Verint Announces Q2 FY2021 Results

Strong Sequential Growth in Q2; Expect Momentum to Continue in Second Half of Year

Strong Cloud Momentum; New SaaS ACV up 65% Year-over-Year

Cash From Operations Increases 39% in First Half of Year

Separation on Track for Shortly After Fiscal Year-End

MELVILLE, N.Y.–(BUSINESS WIRE)–Verint® Systems Inc. (NASDAQ: VRNT), a global Actionable Intelligence® leader, today announced results for the three and six months ended July 31, 2020 (FY2021). Revenue for the three months ended July 31, 2020 was $309 million on a GAAP basis and $313 million on a non-GAAP basis. For the three months ended July 31, 2020, diluted EPS was $0.09 on a GAAP basis, and $1.06 on a non-GAAP basis. Revenue for the six months ended July 31, 2020 was $596 million on a GAAP basis and $605 million on a non-GAAP basis. For the six months ended July 31, 2020, diluted EPS was $0.00 on a GAAP basis, and $1.59 on a non-GAAP basis.

“We had a solid Q2 with strong sequential revenue growth, year-over-year operating income growth and cash from operations growth. Our cloud business accelerated, and our on-premises business began to recover from the initial impact of COVID-19. We expect our cloud momentum to continue in the second half of the year and on-premises deals to continue to gradually recover,” said Dan Bodner, CEO.

Bodner continued, “We are also pleased to report significant progress on our plan to create two independent public companies and that we are on track to complete the separation shortly after fiscal year-end. Both businesses are market leaders and we believe both companies will have significant growth opportunities post separation.”

Customer Engagement Q2 Highlights

  • SaaS Bookings Growth: New SaaS ACV up 65% y-o-y
  • Cloud Revenue: Up ~30% y-o-y excluding ForeSee
  • Recurring Software Revenue: Percentage of software that is recurring increased to 80%, up ~600bps y-o-y
  • See Tables 2, 4 and 7 for additional Customer Engagement financial information

“Our cloud-first strategy is working well. In Q2, we delivered strong cloud revenue growth, strong SaaS bookings growth, and an increase in the percentage of our software revenue that is recurring. During the quarter, we continued to win new cloud customers and displace competitors due to our strong differentiation in artificial intelligence and automation and communications infrastructure neutrality. In addition to receiving many seven figure cloud orders in Q2, we received an initial multi-million dollar order from the Social Security Administration and expect expansions as the project scales over time. Looking forward, we expect our cloud momentum to continue and we are on track to meet our target of completing our cloud transition within two years,” said Bodner.

Cyber Intelligence Q2 Highlights

  • Large Orders: Including two for ~$15 million each, one for ~$10 million, and four for ~$4 million each
  • Software Model Drives Margin Expansion: Estimated fully allocated gross margins up ~500bps y-o-y and estimated fully allocated operating margins up ~600bps y-o-y
  • See Tables 2, 5 and 7 for additional Cyber Intelligence financial information

“In Cyber Intelligence, we continued to win many large deals in Q2 for our analytical security software. Our margins expanded in Q2, with our estimated fully allocated operating margins increasing approximately 600bps year-over-year. As a leader in analytical security software, customers come to Verint for our mission critical security software to help prevent terror, crime and cyber threats and to accelerate investigations,” said Bodner.

Outlook

Doug Robinson, CFO, added, “I am pleased with our Q2 performance, particularly with our strong cloud momentum. Looking forward, our view of the year has improved and we expect our non-GAAP revenue to improve sequentially both in Q3 and Q4 and adjusted EBITDA for the year to be similar to last year. We are also pleased with the progress we are making towards our separation and we expect to make our initial confidential submission to the SEC later this month.”

Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the three and six months ended July 31, 2020 and outlook. An online, real-time webcast of the conference call will be available on our website at www.verint.com. 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 7557358. 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) is a global leader in Actionable Intelligence® solutions with a focus on customer engagement optimization and cyber intelligence. Today, over 10,000 organizations in more than 180 countries—including over 85 percent of the Fortune 100—count on intelligence from Verint solutions to make more informed, effective and timely decisions. Learn more about how we’re creating A Smarter World with Actionable Intelligence® at www.verint.com.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Verint Systems Inc. These forward-looking statements are not guarantees of future performance and they are based on management’s expectations that involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, any of which could cause our actual results or conditions to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual results or conditions to differ materially from current expectations include, among others: uncertainties regarding the impact of changes in macroeconomic and/or global conditions, including as a result of slowdowns, recessions, economic instability, political unrest, armed conflicts, natural disasters, or outbreaks of disease, such as the COVID-19 pandemic, as well as the resulting impact on information technology spending and government budgets in both developed countries and developing countries, on our business; risks that our customers delay, cancel, or refrain from placing orders, refrain from renewing subscriptions or service contracts, or are unable to honor contractual commitments or payment obligations due to liquidity issues or other challenges in their budgets and business, due to the COVID-19 pandemic or otherwise; risks that continuing 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 needs, while simultaneously preserving our legacy businesses and migrating away from areas of commoditization; risks due to aggressive competition in all of our markets, including with respect to maintaining revenue, margins, and sufficient levels of investment in our business and operations; risks created by the continued consolidation of our competitors or the introduction of large competitors in our markets with greater resources than we have; risks associated with our ability to successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with valuations, reputational considerations, capital constraints, costs and expenses, maintaining profitability levels, expansion into new areas, management distraction, post-acquisition integration activities, and potential asset impairments; risks relating to our ability to properly manage investments in our business and operations, execute on growth initiatives, and enhance our existing operations and infrastructure, including the proper prioritization and allocation of limited financial and other resources; risks associated with our ability to retain, recruit, and train qualified personnel in regions in which we operate, including in new markets and growth areas we may enter; risks that we may be unable to establish and maintain relationships with key resellers, partners, and systems integrators and risks associated with our reliance on third-party suppliers, partners, or original equipment manufacturers (“OEMs”) for certain components, products, or services, including companies that may compete with us or work with our competitors; risks associated with the mishandling or perceived mishandling of sensitive or confidential information, including information that may belong to our customers or other third parties, and with security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions; risks that our products 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; risks associated with our significant international operations, including, among others, in Israel, Europe, and Asia, 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 political and reputational factors related to our business or operations, including reputational risks associated with our security solutions and our ability to maintain security clearances where required, as well as risks associated with a significant amount of our business coming from domestic and foreign government customers; risks associated with complex and changing local and foreign regulatory environments in the jurisdictions in which we operate, including, among others, with respect to trade compliance, anti-corruption, information security, data privacy and protection, tax, labor, government contracts, relating to our own operations, the products and services we offer, and/or the use of our solutions by our customers; challenges associated with selling sophisticated solutions, including with respect to assisting customers in understanding and realizing the benefits of our solutions, and developing, offering, implementing, and maintaining a broad and sophisticated solution portfolio; challenges associated with pursuing larger sales opportunities, including with respect to longer sales cycles, transaction reductions, deferrals, or cancellations during the sales cycle; risk of customer concentration; challenges associated with our ability to accurately forecast when a sales opportunity will convert to an order, or to accurately forecast revenue and expenses; challenges associated with our Customer Engagement segment cloud transition and our Cyber Intelligence segment software model transition, and risk of increased volatility of our operating results from period to period; 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 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 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 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 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 changing accounting principles or standards, tax laws and regulations, tax rates, and the continuing availability of expected tax benefits; risks associated with market volatility in the prices of our common stock and convertible notes based on our performance, third-party publications or speculation, or other factors and risks associated with actions of activist stockholders; risks associated with the issuance of preferred stock to an affiliate of Apax Partners, including with respect to completion of the second tranche of the investment and Apax’s significant ownership position and potential that its interests will not be aligned with those of our common stockholders; and risks associated with the planned spin-off of our Cyber Intelligence Solutions business, including the possibility that the spin-off transaction may not be completed in the expected timeframe or at all, that it will not achieve the benefits anticipated, or that it may negatively impact our operations or stock price, including as a result of management distraction from our business. 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, 2020, our Quarterly Report on Form 10-Q for the quarter ended April 30, 2020, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2020, when filed, and other filings we make with the SEC.

