Verint Systems Inc. (VRNT) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with revenue exceeding guidance and growth in SaaS ARR and free cash flow. The new partnership with RingCentral and the share repurchase program are positive catalysts. Despite competitive pressures and economic uncertainties, the company maintains its revenue and EPS guidance. The Q&A section supports market share gains and improved sales cycles, enhancing the overall sentiment. Given the small-cap market cap, the stock is likely to react positively, with an expected price increase of 2% to 8%.
Key Financial Performance
Revenue $224 million, approximately 5% year-over-year growth adjusted for last year's divestiture, driven by unbundled SaaS renewal revenue coming in Q3 instead of Q4.
Gross Margin Non-GAAP gross margin at 72%, up approximately 70 basis points year-over-year, reflecting a favorable mix shift towards higher margin recurring revenue.
Non-GAAP Diluted EPS $0.54, approximately $0.11 ahead of guidance, driven by revenue overachievement and gross margin expansion.
Bundled SaaS Revenue Growth 19% year-over-year growth, an acceleration from previous quarters, driven by AI momentum.
Unbundled SaaS Revenue $73 million, ahead of expectations due to renewal revenue coming in Q3 that was previously expected in Q4.
SaaS ARR Growth 11% year-over-year growth, driven by AI adoption.
Free Cash Flow 25% more than last year year-to-date, targeting strong cash generation in Q4 and more than 30% growth for the full year.
Net Debt Remains under 1x last 12 month EBITDA, supported by strong cash flow.
New SaaS ACV Bookings Growth 37% year-over-year growth in Q3.
Revenue Guidance for FY'25 Maintaining revenue outlook of $933 million, reflecting a bit more than 5% growth compared to FY'24 adjusted revenue.
Gross Margin Guidance Expecting at least 150 basis points of expansion year-over-year.
Diluted EPS Guidance Expecting $2.90 at the midpoint of revenue guidance.
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Operating Highlights
New AI-powered Bots: Verint introduced the CX/EX scoring bot, designed to provide real-time insights into customer and employee experiences, enhancing the agent's efficiency.
AI Business Outcomes: Customers reported significant savings, such as a telecom company saving over $10 million annually by using Verint's Intelligent Virtual Assistant.
Market Positioning: Verint is positioned as a leader in the CX automation market, gaining market share by delivering measurable AI business outcomes.
Partnership with RingCentral: A new partnership with RingCentral was announced, focusing on cloud-to-cloud integration to enhance contact center capabilities.
Revenue Growth: Q3 revenue reached $224 million, exceeding guidance by $14 million, driven by strong SaaS momentum.
Gross Margin Expansion: Gross margin expanded to 72%, reflecting a favorable shift towards higher-margin recurring revenue.
Investor Day: An Investor Day is scheduled for January 14, focusing on financial outlook and AI business outcomes.
Acquisition Integration: A tuck-in acquisition was completed, contributing $1 million in Q3 revenue and enhancing AI capabilities.
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Risk or Challenges
Competitive Pressures: Verint faces competition from both specialized AI solution providers and internal IT development efforts by enterprise customers. Competitors are trying to sell into the CX automation market, which is experiencing significant interest due to potential cost savings and improved customer experience.
Regulatory Issues: No specific regulatory issues were mentioned during the call.
Supply Chain Challenges: No supply chain challenges were discussed in the transcript.
Economic Factors: The company noted that some customers are reducing workforce due to AI adoption, while others are reallocating agent tasks to focus on customer relationships and upselling, indicating a shift in operational strategies influenced by economic conditions.
Market Adoption of AI: There is a noted 'AI paralysis' among customers due to the overwhelming number of AI solutions available, which has led to longer sales cycles. However, as customers become more familiar with AI capabilities, sales cycles are expected to improve.
Integration Challenges: Verint's hybrid cloud model allows for integration without requiring customers to convert existing solutions to the cloud, which mitigates potential integration challenges.
Acquisition Risks: The recent tuck-in acquisition of an AI technology startup presents risks related to customer retention, as the startup's contracts allow customers to terminate at any time.
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Guidance & Outlook
AI Innovation: Verint continues to benefit from strong AI momentum, with significant customer reported outcomes from AI deployments, including annual savings of over $10 million for a telecommunications company and $9 million for a financial services company.
Hybrid Cloud Model: The hybrid cloud model allows customers to integrate AI innovations without needing to convert existing solutions to the cloud, facilitating quicker adoption of AI technologies.
New Product Announcements: Verint introduced the CX/EX scoring bot, which provides real-time insights into customer and employee experiences, enhancing the capabilities of their AI offerings.
