
to research and development, net and selling, general and
administrative, allocated approximately proportional to our
non-GAAP segment revenue for the years ended January 31, 2020 and
2019, respectively, which we believe provides a reasonable
approximation for purposes of understanding the relative non-GAAP
operating margins of the two businesses.
(3) Represents our shared support expenses (as disclosed in
footnote 18 to our January 31, 2021 Form 10-K, when filed),
including general and administrative shared services acquisition
expenses, net and restructuring expenses, separation expenses,
impairment charges and other adjustments, allocated approximately
proportional to our non-GAAP segment revenue for the years ended
January 31, 2020 and 2019, respectively, which we believe provides
a reasonable approximation for purposes of understanding the
relative non-GAAP operating margins of the two businesses.
(4) Represents the portion of our acquisition expenses, net and
restructuring expenses, separation expenses, impairment charges and
other adjustments, allocated approximately proportional to our
annual non-GAAP segment revenue for the years ended January 31,
2020 and 2019, respectively, which we believe provides a reasonable
approximation for purposes of understanding the relative GAAP and
non-GAAP gross margins and operating margins of the two
businesses.
(5) Represents certain depreciation and amortization expenses,
which are otherwise included in our non-GAAP operating income,
allocated approximately proportional to our non-GAAP segment
revenue for the years ended January 31, 2020 and 2019,
respectively, which we believe provides a reasonable approximation
for purposes of understanding the relative adjusted EBITDA of the
two businesses.
Table 3
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited)
Three Months Ended
January 31,
Year Ended January
31,
(in thousands, except per share data)
2021
2020
2021
2020
Table of
Reconciliation from GAAP Other Expense, Net to Non-GAAP Other
Expense, Net
GAAP other expense, net
$
(41,179)
$
(10,128)
$
(92,482)
$
(34,553)
Unrealized losses on derivatives, net
357
—
1,115
1,485
Amortization of convertible note
discount
3,263
3,184
12,883
12,490
Expenses and losses on debt modification
or retirement
—
—
1,462
—
Change in fair value of future tranche
right
33,312
—
56,146
—
Acquisition expenses, net
14
(22)
(3,629)
(90)
Non-GAAP other expense, net(1)
$
(4,233)
$
(6,966)
$
(24,505)
$
(20,668)
Table of
Reconciliation from GAAP (Benefit) Provision for Income Taxes to
Non-GAAP Provision for Income Taxes
GAAP (benefit) provision for income
taxes
$
(160)
$
11,500
$
16,330
$
17,620
GAAP effective income tax rate
0.9
%
63.3
%
100.7
%
33.1
%
Non-GAAP tax adjustments
2,726
(5,911)
1,197
4,085
Non-GAAP provision for income
taxes
$
2,566
$
5,589
$
17,527
$
21,705
Non-GAAP effective income tax
rate
3.5
%
6.8
%
6.4
%
8.0
%
Table of
Reconciliation from GAAP Net (Loss) Income Attributable to Verint
Systems Inc. Common Shares to Non-GAAP Net Income Attributable to
Verint Systems Inc. Common Shares
GAAP net (loss) income attributable to
Verint Systems Inc. common shares
$
(22,436)
$
4,869
$
(14,923)
$
28,684
Revenue adjustments
2,328
10,259
13,905
32,383
Amortization of acquired technology
5,598
5,722
18,905
23,984
Amortization of other acquired intangible
assets
6,766
8,328
30,995
31,458
Stock-based compensation expenses
10,845
26,485
62,433
82,698
Unrealized losses on derivatives, net
357
—
1,115
1,485
Amortization of convertible note
discount
3,263
3,184
12,883
12,490
Expenses and losses on debt modification
or retirement
—
—
1,462
—
Change in fair value of future tranche
right
33,312
—
56,146
—
Acquisition expenses, net
4,084
2,339
(1,519)
10,846
Restructuring expenses
4,625
1,419
12,267
6,569
Separation expenses
19,835
3,583
47,707
5,288
Impairment charges
357
—
502
—
Other adjustments
445
2,222
(743)
10,137
Non-GAAP tax adjustments
(2,726)
5,911
(1,197)
(4,085)
Dividends, reversed due to assumed
conversion of preferred stock
2,514
—
7,656
—
Total adjustments
91,603
69,452
262,517
213,253
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
69,167
$
74,321
$
247,594
$
241,937
Table Comparing
GAAP Diluted Net (Loss) Income Per Common Share Attributable to
Verint Systems Inc. to Non-GAAP Diluted Net Income Per Common Share
Attributable to Verint Systems Inc.
GAAP diluted net (loss) income per common
share attributable to Verint Systems Inc.
$
(0.34)
$
0.07
$
(0.23)
$
0.43
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.
$
0.98
$
1.11
$
3.60
$
3.59
GAAP weighted-average shares used in
computing diluted net (loss) income per common share attributable
to Verint Systems Inc.
65,753
66,999
65,173
67,355
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
4,846
—
3,654
—
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.