VERINT, ACTIONABLE INTELLIGENCE, THE CUSTOMER ENGAGEMENT COMPANY, CUSTOMER ENGAGEMENT SOLUTIONS and CYBER INTELLIGENCE SOLUTIONS 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
July 31,

 

Six Months Ended
July 31,

(in thousands, except per share data)

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

Product

 

$

96,076

 

 

$

109,983

 

 

$

173,360

 

 

$

214,207

 

Service and support

 

213,033

 

 

214,322

 

 

423,044

 

 

425,357

 

Total revenue

 

309,109

 

 

324,305

 

 

596,404

 

 

639,564

 

Cost of revenue:

 

 

 

 

 

 

 

 

Product

 

24,648

 

 

29,424

 

 

45,966

 

 

57,544

 

Service and support

 

69,023

 

 

81,430

 

 

145,422

 

 

160,791

 

Amortization of acquired technology

 

4,428

 

 

5,587

 

 

9,037

 

 

12,294

 

Total cost of revenue

 

98,099

 

 

116,441

 

 

200,425

 

 

230,629

 

Gross profit

 

211,010

 

 

207,864

 

 

395,979

 

 

408,935

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development, net

 

55,229

 

 

58,685

 

 

114,308

 

 

115,854

 

Selling, general and administrative

 

105,406

 

 

126,265

 

 

217,057

 

 

247,986

 

Amortization of other acquired intangible assets

 

8,058

 

 

7,639

 

 

16,123

 

 

15,352

 

Total operating expenses

 

168,693

 

 

192,589

 

 

347,488

 

 

379,192

 

Operating income

 

42,317

 

 

15,275

 

 

48,491

 

 

29,743

 

Other income (expense), net:

 

 

 

 

 

 

 

 

Interest income

 

839

 

 

1,687

 

 

1,856

 

 

3,113

 

Interest expense

 

(10,263)

 

 

(10,107)

 

 

(20,961)

 

 

(20,041)

 

Other (expense) income, net

 

(12,211)

 

 

909

 

 

(14,441)

 

 

119

 

Total other expense, net

 

(21,635)

 

 

(7,511)

 

 

(33,546)

 

 

(16,809)

 

Income before provision (benefit) for income taxes

 

20,682

 

 

7,764

 

 

14,945

 

 

12,934

 

Provision (benefit) for income taxes

 

10,095

 

 

(4,507)

 

 

8,333

 

 

(3,098)

 

Net income

 

10,587

 

 

12,271

 

 

6,612

 

 

16,032

 

Net income attributable to noncontrolling interests

 

2,093

 

 

1,713

 

 

4,132

 

 

3,898

 

Net income attributable to Verint Systems Inc.

 

8,494

 

 

10,558

 

 

2,480

 

 

12,134

 

Dividends on preferred stock

 

(2,484)

 

 

 

 

(2,484)

 

 

 

Net income (loss) attributable to Verint Systems Inc. common shares

 

$

6,010

 

 

$

10,558

 

 

$

(4)

 

 

$

12,134

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share attributable to Verint Systems Inc.:

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

$

0.16

 

 

$

 

 

$

0.18

 

Diluted

 

$

0.09

 

 

$

0.16

 

 

$

 

 

$

0.18

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

64,954

 

 

66,272

 

 

64,670

 

 

65,870

 

Diluted

 

65,849

 

 

67,519

 

 

64,670

 

 

67,338

 

Table 2

VERINT SYSTEMS INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures by Segment

(Unaudited)

 

 

 

Three Months Ended
July 31,

 

 

2020

 

2019

(in thousands)

 

Customer

Engagement

 

Cyber

Intelligence

 

Consolidated

 

Customer

Engagement

 

Cyber

Intelligence

 

Consolidated

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Total GAAP revenue

 

$

204,080

 

 

$

105,029

 

 

$

309,109

 

 

$

211,436

 

 

$

112,869

 

 

$

324,305

 

Revenue adjustments

 

3,066

 

 

1,238

 

 

4,304

 

 

6,988

 

 

24

 

 

7,012

 

Total non-GAAP revenue

 

$

207,146

 

 

$

106,267

 

 

$

313,413

 

 

$

218,424

 

 

$

112,893

 

 

$

331,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED GROSS PROFIT AND GROSS MARGIN

 

 

 

 

 

 

 

 

 

 

 

 

Segment products costs

 

$

8,071

 

 

$

15,327

 

 

$

23,398

 

 

$

8,861

 

 

$

18,654

 

 

$

27,515

 

Segment service expenses

 

50,986

 

 

14,801

 

 

65,787

 

 

57,844

 

 

18,924

 

 

76,768

 

Amortization of acquired technology

 

4,189

 

 

239

 

 

4,428

 

 

5,224

 

 

363

 

 

5,587

 

Stock-based compensation expenses (1)

 

1,346

 

 

392

 

 

1,738

 

 

1,570

 

 

464

 

 

2,034

 

Shared support expenses allocation (3)

