Q1 Results Ahead of Guidance with Strength Across All Key Cloud
Metrics
Raises FYE 2023 Non-GAAP Cloud Revenue Growth Guidance to a
Range of 32% to 34%
Verint® (Nasdaq: VRNT), The Customer Engagement Company™,
today announced results for the three months ended April 30, 2022
(FYE 2023). Revenue for the three months ended April 30, 2022 was
$218 million on a GAAP basis representing 8.5% year-over-year
growth and $219 million on a non-GAAP basis representing 8.6%
year-over-year growth. For the three months ended April 30, 2022,
net loss per share was $(0.08) on a GAAP basis and diluted EPS was
$0.52 on a non-GAAP basis.
“I am pleased to report strong cloud momentum in the first
quarter with revenue and diluted EPS coming in ahead of
expectations. Our first quarter showed strength across all key
metrics including New Perpetual License Equivalent (PLE) Bookings
growth and mix, with our bookings continuing to shift to SaaS,”
said Dan Bodner, Verint CEO.
Bodner continued, “Looking ahead, we expect our cloud momentum
to continue and are raising our annual guidance for cloud revenue
growth to a range of 32% to 34%. Behind our strong momentum is our
focus on helping brands close the engagement capacity gap with our
highly differentiated customer engagement cloud platform.”
First Quarter Highlights
- Strong Cloud Revenue Growth: Cloud revenue increased 38%
year-over-year
- Non-GAAP Revenue and Diluted EPS: Ahead of our
guidance
- Favorable Mix Shift: 58% of New PLE bookings came from
SaaS (up from 51% in Q1 of the prior year)
- Strong Cash Flow Generation: Operating cash flow up 43%
year-over-year to $54 million
Verint Investor Day
(Virtual)
- Day: Thursday, June 9, 2022
- Time: 10:30am ET
- Registration Link: Click here
Bodner concluded, “On Thursday of this week, we will hold our
annual investor day, and we will do a deep dive into our platform
differentiation.”
FYE 2023 Outlook
Our non-GAAP annual outlook for the year ending January 31, 2023
is as follows:
- Revenue: $940 million +/- 2%, reflecting 7%
year-over-year growth
- Cloud Revenue Growth: 32% to 34% year-over-year
- Diluted EPS: $2.50 at the midpoint of our revenue
guidance, reflecting 10% year-over-year growth
Our non-GAAP outlook for the three months ending July 31, 2022
and year ending January 31, 2023 excludes the following GAAP
measure which we are able to quantify with reasonable
certainty:
- Amortization of intangible assets of approximately $10 million
and $40 million, for the three months ending July 31, 2022 and year
ending January 31, 2023, respectively.
Our non-GAAP outlook for the three months ending July 31, 2022
and year ending January 31, 2023 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 $0
million and $1 million, and $2 million and $3 million, for the
three months ending July 31, 2022 and year ending January 31, 2023,
respectively.
- Stock-based compensation expenses are expected to be between
approximately $25 million and $29 million, and $81 million and $87
million, for the three months ending July 31, 2022 and year ending
January 31, 2023, respectively, assuming market prices for our
common stock approximately consistent with current levels.
- Costs associated with modifying our workplace following the
spin-off of our former cyber intelligence business and in response
to our decision to move to a hybrid work environment, including
assumed lease terminations and abandonments, IT infrastructure
costs, and other charges are expected to be between approximately
$7 million and $9 million, and $21 million and $25 million, for the
three months ending July 31, 2022 and year ending January 31, 2023,
respectively.
Our non-GAAP guidance does not include the potential impact of
any in-process business acquisitions that may close after the date
hereof, and, unless otherwise specified, reflects foreign currency
exchange rates approximately consistent with current rates.
