Verint Announces Q4 and Full Year FYE 2023 Results

Revenue and Diluted EPS ahead of Guidance

Strong SaaS Revenue Growth Drives Recurring Revenue Growth with Expanding Gross Margins

Expect SaaS Momentum to Continue with 25% to 30% SaaS Revenue Growth in FYE24

MELVILLE, N.Y.–(BUSINESS WIRE)–Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three months and year ended January 31, 2023 (FYE 2023). Revenue for the three months ended January 31, 2023 was $236 million on a GAAP basis representing 0.9% year-over-year growth and $237 million on a non-GAAP basis, representing 2.0% year-over-year growth on a non-GAAP constant currency basis. Revenue for the year ended January 31, 2023 was $902 million on a GAAP basis, representing 3.2% year-over-year growth, and $905 million on a non-GAAP basis, representing 5.0% year-over-year growth on a non-GAAP constant currency basis. For the three months ended January 31, 2023, diluted EPS was $0.12 on a GAAP basis and $0.75 on a non-GAAP basis. For the year ended January 31, 2023, net loss per share was $(0.09) on a GAAP basis and diluted EPS was $2.52 on a non-GAAP basis.

“I am pleased with our non-GAAP revenue and diluted EPS coming ahead of our guidance. Our results were driven by our cloud platform delivering differentiated CX automation to help brands close the engagement capacity gap. In Q4, we had many significant SaaS wins from existing customers, including seven and eight digit deals, and throughout the year we added 100 new logos every quarter,” said Dan Bodner, Verint CEO.

Bodner continued, “Our multi-year SaaS transition, is tracking ahead of the plan outlined two years ago at the time of the spin. As we are approaching the substantial completion of our SaaS transition next year, we are evolving our disclosure from transitional to traditional operating SaaS metrics, and today we are introducing a new operating metric, SaaS Annual Recurring Revenue (ARR). SaaS ARR has been growing at more than a 30% CAGR over the last two years and reached a milestone of approximately half a billion at the end of Fiscal 2023.”

Full Year FYE 2023 Highlights

	GAAP		Non-GAAP
(in millions)	Reported	CC	Reported	CC	CC Growth
Revenue	$902	$921	$905	$925	5%
Recurring Revenue	$686	$700	$689	$704	10%
SaaS Revenue	$444	$452	$447	$455	38%

Note: CC represents constant currency.

• Recurring Revenue: Up 10% year-over-year on a non-GAAP constant currency basis
• SaaS Revenue: Up 38% year-over-year on a non-GAAP constant currency basis
• SaaS ARR: $498 million, up 25% year-over-year
• New SaaS ACV Growth: Up 11% year-over-year on a constant currency basis
• Favorable Mix Shift: 86% of non-GAAP Software Revenue is Recurring (up 330bps year-over-year)
• New Customer Additions: Added 400+ logos with 100+ new logos every quarter

Grant Highlander, Verint CFO, added, “Throughout the year we delivered strong SaaS revenue growth and are very pleased with the progress of our cloud transition. Our cloud operations have reached scale and we are also pleased with our ongoing gross margin expansion which we expect to continue over-time. We believe our SaaS momentum will continue over the long run driving shareholder value. Last quarter we announced a new $200 million buyback program, of which we have bought approximately $41 million of stock so far.”

FYE 2024 Outlook

We are providing our non-GAAP annual outlook for the year ending January 31, 2024 reflecting the current macroeconomic environment as follows:

• Revenue: $935 million +/- 2%
• SaaS Revenue: 25% – 30% year-over-year growth
• Diluted EPS: $2.65 at the midpoint of our revenue guidance

Our non-GAAP outlook for the three months ending April 30, 2023 and year ending January 31, 2024 excludes the following GAAP measure which we are able to quantify with reasonable certainty:

• Amortization of intangible assets of approximately $8 million and $32 million, for the three months ending April 30, 2023 and year ending January 31, 2024, respectively.