 

1,797

 

 

951

 

 

2,748

 

 

2,959

 

 

1,578

 

 

4,537

 

Total GAAP estimated fully allocated cost of revenue

 

66,389

 

 

31,710

 

 

98,099

 

 

76,458

 

 

39,983

 

 

116,441

 

GAAP estimated fully allocated gross profit

 

137,691

 

 

73,319

 

 

211,010

 

 

134,978

 

 

72,886

 

 

207,864

 

GAAP estimated fully allocated gross margin

 

67.5

%

 

69.8

%

 

68.3

%

 

63.8

%

 

64.6

%

 

64.1

%

Revenue adjustments

 

3,066

 

 

1,238

 

 

4,304

 

 

6,988

 

 

24

 

 

7,012

 

Amortization of acquired technology

 

4,189

 

 

239

 

 

4,428

 

 

5,224

 

 

363

 

 

5,587

 

Stock-based compensation expenses (1)

 

1,346

 

 

392

 

 

1,738

 

 

1,570

 

 

464

 

 

2,034

 

Acquisition expenses, net (4)

 

34

 

 

19

 

 

53

 

 

3

 

 

2

 

 

5

 

Restructuring expenses (4)

 

(39)

 

 

(20)

 

 

(59)

 

 

688

 

 

367

 

 

1,055

 

Non-GAAP estimated fully allocated gross profit

 

$

146,287

 

 

$

75,187

 

 

$

221,474

 

 

$

149,451

 

 

$

74,106

 

 

$

223,557

 

Non-GAAP estimated fully allocated gross margin

 

70.6

%

 

70.8

%

 

70.7

%

 

68.4

%

 

65.6

%

 

67.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED RESEARCH AND DEVELOPMENT, NET

 

 

 

 

 

 

 

 

 

 

 

 

Segment expenses

 

$

22,194

 

 

$

23,335

 

 

$

45,529

 

 

$

26,871

 

 

$

22,418

 

 

$

49,289

 

Stock-based compensation expenses (2)

 

1,933

 

 

1,023

 

 

2,956

 

 

2,182

 

 

1,165

 

 

3,347

 

Shared support expenses allocation (3)

 

4,410

 

 

2,334

 

 

6,744

 

 

3,944

 

 

2,105

 

 

6,049

 

GAAP estimated fully allocated research and development, net

 

28,537

 

 

26,692

 

 

55,229

 

 

32,997

 

 

25,688

 

 

58,685

 

As a percentage of GAAP revenue

 

14.0

%

 

25.4

%

 

17.9

%

 

15.6

%

 

22.8

%

 

18.1

%

Stock-based compensation expenses (2)

 

(1,933)

 

 

(1,023)

 

 

(2,956)

 

 

(2,182)

 

 

(1,165)

 

 

(3,347)

 

Acquisition expenses, net (4)

 

(78)

 

 

(41)

 

 

(119)

 

 

(140)

 

 

(75)

 

 

(215)

 

Restructuring expenses (4)

 

(206)

 

 

(110)

 

 

(316)

 

 

(80)

 

 

(43)

 

 

(123)

 

Other adjustments (4)

 

(45)

 

 

(24)

 

 

(69)

 

 

 

 

 

 

 

Non-GAAP estimated fully allocated research and development, net

 

$

26,275

 

 

$

25,494

 

 

$

51,769

 

 

$

30,595

 

 

$

24,405

 

 

$

55,000

 

As a percentage of non-GAAP revenue

 

12.7

%

 

24.0

%

 

16.5

%

 

14.0

%

 

21.6

%

 

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Segment expenses

 

$

36,307

 

 

$

17,507

 

 

$

53,814

 

 

$

48,076

 

 

$

22,407

 

 

$

70,483

 

Stock-based compensation expenses (2)

 

8,308

 

 

4,395

 

 

12,703

 

 

9,891

 

 

5,279

 

 

15,170

 

Shared support expenses allocation (3)

 

25,433

 

 

13,456

 

 

38,889

 

 

26,479

 

 

14,133

 

 

40,612

 

GAAP estimated fully allocated selling, general and administrative expenses

 

70,048

 

 

35,358

 

 

105,406

 

 

84,446

 

 

41,819

 

 

126,265

 

As a percentage of GAAP revenue

 

34.3

%

 

33.7

%

 

34.1

%

 

39.9

%

 

37.1

%

 

38.9

%

Stock-based compensation expenses (2)