We are unable, without unreasonable efforts, to provide a
reconciliation for other GAAP measures which are excluded from our
non-GAAP outlook, including the impact of future business
acquisitions or acquisition expenses, future restructuring
expenses, and non-GAAP income tax adjustments due to the level of
unpredictability and uncertainty associated with these items. For
these same reasons, we are unable to assess the probable
significance of these excluded items. While historical results may
not be indicative of future results, actual amounts for the three
months ended April 30, 2022 and 2021 for the GAAP measures excluded
from our non-GAAP outlook appear in Tables 2, 3 and 4 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 ended April 30, 2022 and
outlook. 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
July 31, 2022. 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 4465914. 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, inflation, economic instability, political unrest,
armed conflicts (such as the Russian invasion of Ukraine), natural
disasters, climate change or other environmental issues, 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; 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 and our ability to keep pace with competitors, some of whom
have greater resources than us, including in areas such as sales
and marketing, branding, technological innovation and development,
recruiting and retention, and growth; risks associated with our
ability to properly execute on 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 relating to our
ability to properly execute on growth or strategic initiatives,
manage investments in our business and operations, and enhance our
existing operations and infrastructure, including the proper
prioritization and allocation of limited financial and other
resources; risks associated with our ability to or costs to retain,
recruit , and train qualified personnel in regions in which we
operate either physically or remotely, including in new markets and
growth areas we may enter, due to competition for talent,
increasing labor costs, applicable regulatory requirements such as
vaccination mandates, or otherwise; 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; 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 cloud
hosting providers and other third-party suppliers, partners, or
original equipment manufacturers (“OEMs”) for certain services,
products, or components, including companies that may compete with
us or work with our competitors; risks associated with our
significant international operations, 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 our
ability to identify suitable targets for acquisition or investment
or successfully compete for, consummate, and implement mergers and
acquisitions, including risks associated with valuations, legacy
liabilities, reputational considerations, capital constraints,
costs and expenses, maintaining profitability levels, expansion
into new areas, management distraction, post-acquisition
integration activities, and potential asset impairments; risks
associated with complex and changing domestic and foreign
regulatory environments, including, among others, with respect to
data privacy and protection, government contracts, anti-corruption,
trade compliance, environmental, social and governance matters,
tax, and labor matters, relating to our own operations, the
products and services we offer, and/or the use of our solutions by
our customers; risks associated with the mishandling or perceived
mishandling of sensitive or confidential information and data,
including personally identifiable information or other information
that may belong to our customers or other third parties, including
in connection with our SaaS or other hosted or managed services
offerings or when we are asked to perform service or support; risks
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 Apax
Partners' significant ownership position and potential that its
interests will not be aligned with those of our common
stockholders; and risks associated with the 2021 spin-off of our
former Cyber Intelligence Solutions business, including the
possibility that the spin-off transaction does not achieve the
benefits anticipated, does not qualify as a tax-free transaction,
or exposes us to unexpected claims or liabilities. We assume no
obligation to revise or update any forward-looking statement,
except as otherwise required by law. For a detailed discussion of
these risk factors, see our Annual Report on Form 10-K for the
fiscal year ended January 31, 2022, our Quarterly Report on Form
10-Q for the quarter ended April 30, 2022, when filed, and other
filings we make with the SEC.
VERINT, VERINT DA VINCI, 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
April 30,
(in thousands, except per share data)
2022
2021
Revenue:
Recurring
$
159,367
$
144,453
Nonrecurring
58,539
56,451
Total revenue
217,906
200,904
Cost of revenue:
Recurring
41,028
38,076
Nonrecurring
32,068
29,880
Amortization of acquired technology
3,639
4,384
Total cost of revenue
76,735
72,340
Gross profit
141,171
128,564
Operating expenses:
Research and development, net
30,947
29,148
Selling, general and administrative
102,882
87,646
Amortization of other acquired intangible
assets
6,844
7,328
Total operating expenses
140,673
124,122
Operating income
498
4,442
Other income (expense), net:
Interest income
199
23
Interest expense
(1,501
)
(5,019
)
Losses on early retirements of debt
—
(2,474
)
Other income, net
1,674
4,050
Total other income (expense),
net
372
(3,420
)
Income before provision for (benefit
from) income taxes
870
1,022
Provision for (benefit from) income
taxes
296
(72
)
Net income
574
1,094
Net income attributable to noncontrolling
interests
288
295
Net income attributable to Verint
Systems Inc.