70,599
66,999
68,827
67,355
Table of
Reconciliation from GAAP Net (Loss) Income Attributable to Verint
Systems Inc. to Adjusted EBITDA
GAAP net (loss) income attributable to
Verint Systems Inc.
$
(19,922)
$
4,869
$
(7,267)
$
28,684
As a percentage of GAAP revenue
(5.7)
%
1.4
%
(0.6)
%
2.2
%
Net income attributable to noncontrolling
interest
1,376
1,799
7,160
6,999
(Benefit) provision for income taxes
(160)
11,500
16,330
17,620
Other expense, net
41,179
10,128
92,482
34,553
Depreciation and amortization(2)
26,158
22,951
97,416
88,783
Revenue adjustments
2,328
10,259
13,905
32,383
Stock-based compensation expenses
10,845
26,485
62,433
82,698
Acquisition expenses, net
4,064
2,359
2,100
10,936
Restructuring expenses
4,629
1,421
12,267
6,567
Separation expenses
16,266
3,583
41,874
5,288
Impairment charges
357
—
502
—
Other adjustments
445
2,222
(743)
10,137
Adjusted EBITDA
$
87,565
$
97,576
$
338,459
$
324,648
As a percentage of non-GAAP
revenue
24.9
%
27.9
%
26.3
%
24.3
%
Table of
Reconciliation from Gross Debt to Net Debt
January 31, 2021
January 31, 2020
Current maturities of long-term debt
$
386,713
$
4,250
Long-term debt
402,781
832,798
Unamortized debt discounts and issuance
costs
7,518
22,327
Gross debt
797,012
859,375
Less:
Cash and cash equivalents
663,843
379,146
Restricted cash and cash equivalents, and
restricted bank time deposits
27,057
43,860
Short-term investments
51,013
20,215
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
55,099
416,154
Long-term restricted cash, cash
equivalents, time deposits and investments
15,712
26,363
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
39,387
$
389,791
(1) For the three months ended January 31, 2021, non-GAAP other
expense, net of $4.2 million was comprised of $6.0 million of
interest and other expense, net of $1.8 million of foreign exchange
gains primarily related to balance sheet translations.
(2) Adjusted for financing fee amortization.
Table 4
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Additional Information
Regarding Apax Series B Investment
(Unaudited)
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2021
2020
2021
2020
GAAP net (loss) income attributable to
Verint Systems Inc. common shares
$
(22,436)
$
4,869
$
(14,923)
$
28,684
Future tranche right revaluation (1)
33,312
—
56,146
—
Adjusted net income attributable to
Verint Systems Inc. common shares excluding future tranche right
revaluation
$
10,876
$
4,869
$
41,223
$
28,684
(1) In the year ended January 31, 2021, we recorded a non-cash
Future Tranche Right revaluation loss of $56.1 million. This
non-cash charge for the period relates to the mark-to-market
adjustment of the Future Tranche Right (right to purchase Series B
Preferred Stock by the Apax Investor at a future date), issued in
connection with the closing of the Series A Preferred Stock on May
7, 2020. The change in fair value was primarily due to a
significant increase in our stock price during the period. The
Future Tranche Right will be remeasured at each reporting period
until the redemption feature is exercised in connection with the
sale and issuance of the Series B Preferred Stock, which is
expected to occur during our first fiscal quarter ending April 30,
2021. Our diluted net income per share for the year ended January
31, 2021 would have been $0.85 higher without this non-cash
charge.
Table 5
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Customer
Engagement Revenue and Cloud Metrics
(Unaudited)
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2021
2020
2021
2020
Table of
Reconciliation from GAAP Software (includes cloud and support) and
Professional Services Revenue to Non-GAAP Software (includes cloud
and support) and Professional Services Revenue
Software (includes cloud and support)
revenue - GAAP
$
199,079
$
180,836
$
717,464
$
714,260
Perpetual revenue - GAAP
42,025
40,526
141,840
179,882
Cloud revenue - GAAP
85,966
61,234
277,411
220,477
Support revenue - GAAP
71,088
79,076
298,213
313,901
Professional services revenue -
GAAP
$
26,001
$
29,222
$
112,783
$
132,265
Total revenue - GAAP
$
225,080
$
210,058
$
830,247
$
846,525
Estimated software (includes cloud and
support) revenue adjustments
$
1,781
$
4,702
$
10,336
$
26,675
Estimated perpetual revenue
adjustments
—
—
—
—
Estimated cloud revenue adjustments
1,772
4,637
10,163
26,346
Estimated support revenue adjustments
9
65
173
329
Estimated professional services revenue
adjustments
—
—
—
—
