Group 1 - Verint Systems (NASDAQ: VRNT) reported solid Q3 earnings but faces pressure from weak topline growth and market concerns regarding AI and increased competition [1] - The company is experiencing challenges in maintaining growth amidst a competitive landscape [1] Group 2 - The article highlights the importance of analyzing undercovered companies, particularly in sectors like technology, software, electronics, and energy transition [1] - The author emphasizes the goal of identifying asymmetric investment opportunities to achieve market-beating returns [1]

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] Group 2 - Michael leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates on stock picks, and a weekly webinar for live advice [3] - The Deep Value Returns community is described as active, vibrant, and supportive, providing accessible chat options for both new and experienced investors [3]

Financial Data and Key Metrics Changes - In Q3 2025, revenue reached $224 million, exceeding guidance by approximately $14 million, representing about 5% year-over-year growth when adjusted for last year's divestiture [11][27] - Non-GAAP diluted EPS was $0.54, approximately $0.11 ahead of guidance [13][29] - Gross margin expanded to 72%, up approximately 70 basis points year-over-year, reflecting a favorable shift towards higher-margin recurring revenue [28] Business Line Data and Key Metrics Changes - Bundled SaaS revenue increased by 19% year-over-year, an acceleration from previous quarters, driven by AI momentum [12][30] - Unbundled SaaS revenue was reported at $73 million, ahead of expectations, with a forecast of around $100 million for Q4 due to a large pool of renewals [31] - New SaaS ACV bookings increased by 37% year-over-year in Q3 [36] Market Data and Key Metrics Changes - SaaS ARR increased by 11% year-over-year, driven by AI adoption, with expectations for double-digit growth in Q4 [37] - The company reported strong customer outcomes from AI deployments, with significant savings reported by clients in various sectors [16][18] Company Strategy and Development Direction - The company aims to maintain its leadership in the CX automation market, emphasizing its unique hybrid cloud model that allows for quick AI integration without disruptive infrastructure changes [44][50] - The focus on AI innovation is expected to drive future growth, with plans to showcase these advancements at the upcoming Investor Day [23][41] Management's Comments on Operating Environment and Future Outlook - Management noted that the contact center market is in the early stages of AI adoption, with increasing customer demand for tangible AI business outcomes [19][70] - There is an expectation for improved sales cycles in 2025 as customers gain a better understanding of AI solutions [67][71] Other Important Information - The company completed a tuck-in acquisition during Q3, contributing approximately $1 million in revenue, with potential for several million in Q4 [54][57] - The company is executing a $200 million share repurchase program and plans to expand on its capital allocation strategy during the Investor Day [39] Q&A Session Summary Question: Is Verint gaining market share in the contact center arena? - Management believes Verint is leading the CX automation market and gaining share due to strong customer-reported outcomes and a unique platform offering [44][46] Question: Can you provide details on the recent tuck-in acquisition? - The acquisition involved a startup focused on AI technology, contributing about $1 million in Q3, with potential for more in Q4 [54][57] Question: Are customers seeing changes in seat counts and net spending? - Some customers are reducing workforce while others are reallocating agents to focus on relationship building, indicating varied strategies in response to AI deployment [60][62] Question: How is the partnership with RingCentral expected to impact growth? - The partnership aims to enhance cloud-to-cloud integration, providing customers with seamless access to Verint's capabilities, expected to be a growth engine in 2025 [75][76] Question: What were the key announcements from the recent Engage conference? - The conference highlighted customer success stories and the introduction of new bots, with a focus on bundling capabilities to enhance customer experience [78][81]