286
799
Dividends on preferred stock
(5,200
)
(3,322
)
Net loss attributable to Verint Systems
Inc. common shares
$
(4,914
)
$
(2,523
)
Net loss per common share attributable
to Verint Systems Inc.:
Basic
$
(0.08
)
$
(0.04
)
Diluted
$
(0.08
)
$
(0.04
)
Weighted-average common shares
outstanding:
Basic
64,947
65,661
Diluted
64,947
65,661
Table 2 VERINT SYSTEMS INC. AND
SUBSIDIARIES GAAP to Non-GAAP Cloud Metrics
(Unaudited)
Cloud Revenue
Three Months Ended
April 30,
(in thousands)
2022
2021
SaaS revenue - GAAP
$
94,730
$
63,592
Bundled SaaS revenue - GAAP
49,285
39,309
Unbundled SaaS revenue - GAAP
45,445
24,283
Optional managed services revenue -
GAAP
15,913
16,458
Cloud revenue - GAAP
$
110,643
$
80,050
Estimated SaaS revenue
adjustments
$
1,269
$
844
Estimated bundled SaaS revenue
adjustments
1,269
782
Estimated unbundled SaaS revenue
adjustments
—
62
Estimated optional managed services
revenue adjustments
60
187
Estimated cloud revenue
adjustments
$
1,329
$
1,031
SaaS revenue - non-GAAP
$
95,999
$
64,436
Bundled SaaS revenue - non-GAAP
50,554
40,091
Unbundled SaaS revenue - non-GAAP
45,445
24,345
Optional managed services revenue -
non-GAAP
15,973
16,645
Cloud revenue - non-GAAP
$
111,972
$
81,081
New SaaS ACV
Three Months Ended
April 30,
(in thousands)
2022
2021
New SaaS ACV
$
24,066
$
18,804
New SaaS ACV Growth YoY
28.0
%
58.1
%
New Perpetual License Equivalent
Bookings
Three Months Ended
April 30,
(in thousands)
2022
2021
New perpetual license equivalent
bookings
$
77,691
$
60,982
New perpetual license equivalent bookings
change YoY
27.4
%
27.9
%
% of new perpetual license equivalent
bookings from SaaS
57.9
%
51.2
%
Table 3 VERINT SYSTEMS INC. AND
SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
Revenue
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
Recurring revenue - GAAP
$
159,367
$
144,453
Nonrecurring revenue - GAAP
58,539
56,451
Total GAAP revenue
217,906
200,904
Recurring revenue adjustments
1,343
1,039
Nonrecurring revenue adjustments
—
—
Total revenue adjustments
1,343
1,039
Recurring revenue - non-GAAP
160,710
145,492
Nonrecurring revenue - non-GAAP
58,539
56,451
Total non-GAAP revenue
$
219,249
$
201,943
Gross Profit and Gross
Margin
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
Recurring costs
$
41,028
$
38,076
Nonrecurring costs
32,068
29,880
Amortization of acquired technology
3,639
4,384
Total GAAP cost of revenue
76,735
72,340
GAAP gross profit
141,171
128,564
GAAP gross margin
64.8
%
64.0
%
Revenue adjustments
1,343
1,039
Amortization of acquired technology
3,639
4,384
Stock-based compensation expenses
1,165
1,262
Acquisition expenses, net
251
25
Restructuring expenses
338
462
Separation expenses
—
78
Non-GAAP gross profit
$
147,907
$
135,814
Non-GAAP gross margin
67.5
%
67.3
%
Research and Development,
net
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP research and development,
net
$
30,947
$
29,148
As a percentage of GAAP revenue
14.2
%
14.5
%
Stock-based compensation expenses
(2,419
)
(1,773
)
Acquisition expenses, net
(198
)
(24
)
Restructuring expenses
(137
)
(184
)
Separation expenses
—
(457
)
Other adjustments
(25
)
—
