Verint Announces Second Quarter Results

Verint Announces Second Quarter Results

Conference Call to Discuss Selected Financial Information and Outlook to be Held Today at 8:30 a.m. ET

MELVILLE, N.Y.--(BUSINESS WIRE)-- Verint®Systems Inc. (NAS: VRNT) , a global leader in Actionable Intelligence® solutions and value-added services, today announced results for the three and six months ended July 31, 2013.


"In Q2, we delivered $223 million of non-GAAP revenue, and $0.70 of non-GAAP fully diluted earnings per share. We are pleased with our strong Q2 results which reflect our focus on innovation, expanding portfolio of analytical solutions and strong competitive position in the enterprise and security intelligence markets," said Dan Bodner, CEO and President.

Financial Highlights

Below is selected unaudited financial information for the three and six months ended July 31, 2013 prepared in accordance with generally accepted accounting principles ("GAAP") and not in accordance with GAAP ("non-GAAP").

Three Months Ended July 31, 2013 - GAAP

  • Revenue: $222.4 million

  • Operating Income: $31.3 million

  • Diluted EPS: $0.33

Three Months Ended July 31, 2013 - Non-GAAP

  • Revenue: $222.8 million

  • Operating Income: $51.4 million

  • Diluted EPS: $0.70

Six Months Ended July 31, 2013 - GAAP

  • Revenue: $427.2 million

  • Operating Income: $45.0 million

  • Diluted EPS: $0.15

Six Months Ended July 31, 2013 - Non-GAAP

  • Revenue: $428.2 million

  • Operating Income: $88.1 million

  • Diluted EPS: $1.14

Financial Outlook

Below is Verint's non-GAAP outlook for the year ending January 31, 2014.

  • We expect revenue to increase between 6% and 7% compared to the year ended January 31, 2013

  • We expect fully diluted earnings per share in the range of $2.75 plus or minus 5 cents

Conference Call Information

We will conduct a conference call today at 8:30 a.m. ET to discuss our results for the three and six months ended July 31, 2013 and outlook for the year ending January 31, 2014. 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 1-866-515-2911 (United States and Canada) and 1- 617-399-5125 (international) and the passcode is 51023644. 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 these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Tables 2 and 3 as well as "Supplemental Information About Non-GAAP Financial Measures" at the end of this press release. Because we do not predict special items that might occur in the future, and our outlook is developed at a level of detail different than that used to prepare GAAP financial measures, we are not providing a reconciliation to GAAP of our forward-looking financial measures for the year ending January 31, 2014.

About Verint Systems Inc.

Verint® (NAS: VRNT) is a global leader in Actionable Intelligence® solutions. Its portfolio of Enterprise Intelligence Solutions and Security Intelligence Solutions helps organizations Make Big Data Actionable through the ability to capture, analyze and act on large volumes of rich, complex and often underused information sources—such as voice, video and unstructured text. With Verint solutions and value-added services, organizations of all sizes can make more timely and effective decisions. Today, more than 10,000 organizations in over 150 countries, including over 80 percent of the Fortune 100, count on Verint solutions to improve enterprise performance and make the world a safer place. Headquartered in NY, Verint has offices worldwide and an extensive global partner network. Learn more 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 risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause actual future results or conditions to differ materially from current expectations include: uncertainties regarding the impact of general economic conditions in the United States and abroad, particularly in information technology spending and government budgets, on our business; risks associated with our ability to keep pace with technological changes and evolving industry standards in our product offerings and to successfully develop, launch, and drive demand for new and enhanced, innovative, high-quality products that meet or exceed customer needs; risks due to aggressive competition in all of our markets, including with respect to maintaining margins and sufficient levels of investment in our business; 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 capital constraints, costs and expenses, maintaining profitability levels, management distraction, post-acquisition integration activities, and potential asset impairments; risks that we may be unable to maintain and enhance relationships with key resellers, partners, and systems integrators; risks relating to our ability to effectively and efficiently execute on our growth strategy, including managing investments in our business and operations and enhancing and securing our internal and external operations; risks associated with our ability to effectively and efficiently allocate limited financial and human resources to business, development, strategic, or other opportunities that may not come to fruition or produce satisfactory returns; risks associated with the mishandling or perceived mishandling of sensitive or confidential information, security lapses, or with information technology system failures or disruptions; risks associated with our significant international operations, including, among others, in Israel, Europe, and Asia, exposure to regions subject to political or economic instability, and fluctuations in foreign exchange rates; risks associated with a significant amount of our business coming from domestic and foreign government customers, including the ability to maintain security clearances for certain projects; risks associated with complex and changing local and foreign regulatory environments in the jurisdictions in which we operate; risks associated with our ability to recruit and retain qualified personnel in regions in which we operate; challenges associated with selling sophisticated solutions, long sales cycles, and emphasis on larger transactions, including in assisting customers in realizing the value they expect and in accurately forecasting revenue and expenses and in maintaining profitability; 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 or claim infringement on their intellectual property rights; risks that our products may contain undetected defects, which could expose us to substantial liability; risks associated with our dependence on a limited number of suppliers or original equipment manufacturers for certain components of our products, including companies that may compete with us or work with our competitors; risks that our customers or partners delay or cancel orders or are unable to honor contractual commitments due to liquidity issues, challenges in their business, or otherwise; 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, including with respect to covenant limitations and compliance, fluctuations in interest rates, and our ability to maintain our credit ratings; risks arising as a result of contingent, unknown or unexpected obligations or liabilities of our former parent company, Comverse Technology, Inc. ("CTI"), assumed upon completion of our merger with CTI that was completed on February 4, 2013 (the "CTI Merger"), including regulatory or compliance liabilities, or as a result of parties obligated to provide us with indemnification being unwilling or unable to perform such obligations; risks associated with being a former consolidated subsidiary of CTI and formerly part of CTI's consolidated tax group; risks relating to our reliance on CTI's former subsidiary, Comverse, Inc. ("Comverse"), to perform certain transition services following the CTI Merger on a timely basis or at all in order for us to comply with certain regulatory requirements; risks relating to our ability to successfully implement and maintain adequate systems and internal controls for our current and future operations and reporting needs and related risks of financial statement omissions, misstatements, restatements, or filing delays; and risks associated with changing tax rates, tax laws and regulations, and the continuing availability of expected tax benefits, including those expected as a result of the CTI Merger. 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, 2013, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2013, when filed, and other filings we make with the SEC.

