Verint Systems, Inc. Q1 FY2024 earnings call

• Q1 results: Non-GAAP revenue at $217M, gross margin near 70% with 200 bps YOY expansion, non-GAAP diluted EPS at $0.53, both ahead of guidance. SaaS revenue up ~24% CC. - Open platform and AI: Leverages open engagement data hub and Verint’s opened Da Vinci AI for CX automation, delivering customer ROI. Received orders from leading brands like Macquarie, Toyota, Deutsche Telekom, and added over 100 new logos in Q1. - SaaS transition: On track to complete next year where 90% of software revenue is recurring; Q1 metric at 87%. Benefits of completion include accelerating revenue growth, higher gross margins, and incremental cash generation.

Non-GAAP Q1 revenue came in at $217 million, ahead of guidance. Gross margin was close to 70%, a strong 200 bps increase year-over-year. Non-GAAP diluted EPS was $0.53, also ahead of guidance. SaaS revenue increased approximately 24% year-over-year on a constant currency basis. The percentage of software revenue from recurring sources reached 87% in Q1, up significantly from Q1 of the previous year. Recurring revenue drives higher gross margins, and the shift to SaaS is a key driver of gross margin expansion.

• Maintaining 2024 guidance: Expect strong SaaS revenue growth and margin expansion, adjusted EBITDA growing faster than revenue. - Next year benefits: Completion of SaaS transition to eliminate nonrecurring revenue headwinds, shift focus to platform and AI adoption for top-line benefit, cash generation to grow faster with double-digit rate next year.

Q: Ryan MacDonald asked about the benefits of SaaS transition completion, specifically the second revenue driver from AI platform adoption.

A: Dan Bodner mentioned next year the headwind from nonrecurring decline ends, customers shifting to Verint cloud for faster innovation and AI, and focus on helping customers expand with marketing, pricing, and sales force.

Q: Shaul Eyal asked about potential for double-digit revenue growth.

A: Dan Bodner stated targeting double-digit growth over time, using ROI examples with specialized bots increasing productivity.

Q: Samad Samana asked about pricing model for AI.

A: Dan Bodner explained flexible pricing via consumption or user-based models, with customers increasing consumption over time.

Q: Grant Highlander discussed SaaS revenue guidance, visibility into back-half acceleration.

A: Grant mentioned new and expansion deals, conversions, and renewal volumes driving second-half growth.

Q: Peter Levine asked about renewals and contract terms.

A: Grant Highlander said renewals are steady, new deals typically three years, with slight tick up in term length; Dan Bodner added customers see value in locking in for innovation.