Verint(VRNT) - 2026 Q2 - Quarterly Results

Executive Summary & Business Update Q2 FY2026 Performance Highlights Verint delivered strong Q2 FY2026 results, with AI Annual Recurring Revenue (AI ARR) growing 21% year-over-year, indicating robust momentum in its AI business - AI Annual Recurring Revenue (AI ARR) grew 21.2% year-over-year to $372 million, demonstrating strong momentum in the AI business[3][5][20] Q2 FY2026 Key Operational and Financial Highlights | Metric (in millions of USD) | Q2 FY2026 | | :--- | :--- | | Subscription ARR | $728 | | YoY Growth | 6.4% | | AI ARR | $372 | | YoY Growth | 21.2% | | Revenue | $208 | | Net Loss Per Share / Diluted EPS (GAAP/Non-GAAP) | $(0.09) / $0.33 | Pending Acquisition by Thoma Bravo Verint will be acquired by Thoma Bravo in an all-cash transaction valued at an enterprise value of $2.0 billion, with shareholders receiving $20.50 per share - Verint has agreed to be acquired by Thoma Bravo in an all-cash transaction for an enterprise value of $2.0 billion, at $20.50 per share, representing an 18% premium to the unaffected share price[3][6] - The transaction is expected to close by the end of Verint's current fiscal year, after which the company's stock will be delisted, and it will suspend financial guidance and earnings calls[6][7] Company Overview & Disclosures About Verint Systems Inc. Verint is a leader in Customer Experience (CX) Automation, serving over 80 of the Fortune 100 companies with its AI-powered open platform and AI bots - Verint is a leader in Customer Experience (CX) Automation, serving over 80 of the Fortune 100 companies[9] - The company leverages its AI-powered open platform and AI bots to deliver tangible AI business outcomes for enterprises[9] Cautions About Forward-Looking Statements The press release contains forward-looking statements subject to numerous risks, including the ability to complete the proposed transaction and macroeconomic conditions - Forward-looking statements are subject to numerous risks, including the ability to complete the transaction, potential delays, termination, transaction costs, litigation, business disruptions, and adverse reactions[11] - Other risks include changes in macroeconomic and global conditions, delays in customer or partner spending, adaptability to technological advancements (like AI), market competition, challenges in executing the SaaS strategy, talent recruitment and retention, international operational risks, government contracts, changes in the regulatory environment (data privacy, AI, cybersecurity), intellectual property protection, debt position, and market volatility[11][12] Additional Information and Solicitation Verint will file a proxy statement with the SEC to seek shareholder approval for the Thoma Bravo acquisition, and investors should review all relevant documents - Verint will file a proxy statement with the SEC to seek shareholder approval for the proposed transaction[14][15] - Investors should consult all relevant documents on the SEC's website (www.sec.gov) and Verint's website (www.verint.com)[15](index=15&type=chunk) - Verint's directors and executive officers may be deemed participants in the proxy solicitation, with relevant information disclosed in the proxy statement[16] GAAP Financial Statements Condensed Consolidated Statements of Operations Verint's Q2 FY2026 total revenue slightly decreased to $208.0 million, with a net loss of $1.4 million, resulting in a net loss per share of $(0.09) Summary of Condensed Consolidated Statements of Operations (in thousands of USD, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $208,007 | $210,170 | $416,104 | $431,447 | | Gross Profit | $140,551 | $145,426 | $279,453 | $302,942 | | Operating Income | $3,349 | $13,870 | $8,421 | $38,315 | | Net (Loss) Income | $(1,380) | $5,723 | $547 | $21,102 | | Net (Loss) Income Attributable to Verint Systems Inc. Common Stockholders | $(5,688) | $1,451 | $(8,066) | $11,492 | | Basic (Loss) Income Per Share | $(0.09) | $0.02 | $(0.13) | $0.19 | | Diluted (Loss) Income Per Share | $(0.09) | $0.02 | $(0.13) | $0.18 | Condensed Consolidated Balance Sheets As of July 31, 2025, Verint's total assets decreased to $2.23 billion, while total liabilities also decreased to $896.4 million Summary of Condensed Consolidated Balance Sheets (in thousands of