Non-GAAP research and development,
net
$
28,168
$
26,710
As a percentage of non-GAAP
revenue
12.8
%
13.2
%
Selling, General and Administrative
Expenses
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP selling, general and
administrative expenses
$
102,882
$
87,646
As a percentage of GAAP revenue
47.2
%
43.6
%
Stock-based compensation expenses
(14,785
)
(13,366
)
Acquisition expenses, net
(1,375
)
(1,644
)
Restructuring expenses
(2,674
)
(593
)
Separation expenses
(591
)
(5,527
)
Accelerated lease costs
(5,548
)
(16
)
Other adjustments
(2,009
)
(44
)
Non-GAAP selling, general and
administrative expenses
$
75,900
$
66,456
As a percentage of non-GAAP
revenue
34.6
%
32.9
%
Operating Income and Operating
Margin
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP operating income
$
498
$
4,442
GAAP operating margin
0.2
%
2.2
%
Revenue adjustments
1,343
1,039
Amortization of acquired technology
3,639
4,384
Amortization of other acquired intangible
assets
6,844
7,328
Stock-based compensation expenses
18,369
16,401
Acquisition expenses, net
1,824
1,693
Restructuring expenses
3,149
1,239
Separation expenses
591
6,062
Accelerated lease costs
5,548
16
Other adjustments
2,034
44
Non-GAAP operating income
$
43,839
$
42,648
Non-GAAP operating margin
20.0
%
21.1
%
Other Income (Expense),
Net
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP other income (expense),
net
$
372
$
(3,420
)
Unrealized losses on derivatives, net
—
14,305
Expenses and losses on debt modification
or retirement
—
2,474
Change in fair value of future tranche
right
—
(15,810
)
Acquisition benefit, net
—
(3,200
)
Non-GAAP other income (expense),
net(1)
372
(5,651
)
Provision for (Benefit from) Income
Taxes
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP provision for (benefit from)
income taxes
$
296
$
(72
)
GAAP effective income tax rate
34.0
%
(7.1
) %
Non-GAAP tax adjustments
4,222
3,740
Non-GAAP provision for income
taxes
$
4,518
$
3,668
Non-GAAP effective income tax
rate
10.2
%
9.9
%
Net (Loss) Income Attributable to
Verint Systems Inc. Common Shares
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP net loss attributable to Verint
Systems Inc. common shares
$
(4,914
)
$
(2,523
)
Revenue adjustments
1,343
1,039
Amortization of acquired technology
3,639
4,384
Amortization of other acquired intangible
assets
6,844
7,328
Stock-based compensation expenses
18,369
16,401
Unrealized losses on derivatives, net
—
14,305
Expenses and losses on debt modification
or retirement
—
2,474
Change in fair value of future tranche
right
—
(15,810
)
Acquisition expenses, net
1,824
(1,507
)
Restructuring expenses
3,149
1,239
Separation expenses
591
6,062
Accelerated lease costs
5,548
16
Other adjustments
2,034
44
Non-GAAP tax adjustments
(4,222
)
(3,740
)
Dividends, reversed due to assumed
conversion of preferred stock(3)
—
3,322
Total adjustments
39,119
35,557
Non-GAAP net income attributable to
Verint Systems Inc. common shares
$
34,205
$
33,034
Diluted Net (Loss) Income Per Common
Share Attributable to Verint Systems Inc.
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP diluted net loss per common share
attributable to Verint Systems Inc.