Total estimated revenue
adjustments
$
1,781
$
4,702
$
10,336
$
26,675
Software (includes cloud and support)
revenue - non-GAAP
$
200,860
$
185,538
$
727,800
$
740,935
Perpetual revenue - non-GAAP
42,025
40,526
141,840
179,882
Cloud revenue - non-GAAP
87,738
65,871
287,574
246,823
Support revenue - non-GAAP
71,097
79,141
298,386
314,230
Professional services revenue -
non-GAAP
$
26,001
$
29,222
$
112,783
$
132,265
Total revenue - non-GAAP
$
226,861
$
214,760
$
840,583
$
873,200
Table of
Reconciliation from GAAP Cloud Revenue to Non-GAAP Cloud
Revenue
SaaS revenue - GAAP
$
69,851
$
46,715
$
217,952
$
163,943
Bundled SaaS revenue - GAAP
39,345
31,406
145,962
115,925
Unbundled SaaS revenue - GAAP (1)
30,506
15,309
71,990
48,018
Optional managed services revenue -
GAAP
$
16,115
$
14,519
$
59,459
$
56,534
Cloud revenue - GAAP
$
85,966
$
61,234
$
277,411
$
220,477
Estimated SaaS revenue
adjustments
$
1,546
$
4,267
$
9,165
$
24,464
Estimated bundled SaaS revenue
adjustments
1,503
4,225
8,988
23,500
Estimated unbundled SaaS revenue
adjustments
43
42
177
964
Estimated optional managed services
revenue adjustments
$
226
$
370
$
998
$
1,882
Estimated cloud revenue
adjustments
$
1,772
$
4,637
$
10,163
$
26,346
SaaS revenue - non-GAAP
$
71,397
$
50,982
$
227,117
$
188,407
Bundled SaaS revenue - non-GAAP
40,848
35,631
154,950
139,425
Unbundled SaaS revenue - non-GAAP (1)
30,549
15,351
72,167
48,982
Optional managed services revenue -
non-GAAP
$
16,341
$
14,889
$
60,457
$
58,416
Cloud revenue - non-GAAP
$
87,738
$
65,871
$
287,574
$
246,823
Table of New SaaS
ACV
New SaaS ACV
$
21,907
$
15,785
$
66,155
$
49,710
New SaaS ACV Growth YoY
38.8
%
35.4
%
33.1
%
71.0
%
Table of New
Perpetual License Equivalent Bookings
New perpetual license equivalent bookings
(2)
$
82,313
$
71,465
$
258,307
$
270,801
New perpetual license equivalent bookings
change YoY
15.2
%
(10.3)
%
(4.6)
%
5.3
%
(1) As our bookings mix has rapidly shifted to cloud, we are now
including support revenue associated with unbundled SaaS within
SaaS. In order to conform with this presentation, unbundled SaaS
revenue for the three months ended January 31, 2020 has been
updated to reflect $1.7 million and the years ended January 31,
2021 and 2020 has been updated to reflect $7.2 million and $4.7
million, respectively, of unbundled SaaS support revenue which had
previously been presented within support revenue.
(2) As our bookings mix has rapidly shifted to cloud, we are now
calculating the conversion factor based on the in-period mix. The
conversion factor was 2.0x, 1.9x and 1.9x for the years ended
January 31, 2019, 2020 and 2021, respectively. Historically, we
used in our dashboard a conversion factor of 2.0x which was based
on our historical mix and represented a good approximation.
Table 6
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Cyber
Intelligence Revenue Metrics
(Unaudited)
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2021
2020
2021
2020
Recurring revenue - GAAP
$
58,588
$
52,092
$
223,405
$
192,578
Nonrecurring revenue - GAAP
65,432
77,053
220,053
264,531
Total revenue - GAAP
$
124,020
$
129,145
$
443,458
$
457,109
Estimated recurring revenue
adjustments
$
547
$
471
$
3,569
$
622
Estimated nonrecurring revenue
adjustments
—
5,086
—
5,086
Total estimated revenue
adjustments
$
547
$
5,557
$
3,569
$
5,708
Recurring revenue - non-GAAP
$
59,135
$
52,563
$
226,974
$
193,200
Nonrecurring revenue - non-GAAP
65,432
82,139
220,053
269,617
Total revenue - non-GAAP
$
124,567
$
134,702
$
447,027
$
462,817
Table 7
VERINT SYSTEMS INC. AND
SUBSIDIARIES
GAAP to Non-GAAP Segment and
Shared Support Metrics
(Unaudited)
Three Months Ended
January 31,
Year Ended January
31,
(in thousands)
2021
2020
2021
2020
Segment expenses - GAAP (1)
$
245,120
$
249,479
$
908,112
$
981,507
Shared support expenses - GAAP (2)
81,507
61,428
256,888
234,271
Total expenses - GAAP
$
326,627
$
310,907
$
1,165,000
$
1,215,778
Estimated segment expense adjustments
$
(22,341)
$
(32,378)
$
(97,322)
$
(114,106)
Estimated shared support expense
adjustments
(30,201)
(17,740)
(76,855)
(56,963)
Total estimated expense
adjustments
$
(52,542)
$
(50,118)
$
(174,177)
$
(171,069)
Segment expenses - non-GAAP (1)
$
222,779
$
217,101
$
810,790
$
867,401
Shared support expenses - non-GAAP (2)
51,306
43,688
180,033
177,308
Total expenses - non-GAAP
$
274,085
$
260,789
$
990,823
$
1,044,709
(1) Segment expenses include expenses incurred directly by the
two historical segments.