 

(8,308)

 

 

(4,395)

 

 

(12,703)

 

 

(9,891)

 

 

(5,279)

 

 

(15,170)

 

Acquisition expenses, net (4)

 

(1,596)

 

 

(843)

 

 

(2,439)

 

 

(1,492)

 

 

(796)

 

 

(2,288)

 

Restructuring expenses (4)

 

(424)

 

 

(224)

 

 

(648)

 

 

(300)

 

 

(161)

 

 

(461)

 

Separation expenses (4)

 

(4,151)

 

 

(2,196)

 

 

(6,347)

 

 

(145)

 

 

(78)

 

 

(223)

 

Other adjustments (4)

 

838

 

 

443

 

 

1,281

 

 

(3,591)

 

 

(1,918)

 

 

(5,509)

 

Non-GAAP estimated fully allocated selling, general and administrative expenses

 

$

56,407

 

 

$

28,143

 

 

$

84,550

 

 

$

69,027

 

 

$

33,587

 

 

$

102,614

 

As a percentage of non-GAAP revenue

 

27.2

%

 

26.5

%

 

27.0

%

 

31.6

%

 

29.8

%

 

31.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME, OPERATING MARGIN, AND ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

GAAP estimated fully allocated operating income

 

$

31,387

 

 

$

10,930

 

 

$

42,317

 

 

$

10,026

 

 

$

5,249

 

 

$

15,275

 

GAAP estimated fully allocated operating margin

 

15.4

%

 

10.4

%

 

13.7

%

 

4.7

%

 

4.7

%

 

4.7

%

Revenue adjustments

 

3,066

 

 

1,238

 

 

4,304

 

 

6,988

 

 

24

 

 

7,012

 

Amortization of acquired technology

 

4,189

 

 

239

 

 

4,428

 

 

5,224

 

 

363

 

 

5,587

 

Amortization of other acquired intangible assets

 

7,719

 

 

339

 

 

8,058

 

 

7,509

 

 

130

 

 

7,639

 

Stock-based compensation expenses (2)

 

11,587

 

 

5,810

 

 

17,397

 

 

13,643

 

 

6,908

 

 

20,551

 

Acquisition expenses, net (4)

 

1,708

 

 

903

 

 

2,611

 

 

1,635

 

 

873

 

 

2,508

 

Restructuring expenses (4)

 

591

 

 

314

 

 

905

 

 

1,068

 

 

571

 

 

1,639

 

Separation expenses (4)

 

4,151

 

 

2,196

 

 

6,347

 

 

145

 

 

78

 

 

223

 

Other adjustments (4)

 

(793)

 

 

(419)

 

 

(1,212)

 

 

3,591

 

 

1,918

 

 

5,509

 

Non-GAAP estimated fully allocated operating income

 

63,605

 

 

21,550

 

 

85,155

 

 

49,829

 

 

16,114

 

 

65,943

 

Depreciation and amortization (5)

 

6,953

 

 

3,679

 

 

10,632

 

 

5,146

 

 

2,746

 

 

7,892

 

Estimated fully allocated adjusted EBITDA

 

$

70,558

 

 

$

25,229

 

 

$

95,787

 

 

$

54,975

 

 

$

18,860

 

 

$

73,835

 

Non-GAAP estimated fully allocated operating margin

 

30.7

%

 

20.3

%

 

27.2

%

 

22.8

%

 

14.3

%

 

19.9

%

Estimated fully allocated adjusted EBITDA margin

 

34.1

%

 

23.7

%

 

30.6

%

 

25.2

%

 

16.7

%

 

22.3

%

 

 

Six Months Ended
July 31,

 

 

2020

 

2019

(in thousands)

 

Customer

Engagement

 

Cyber

Intelligence

 

Consolidated

 

Customer

Engagement

 

Cyber

Intelligence

 

Consolidated

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Total GAAP revenue

 

$

389,945

 

 

$

206,459

 

 

$

596,404

 

 

$

418,531

 

 

$

221,033

 

 

$

639,564

 

Revenue adjustments

 

6,328

 

 

2,330

 

 

8,658

 

 

15,760

 

 

151

 

 

15,911

 

Total non-GAAP revenue

 

$

396,273

 

 

$

208,789

 

 

$

605,062

 

 

$

434,291

 

 

$

221,184

 

 

$

655,475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED GROSS PROFIT AND GROSS MARGIN

 

 

 

 

 

 

 

 