Core Insights - Verint Systems (VRNT) reported revenue of $224.19 million for the quarter ended October 2024, marking a year-over-year increase of 2.5% and exceeding the Zacks Consensus Estimate of $210.21 million by 6.65% [1] - The company's EPS for the same period was $0.54, down from $0.65 a year ago, but it surpassed the consensus EPS estimate of $0.43 by 25.58% [1] Revenue Breakdown - Perpetual revenue (non-GAAP) was reported at $23.47 million, exceeding the average estimate of $21.39 million by analysts, but reflecting a year-over-year decline of 4.4% [3] - Professional services revenue (non-GAAP) was $20.86 million, falling short of the $23.02 million average estimate and showing a significant year-over-year decrease of 36.5% [3] - Support revenue (non-GAAP) reached $25.46 million, slightly above the average estimate of $24.80 million, but still representing a year-over-year decline of 24.3% [3] Stock Performance - Over the past month, Verint's shares have returned +9.7%, outperforming the Zacks S&P 500 composite's +5.8% change [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Core Viewpoint - Verint Systems reported quarterly earnings of $0.54 per share, exceeding the Zacks Consensus Estimate of $0.43 per share, although down from $0.65 per share a year ago [1][3] Financial Performance - The earnings surprise for the quarter was 25.58%, with the company previously expected to post earnings of $0.53 per share but actually reporting $0.49 per share in the prior quarter, resulting in a surprise of -7.55% [2] - For the quarter ended October 2024, Verint posted revenues of $224.19 million, surpassing the Zacks Consensus Estimate by 6.65%, compared to $218.67 million in the same quarter last year [3] - Over the last four quarters, Verint has exceeded consensus EPS estimates three times and has topped consensus revenue estimates three times as well [3] Stock Performance and Outlook - Verint shares have declined approximately 10.2% since the beginning of the year, contrasting with the S&P 500's gain of 26.8% [5] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [8] - The current consensus EPS estimate for the upcoming quarter is $1.40 on revenues of $291.59 million, and for the current fiscal year, it is $2.92 on revenues of $933.24 million [9] Industry Context - The Computer - Software industry, to which Verint belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [10]

Financial Performance - Total revenue for the three months ended October 31, 2024, was $224.193 million, a 2.5% increase from $218.547 million in the same period of 2023[25]. - Recurring revenue for the same period was $179.858 million, up 11.6% from $161.117 million year-over-year[25]. - Net income attributable to Verint Systems Inc. for the three months ended October 31, 2024, was $28.716 million, compared to $12.612 million in the same period of 2023, representing a 127.6% increase[25]. - Gross profit for the three months ended October 31, 2024, was $158.627 million, an increase from $153.009 million in the same period of 2023[25]. - Operating income for the three months ended October 31, 2024, was $21.748 million, down from $26.718 million in the same period of 2023[25]. - Net income for the nine months ended October 31, 2023, was $50,119,000, compared to $10,711,000 for the same period in 2022, representing a significant increase[37]. - Total revenue for the nine months ended October 31, 2024, was $655.640 million, an increase from $645.278 million in the same period of 2023, representing a growth of 0.2%[63]. - Recurring revenue for the nine months ended October 31, 2024, was $516.615 million, compared to $488.555 million in 2023, reflecting a year-over-year increase of 5.8%[63]. - For the three months ended October 31, 2024, net income attributable to Verint Systems Inc. was $28,716,000, compared to $12,612,000 for the same period in 2023, representing a 127% increase[72]. - For the nine months ended October 31, 2024, net income attributable to Verint Systems Inc. was $49,488,000, compared to $9,907,000 for the same period in 2023, indicating a significant increase[72]. Assets and Liabilities - Total assets increased to $2,248.3 million as of October 31, 2024, compared to $2,226.4 million on January 31, 2024, reflecting a growth of 0.98%[21]. - Cash and cash equivalents decreased to $182.8 million from $241.4 million, a decline of 24.2%[21]. - Accounts receivable net of allowance for credit losses increased to $152.9 million, up from $190.5 million, indicating a decrease of 19.8%[21]. - Total current liabilities decreased to $387.0 million from $418.2 million, a reduction of 7.4%[21]. - Long-term debt slightly increased to $412.2 million from $411.0 million, reflecting a growth of 0.3%[21]. - Stockholders' equity rose to $881.8 million from $832.7 million, an increase of 5.9%[21]. - Retained earnings improved to $33.1 million from a deficit of $6.7 million, indicating a