Technology

Verint (VRNT) Q4 Earnings & Revenues Beat, Increase Y/Y

Verint Systems VRNT reported fourth-quarter fiscal 2019 adjusted earnings of $1.08 per share, which increased 2.9% year over year and comfortably beat the Zacks Consensus Estimate of $1.01.

Adjusted revenues of $336.3 million increased 4.3% year over year and beat the Zacks Consensus Estimate of $333 million

Verint Systems Inc. Price, Consensus and EPS Surprise

Verint Systems Inc. Price, Consensus and EPS Surprise | Verint Systems Inc. Quote

Quarter Details

Product revenues (38.5% of total revenues) grew 5.4% year over year to $127.1 million. Service and support revenues (61.5%) increased 2.5% year over year to $203.2 million.

Segment wise, non-GAAP Customer Engagement revenues (66%) increased 2.6% year over year to $217.8 million.  Moreover, the company stated that it generated about 15% of Customer Engagement revenues from SMB business partners.

Non-GAAP Customer Engagement cloud revenues increased 22.5% year over year to $165.4 million. Non-GAAP Customer Engagement recurring revenues increased 9.1% year over year to $480.7 million.

Non-GAAP cloud annualized recurring revenue (ARR) increased 44.8% year over year to $199.8 million.

In the current quarter, Verint received cloud orders from both new and existing customers. Some new customer orders included a $6 million order from a travel company, a $5 million order from a financial company and a $2 million order from a ridesharing company. Additionally, it received an order worth $7 million from an existing telecom customer in fiscal fourth-quarter, bringing their total order value to $20 million for fiscal 2019.

With the evolution of digital connectivity, growth in customers’ interactions is driving the need for efficient customer management solutions. Additionally, about 71% of the companies are considering customer experience to be their top priority and using it as a business differentiator, per management.

Due to the abovementioned trend, Verint Customer Engagement revenues are expected to increase given the company’s ability to provide automated solutions that boost efficiency while cutting down on costs.

Cyber Intelligence revenues (36%) grew 7.7% year over year to $118.9 million. The company has more than 1,000 government and enterprise customers in this segment across the globe. Notably, government customers contributed more to Cyber Intelligence revenues (about 80%).

Additionally, the company’s ability to anticipate new market trends and bring solutions to address the same helped it win approximately $65 million worth of orders in the reported quarter.

Verint has a strong clientele of more than 10,000, with about 85% of them belonging to the top 100 of the Fortune 500 list.

Operating Details

Non-GAAP gross profit increased 6% year over year to $234.9 million. Gross margin expanded 110 basis points (bps) to 69.8%.

Research and development expenses increased 9% year over year to $53 million. Also, selling, general and administrative expenses increased 2.1% year over year to $114.7 million. Total operating expenses increased 4.5% year over year to $176 million.

Adjusted EBITDA increased 6.2% year over year to $95.4 million. Adjusted EBODTA margin expanded 50 bps to 28.3%.

Non-GAAP operating income increased 7.5% year over year to $88.2 million and operating margin expanded 80 bps to 26.2%.

Balance Sheet and Cash Flow

Verint had $369.9 million of cash and cash equivalents as of Jan 31, 2019 compared with $353.4 million in the prior quarter.

Cash flow from operations was $215.3 million compared with $176.3 million from the year-ago period. Moreover, long-term debt for the quarter was $777.8 million compared with $775.3 million for the quarter ending Oct 31.

Guidance

First-Quarter Fiscal 2020

Non-GAAP revenues are expected to witness year-over-year growth of 8%. Non-GAAP earnings per share are anticipated to increase 14% year over year.

Fiscal 2020

Non-GAAP revenue guidance has been revised to $1.37 billion (+/-2%) from $1.325 billion guided earlier, indicating year-over-year growth of 10%. Additionally, cloud revenues are anticipated to be $250 million owing to strength in Verint’s cloud solution and increasing demand for the same.

Non-GAAP earnings per share guidance has been revised to $3.60 from the earlier projection of $3.50, indicating year-over-year growth of 12%.

Zacks Rank & Stocks to Consider

Currently, Verint carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer and technology sector are Akamai Technologies AKAM, Facebook FB and Intuit Inc. INTU. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term growth rates for Akamai, Facebook and Intuit is projected to be 15%, 18% and 16%, respectively.

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