Verint Systems, Inc. Q3 FY2025 earnings call

• Q3 revenue was $224 million, ~$14 million ahead of guidance, with 5% adjusted year-over-year growth. Non-GAAP diluted EPS was $0.54, ~$0.11 ahead of guidance. • Won large contracts driven by AI innovation and hybrid cloud model, including an $11 million order for a financial services company and $7 million and $6 million orders for insurance and healthcare companies. • Customers reported strong AI business outcomes, e.g., a telecom company saved over $10 million with Verint IVA, and a financial services company saved $9 million with Verint bots. • Investor Day on January 14 will showcase open platform, go-to-market differentiation, customer AI outcomes, financial model including fiscal '26 guidance, ARR, and cash flow metrics.

In Q3, revenue was $224 million, ~5% year-over-year growth adjusted for divestiture. Bundled SaaS revenue increased 19% year-over-year in Q3, with acceleration expected in Q4. Unbundled SaaS revenue was $73 million in Q3, driven by renewal revenue shifting forward. Gross margin expanded year-over-year due to mix shift to recurring revenue. Bundled SaaS contributed significantly to growth, with AI innovation driving its momentum, and unbundled SaaS benefited from deal timing and accounting standards.

• Maintained full-year guidance for 5% adjusted revenue growth. • Non-GAAP revenue outlook for FY'25 is $933 million ±2%, expecting over 5% growth vs FY'24. • Expect gross margin to increase at least 150 basis points year-over-year. • Non-GAAP diluted EPS midpoint for FY'25 is $2.90. • Expect double-digit SaaS ARR growth in Q4. • Target strong cash generation in Q4 with over 30% full-year free cash flow growth.

• Forward-looking statements are based on current expectations and may not materialize. Actual results could differ due to risks and uncertainties discussed in SEC filings like Form 10-K and 10-Q.

Q: Do you view Verint as gaining market share in the contact center arena?

A: Yes, we are leading the CX automation market. Differentiated by open platform allowing customers to add AI now and convert later, unlike point solutions or internal IT development which have longer, disruptive projects.

Q: Can you share info about the tuck-in acquisition in Q3?

A: It's a start-up with strong AI team and technology, integrated some into platform. Recognized ~$1 million in Q3 revenue, could be several million in Q4.

Q: Are you seeing change in customer seat counts and net spend?

A: Yes, some customers reduce workforce, others use agents for upsell. AI allows reducing seats but gaining from bot purchases.

Q: Discuss the partnership with RingCentral?

A: Joint cloud-to-cloud integration announced, minimal contribution in Q4 but expected to be a growth engine next year.

Q: Recap key announcements from Engage and customer feedback?

A: Engage focused on customer business outcomes. Bot count expanded to 50+, with focus on bundling bots. Customers appreciate ability to start small and prove results, with bundles available for faster consumption.