 

 

 

 

Segment products costs

 

$

15,205

 

 

$

28,828

 

 

$

44,033

 

 

$

17,323

 

 

$

36,504

 

 

$

53,827

 

Segment service expenses

 

106,642

 

 

32,645

 

 

139,287

 

 

115,671

 

 

37,600

 

 

153,271

 

Amortization of acquired technology

 

8,545

 

 

492

 

 

9,037

 

 

10,612

 

 

1,682

 

 

12,294

 

Stock-based compensation expenses (1)

 

2,094

 

 

611

 

 

2,705

 

 

2,654

 

 

784

 

 

3,438

 

Shared support expenses allocation (3)

 

3,508

 

 

1,855

 

 

5,363

 

 

5,086

 

 

2,713

 

 

7,799

 

Total GAAP estimated fully allocated cost of revenue

 

135,994

 

 

64,431

 

 

200,425

 

 

151,346

 

 

79,283

 

 

230,629

 

GAAP estimated fully allocated gross profit

 

253,951

 

 

142,028

 

 

395,979

 

 

267,185

 

 

141,750

 

 

408,935

 

GAAP estimated fully allocated gross margin

 

65.1

%

 

68.8

%

 

66.4

%

 

63.8

%

 

64.1

%

 

63.9

%

Revenue adjustments

 

6,328

 

 

2,330

 

 

8,658

 

 

15,760

 

 

151

 

 

15,911

 

Amortization of acquired technology

 

8,545

 

 

492

 

 

9,037

 

 

10,612

 

 

1,682

 

 

12,294

 

Stock-based compensation expenses (1)

 

2,094

 

 

611

 

 

2,705

 

 

2,654

 

 

784

 

 

3,438

 

Acquisition expenses, net (4)

 

158

 

 

84

 

 

242

 

 

13

 

 

7

 

 

20

 

Restructuring expenses (4)

 

1,018

 

 

539

 

 

1,557

 

 

981

 

 

523

 

 

1,504

 

Non-GAAP estimated fully allocated gross profit

 

$

272,094

 

 

$

146,084

 

 

$

418,178

 

 

$

297,205

 

 

$

144,897

 

 

$

442,102

 

Non-GAAP estimated fully allocated gross margin

 

68.7

%

 

70.0

%

 

69.1

%

 

68.4

%

 

65.5

%

 

67.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED RESEARCH AND DEVELOPMENT, NET

 

 

 

 

 

 

 

 

 

 

 

 

Segment expenses

 

$

46,095

 

 

$

49,006

 

 

$

95,101

 

 

$

53,320

 

 

$

44,338

 

 

$

97,658

 

Stock-based compensation expenses (2)

 

3,461

 

 

1,831

 

 

5,292

 

 

3,871

 

 

2,066

 

 

5,937

 

Shared support expenses allocation (3)

 

9,100

 

 

4,815

 

 

13,915

 

 

7,993

 

 

4,266

 

 

12,259

 

GAAP estimated fully allocated research and development, net

 

58,656

 

 

55,652

 

 

114,308

 

 

65,184

 

 

50,670

 

 

115,854

 

As a percentage of GAAP revenue

 

15.0

%

 

27.0

%

 

19.2

%

 

15.6

%

 

22.9

%

 

18.1

%

Stock-based compensation expenses (2)

 

(3,461)

 

 

(1,831)

 

 

(5,292)

 

 

(3,871)

 

 

(2,066)

 

 

(5,937)

 

Acquisition expenses, net (4)

 

(271)

 

 

(143)

 

 

(414)

 

 

(266)

 

 

(142)

 

 

(408)

 

Restructuring expenses (4)

 

(812)

 

 

(430)

 

 

(1,242)

 

 

(379)

 

 

(202)

 

 

(581)

 

Other adjustments (4)

 

(45)

 

 

(24)

 

 

(69)

 

 

 

 

 

 

 

Non-GAAP estimated fully allocated research and development, net

 

$

54,067

 

 

$

53,224

 

 

$

107,291

 

 

$

60,668

 

 

$

48,260

 

 

$

108,928

 

As a percentage of non-GAAP revenue

 

13.6

%

 

25.5

%

 

17.7

%

 

14.0

%

 

21.8

%

 

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESTIMATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Segment expenses

 

$

76,451

 

 

$

39,904

 

 

$

116,355

 

 

$

94,274

 

 

$

45,966

 

 

$

140,240

 