Our non-GAAP outlook for the three months ending April 30, 2023 and year ending January 31, 2024 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 $1 million and $2 million, for the three months ending April 30, 2023 and year ending January 31, 2024, respectively.
• Stock-based compensation expenses are expected to be between approximately $14 million and $17 million, and $70 million and $75 million, for the three months ending April 30, 2023 and year ending January 31, 2024, respectively, assuming market prices for our common stock approximately consistent with current levels.
• Costs associated with modifying our workplace in response to our decision to move to a hybrid work environment, including assumed lease terminations and abandonments, IT facilities and infrastructure costs, and other nonrecurring charges are expected to be between approximately $1 million and $3 million, and $27 million and $30 million, for the three months ending April 30, 2023 and year ending January 31, 2024, 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 and year ended January 31, 2023 and 2022 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 and year ended January 31, 2023 and outlook. An online, real-time webcast of the conference call and webcast slides will be available on our website at www.verint.com. Participants may register for the call here to receive the dial-in numbers and unique PIN to access the call. Please join the call 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 build enduring customer relationships by connecting work, data, and experiences across the enterprise. More than 10,000 organizations in 180 countries – including over 85 of the Fortune 100 companies – are using the Verint Customer Engagement Platform to draw on the latest advancements in AI, analytics, and an open cloud architecture to elevate customer experience.

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, rising interest rates, tightening credit markets, inflation, instability in the banking sector, political unrest, armed conflicts (such as the Russian invasion of Ukraine), actual or threatened trade wars, natural disasters, or outbreaks of disease (such as the COVID-19 pandemic), as well as the resulting impact on spending by customers or partners, on our business; risks that our customers or partners delay, downsize, cancel, or refrain from placing orders or renewing subscriptions or contracts, or are unable to honor contractual commitments or payment obligations due to challenges or uncertainties in their budgets, liquidity or and businesses; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards, including achieving and maintaining the competitive differentiation of our solution platform; to adapt to changing market potential from area to area within our markets; and to successfully develop, launch, and drive demand for new, innovative, high-quality products and services that meet or exceed customer challenges and needs, while simultaneously preserving our legacy businesses and migrating away from areas of commoditization; risks due to aggressive competition in all of our markets and our ability to keep pace with competitors, some of whom may be able to grow faster than us or have greater resources than us, including in areas such as sales and marketing, branding, technological innovation and development, and recruiting and retention; risks associated with our ability to properly execute on our cloud transition, including successfully transitioning customers to our cloud platform and the 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 identify and execute on growth or strategic initiatives, manage investments in our business and operations, and enhance our existing operations and infrastructure, including the proper prioritization and allocation of limited financial and other resources; risks associated with our ability to or costs to retain, recruit , and train qualified personnel and management in regions in which we operate either physically or remotely, including in new markets and growth areas we may enter, due to competition for talent, increased labor costs, applicable regulatory requirements, or otherwise; challenges associated with selling sophisticated solutions and cloud-based solutions, including with respect to longer sales cycles, more complex sales processes and customer approval processes, more complex contractual and information security requirements, and assisting customers in understanding and realizing the benefits of our solutions, as well as with developing, offering, implementing, and maintaining an enterprise class, broad solution portfolio; risks that we may be unable to maintain, expand, and enable our relationships with partners as part of our growth strategy while avoiding excessive concentration with any one partner; risks associated with our reliance on third-party suppliers, partners, or original equipment manufacturers (“OEMs”) for certain services, products, or components, including companies that may compete with us or work with our competitors; risks associated with our significant international operations, including exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, inflation, increased financial accounting and reporting burdens and complexities, and challenges associated with a significant portion of our cash being held overseas; risks associated with a significant part of our business coming from government contracts and associated procurement processes and regulatory requirements; risks associated with our ability to identify suitable targets for acquisition or investment or successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with valuations, legacy liabilities, reputational considerations, capital constraints, costs and expenses, maintaining profitability levels, expansion into new areas, management distraction, post-acquisition integration activities, and potential asset impairments; risks associated with complex and changing domestic and foreign regulatory environments, including, among others, with respect to data privacy, artificial intelligence, information security, government contracts, anti-corruption, trade compliance, climate change or other environmental, social and governance matters, tax, and labor matters, relating to our own operations, the products and services we offer, and/or the use of our solutions by our customers; risks associated with the mishandling or perceived mishandling of sensitive or confidential information and data, including personally identifiable information or other information that may belong to our customers or other third parties, including in connection with our software as a service (“SaaS”) or other hosted or managed services offerings or when we are asked to perform service or support; risks associated with our reliance on third parties to provide certain cloud hosting or other cloud-based services to us or our customers, including the risk of service disruption, data breaches, or data loss or corruption; risks that our solutions or services, or those of third-party suppliers, partners, or OEMs which we use in or with our offerings or otherwise rely on, including third-party hosting platforms, may contain defects, vulnerabilities, or develop operational problems; risks that we or our solutions maybe subject to 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 February 1, 2021 spin-off of our former Cyber Intelligence Solutions business, including the possibility that the spin-off transaction does not achieve the benefits anticipated, does not qualify as a tax-free transaction, or exposes us to unexpected claims or liabilities. We assume no obligation to revise or update any forward-looking statement, except as otherwise required by law. For a detailed discussion of these risk factors, see our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, when filed, and other filings we make with the SEC.

