Strong Momentum Continues Across Key SaaS Metrics

Also Announces New $200 Million Share Buyback Program

MELVILLE, N.Y.--(BUSINESS WIRE)-- Verint® (Nasdaq: VRNT), The Customer Engagement Company™, today announced results for the three and nine months ended October 31, 2022 (FYE 2023). Revenue for the three months ended October 31, 2022 was $225 million on a GAAP basis representing 0.2% year-over-year growth and $226 million on a non-GAAP basis, representing (0.6)% year-over-year change and 2.2% year-over-year growth on a constant currency basis. Revenue for the nine months ended October 31, 2022 was $666 million on a GAAP basis, representing 4.0% year-over-year growth, and $668 million on a non-GAAP basis, representing 3.7% year-over-year growth and 6.0% year-over-year growth on a constant currency basis. For the three months ended October 31, 2022, net loss per share was $(0.02) on a GAAP basis and diluted EPS was $0.69 on a non-GAAP basis. For the nine months ended October 31, 2022, net loss per share was $(0.21) on a GAAP basis and diluted EPS was $1.77 on a non-GAAP basis.

Third Quarter Highlights

Note: CC represents constant currency.

• New SaaS ACV Growth: Up 51% year-over-year on a constant currency basis
• Favorable Mix Shift: 88% of Software Revenue is Recurring (up from 80% last year)
• Cloud Revenue: Up 35% year-over-year on a constant currency basis
• New Customer Additions: Added 100+ new logos

“I am pleased to report another quarter with continued strong SaaS momentum across key metrics driven by brands looking to close the engagement capacity gap. We had many significant wins from existing and new customers and delivered strong SaaS Revenue growth and New SaaS ACV bookings growth with our bookings mix continuing to shift to SaaS. Revenue came in line with guidance with both gross margins and diluted EPS coming in strong ahead of our prior guidance”, said Dan Bodner, Verint CEO.

Year-to-Date Highlights

Note: CC represents constant currency.

• New SaaS ACV Growth: Up 25% year-over-year on a constant currency basis
• Favorable Mix Shift: 85% of Software Revenue is Recurring (up from 82% last year)
• Cloud Revenue: Up 34% year-over-year on a constant currency basis
• New Customer Additions: Added 100+ new logos each quarter

Doug Robinson, Verint CFO, added, “Throughout this year we delivered strong SaaS metrics and are pleased with our cloud transition. We are also pleased with our ability to manage through the FX environment with a natural hedge on the bottom line. In Q3, we saw a change in behavior from our perpetual license customers and expect perpetual revenue to come in lower than our original outlook. Our current outlook reflects continued strong SaaS growth, including an acceleration in New SaaS ACV bookings in the second half of the year, as well as a continued perpetual revenue decline.”

Share Buyback Program

Verint today also announced that our Board of Directors has authorized a new share repurchase program whereby we may repurchase up to $200 million of common stock over the period from December 12, 2022 until January 31, 2025. We may utilize a number of different methods to effect the repurchases, including but not limited to, open market purchases and accelerated share repurchases, and some or all of the repurchases may be made through Rule 10b5-1 plans. The specific timing, price, and size of purchases will depend on prevailing stock prices, general market and economic conditions, and other considerations. The program may be extended, suspended, or discontinued at any time without prior notice and does not obligate us to acquire any particular amount of common stock.

Mr. Bodner continued, “Long term, we operate in a favorable market that supports sustainable SaaS growth. Our new $200 million share buyback program reflects the confidence we have in our long term opportunity.”

FYE 2023 Outlook

We are adjusting our non-GAAP annual outlook for the year ending January 31, 2023 reflecting current trends as follows:

• Revenue: $900 million +/- 2%, reflecting 5% year-over-year growth on a constant currency basis
• SaaS Revenue Growth: More than 35% year-over-year growth with cloud revenue growing more than 30% year-over-year both on a constant currency basis
• Diluted EPS: $2.50 at the midpoint of our revenue guidance, reflecting 10% year-over-year growth

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: $945 million +/- 2%, reflecting 6% year-over-year growth on a constant currency basis
• SaaS Revenue Growth: Approximately 30% year-over-year growth on a constant currency basis
• Diluted EPS: $2.70 at the midpoint of our revenue guidance, reflecting 8% year-over-year growth

Our non-GAAP outlook for the 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 $39 million.

Our non-GAAP outlook for the 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 $2 million and $3 million.
• Stock-based compensation expenses are expected to be between approximately $79 million and $82 million, 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 charges are expected to be between approximately $26 million and $29 million.

Our non-GAAP outlook for the 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 $30 million.

Our non-GAAP outlook for the 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.
• Stock-based compensation expenses are expected to be between approximately $69 million and $75 million, 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 charges are expected to be between approximately $20 million and $26 million.

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 and nine months ended October 31, 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 and nine months ended October 31, 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. 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, 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 spending by customers or partners, on our business; risks that our customers or partners 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 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 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 and cloud-based solutions, including with respect to longer sales cycles, more complex sales 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 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 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, 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 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, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2022, our Quarterly Report on Form 10-Q for the quarter ended October 31, 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.

(1) GAAP SaaS revenue for the three and nine months ended October 31, 2022 was $118.5 million, representing 44% year-over-year growth and $318.6 million, representing 43% year-over-year growth, respectively, on a constant currency basis.

(2) Non-GAAP SaaS revenue for the three and nine months ended October 31, 2022 was $118.9 million, representing 41% year-over-year growth and $321.0 million, representing 42% year-over-year growth, respectively, on a constant currency basis.

(3) GAAP cloud revenue for the three and nine months ended October 31, 2022 was $134.9 million, representing 37% year-over-year growth and $367.6 million, representing 35% year-over-year growth, respectively, on a constant currency basis.

(4) Non-GAAP cloud revenue for the three and nine months ended October 31, 2022 was $135.3 million, representing 35% year-over-year growth and $370.2 million, representing 34% year-over-year growth, respectively, on a constant currency basis.

(5) New SaaS ACV for the three and nine months ended October 31, 2022 was $27.6 million, representing 50.7% year-over-year growth and $79.7 million, representing 25.2% year-over-year growth, respectively, on a constant currency basis.

(6) New perpetual license equivalent bookings for the three and nine months ended October 31, 2022 were $72.5 million, representing a (3.9)% year-over-year change and $232.4 million, representing 11.0% year-over-year growth, respectively, on a constant currency basis.

(7) The foregoing measures at constant currency are calculated by translating the non-U.S. dollar portion of the current-period measure into U.S. dollars using average foreign currency exchange rates for the three and nine months ended October 31, 2021, as applicable, 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.

(1) For the three months ended October 31, 2022, non-GAAP other expense, net of $0.1 million was comprised of $1.4 million of interest and other expense, net of $1.3 million of foreign exchange gains primarily related to balance sheet revaluations.

(2) Adjusted for financing fee amortization.

(3) EPS calculation includes the more dilutive of either preferred stock dividends or conversion of preferred stock shares. Conversion of the outstanding preferred shares was more dilutive in three and nine months ended October 31, 2022 and 2021.