(2) Shared support expenses include certain operating expenses
that are provided by shared resources or are otherwise generally
not controlled by segment management. The majority of which are for
administrative support functions, such as information technology,
human resources, finance, legal, and other general corporate
support, and for occupancy expenses.
Table 8
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Calculation of Change in
Revenue on a Constant Currency Basis
(Unaudited)
GAAP Revenue
Non-GAAP Revenue
(in thousands, except percentages)
Three Months Ended
Year Ended
Three Months Ended
Year Ended
Total Revenue
Revenue for the three months and year
ended January 31, 2020
$
339,203
$
1,303,634
$
349,462
$
1,336,017
Revenue for the three months and year
ended January 31, 2021
$
349,100
$
1,273,705
$
351,428
$
1,287,610
Revenue for the three months and year
ended January 31, 2021 at constant currency(1)
$
346,000
$
1,273,000
$
348,000
$
1,287,000
Reported period-over-period revenue
change
2.9
%
(2.3)
%
0.6
%
(3.6)
%
% impact from change in foreign currency
exchange rates
(0.9)
%
—
%
(1.0)
%
(0.1)
%
Constant currency period-over-period
revenue change
2.0
%
(2.3)
%
(0.4)
%
(3.7)
%
Customer Engagement
Revenue for the three months and year
ended January 31, 2020
$
210,058
$
846,525
$
214,760
$
873,200
Revenue for the three months and year
ended January 31, 2021
$
225,080
$
830,247
$
226,861
$
840,583
Revenue for the three months and year
ended January 31, 2021 at constant currency(1)
$
223,000
$
829,000
$
224,000
$
839,000
Reported period-over-period revenue
change
7.2
%
(1.9)
%
5.6
%
(3.7)
%
% impact from change in foreign currency
exchange rates
(1.0)
%
(0.2)
%
(1.3)
%
(0.2)
%
Constant currency period-over-period
revenue change
6.2
%
(2.1)
%
4.3
%
(3.9)
%
Cyber Intelligence
Revenue for the three months and year
ended January 31, 2020
$
129,145
$
457,109
$
134,702
$
462,817
Revenue for the three months and year
ended January 31, 2021
$
124,020
$
443,458
$
124,567
$
447,027
Revenue for the three months and year
ended January 31, 2021 at constant currency(1)
$
123,000
$
444,000
$
124,000
$
448,000
Reported period-over-period revenue
change
(4.0)
%
(3.0)
%
(7.5)
%
(3.4)
%
% impact from change in foreign currency
exchange rates
(0.8)
%
0.1
%
(0.4)
%
0.2
%
Constant currency period-over-period
revenue change
(4.8)
%
(2.9)
%
(7.9)
%
(3.2)
%
(1) Revenue for the three months and year ended January 31, 2021
at constant currency is calculated by translating current-period
GAAP or non-GAAP foreign currency revenue (as applicable) into U.S.
dollars using average foreign currency exchange rates for the three
months and year ended January 31, 2020 rather than actual
current-period foreign currency exchange rates.
For further information see "Supplemental Information About
Constant Currency" at the end of this press release.
Table 9
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Unaudited)
January 31,
(in thousands, except share and per share
data)
2021
2020
Assets
Current Assets:
Cash and cash equivalents
$
663,843
$
379,146
Restricted cash and cash equivalents, and
restricted bank time deposits
27,057
43,860
Short-term investments
51,013
20,215
Accounts receivable, net of allowance for
doubtful accounts of $6.2 million and $5.3 million,
respectively
381,158
382,435
Contract assets, net
57,033
64,961
Inventories
20,083
20,495
Prepaid expenses and other current
assets
77,555
87,946
Total current assets
1,277,742
999,058
Property and equipment, net
106,242
116,111
Operating lease right-of-use assets
88,889
102,149
Goodwill
1,485,590
1,469,211
Intangible assets, net
149,043
197,764
Deferred income taxes
14,489
13,802
Other assets
139,300
117,963
Total assets
$
3,261,295
$
3,016,058
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
76,975
$
71,604
Accrued expenses and other current
liabilities
311,706
229,698
Current maturities of long-term debt
386,713
4,250
Contract liabilities
388,045
397,350
Total current liabilities
1,163,439
702,902
Long-term debt
402,781
832,798
Long-term contract liabilities
38,539
40,565
Operating lease liabilities
79,886
90,372
Deferred income taxes
36,976
39,829
Other liabilities
51,641
67,155
Total liabilities
1,773,262
1,773,621
Commitments and Contingencies
Temporary Equity:
Preferred stock - $0.001 par value;
authorized 2,207,000; Series A Preferred Stock; 200,000 shares
issued and outstanding at January 31, 2021; no shares issued and
outstanding at January 31, 2020; aggregate liquidation preference
and current redemption value of $206,067 at January 31, 2021.