Partnerships: A new partnership with RingCentral was announced, focusing on cloud-to-cloud integration to enhance customer offerings in the contact center market.
Q3 Revenue: Q3 revenue was $224 million, exceeding guidance by approximately $14 million, driven by strong SaaS momentum.
Full Year Revenue Guidance: Maintaining full year revenue guidance of $933 million, reflecting over 5% growth compared to FY'24 adjusted revenue.
Q4 Expectations: Expecting Q4 to be the largest unbundled SaaS revenue quarter with around $100 million due to a large pool of renewals.
Non-GAAP EPS Guidance: Expecting non-GAAP diluted EPS of $2.90 at the midpoint of revenue guidance.
Gross Margin Outlook: Expecting gross margin to increase by at least 150 basis points year-over-year.
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Shareholder Return Plan
Share Repurchase Program: Verint is executing on a previously announced $200 million share repurchase program.
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Key Q&A
Q:Do you currently view Verint as gaining market share within the contact center arena?
A:Yes, we believe we are leading the CX automation market and taking share, as evidenced by customer-reported business outcomes.
Q:Can you share some info about the tuck-in acquisition made during the third quarter?
A:The tuck-in acquisition is a startup with strong AI technology, contributing about $1 million in Q3, and we expect several million in Q4.
Q:Are you seeing any change in seat counts and net spend from customers renewing?
A:Yes, some customers are reducing workforce while others are using agents to build relationships, leading to varied choices.
Q:Do you think sales cycles can improve in 2025 with a better understanding of AI?
A:Yes, as customers realize they can deploy AI with minimal investment and see real results, the paralysis is starting to undo.
Q:Can you discuss the partnership with RingCentral?
A:The partnership focuses on cloud-to-cloud integration to offer customers Verint's capabilities, expected to be a growth engine next year.
Q:What were some key announcements from the Engage conference?
A:The conference focused on customer experiences and outcomes, with over 50 bots available, and a push towards bundling for faster consumption.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific financial impact of the tuck-in acquisition beyond the $1 million recognized in Q3, and the future revenue potential remains vague.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI outcome
AI tool
ARR
CFA Investor
CX EX
CX automation
EX scoring
SaaS acceleration
SaaS stream
automation platform
bot agent
box
bundle
case
center market
cloud integration
cloud model
conversion
copilot bot
course
divestiture
enterprise
insurance
knowledge
lab
model AI
momentum
noise
outcome platform
partner
platform CX
prem
project
seat
self service
task
tuck acquisition
workflow
VRNT Transcript
Verint Systems Inc. (VRNT) Q1 2026 Earnings Call Transcript
Positive6-4
The earnings call reflects strong financial performance with record bookings, high AI ARR growth, and a positive outlook. The share buyback program and raised guidance further support a positive sentiment. Despite competitive pressures and economic factors, Verint's differentiation in AI and strong customer adoption provide confidence. The Q&A section reveals strong demand for AI, successful upselling, and high retention rates, enhancing the positive outlook. With a market cap of approximately $2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
Verint Systems Inc. (VRNT) Q4 2025 Earnings Call Transcript
Positive3-26
Verint demonstrated strong financial performance with AI-driven revenue growth, exceeding guidance in several areas. Despite some unbundled SaaS deals not materializing, the company maintains optimistic guidance and a new $200 million buyback program. The partnership with RingCentral and positive Q&A insights about customer confidence in AI deployments further bolster sentiment. Given the market cap of $2 billion, the positive developments and strategic initiatives should result in a positive stock price movement of 2% to 8% over the next two weeks.
Verint Systems Inc. (VRNT) Q4 2025 Earnings Call Transcript
Positive3-26
Verint's earnings call reveals strong financial performance with revenue exceeding guidance and a positive outlook for Q4. The stock buyback program and increased ARR guidance further boost sentiment. Despite some competitive pressures and regulatory concerns, the company's AI-driven growth and customer success stories are compelling. The Q&A indicates confidence in closing delayed deals and expanding market share. Given the $2 billion market cap, these factors suggest a positive stock price movement of 2% to 8% in the next two weeks.
Verint Systems Inc. (VRNT) Q3 2025 Earnings Call Transcript
Positive12-5
The earnings call highlights strong financial performance, with revenue exceeding guidance and growth in SaaS ARR and free cash flow. The new partnership with RingCentral and the share repurchase program are positive catalysts. Despite competitive pressures and economic uncertainties, the company maintains its revenue and EPS guidance. The Q&A section supports market share gains and improved sales cycles, enhancing the overall sentiment. Given the small-cap market cap, the stock is likely to react positively, with an expected price increase of 2% to 8%.
VRNT Report
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