significant turnaround[21]. - Contract assets increased to $94.0 million from $66.9 million, a growth of 40.6%[21]. - The company reported a decrease in contract liabilities to $230.1 million from $254.4 million, a decline of 9.5%[21]. - Goodwill increased to $1,404.8 million from $1,352.7 million, reflecting a growth of 3.9%[21]. - As of October 31, 2023, total stockholders' equity was $805,365,000, down from $826,048,000 at the end of the previous quarter[33]. - Contract liabilities as of October 31, 2024, were $230.145 million, down from $254.437 million as of January 31, 2024, a decrease of 9.5%[65]. - Remaining performance obligations totaled $681.051 million as of October 31, 2024, compared to $744.302 million as of January 31, 2024, reflecting a decline of 8.5%[69]. Expenses - Research and development expenses for the three months ended October 31, 2024, increased to $37.736 million from $32.084 million year-over-year, a 17.5% increase[25]. - Selling, general and administrative expenses rose to $95.987 million for the three months ended October 31, 2024, compared to $87.879 million in the same period of 2023, a 9.4% increase[25]. - The company reported a comprehensive income of $31.937 million for the three months ended October 31, 2024, compared to a loss of $11.047 million in the same period of 2023[27]. - The company incurred a total interest expense of $1.865 million for borrowings under the Credit Agreement for the three months ended October 31, 2024[136]. - For the nine months ended October 31, 2024, the company incurred total interest expense of $5.727 million on borrowings under the Credit Agreement[136]. Stock and Dividends - The company declared dividends on preferred stock amounting to $4 million for the three months ended October 31, 2024, compared to $5.2 million in the same period of 2023[25]. - Preferred stock dividend payments amounted to $20,080,000, consistent with the previous year's payment of $20,800,000[37]. - The company did not declare or pay any cash dividends on common stock during the nine months ended October 31, 2024, due to restrictions under the terms of its Credit Agreement[162]. - During the nine months ended October 31, 2024, the company repurchased approximately 1,701,000 shares of common stock for a cost of $52.9 million under the prior stock repurchase program[168]. - The company announced a new stock repurchase program on September 4, 2024, allowing for the repurchase of shares not to exceed $200.0 million during the period from August 29, 2024, until August 29, 2026[167]. Acquisitions and Investments - The company acquired the assets of Cogito Corporation for a total purchase price of $52.07 million, which included $38.2 million in cash and $13.9 million in contingent consideration[83]. - The acquisition of Cogito resulted in the recognition of $28.9 million in goodwill, attributed to synergies in products and technologies[85]. - The company completed several acquisitions in 2024, including an AI-powered analytics company and a provider of cloud-based callback solutions, with total goodwill recognized from these transactions amounting to $8.3 million and $3.2 million respectively[91][94]. - The company completed the acquisition of a workforce scheduling automation solutions provider, resulting in increases to goodwill and intangible assets, but it was not material to the financial statements[97]. - The company invested approximately $1.7 million in a privately-held company through three SAFE investments made in March 2023, July 2023, and January 2024[204]. - The company completed the acquisition of the previously mentioned privately-held company, consolidating its results of operations into the financial statements as of April 30, 2024[204]. Tax and Compliance - For the nine months ended October 31, 2024, the company recorded a pretax income of $51.7 million with an income tax provision of $1.5 million, resulting in an effective tax rate of 3.0%[181]. - In comparison, for the nine months ended October 31, 2023, the company had a pretax income of $25.5 million and an income tax provision of $14.8 million, leading to an effective tax rate of 58.0%[182]. - As of October 31, 2024, the company had unrecognized income tax benefits amounting to $75.4 million, which could impact the effective income tax rate if recognized[184]. - The company anticipates a potential decrease of approximately $1.9 million in unrecognized income tax benefits over the next twelve months due to settlements of tax audits or lapses of statutes of limitation[186]. - The OECD Pillar 2 guidelines, which propose a global minimum tax of 15%, are being monitored by the company for potential impacts on its tax rate starting in 2024[187]. Financial Instruments and Risks - The primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk[209]. - The total derivative liabilities related to foreign currency forward contracts amounted to $77,000[207].

