Delivers Strong Q3 Cloud Revenue Growth; Expects Strong Q4 and Raises Annual Cloud Revenue Growth Guidance

Verint, The Customer Engagement Company™, today announced results for the three and nine months ended October 31, 2021 (FYE 2022). Revenue for the three months ended October 31, 2021 was $225 million on a GAAP basis representing 4% year-over-year growth and $227 million on a non-GAAP basis also representing 4% year-over-year growth. Revenue for the nine months ended October 31, 2021 was $640 million on a GAAP basis representing 6% year-over-year growth and $645 million on a non-GAAP basis representing 5% year-over-year growth. For the three months ended October 31, 2021, diluted EPS was $0.12 on a GAAP basis and, $0.69 on a non-GAAP basis. For the nine months ended October 31, 2021, diluted EPS was $0.08 on a GAAP basis and $1.71 on a non-GAAP basis.

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“Supplemental Information About Non-GAAP Financial Measures and Operating Metrics”

“The momentum we experienced in the first half of the year continued in the third quarter with strong cloud revenue growth, strong new PLE bookings growth, and strong revenue and diluted EPS coming in significantly ahead of expectations. We expect to finish the year with a strong Q4 and are raising our annual outlook for total revenue, cloud revenue, and new PLE bookings. We believe our results and improved outlook reflect the differentiation of our cloud platform and our execution following the spin-off of our security business in February 2021,” said Dan Bodner, Verint CEO.

Bodner continued, “At the time of the spin-off, we laid out three-year targets for accelerating growth. I am pleased to report that based on our strong PLE bookings this year across existing and new customers, we now believe we are tracking ahead of these targets. We are introducing guidance for next year of 7% revenue growth, above our prior targets. We are also increasing our targets for FYE 2024 to 10% revenue growth taking our total revenue to $1.03 billion with about $650 million in cloud revenue.”

Third Quarter Key Cloud Metrics

• Strong Cloud Revenue Growth: Up 32% year-over-year
• Strong Software Bookings Growth: New perpetual license equivalent (PLE) bookings up 14% year-over-year
• Large Cloud Orders: 21 orders each in excess of $1 million Total Contract Value (TCV)

FYE 2022 and FYE 2023 Outlook

We are increasing our non-GAAP annual outlook for the year ending January 31, 2022, as follows:

• Cloud Revenue Growth: a range of 35% to 37% (up from our prior guidance of 35% last quarter and 30% at the start of the year)
• New PLE Bookings Growth: a range of 15% to 17% (up from our prior guidance of 15% last quarter and 10% at the start of the year)
• Revenue: $875 million +/- 1% (up from our prior guidance of $872 million last quarter and $860 million at the start of the year)
• Diluted EPS: $2.25 at the midpoint of our revenue guidance (up from our prior guidance of $2.20 at the start of the year)

We are introducing our non-GAAP annual outlook for the year ending January 31, 2023, above our prior targets, as follows:

• Cloud Revenue: 30% growth resulting in cloud revenue of over $500 million
• New PLE Bookings Growth: a range of 10% to 12%
• Revenue: $935 million +/- 2% reflecting 7% year-over-year growth
• Diluted EPS: $2.49 at the midpoint of our revenue guidance, reflecting 11% year-year-year growth

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Our non-GAAP outlook for the year ending January 31, 2022 excludes the following GAAP measures which we are able to quantify with reasonable certainty:

• Amortization of intangible assets of approximately $47 million.
• Expenses and losses on debt modification or retirement of approximately $2 million.
• Favorable change in fair value of future tranche right of approximately $16 million.
• Unrealized losses on derivatives, net of approximately $14 million.

Our non-GAAP outlook for the year ending January 31, 2022 excludes the following GAAP measures for which we are able to provide a range of probable significance:

• Revenue adjustments are expected to be between approximately $5 million and $7 million.
• Stock-based compensation expenses are expected to be between approximately $65 million and $70 million for the year ending January 31, 2022, assuming market prices for our common stock approximately consistent with current levels.
• Further costs associated with Verint’s February 1, 2021 separation into two independent public companies are expected to be between approximately $13 million and $15 million.

Our initial non-GAAP outlook for the year ending January 31, 2023 excludes the following GAAP measures which we are able to quantify with reasonable certainty:

• Amortization of intangible assets of approximately $41 million.

Our initial non-GAAP outlook for the year ending January 31, 2023 excludes the following GAAP measures for which we are able to provide a range of probable significance:

• Revenue adjustments are expected to be between approximately $2 million and $4 million.
• Stock-based compensation expenses are expected to be between approximately $67 million and $73 million for the year ending January 31, 2023, assuming market prices for our common stock approximately consistent with current levels.
• Costs associated with modifying our workplace in response to the post-spin and COVID work environment, including assumed lease terminations and abandonments, IT infrastructure costs, and other charges are expected to be between approximately $20 million and $30 million.

Our non-GAAP FYE 2024 targets exclude any GAAP revenue adjustments.

Our non-GAAP guidance and targets do not include the potential impact of any in-process business acquisitions that may close after the date hereof, and, unless otherwise specified, reflects foreign currency exchange rates approximately consistent with current rates.

We are unable, without unreasonable efforts, to provide a reconciliation for other GAAP measures which are excluded from our non-GAAP outlook and targets, including the impact of future business acquisitions or acquisition expenses, future restructuring expenses, and non-GAAP income tax adjustments due to the level of unpredictability and uncertainty associated with these items. For these same reasons, we are unable to assess the probable significance of these excluded items. While historical results may not be indicative of future results, actual amounts for the three and nine months ended October 31, 2021 and 2020 for the GAAP measures excluded from our non-GAAP outlook appear in Tables 2, 3 and 4 of this press release.

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