$
(0.08
)
$
(0.04
)
Non-GAAP diluted net income per common
share attributable to Verint Systems Inc.(3)
$
0.52
$
0.44
GAAP weighted-average shares used in
computing diluted net loss per common share attributable to Verint
Systems Inc.
64,947
65,661
Additional weighted-average shares
applicable to non-GAAP diluted net income per common share
attributable to Verint Systems Inc.
1,255
10,031
Non-GAAP diluted weighted-average
shares used in computing net income per common share attributable
to Verint Systems Inc.(3)
66,202
75,692
GAAP Net Income from Operations to
Adjusted EBITDA
Three Months Ended
April 30,
(in thousands, except per share data)
2022
2021
GAAP net income from operations
$
574
$
1,094
As a percentage of GAAP revenue
0.3
%
0.5
%
Provision for (benefit from) income
taxes
296
(72
)
Other (income) expense, net
(372
)
3,420
Depreciation and amortization(2)
17,399
18,281
Revenue adjustments
1,343
1,039
Stock-based compensation expenses
18,369
16,401
Acquisition expenses, net
1,824
1,693
Restructuring expenses
2,993
1,238
Separation expenses
591
5,696
Accelerated lease costs
5,548
16
Other adjustments
2,034
44
Adjusted EBITDA
$
50,599
$
48,850
As a percentage of non-GAAP
revenue
23.1
%
24.2
%
Gross Debt to Net Debt
(in thousands)
April 30,
2022
January 31,
2022
Long-term debt
$
407,402
$
406,954
Unamortized debt discounts and issuance
costs
7,598
8,046
Gross debt
415,000
415,000
Less:
Cash and cash equivalents
285,046
358,805
Restricted cash and cash equivalents, and
restricted bank time deposits
23
6
Short-term investments
745
765
Net debt, excluding long-term
restricted cash, cash equivalents, time deposits, and
investments
129,186
55,424
Long-term restricted cash, cash
equivalents, time deposits, and investments
387
409
Net debt, including long-term
restricted cash, cash equivalents, time deposits, and
investments
$
128,799
$
55,015
(1) For the three months ended April 30, 2022, non-GAAP other
income, net of $0.4 million was comprised of $1.7 million of
foreign exchange gains primarily related to balance sheet
revaluations, net of $1.3 million of interest and other
expense.
(2) Adjusted for financing fee amortization.
(3) EPS calculation includes the more dilutive of either
preferred stock dividends or conversion of preferred stock shares.
Average shares for the calculation of adjusted diluted EPS for the
three months ended April 30, 2022, excludes shares associated with
our convertible preferred stock and therefore earnings include the
preferred stock dividends. Conversion of the outstanding preferred
shares was more dilutive in three months ended April 30, 2021.
Table 4 VERINT SYSTEMS INC. AND
SUBSIDIARIES GAAP to Non-GAAP Recurring and Nonrecurring
Revenue and Gross Profit (Unaudited)
Recurring and Nonrecurring
Revenue
Three Months Ended
April 30,
(in thousands)
2022
2021
Recurring revenue - GAAP
$
159,367
$
144,453
Cloud revenue - GAAP
110,643
80,050
Support revenue - GAAP
48,724
64,403
Nonrecurring revenue - GAAP
$
58,539
$
56,451
Perpetual revenue - GAAP
33,258
29,323
Professional services revenue - GAAP
25,281
27,128
Total revenue - GAAP
$
217,906
$
200,904
Estimated recurring revenue
adjustments
$
1,343
$
1,039
Estimated cloud revenue adjustments
1,329
1,031
Estimated support revenue adjustments
14
8
Estimated nonrecurring revenue
adjustments
$
—
$
—
Estimated perpetual revenue
adjustments
—
—
Estimated professional services revenue
adjustments
—
—
Total estimated revenue
adjustments
$
1,343
$
1,039
Recurring revenue - non-GAAP
$
160,710
$
145,492
Cloud revenue - non-GAAP
111,972
81,081
