Verint Systems, Inc. Q2 FY2024 earnings call

Q2 Performance Highlights

• Delivered solid SaaS metrics: New SaaS ACV bookings $26.5M, SaaS ARR grew 17% in Q2.
• Significant wins: Over 20 orders >$1M TCV from existing customers, over 100 new logos added.

Platform Innovation

• Unveiled new AI bots at Engage conference to augment workforce and deliver customer ROI.

Bookings Trends

• Elongated sales cycles led to $8M ACV deals shifting to Q3/Q4, with $10M of new SaaS ACV bookings expected to shift to next year.

Transition to SaaS

• Perpetual to SaaS transition progressing, aiming for 88% software revenue from recurring sources.

Margin and Guidance

• Non-GAAP gross margins expanded, adjusted EBITDA expected at $250M, diluted EPS at $2.65.

In Q2, revenue came in at $210 million. Non-GAAP gross margins expanded to 70%. New SaaS ACV bookings in Q2 were $26.5 million. SaaS ARR grew 17% in Q2. SaaS revenue contribution is significant, with new bookings and strong renewals driving growth. For example, existing customers had over 20 orders in excess of $1 million TCV, and over 100 new logos were added in Q2. The revenue contribution of SaaS is a key part of the overall financial performance, with SaaS ARR being an important metric to normalize SaaS growth.

Revenue Guidance

• Adjusted annual revenue outlook to $910M due to macroeconomic environment.

SaaS Revenue Growth

• Expect SaaS revenue growth of 18%-20% for the full year, midpoint $530M SaaS revenue.

Booking Shift

• Anticipate approximately $10M of new SaaS ACV bookings shifting to next year due to elongated sales cycles.

• Macro economic environment causing elongated sales cycles impacting booking timing.
• Impact of unbundled SaaS deals on revenue recognition as unbundled deals are recognized upfront.
• Dependence on continued customer adoption and consumption of AI bots for sustained growth.

Q: Ryan MacDonald asked about updated guidance and sales cycle elongation.

A: Dan Bodner stated elongated sales cycles continued, pipeline grew 20%, and $10M of new SaaS ACV bookings shifted to next year.

Q: Peter Levine inquired about hiring plans and sales force.

A: Dan Bodner said no hiring plans currently, focus on existing sales force to build pipeline.

Q: Mason Marin asked about existing customers and bot impact.

A: Dan Bodner mentioned renewals strong, no change in behavior except elongated cycles and bot interest, with bots expected to increase ARPU over time.