VERINT, VERINT DA VINCI, THE CUSTOMER ENGAGEMENT COMPANY, BOUNDLESS CUSTOMER ENGAGEMENT and THE ENGAGEMENT CAPACITY GAP are trademarks of Verint Systems Inc. or its subsidiaries. Verint and other parties may also have trademark rights in other terms used herein.

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)			2023				2022				2023				2022
Revenue:
Recurring		$	185,508			$	173,687			$	685,537			$	633,129
Nonrecurring			50,739				60,481				216,708				241,380
Total revenue			236,247				234,168				902,245				874,509
Cost of revenue:
Recurring			41,633				44,046				162,347				156,569
Nonrecurring			28,749				33,317				119,530				124,226
Amortization of acquired technology			2,449				4,218				13,191				17,777
Total cost of revenue			72,831				81,581				295,068				298,572
Gross profit			163,416				152,587				607,177				575,937
Operating expenses:
Research and development, net			32,800				31,322				130,644				123,291
Selling, general and administrative			90,595				108,008				392,939				376,808
Amortization of other acquired intangible assets			6,351				7,061				26,238				28,995
Total operating expenses			129,746				146,391				549,821				529,094
Operating income			33,670				6,196				57,356				46,843
Other income (expense), net:
Interest income			1,559				86				3,301				233
Interest expense			(2,366	)			(1,605	)			(7,877	)			(10,325	)
Losses on early retirements of debt			—				—				—				(2,474	)
Other income, net			(1,204	)			1,438				1,982				5,227
Total other expense, net			(2,011	)			(81	)			(2,594	)			(7,339	)
Income from continuing operations before provision for income taxes			31,659				6,115				54,762				39,504
Provision for income taxes			18,564				10,375				39,103				23,853
Net income (loss)			13,095				(4,260	)			15,659				15,651
Net income attributable to noncontrolling interests			147				363				761				1,238
Net income (loss) attributable to Verint Systems Inc.			12,948				(4,623	)			14,898				14,413
Dividends on preferred stock			(5,200	)			(5,200	)			(20,800	)			(18,922	)
Net income (loss) attributable to Verint Systems Inc. common shares		$	7,748			$	(9,823	)		$	(5,902	)		$	(4,509	)
Net income (loss) per common share attributable to Verint Systems Inc.:
Basic		$	0.12			$	(0.15	)		$	(0.09	)		$	(0.07	)
Diluted		$	0.12			$	(0.15	)		$	(0.09	)		$	(0.07	)
Weighted-average common shares outstanding:
Basic			65,760				65,916				65,332				65,591
Diluted			66,131				65,916				65,332				65,591