Support revenue - non-GAAP
48,738
64,411
Nonrecurring revenue - non-GAAP
$
58,539
$
56,451
Perpetual revenue - non-GAAP
33,258
29,323
Professional services revenue -
non-GAAP
25,281
27,128
Total revenue - non-GAAP
$
219,249
$
201,943
Recurring Gross Profit
Three Months Ended
April 30,
(in thousands)
2022
2021
GAAP recurring revenue
$
159,367
$
144,453
GAAP recurring costs
41,028
38,076
GAAP recurring gross profit
118,339
106,377
GAAP recurring gross margin
74.3
%
73.6
%
Recurring revenue adjustments
1,343
1,039
Recurring stock-based compensation
expenses
525
429
Recurring acquisition expenses, net
22
25
Recurring restructuring expenses
111
353
Recurring separation expenses
—
32
Non-GAAP recurring gross profit
$
120,340
$
108,255
Non-GAAP recurring gross margin
74.9
%
74.4
%
Nonrecurring Gross
Profit
Three Months Ended
April 30,
(in thousands)
2022
2021
GAAP nonrecurring revenue
$
58,539
$
56,451
GAAP nonrecurring costs
32,068
29,880
GAAP nonrecurring gross profit
26,471
26,571
GAAP nonrecurring gross margin
45.2
%
47.1
%
Nonrecurring revenue adjustments
—
—
Nonrecurring stock-based compensation
expenses
640
833
Nonrecurring acquisition expenses, net
229
—
Nonrecurring restructuring expenses
227
109
Nonrecurring separation expenses
—
46
Non-GAAP nonrecurring gross
profit
$
27,567
$
27,559
Non-GAAP nonrecurring gross
margin
47.1
%
48.8
%
Table 5 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
Three Months
Ended
Revenue for the three months ended April
30, 2021
$
200,904
$
201,943
Revenue for the three months ended April
30, 2022
$
217,906
$
219,249
Revenue for the three months ended April
30, 2022 at constant currency(1)
$
220,000
$
222,000
Reported period-over-period revenue
growth
8.5
%
8.6
%
% impact from change in foreign currency
exchange rates
1.0
%
1.3
%
Constant currency period-over-period
revenue growth
9.5
%
9.9
%
(1) Revenue for the three months ended April 30, 2022 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 ended April 30, 2021 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 6 VERINT SYSTEMS INC. AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(Unaudited)
April 30,
January 31,
(in thousands, except share and per share
data)
2022
2022
Assets
Current Assets:
Cash and cash equivalents
$
285,046
$
358,805
Short-term investments
745
765
Accounts receivable, net of allowance for
credit losses of $1.3 million and $1.3 million, respectively
149,758
193,831
Contract assets, net
37,993
42,688
Inventories
5,225
5,337
Prepaid expenses and other current
assets
56,433
53,752
Total current assets
535,200
655,178
Property and equipment, net
61,577
64,090
Operating lease right-of-use assets
32,724
35,433
Goodwill
1,327,444
1,353,421
Intangible assets, net
104,838
118,254
Other assets
139,258
134,729
Total assets
$
2,201,041
$
2,361,105
Liabilities, Temporary Equity, and
Stockholders' Equity
Current Liabilities:
Accounts payable
$
35,482
$
39,501
Accrued expenses and other current
liabilities
146,327
168,694
Contract liabilities
258,065
271,271
Total current liabilities
439,874
479,466
Long-term debt
407,402
406,954
Long-term contract liabilities
15,704
15,872
Operating lease liabilities
29,096
28,457
Other liabilities
37,191
39,456
Total liabilities
929,267
970,205
Commitments and Contingencies
Temporary Equity:
Preferred Stock — $0.001 par value;
authorized 2,207,000 shares
Series A Preferred Stock; 200,000 shares
issued and outstanding at April 30, 2022 and January 31, 2022,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at April 30, 2022 and January 31, 2022,
respectively.
