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,
2013201220132012
 
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:
Product30,09036,38261,26267,274
Service and support40,17035,95478,66869,606
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, net31,20330,19561,23158,598
Selling, general and administrative81,36473,953163,068146,676
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 income166124321254
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 taxes21,31418,03716,48032,066
Provision for income taxes 2,809  4,772  5,912  7,171 
Net income18,50513,26510,56824,895
Net income attributable to noncontrolling interest 969  658  2,185  2,253 
Net income attributable to Verint Systems Inc.17,53612,6078,38322,642
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 
 
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Table 2

Verint Systems Inc. and Subsidiaries

Segment Revenue

(Unaudited)

(In thousands)

 
 
Three Months Ended July 31,Six Months Ended July 31,
2013201220132012
 

GAAP Revenue By Segment:

Enterprise Intelligence$125,873$116,375$238,796$226,202
 
Video Intelligence32,13638,15960,93466,837
Communications Intelligence 64,438 57,892 127,503 116,022
Total Video and Communications Intelligence96,57496,051188,437182,859
    

GAAP Total Revenue

$222,447$212,426$427,233$409,061
 

Revenue Adjustments Related to Acquisitions:

Enterprise Intelligence$116$1,259$369$3,212