Table 2 VERINT SYSTEMS INC. AND SUBSIDIARIES GAAP to Non-GAAP Cloud Metrics (Unaudited)
Cloud Revenue
		Three Months Ended January 31,								Year Ended January 31,
(in thousands)			2023				2022				2023				2022
SaaS revenue – GAAP(1)(7)		$	131,134			$	100,685			$	444,205			$	322,764
Bundled SaaS revenue – GAAP			61,555				52,396				222,560				183,035
Unbundled SaaS revenue – GAAP			69,579				48,289				221,645				139,729
Optional managed services revenue – GAAP			14,261				15,960				61,388				65,648
Cloud revenue – GAAP(3)(7)			145,395				116,645				505,593				388,412
Estimated SaaS revenue adjustments			490				1,920				2,813				5,621
Estimated bundled SaaS revenue adjustments			490				1,920				2,813				5,558
Estimated unbundled SaaS revenue adjustments			—				—				—				63
Estimated optional managed services revenue adjustments			14				81				175				512
Estimated cloud revenue adjustments			504				2,001				2,988				6,133
SaaS revenue – non-GAAP(2)(7)			131,624				102,605				447,018				328,385
Bundled SaaS revenue – non-GAAP			62,045				54,316				225,373				188,593
Unbundled SaaS revenue – non-GAAP			69,579				48,289				221,645				139,792
Optional managed services revenue – non-GAAP			14,275				16,041				61,563				66,160
Cloud revenue – non-GAAP(4)(7)		$	145,899			$	118,646			$	508,581			$	394,545
New SaaS ACV
		Three Months Ended January 31,								Year Ended January 31,
(in thousands)			2023				2022				2023				2022
New SaaS ACV(5)(7)		$	23,875			$	30,288			$	102,053			$	93,972
New SaaS ACV Growth YoY			(21.2	)%			38.3	%			8.6	%			42.0	%
New Perpetual License Equivalent Bookings
		Three Months Ended January 31,								Year Ended January 31,
(in thousands)			2023				2022				2023				2022
New perpetual license equivalent bookings(6)(7)		$	74,427			$	92,633			$	303,718			$	302,112
New perpetual license equivalent bookings change YoY			(19.7	)%			12.5	%			0.5	%			17.0	%
New perpetual license equivalent bookings – SaaS component		$	45,053			$	56,321			$	189,216			$	158,911
New perpetual license equivalent bookings – SaaS growth YoY			(20.0	)%			40.8	%			19.1	%			37.3	%
% of new perpetual license equivalent bookings from SaaS			60.5	%			60.8	%			62.3	%			52.6	%
New perpetual license equivalent bookings – Perpetual component		$	29,374			$	36,312			$	114,502			$	143,201
New perpetual license equivalent bookings – Perpetual change YoY			(19.1	)%			(14.2	)%			(20.0	)%			0.4	%
% of new perpetual license equivalent bookings from Perpetual			39.5	%			39.2	%			37.7	%			47.4	%
SaaS ARR
										Year Ended January 31,
(in thousands)											2023				2022
SaaS ARR										$	497,982			$	397,493
SaaS ARR Growth YoY											25.3	%			46.6	%

(1) GAAP SaaS revenue for the three months and year ended January 31, 2023 was $133.1 million, representing 32% year-over-year growth and $451.7 million, representing 40% year-over-year growth, respectively, on a constant currency basis.

(2) Non-GAAP SaaS revenue for the three months and year ended January 31, 2023 was $133.6 million, representing 30% year-over-year growth and $454.6 million, representing 38% year-over-year growth, respectively, on a constant currency basis.

(3) GAAP cloud revenue for the three months and year ended January 31, 2023 was $147.9 million, representing 27% year-over-year growth and $515.5 million, representing 33% year-over-year growth, respectively, on a constant currency basis.

(4) Non-GAAP cloud revenue for the three months and year ended January 31, 2023 was $148.4 million, representing 25% year-over-year growth and $518.6 million, representing 31% year-over-year growth, respectively, on a constant currency basis.

Contacts

Investor Relations
Matthew Frankel, CFA

Verint Systems Inc.

(631) 962-9672

matthew.frankel@verint.com

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