200,628
200,628
Series B Preferred Stock; 200,000 shares
issued and outstanding at April 30, 2022 and January 31, 2022,
respectively; aggregate liquidation preference and redemption value
of $203,467 and $206,067 at April 30, 2022 and January 31, 2022,
respectively.
235,693
235,693
Total temporary equity
436,321
436,321
Stockholders' Equity:
Common stock — $0.001 par value;
authorized 120,000,000 shares. Issued 66,677,000 and 66,211,000
shares; outstanding 64,677,000 and 66,211,000 shares at April 30,
2022 and January 31, 2022, respectively.
67
66
Additional paid-in capital
1,141,162
1,125,152
Treasury stock, at cost — 2,000,000 shares
at April 30, 2022; No shares at January 31, 2022.
(105,666
)
—
Accumulated deficit
(54,223
)
(54,509
)
Accumulated other comprehensive loss
(148,560
)
(118,515
)
Total Verint Systems Inc. stockholders'
equity
832,780
952,194
Noncontrolling interests
2,673
2,385
Total stockholders' equity
835,453
954,579
Total liabilities, temporary equity,
and stockholders' equity
$
2,201,041
$
2,361,105
Table 7 VERINT SYSTEMS INC. AND
SUBSIDIARIES Condensed Consolidated Statements of Cash
Flows (Unaudited)
Three Months Ended
April 30,
(in thousands)
2022
2021
Cash flows from operating
activities:
Net income
$
574
$
1,094
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
18,048
19,049
Stock-based compensation, excluding
cash-settled awards
18,364
16,405
Change in fair value of future tranche
right
—
(15,810
)
Non-cash losses on derivative financial
instruments, net
—
14,374
Losses on early retirements of debt
—
2,474
Other, net
2,163
(2,317
)
Changes in operating assets and
liabilities:
Accounts receivable
41,766
58,026
Contract assets
4,024
(2,184
)
Inventories
68
(350
)
Prepaid expenses and other assets
(8,686
)
(18,781
)
Accounts payable and accrued expenses
(5,694
)
(1,510
)
Contract liabilities
(9,645
)
(15,524
)
Deferred income taxes
(1,074
)
(16,977
)
Other, net
(5,982
)
(260
)
Net cash provided by operating activities
— continuing operations
53,926
37,709
Net cash used in operating activities —
discontinued operations
—
(8,007
)
Net cash provided by operating
activities
53,926
29,702
Cash flows from investing
activities:
Purchases of property and equipment
(5,224
)
(4,369
)
Maturities and sales of investments
250
45,640
Purchases of investments
(250
)
—
Cash paid for capitalized software
development costs
(2,003
)
(1,966
)
Change in restricted bank time deposits,
and other investing activities, net
20
(32
)
Net cash (used in) provided by
investing activities
(7,207
)
39,273
Cash flows from financing
activities:
Proceeds from issuance of preferred
stock
—
200,000
Proceeds from borrowings
—
315,000
Repayments of borrowings and other
financing obligations
(775
)
(310,633
)
Purchases of capped calls
—
(40,950
)
Payments of debt-related costs
(93
)
(9,422
)
Purchases of treasury stock and common
stock for retirement
(105,213
)
(75,014
)
Preferred stock dividend payments
(10,400
)
(5,200
)
Distributions paid to noncontrolling
interest
—
—
Payment for termination of interest rate
swap
—
(16,502
)
Net cash transferred to Cognyte Software
Ltd.
—
(114,657
)
Dividend and other settlements received
from Cognyte Software Ltd.