USD) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Total Current Assets | $499,206 | $578,772 | | Total Assets | $2,231,888 | $2,290,049 | | Total Current Liabilities | $772,975 | $518,683 | | Total Liabilities | $896,447 | $964,454 | | Total Stockholders' Equity | $899,120 | $889,274 | Condensed Consolidated Statements of Cash Flows For the six months ended July 31, 2025, net cash from operating activities was $45.4 million, a decrease from the prior year's $64.6 million Summary of Condensed Consolidated Statements of Cash Flows (in thousands of USD) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $45,434 | $64,580 | | Net cash used in investing activities | $(11,054) | $(21,727) | | Net cash used in financing activities | $(77,995) | $(77,478) | | Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | $(40,739) | $(34,005) | | Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $174,968 | $208,664 | Key Operating Metrics & Revenue Analysis Annual Recurring Revenue (ARR) As of July 31, 2025, Subscription ARR grew 6.4% year-over-year to $728.5 million, driven by a 21.2% increase in AI ARR Annual Recurring Revenue (in thousands of USD) | Metric | July 31, 2025 | July 31, 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Subscription ARR | $728,492 | $684,692 | 6.4% | | AI ARR | $372,016 | $307,045 | 21.2% | | Non-AI ARR | $356,476 | $377,647 | (5.6)% | Revenue Breakdown and Constant Currency Analysis Q2 FY2026 total revenue decreased by 1.0% (1.5% in constant currency) to $208.0 million, with recurring revenue growth offset by declines in non-recurring revenue Revenue Breakdown (in thousands of USD) | Revenue Category | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Bundled SaaS revenue | $84,897 | $71,593 | $166,154 | $137,288 | | Unbundled SaaS revenue | $53,928 | $59,511 | $120,155 | $134,799 | | Total SaaS revenue | $138,825 | $131,104 | $286,309 | $272,087 | | Total recurring revenue | $165,521 | $163,229 | $339,144 | $336,757 | | Non-recurring perpetual license revenue | $22,873 | $23,834 | $39,894 | $48,734 | | Non-recurring professional services and other revenue | $19,613 | $23,107 | $37,066 | $45,956 | | Total revenue | $208,007 | $210,170 | $416,104 | $431,447 | Revenue Change at Constant Currency (in thousands of USD, percentages) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Reported revenue growth for the period | (1.0)% | | (3.6)% | | | Percentage impact of foreign currency exchange rate changes | (0.5)% | | (0.2)% | | | Reported revenue growth for the period at constant currency | (1.5)% | | (3.8)% | | Non-GAAP Financial Measures and Reconciliations Non-GAAP Gross Profit and Gross Margin Q2 FY2026 Non-GAAP gross profit was $144.9 million with a gross margin of 69.6%, down from the prior year's 71.2% Non-GAAP Gross Profit and Gross Margin (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP gross profit | $140,551 | $145,426 | $279,453 | $302,942 | | GAAP gross margin | 67.6% | 69.2% | 67.2% | 70.2% | | Non-GAAP gross profit | $144,863 | $149,658 | $290,248 | $309,796 | | Non-GAAP gross margin | 69.6% | 71.2% | 69.8% | 71.8% | Non-GAAP Operating Expenses In Q2 FY2026, Non-GAAP R&D and SG&A expenses increased as a percentage of revenue compared to the prior year Non-GAAP Research and Development Expenses, Net (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-GAAP research and development expenses, net | $35,895 | $30,707 | $72,245 | $62,430 | | As a percentage of revenue | 17.3% | 14.6% | 17.4% | 14.5% | Non-GAAP Sales, General, and Administrative Expenses (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-GAAP sales, general, and administrative expenses | $79,866 | $74,698 | $163,517 | $153,131 | | As a percentage of revenue | 38.4% | 35.5% | 39.3% | 35.5% | Non-GAAP Operating Income and Margin Q2 FY2026 Non-GAAP operating income decreased to $29.1 million, with the operating margin contracting to 14.0% from 21.1% in the prior year Non-GAAP Operating Income and Operating Margin (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP operating income | $3,349 | $13,870 | $8,421 | $38,315 | | GAAP operating margin | 1.6% | 6.6% | 2.0% | 8.9% | | Non-GAAP operating income | $29,102 | $44,253 | $54,486 | $94,235 | | Non-GAAP operating margin | 14.0% | 21.1% | 13.1% | 21.8% | Non-GAAP Net Income and EPS Q2 FY2026 Non-GAAP net income attributable to common stockholders