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Verint Systems (VRNT) Q3 Earnings Beat, Revenues Rise Y/Y

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Verint Systems (VRNT - Free Report) reported third-quarter fiscal 2019 adjusted earnings of 85 cents per share, which increased 28.8% year over year and comfortably beat the Zacks Consensus Estimate of 71 cents.

Revenues of $303.9 million increased 8.3% year over year driven by higher sales of Verint’s actionable intelligence solutions.

Quarter Details

Product revenues (36.7% of total revenues) grew 17.8% year over year to $111.7 million. Service and support revenues (63.3%) increased 3.5% year over year to $192.3 million.

Segment wise, Customer Engagement revenues (65%) increased 8.7% year over year to $197.5 million primarily due to Verint’s key innovations in the area of automation.

With about 50% growth in patents and applications in automation, in the last 12 months, the company won customers like UCB in the current quarter, thereby enhancing customer experience. Notably, Verint’s customer engagement portfolio supports more than 3 billion cloud interactions across its customer base on an annual basis.

Cyber Intelligence revenues (35%) grew 7.4% year over year to $106.5 million primarily due to growing demand for data protection software. The company’s ability to anticipate new market trends and bring solutions to address the same helped it win approximately $75 million worth of orders in the reported quarter.

By geography, revenues from Americas (55.9%) grew 13.3% year over year to $170 million and revenues from APAC (19.4%) increased 28.3% year over year to $59 million. However, revenues from EMEA (26%) declined 10.2% year over year to $79 million.

Verint Systems Inc. Price, Consensus and EPS Surprise

Verint Systems Inc. Price, Consensus and EPS Surprise | Verint Systems Inc. Quote

Operating Details

Gross profit increased 13.8% year over year to $192.7 million. Gross margin expanded 310 basis points (bps) to 63.4%.

Research and development expenses increased 9.4% year over year to $51.6 million primarily due to investments in innovative technology. Also, selling, general and administrative expenses increased 2.7% year over year to $99.9 million. Therefore, total operating expenses increased 5% year over year to $159.1 million.

Adjusted EBITDA increased 20.5% year over year to $76.3 million. Operating income surged 89% year over year to $33.7 million and operating margin expanded 470 bps to 11.1%.

Balance Sheet and Cash Flow

Verint had $353.4 million of cash and cash equivalents as of Oct 31, 2018 compared with $375.1 million in the prior quarter.

Cash flow from operations was $27 million, up 37% year over year. Moreover, long-term debt for the quarter was $775.3 million compared with $772.9 million for the quarter ending Jul 31.

Guidance

For fiscal 2019, non-GAAP revenues are expected to be $1.24 billion (+/-1%). Non-GAAP earnings per share are expected to be $3.15.

For fiscal 2020, non-GAAP revenues are expected to approximately $1.325 billion (+/-2%). Non-GAAP earnings per share are expected to be $3.50.

Zacks Rank & Other Stocks to Consider

Currently, Verint carries a Zacks Rank #3 (Hold).

Some other top-ranked stocks in the broader computer and technology sector are Generac Holdings (GNRC - Free Report) , Alteryx (AYX - Free Report) and Castlight Health (CSLT - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Long term growth rates for Generac, Alteryx and Castlight is projected to be 6.5%, 8% and 22.5%, respectively.

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