200,628
—
Equity component of currently redeemable
convertible notes
4,841
—
Total temporary equity
205,469
—
Stockholders' Equity:
Common stock - $0.001 par value;
authorized 120,000,000 shares. Issued 70,177,000 and 68,529,000;
outstanding 65,773,000 and 64,738,000 shares at January 31, 2021
and 2020, respectively
70
68
Additional paid-in capital
1,726,166
1,660,889
Treasury stock, at cost 4,404,000 and
3,791,000 shares at January 31, 2021 and 2020, respectively
(208,124)
(174,134)
Accumulated deficit
(113,797)
(105,590)
Accumulated other comprehensive loss
(136,878)
(151,865)
Total Verint Systems Inc. stockholders'
equity
1,267,437
1,229,368
Noncontrolling interests
15,127
13,069
Total stockholders' equity
1,282,564
1,242,437
Total liabilities, temporary equity,
and stockholders' equity
$
3,261,295
$
3,016,058
Table 10
VERINT SYSTEMS INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Year Ended January
31,
(in thousands)
2021
2020
Cash flows from operating
activities:
Net (loss) income
$
(107)
$
35,683
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
100,408
91,532
Provision for doubtful accounts
3,777
2,572
Stock-based compensation, excluding
cash-settled awards
62,289
82,698
Change in fair value of future tranche
right
56,146
—
Amortization of discount on convertible
notes
12,883
12,490
(Benefit) provision from deferred income
taxes
(3,735)
2,145
Non-cash losses (gains) on derivative
financial instruments, net
1,362
(599)
Other non-cash items, net
(8,188)
4,544
Changes in operating assets and
liabilities, net of effects of business combinations and
divestitures:
Accounts receivable
(2,288)
(6,894)
Contract assets
8,379
(1,470)
Inventories
(1,508)
1,752
Prepaid expenses and other assets
(16,736)
13,523
Accounts payable and accrued expenses
49,430
(14,488)
Contract liabilities
(11,332)
27,575
Other liabilities
902
(13,290)
Other, net
2,164
131
Net cash provided by operating
activities
253,846
237,904
Cash flows from investing
activities:
Cash paid for business combinations,
including adjustments, net of cash acquired
—
(74,096)
Purchases of property and equipment
(27,880)
(35,028)
Purchases of investments
(151,116)
(47,407)
Maturities and sales of investments
120,937
59,324
Settlements of derivative financial
instruments not designated as hedges
159
3,093
Cash paid for capitalized software
development costs
(12,444)
(17,222)
Change in restricted bank time deposits,
including long-term portion
31,238
(14,215)
Other investing activities
1,863
(250)
Net cash used in investing
activities
(37,243)
(125,801)
Cash flows from financing
activities:
Proceeds from issuance of preferred stock
and future tranche right, net of issuance costs
197,254
—
Proceeds from borrowings
155,000
45,000
Repayments of borrowings and other
financing obligations
(207,165)
(6,478)
Payments to repurchase convertible
notes
(13,032)
—
Payments of equity issuance, debt
issuance, and other debt-related costs
(2,287)
(212)
Dividends or distributions paid to
noncontrolling interests
(5,414)
(5,488)
Purchases of treasury stock
(36,836)
(113,690)
Preferred stock dividend payments
(1,589)
—
Payments of deferred purchase price and
contingent consideration for business combinations (financing
portion) and other financing activities
(13,998)
(30,454)
Net cash provided by (used in)
financing activities
71,933
(111,322)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(60)
(1,823)
Net increase (decrease) in cash, cash
equivalents, restricted cash, and restricted cash
equivalents
288,476
(1,042)
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of year
411,657
412,699
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of year
$
700,133
$
411,657
Reconciliation of cash, cash
equivalents, restricted cash, and restricted cash equivalents at
end of year to the consolidated balance sheets:
Cash and cash equivalents
$
663,843
$
379,146
Restricted cash and cash equivalents
included in restricted cash and cash equivalents, and restricted
bank time deposits
25,910
24,513
Restricted cash and cash equivalents
included in other assets
10,380
7,998
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
700,133
$
411,657
See notes to consolidated financial statements.
Verint Systems Inc. and Subsidiaries
Supplemental Information About Non-GAAP Financial Measures and
Operating Metrics
This press release contains non-GAAP financial measures,
consisting of non-GAAP revenue, non-GAAP software revenue (includes
cloud and support), non-GAAP perpetual revenue, non-GAAP support
revenue, non-GAAP professional services revenue, non-GAAP recurring
revenue, non-GAAP nonrecurring revenue, non-GAAP cloud revenue,
non-GAAP SaaS revenue, non-GAAP bundled SaaS revenue, non-GAAP
unbundled SaaS revenue, non-GAAP optional managed services revenue,
estimated GAAP fully allocated cost of revenue, estimated GAAP and
non-GAAP fully allocated gross profit and gross margins, estimated
GAAP and non-GAAP fully allocated research and development, net,
estimated GAAP and non-GAAP fully allocated selling, general and
administrative expenses, estimated GAAP and non-GAAP fully
allocated operating income and operating margins, non-GAAP other
income (expense), net, non-GAAP provision (benefit) for income
taxes and non-GAAP effective income tax rate, non-GAAP net income
attributable to Verint Systems Inc. common shares, non-GAAP diluted
net income per common share attributable to Verint Systems Inc.,
estimated fully allocated adjusted EBITDA and adjusted EBITDA
margins, net debt, additional information regarding Apax Series B
investment, non-GAAP segment expenses, non-GAAP shared support
expenses and constant currency measures. The tables above include a
reconciliation of each non-GAAP financial measure for completed
periods presented in this press release to the most directly
comparable GAAP financial measure.