was $20.0 million, resulting in a diluted EPS of $0.33, down from $0.49 in the prior year Non-GAAP Net Income and EPS (in thousands of USD, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP net (loss) income attributable to Verint Systems Inc. common stockholders | $(5,688) | $1,451 | $(8,066) | $11,492 | | Non-GAAP net income attributable to Verint Systems Inc. common stockholders | $20,000 | $35,550 | $38,426 | $78,107 | | GAAP diluted (loss) income per share attributable to Verint Systems Inc. | $(0.09) | $0.02 | $(0.13) | $0.18 | | Non-GAAP diluted net income per share attributable to Verint Systems Inc. | $0.33 | $0.49 | $0.62 | $1.08 | Adjusted EBITDA Q2 FY2026 Adjusted EBITDA was $35.6 million, representing a margin of 17.1%, a decrease from $50.5 million and a 24.0% margin in the prior year Adjusted EBITDA (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP net (loss) income | $(1,380) | $5,723 | $547 | $21,102 | | Adjusted EBITDA | $35,612 | $50,523 | $67,508 | $106,829 | | As a percentage of revenue | 17.1% | 24.0% | 16.2% | 24.8% | Net Debt and Free Cash Flow Net debt increased to $239.6 million as of July 31, 2025, while free cash flow for Q2 FY2026 improved significantly to $13.5 million Net Debt (in thousands of USD) | Metric | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Total debt | $415,000 | $415,000 | | Less: Cash and cash equivalents | $174,968 | $215,707 | | Net debt (excluding long-term restricted cash, cash equivalents, time deposits, and investments) | $239,598 | $197,949 | Free Cash Flow (in thousands of USD) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $19,111 | $3,863 | $45,434 | $64,580 | | Free cash flow | $13,478 | $(3,577) | $33,776 | $51,011 | Supplemental Information and Definitions About Non-GAAP Financial Measures Verint uses non-GAAP financial measures to provide supplemental information for comparing performance across periods and against other technology companies - Non-GAAP financial measures are intended to help investors better understand the company's financial performance and facilitate comparisons with peers by excluding certain volatile, subjective, or unplanned items[47] - Limitations of non-GAAP measures are that they do not reflect all operating results under GAAP, do not represent free cash available for business growth, and may be calculated differently than by other companies[48] - Non-GAAP adjustments include: amortization of acquired technology and intangible assets, stock-based compensation expenses, acquisition and divestiture expenses (gains), net, restructuring expenses (benefits), impairment charges and other adjustments, and non-GAAP income tax adjustments[49][50][51][53][54][55] Supplemental Information About Constant Currency Verint provides constant currency measures to assess performance excluding the impact of foreign exchange rate fluctuations - Constant currency measures are used to assess performance excluding the impact of foreign exchange rate fluctuations by converting current period results using prior period average exchange rates[61] - Non-U.S. dollar denominated revenue accounted for 21% (for the three months ended July 31, 2025) and 22% (for the three months ended July 31, 2024) of total revenue[39] - Non-U.S. dollar denominated GAAP cost of revenue and operating expenses combined represented 32% of total GAAP cost of revenue and operating expenses for the three and six months ended July 31, 2025 and 2024[40] Operating Metrics Definitions This section defines key operating metrics used by Verint, including Subscription ARR, AI ARR, and Non-AI ARR - Subscription Annual Recurring Revenue (ARR) is the annualized quarterly run-rate value of active or signed subscription contracts at the end of a period, including SaaS, support, and optional managed services contracts[64] - AI Annual Recurring Revenue (AI ARR) is the portion of ARR derived from solutions that include AI-powered capabilities[65] - Non-AI Annual Recurring Revenue (Non-AI ARR) is the portion of ARR derived from SaaS, support, and optional managed services contracts that do not include AI-powered capabilities[66] - Other key operating metrics include: Recurring Revenue, Non-Recurring Perpetual License Revenue, Non-Recurring Professional Services and Other Revenue, SaaS Revenue, Cash Generation, and Cash Contribution[59][60][66][67]