Revenue Performance - Revenue for Q3 FYE 2025 was $224 million, representing a 3% year-over-year growth on a reported basis and 5% on a non-GAAP basis[2]. - Bundled SaaS revenue growth accelerated to 19% year-over-year, driven by strong demand for AI business outcomes[3]. - New SaaS ACV bookings for new deals, excluding cloud conversions, increased by 37% year-over-year in Q3[3]. - For the year ending January 31, 2025, the revenue outlook is $933 million +/- 2%, reflecting a 5% year-over-year growth[5]. - Total revenue for the three months ended October 31, 2024, was $224,193,000, a slight increase from $218,547,000 in the same period of 2023, representing a growth of 3%[17]. - Total revenue for the nine months ended October 31, 2024, was $141,151 thousand, compared to $139,555 thousand in 2023, indicating a slight growth[24]. - The company reported a constant currency period-over-period revenue growth of 2.0% for the three months ended October 31, 2024[33]. Profitability Metrics - Gross margin expanded approximately 70 basis points year-over-year in Q3, attributed to a shift towards recurring revenue[4]. - Gross profit for the three months ended October 31, 2024, was $158,627,000, compared to $153,009,000 in 2023, resulting in a gross margin of 70.8%, up from 70.0%[20]. - Net income attributable to Verint Systems Inc. was $28,716,000 for the three months ended October 31, 2024, compared to $12,612,000 in 2023, showing a significant increase of 128%[17]. - The company reported a diluted net income per share of $0.39 for the three months ended October 31, 2024, compared to $0.12 in 2023, marking a significant increase[17]. - GAAP net income for the three months ended October 31, 2024, was $24,716 thousand, compared to $7,412 thousand in 2023, representing a significant increase[24]. - Non-GAAP diluted net income per share for the three months ended October 31, 2024, was $0.54, down from $0.65 in 2023[24]. - Adjusted EBITDA for the three months ended October 31, 2024, was $53,468 thousand, down from $59,236 thousand in 2023, with a margin of 23.8%[26]. Expenses and Investments - Research and development expenses for the three months ended October 31, 2024, were $37,736,000, an increase from $32,084,000 in 2023, representing a growth of 18%[20]. - Selling, general and administrative expenses increased to $95,987,000 for the three months ended October 31, 2024, compared to $87,879,000 in 2023, reflecting an increase of 9%[20]. - Non-GAAP selling, general and administrative expenses for the three months ended October 31, 2024, were $80,299 thousand, representing 35.8% of non-GAAP revenue, compared to 33.5% in 2023[22]. - Cash used in investing activities was $74,007,000, compared to $24,333,000 in the previous period, indicating a significant increase in investment outflows[37]. Cash Flow and Debt - Net cash provided by operating activities increased to $98,227,000 from $81,679,000, an increase of about 20%[37]. - Gross debt as of October 31, 2024, was $415,000 thousand, with net debt of $230,730 thousand[26]. - The company reported a net decrease in cash and equivalents of $59,360,000 for the period[37]. - Cash and cash equivalents at the end of the period were $183,309,000, down from $211,410,000, a decrease of about 13%[37]. Guidance and Future Outlook - The company expects to maintain its full-year guidance for revenue and non-GAAP diluted EPS[4]. - An investor day is scheduled for January 14, 2025, to showcase AI differentiation and review financial models[5]. - The non-GAAP effective income tax rate for the year ending January 31, 2025, is approximately 11%, up from 8% for the year ended January 31, 2024[52]. SaaS and Recurring Revenue - SaaS Annual Recurring Revenue (ARR) increased by 11% year-over-year[4]. - SaaS revenue for the three months ended October 31, 2024, was $148,662,000, compared to $115,651,000 in 2023, indicating a growth of 28%[19]. - Recurring revenue for the same period was $179,858,000, up from $161,117,000, indicating a growth of 11% year-over-year[20]. - Recurring revenue primarily consists of SaaS revenue, optional managed services revenue, and post-contract support, indicating a stable revenue stream[53]. Financial Definitions - SaaS Annual Recurring Revenue (SaaS ARR) is used to identify the annual recurring value of customer contracts at the end of a reporting period, reflecting the growth of the recurring business as the company shifts to SaaS[57]. - Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation, amortization, and other excluded expenses, providing a clearer view of operating performance[59]. - Net Debt is calculated as the sum of long-term and short-term debt minus cash and cash equivalents, aiding in the evaluation of capital structure and financial leverage[60]. - Free Cash Flow is defined as GAAP cash provided by operating activities less capital expenditures, indicating the company's ability to generate cash after investments[61].

Wall Street analysts forecast that Verint Systems (VRNT) will report quarterly earnings of $0.43 per share in its upcoming release, pointing to a year-over-year decline of 33.9%. It is anticipated that revenues will amount to $210.21 million, exhibiting a decline of 3.9% compared to the year-ago quarter.The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial p ...

Verint Systems Inc VRNT shares are in the spotlight Thursday after The Bear Cave released a bearish report on the contact center company. What To Know: Short-selling firm The Bear Cave has customer experience (CX) automation company Verint Systems in its crosshairs. The short seller published a report Thursday morning titled, "Problems at Verint Systems (VRNT)," arguing that the company is likely to be disrupted by AI advancement. "Verint's management insists Verint will be an AI beneficiary as customers us ...

Wanniwat Roumruk/iStock via Getty Images A year ago, a substantial post-earnings loss for Verint Systems (NASDAQ:VRNT) caught my interest, given the company's promise of a "bot factory" that would bolster contact center capabilities with generative AI and related automation. Verint Systems convincingly delivered on the AI promise in its latest earnings report. Unfortunately, the substantial growth in the AI-related business is not yet translating into impressive overall growth. Investors have less patience ...