We believe these non-GAAP financial measures, used in
conjunction with the corresponding GAAP measures, provide investors
with useful supplemental information about the financial
performance of our business by:
- facilitating the comparison of our financial results and
business trends between periods, by excluding certain items that
either can vary significantly in amount and frequency, are based
upon subjective assumptions, or in certain cases are unplanned for
or difficult to forecast,
- facilitating the comparison of our financial results and
business trends with other technology companies who publish similar
non-GAAP measures, and
- allowing investors to see and understand key supplementary
metrics used by our management to run our business, including for
budgeting and forecasting, resource allocation, and compensation
matters.
We also make these non-GAAP financial measures available because
a number of our investors have informed us that they find this
supplemental information useful.
Non-GAAP financial measures should not be considered in
isolation as substitutes for, or superior to, 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 or in addition to the adjustments
made in these non-GAAP financial measures. Other companies may
calculate similar non-GAAP financial measures differently than we
do, limiting their usefulness as comparative measures.
Our non-GAAP financial measures are calculated by making the
following adjustments to our GAAP financial measures:
Revenue adjustments. We exclude from our non-GAAP revenue the
impact of fair value adjustments required under GAAP relating to
cloud services and customer support contracts acquired in a
business acquisition, which would have otherwise been recognized on
a stand-alone basis. We believe that it is useful for investors to
understand the total amount of revenue that we and the acquired
company would have recognized on a stand-alone basis under GAAP,
absent the accounting adjustment associated with the business
acquisition. Our non-GAAP revenue also reflects certain adjustments
from aligning an acquired company’s revenue recognition policies to
our policies. We believe that our non-GAAP revenue measure helps
management and investors understand our revenue trends and serves
as a useful measure of ongoing business performance.
Amortization of acquired technology and other acquired
intangible assets. When we acquire an entity, we are required under
GAAP to record the fair values of the intangible assets of the
acquired entity and amortize those assets over their useful lives.
We exclude the amortization of acquired intangible assets,
including acquired technology, from our non-GAAP financial measures
because they are inconsistent in amount and frequency and are
significantly impacted by the timing and size of acquisitions. We
also exclude these amounts to provide easier comparability of pre-
and post-acquisition operating results.
Stock-based compensation expenses. We exclude stock-based
compensation expenses related to restricted stock awards, stock
bonus programs, bonus share programs, and other stock-based awards
from our non-GAAP financial measures. We evaluate our performance
both with and without these measures because stock-based
compensation is typically a non-cash expense and can vary
significantly over time based on the timing, size and nature of
awards granted, and is influenced in part by certain factors which
are generally beyond our control, such as the volatility of the
price of our common stock. In addition, measurement of stock-based
compensation is subject to varying valuation methodologies and
subjective assumptions, and therefore we believe that excluding
stock-based compensation from our non-GAAP financial measures
allows for meaningful comparisons of our current operating results
to our historical operating results and to other companies in our
industry.
Unrealized gains and losses on certain derivatives, net. We
exclude from our non-GAAP financial measures unrealized gains and
losses on certain foreign currency derivatives which are not
designated as hedges under accounting guidance. We exclude
unrealized gains and losses on foreign currency derivatives that
serve as economic hedges against variability in the cash flows of
recognized assets or liabilities, or of forecasted transactions.
These contracts, if designated as hedges under accounting guidance,
would be considered “cash flow” hedges. These unrealized gains and
losses are excluded from our non-GAAP financial measures because
they are non-cash transactions which are highly variable from
period to period. Upon settlement of these foreign currency
derivatives, any realized gain or loss is included in our non-GAAP
financial measures.
Amortization of convertible note discount. Our non-GAAP
financial measures exclude the amortization of the imputed discount
on our convertible notes. Under GAAP, certain convertible debt
instruments that may be settled in cash upon conversion are
required to be bifurcated into separate liability (debt) and equity
(conversion option) components in a manner that reflects the
issuer’s assumed non-convertible debt borrowing rate. For GAAP
purposes, we are required to recognize imputed interest expense on
the difference between our assumed non-convertible debt borrowing
rate and the coupon rate on our 1.50% convertible notes. This
difference is excluded from our non-GAAP financial measures because
we believe that this expense is based upon subjective assumptions
and does not reflect the cash cost of our convertible debt.