VERINT, ACTIONABLE INTELLIGENCE, MAKE BIG DATA ACTIONABLE, CUSTOMER-INSPIRED EXCELLENCE, INTELLIGENCE IN ACTION, IMPACT 360, WITNESS, VERINT VERIFIED, VOVICI, GMT, AUDIOLOG, ENTERPRISE INTELLIGENCE SOLUTIONS, SECURITY INTELLIGENCE SOLUTIONS, VOICE OF THE CUSTOMER ANALYTICS, NEXTIVA, EDGEVR, RELIANT, VANTAGE, STAR-GATE, ENGAGE, CYBERVISION, FOCALINFO, SUNTECH, and VIGIA are trademarks or registered trademarks of Verint Systems Inc. or its subsidiaries. Other trademarks mentioned are the property of their respective owners.

Table 1

Verint Systems Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

Three Months Ended July 31,

Six Months Ended July 31,

2013

2012

2013

2012

Revenue:

Product

$

97,865

$

101,990

$

185,215

$

193,989

Service and support

124,582

110,436

242,018

215,072

Total revenue

222,447

212,426

427,233

409,061

Cost of revenue:

Product

30,090

36,382

61,262

67,274

Service and support

40,170

35,954

78,668

69,606

Amortization of acquired technology and backlog

2,347

3,644

5,985

7,428

Total cost of revenue

72,607

75,980

145,915

144,308

Gross profit

149,840

136,446

281,318

264,753

Operating expenses:

Research and development, net

31,203

30,195

61,231

58,598

Selling, general and administrative

81,364

73,953

163,068

146,676

Amortization of other acquired intangible assets

6,010

6,035

12,043

12,233

Total operating expenses

118,577

110,183

236,342

217,507

Operating income

31,263

26,263

44,976

47,246

Other income (expense), net:

Interest income

166

124

321

254

Interest expense

(7,383

)

(7,867

)

(14,571

)

(15,585

)

Loss on extinguishment of debt

(173

)

-

(9,879

)

-

Other income (expense), net

(2,559

)

(483

)

(4,367

)

151

Total other expense, net

(9,949

)

(8,226

)

(28,496

)

(15,180

)

Income before provision for income taxes

21,314

18,037

16,480

32,066

Provision for income taxes

2,809

4,772

5,912

7,171

Net income

18,505

13,265

10,568

24,895

Net income attributable to noncontrolling interest

969

658

2,185

2,253

Net income attributable to Verint Systems Inc.

17,536

12,607

8,383

22,642

Dividends on preferred stock

-

(3,868

)

(174

)

(7,612

)

Net income attributable to Verint Systems Inc. common shares

$

17,536

$

8,739

$

8,209

$

15,030

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

Basic

$

0.33

$

0.22

$

0.16

$

0.38

Diluted

$

0.33

$

0.22

$

0.15

$

0.38

Weighted-average common shares outstanding:

Basic

52,977

39,712

52,484

39,392

Diluted

53,637

40,072

53,176

39,938

Table 2

Verint Systems Inc. and Subsidiaries

Segment Revenue

(Unaudited)

(In thousands)

Three Months Ended July 31,

Six Months Ended July 31,

2013

2012

2013

2012

GAAP Revenue By Segment:

Enterprise Intelligence

$

125,873

$

116,375

$

238,796

$

226,202

Video Intelligence

32,136

38,159

60,934

66,837

Communications Intelligence

64,438

57,892

127,503

116,022

Total Video and Communications Intelligence

96,574

96,051

188,437

182,859

GAAP Total Revenue

$

222,447

$

212,426

$

427,233

$

409,061

Revenue Adjustments Related to Acquisitions:

Enterprise Intelligence

$

116

$

1,259

$

369

$

3,212