Stock-based compensation expenses (2)

 

15,424

 

 

8,160

 

 

23,584

 

 

18,438

 

 

9,841

 

 

28,279

 

Shared support expenses allocation (3)

 

50,435

 

 

26,683

 

 

77,118

 

 

51,812

 

 

27,655

 

 

79,467

 

GAAP estimated fully allocated selling, general and administrative expenses

 

142,310

 

 

74,747

 

 

217,057

 

 

164,524

 

 

83,462

 

 

247,986

 

As a percentage of GAAP revenue

 

36.5

%

 

36.2

%

 

36.4

%

 

39.3

%

 

37.8

%

 

38.8

%

Stock-based compensation expenses (2)

 

(15,424)

 

 

(8,160)

 

 

(23,584)

 

 

(18,438)

 

 

(9,841)

 

 

(28,279)

 

Acquisition expenses, net (4)

 

889

 

 

471

 

 

1,360

 

 

(3,878)

 

 

(2,070)

 

 

(5,948)

 

Restructuring expenses (4)

 

(2,346)

 

 

(1,241)

 

 

(3,587)

 

 

(646)

 

 

(345)

 

 

(991)

 

Separation expenses (4)

 

(9,236)

 

 

(4,886)

 

 

(14,122)

 

 

(147)

 

 

(79)

 

 

(226)

 

Other adjustments (4)

 

777

 

 

411

 

 

1,188

 

 

(4,932)

 

 

(2,633)

 

 

(7,565)

 

Non-GAAP estimated fully allocated selling, general and administrative expenses

 

$

116,970

 

 

$

61,342

 

 

$

178,312

 

 

$

136,483

 

 

$

68,494

 

 

$

204,977

 

As a percentage of non-GAAP revenue

 

29.5

%

 

29.4

%

 

29.5

%

 

31.4

%

 

31.0

%

 

31.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME, OPERATING MARGIN, AND ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

GAAP estimated fully allocated operating income

 

$

37,502

 

 

$

10,989

 

 

$

48,491

 

 

$

22,380

 

 

$

7,363

 

 

$

29,743

 

GAAP estimated fully allocated operating margin

 

9.6

%

 

5.3

%

 

8.1

%

 

5.3

%

 

3.3

%

 

4.7

%

Revenue adjustments

 

6,328

 

 

2,330

 

 

8,658

 

 

15,760

 

 

151

 

 

15,911

 

Amortization of acquired technology

 

8,545

 

 

492

 

 

9,037

 

 

10,612

 

 

1,682

 

 

12,294

 

Amortization of other acquired intangible assets

 

15,483

 

 

640

 

 

16,123

 

 

15,097

 

 

255

 

 

15,352

 

Stock-based compensation expenses (2)

 

20,979

 

 

10,602

 

 

31,581

 

 

24,963

 

 

12,691

 

 

37,654

 

Acquisition expenses, net (4)

 

(460)

 

 

(244)

 

 

(704)

 

 

4,157

 

 

2,219

 

 

6,376

 

Restructuring expenses (4)

 

4,176

 

 

2,210

 

 

6,386

 

 

2,006

 

 

1,070

 

 

3,076

 

Separation expenses (4)

 

9,236

 

 

4,886

 

 

14,122

 

 

147

 

 

79

 

 

226

 

Other adjustments (4)

 

(732)

 

 

(387)

 

 

(1,119)

 

 

4,932

 

 

2,633

 

 

7,565

 

Non-GAAP estimated fully allocated operating income

 

101,057

 

 

31,518

 

 

132,575

 

 

100,054

 

 

28,143

 

 

128,197

 

Depreciation and amortization (5)

 

13,858

 

 

7,332

 

 

21,190

 

 

10,279

 

 

5,486

 

 

15,765

 

Estimated fully allocated adjusted EBITDA

 

$

114,915

 

 

$

38,850

 

 

$

153,765

 

 

$

110,333

 

 

$

33,629

 

 

$

143,962

 

Non-GAAP estimated fully allocated operating margin

 

25.5

%

 

15.1

%

 

21.9

%

 

23.0

%

 

12.7

%

 

19.6

%

Estimated fully allocated adjusted EBITDA margin

 

29.0

%

 

18.6

%

 

25.4

%

 

25.4

%

 

15.2

%

 

22.0

%

Contacts

Investor Relations
Alan Roden

Verint Systems Inc.

(631) 962-9304

alan.roden@verint.com

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