Expenses and losses on debt modification or retirement. We
exclude from our non-GAAP financial measures losses on early
retirements of debt attributable to refinancing or repaying our
debt, and expenses incurred to modify debt terms, because we
believe they are not reflective of our ongoing operations.
Change in fair value of future tranche right. On December 4,
2019, we entered into an Investment Agreement with an affiliate of
Apax Partners (the “Apax Investor”), whereby the Apax Investor
agreed to make an investment in us of up to $400.0 million of
convertible preferred stock. In connection with the Apax Investor’s
first $200.0 million investment on May 7, 2020 (for 200,000 shares
of Series A Preferred Stock), we determined that our obligation to
issue, and the Apax Investor’s obligation to purchase the Series B
Preferred Stock in connection with the completion of the spin-off
of our Cyber Intelligence Solutions business and other customary
closing conditions (the “Future Tranche Right”) meets the
definition of a freestanding financial instrument. This Future
Tranche Right is reported at fair value as an asset or liability on
our consolidated balance sheet and is remeasured at fair value each
reporting period until the settlement of the right (at the time of
issuance of the Series B Preferred Stock), with changes in its fair
value recognized as a non-cash charge or benefit within other
income (expense), net on the consolidated statement of operations.
We are excluding this change in fair value of the Future Tranche
Right from our non-GAAP financial measures because it is unusual in
nature, can vary significantly in amount, and is unrelated to our
ongoing operations.
Acquisition expenses, net. In connection with acquisition
activity (including with respect to acquisitions that are not
consummated), we incur expenses, including legal, accounting, and
other professional fees, integration costs, changes in the fair
value of contingent consideration obligations, and other costs.
Integration costs may consist of information technology expenses as
systems are integrated across the combined entity, consulting
expenses, marketing expenses, and professional fees, as well as
non-cash charges to write-off or impair the value of redundant
assets. We exclude these expenses from our non-GAAP financial
measures because they are unpredictable, can vary based on the size
and complexity of each transaction, and are unrelated to our
continuing operations or to the continuing operations of the
acquired businesses.
Restructuring expenses. We exclude restructuring expenses from
our non-GAAP financial measures, which include employee termination
costs, facility exit costs, certain professional fees, asset
impairment charges, and other costs directly associated with
resource realignments incurred in reaction to changing strategies
or business conditions. All of these costs can vary significantly
in amount and frequency based on the nature of the actions as well
as the changing needs of our business and we believe that excluding
them provides easier comparability of pre- and post-restructuring
operating results.
Separation expenses. On February 1, 2021, we completed the
spin-off of our Cyber Intelligence business into a separate,
independent publicly traded company, Cognyte Software Ltd. We have
incurred and expect to incur, significant expenses in connection
with the spin-off, including third-party advisory, accounting,
legal, consulting, and other similar services related to the
separation as well as costs associated with the operational
separation of the two businesses, including those related to human
resources, brand management, real estate, and information
technology (which IT expenses are included in Separation expenses
to the extent not capitalized). Separation expenses also include
incremental cash income taxes related to the reorganization of
legal entities and operations in order to effect the separation.
These costs are incremental to our normal operating expenses and
are being incurred solely as a result of the separation
transaction. Accordingly, we are excluding these separation
expenses from our non-GAAP financial measures in order to evaluate
our performance on a comparable basis.
Impairment charges and other adjustments. We exclude from our
non-GAAP financial measures asset impairment charges (other than
those already included within restructuring or acquisition
activity), rent expense for redundant facilities, gains or losses
on sales of property, gains or losses on settlements of certain
legal matters, and certain professional fees unrelated to our
ongoing operations, including fees and expenses (or recoveries)
related to a shareholder proxy contest that was settled in June
2019 of $(1.3) million and $7.9 million during the years ended
January 31, 2021 and 2020, respectively, all of which are unusual
in nature and can vary significantly in amount and frequency.
Non-GAAP income tax adjustments. We exclude our GAAP provision
(benefit) for income taxes from our non-GAAP measures of net income
attributable to Verint Systems Inc., and instead include a non-GAAP
provision for income taxes, determined by applying a non-GAAP
effective income tax rate to our income before provision for income
taxes, as adjusted for the non-GAAP items described above. The
non-GAAP effective income tax rate is generally based upon the
income taxes we expect to pay in the reporting year. Our GAAP
effective income tax rate can vary significantly from year to year
as a result of tax law changes, settlements with tax authorities,
changes in the geographic mix of earnings including acquisition
activity, changes in the projected realizability of deferred tax
assets, and other unusual or period-specific events, all of which
can vary in size and frequency. We believe that our non-GAAP
effective income tax rate removes much of this variability and
facilitates meaningful comparisons of operating results across
periods. Our non-GAAP effective income tax rate for the year ended
January 31, 2021 is 6% and was 8% for the year ended January 31,
2020. We evaluate our non-GAAP effective income tax rate on an
ongoing basis, and it can change from time to time. Our non-GAAP
income tax rate can differ materially from our GAAP effective
income tax rate.