—
40,164
Payments of contingent consideration for
business combinations (financing portion), and other financing
activities
(1,549
)
(2,842
)
Net cash used in financing
activities
(118,030
)
(20,056
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(2,431
)
218
Net (decrease) increase in cash, cash
equivalents, restricted cash, and restricted cash
equivalents
(73,742
)
49,137
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of period
358,868
700,133
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of period
$
285,126
$
749,270
Reconciliation of cash, cash
equivalents, restricted cash, and restricted cash equivalents at
end of period to the condensed consolidated balance sheets:
Cash and cash equivalents
$
285,046
$
359,418
Restricted cash and cash equivalents
included in restricted cash and cash equivalents, and restricted
bank time deposits
—
389,795
Restricted cash and cash equivalents
included in prepaid expenses and other current assets
23
—
Restricted cash and cash equivalents
included in other assets
57
57
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
285,126
$
749,270
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 recurring revenue,
non-GAAP nonrecurring revenue, non-GAAP perpetual revenue, non-GAAP
support revenue, non-GAAP professional services 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, non-GAAP recurring gross profit and gross
margins, non-GAAP nonrecurring gross profit and gross margins,
non-GAAP gross profit and gross margins, non-GAAP research and
development, net, non-GAAP selling, general and administrative
expenses, non-GAAP operating income and operating margins, non-GAAP
other income (expense), net, non-GAAP provision for (benefit from)
income taxes and non-GAAP effective income tax rate, non-GAAP net
income (loss) attributable to Verint Systems Inc. common shares,
non-GAAP diluted net income (loss) per common share attributable to
Verint Systems Inc., adjusted EBITDA and adjusted EBITDA margins,
net debt 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 unit and
performance stock unit 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 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.
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 former Cyber Intelligence Solutions business and the
satisfaction of other customary closing conditions (the “Future
Tranche Right”) met the definition of a freestanding financial
instrument. This Future Tranche Right was reported at fair value as
an asset or liability on our consolidated balance sheet and was
remeasured at fair value each reporting period until the settlement
of the right at the time of issuance of the Series B Preferred
Stock, which occurred on April 6, 2021. Changes in its fair value
were recognized as a non-cash charge or benefit within other income
(expense), net on the condensed consolidated statement of
operations. We excluded this change in fair value of the Future
Tranche Right from our non-GAAP financial measures because it was
unusual in nature, could vary significantly in amount, and was
unrelated to our ongoing operations.
Acquisition expenses (benefit), net. In connection with
acquisition activity (including with respect to acquisitions that
are not consummated), we incur expenses (benefits), 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 (except as included in Accelerated lease
costs described below), 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
previously announced spin-off of our former Cyber Intelligence
Solutions business. We exclude from our non-GAAP financial measures
expenses incurred 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 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.
Accelerated lease costs. We exclude from our non-GAAP financial
measures accelerated facility costs and associated accelerated
lease expenses due to the early termination or abandonment of
certain office leases as a result of our move to a hybrid work
model because these charges are not reflective of our ongoing
business and operating results.
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), IT infrastructure costs and other charges associated
with modifying the workplace, 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, all of which are unusual
in nature and can vary significantly in amount and frequency.
Non-GAAP income tax adjustments. We exclude from our non-GAAP
measures of net income attributable to Verint Systems Inc., our
GAAP provision for (benefit from) income taxes 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 ending
January 31, 2023 is currently approximately 10% and was 11% for the
year ended January 31, 2022. 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.
Revenue Metrics and Operating
Metrics
Recurring revenue, on both a GAAP and non-GAAP basis, is the
portion of our revenue that we believe is likely to be renewed in
the future, and primarily consists of cloud revenue and initial and
renewal post contract support.
Nonrecurring revenue, on both a GAAP and non-GAAP basis,
primarily consists of our perpetual licenses, consulting,
implementation and installation services, hardware, and
training.
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 are 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. 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.
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, stock-based
compensation expenses, 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 expenses, 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
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, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220607006151/en/
Investor Relations Matthew
Frankel, CFA Verint Systems Inc. (631) 962-9672
matthew.frankel@verint.com
Verint Systems (NASDAQ:VRNT)
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