Customer Engagement Revenue Metrics and
Operating Metrics
Software (includes cloud and support) includes software
licenses, appliances, SaaS and optional managed services. Recurring
Software Revenue includes SaaS, optional managed services, and
support revenue.
Cloud revenue primarily consists of SaaS and optional managed
services.
SaaS revenue includes bundled SaaS, software with standard
managed services and unbundled SaaS (including associated support)
that we account for as term licenses where managed services are
purchased separately.
Optional Managed Services is recurring services that are
intended to improve our customers operations and reduce
expenses.
New SaaS Annual Contract Value (ACV) includes the annualized
contract value of all new SaaS contracts received within the
period; 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.
New Perpetual License Equivalent Bookings are used to normalize
between perpetual and SaaS bookings and measure overall software
bookings growth. We calculate new perpetual license equivalent
bookings by adding to perpetual licenses an amount equal to New
SaaS ACV bookings multiplied by a conversion factor that normalizes
the mix of bundled and unbundled SaaS and perpetual bookings in a
given period. The conversion factor used is based on our order mix
and may change from period to period. The conversion factor was
1.9x for both the years ended January 31, 2021 and 2020. Management
uses perpetual license equivalent bookings to understand our
performance, including our software bookings growth and
SaaS/perpetual license mix. This metric should not be viewed in
isolation from other operating metrics that we make available to
investors.
Cyber Intelligence Recurring and
Nonrecurring Revenue Metrics
Recurring revenue, on both a GAAP and non-GAAP basis, primarily
consists of initial and renewal support, subscription software
licenses, and SaaS in certain limited transactions.
Nonrecurring revenue, on both a GAAP and non-GAAP basis,
primarily consists of our perpetual licenses, long-term projects
including software customizations that are recognized over time
using a percentage of completion (“POC”) method, consulting,
implementation and installation services, training, and
hardware.
We believe that recurring and nonrecurring revenue provide
investors with useful insight into the nature and sustainability of
our revenue streams. The recurrence of these revenue streams in
future periods depends on a number of factors including contractual
periods and customers' renewal decisions. Please see “Revenue
adjustments” above for an explanation for why we present these
revenue numbers on both a GAAP and non-GAAP basis.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure defined as net income
(loss) before interest expense, interest income, income taxes,
depreciation expense, amortization expense, revenue adjustments,
restructuring expenses, acquisition expenses, and other expenses
excluded from our non-GAAP financial measures as described above.
We believe that adjusted EBITDA is also commonly used by investors
to evaluate operating performance between companies because it
helps reduce variability caused by differences in capital
structures, income taxes, stock-based compensation, accounting
policies, and depreciation and amortization policies. Adjusted
EBITDA is also used by credit rating agencies, lenders, and other
parties to evaluate our creditworthiness.
Net Debt
Net Debt is a non-GAAP measure defined as the sum of long-term
and short-term debt on our consolidated balance sheet, excluding
unamortized discounts and issuance costs, less the sum of cash and
cash equivalents, restricted cash, restricted cash equivalents,
restricted bank time deposits, and restricted investments
(including long-term portions), and short-term investments. We use
this non-GAAP financial measure to help evaluate our capital
structure, financial leverage, and our ability to reduce debt and
to fund investing and financing activities and believe that it
provides useful information to investors.
Supplemental Information About Constant
Currency
Because we operate on a global basis and transact business in
many currencies, fluctuations in foreign currency exchange rates
can affect our consolidated U.S. dollar operating results. To
facilitate the assessment of our performance excluding the effect
of foreign currency exchange rate fluctuations, we calculate our
GAAP and non-GAAP revenue, cost of revenue, and operating expenses
on both an as-reported basis and a constant currency basis,
allowing for comparison of results between periods as if foreign
currency exchange rates had remained constant. We perform our
constant currency calculations by translating current-period
foreign currency results into U.S. dollars using prior-period
average foreign currency exchange rates or hedge rates, as
applicable, rather than current period exchange rates. We believe
that constant currency measures, which exclude the impact of
changes in foreign currency exchange rates, facilitate the
assessment of underlying business trends.
Unless otherwise indicated, our financial outlook for revenue,
operating margin, and diluted earnings per share, which is provided
on a non-GAAP basis, reflects foreign currency exchange rates
approximately consistent with rates in effect when the outlook is
provided.
We also incur foreign exchange gains and losses resulting from
the revaluation and settlement of monetary assets and liabilities
that are denominated in currencies other than the entity’s
functional currency. We periodically report our historical non-GAAP
diluted net income per share both inclusive and exclusive of these
net foreign exchange gains or losses. Our financial outlook for
diluted earnings per share includes net foreign exchange gains or
losses incurred to date, if any, but does not include potential
future gains or losses.
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version on businesswire.com: https://www.businesswire.com/news/home/20210331005926/en/
Investor Relations Matthew
Frankel, CFA Verint Systems Inc. (631) 962-9672
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
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