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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q 
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 31, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                                to                                     .
 
Commission File No. 001-34807

verintlogoa08.jpg
Verint Systems Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-3200514
(State or Other Jurisdiction of Incorporation or
Organization)		 (I.R.S. Employer Identification No.)
225 Broadhollow Road 
Melville,New York11747
(Address of Principal Executive Offices) (Zip Code)
(631)962-9600
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
The NASDAQ Stock Market, LLC
Common Stock, $.001 par value per shareVRNT(NASDAQ Global Select Market)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☑
 
There were 62,005,537 shares of the registrant’s common stock outstanding on August 19, 2024.


Verint Systems Inc. and Subsidiaries
Index to Form 10-Q
As of and For the Period Ended July 31, 2024
Page
 
  
 
 
 
 
 
 
  
  
  
 
 
i
Cautionary Note on Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. Forward-looking statements may appear throughout this report, including without limitation, in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and are often identified by future or conditional words such as “will”, “plans”, “expects”, “intends”, “believes”, “seeks”, “estimates”, or “anticipates”, or by variations of such words or by similar expressions. There can be no assurance that forward-looking statements will be achieved. By their very nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other important factors that could cause our actual results or conditions to differ materially from those expressed or implied by such forward-looking statements. Important risks, uncertainties, assumptions, and other factors that could cause our actual results or conditions to differ materially from our forward-looking statements include, among others:
 
•uncertainties regarding the impact of changes in macroeconomic and/or global conditions, including as a result of slowdowns, recessions, economic instability, rising interest rates, tightening credit markets, inflation, instability in the banking sector, actual or threatened trade wars, political unrest, armed conflicts, natural disasters, or outbreaks of disease (including global epidemics or pandemics), as well as the resulting impact on spending by customers or partners, on our business;
•risks that our customers or partners delay, downsize, cancel, or refrain from placing orders or renewing subscriptions or contracts, or are unable to honor contractual commitments or payment obligations due to challenges or uncertainties in their budgets, liquidity, or businesses;
•risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards, including achieving, demonstrating, and maintaining the competitive differentiation of our solution platform; to adapt to changing market potential from area to area within our markets; and to successfully develop, launch, and drive demand for new, innovative, high-quality products and services that meet or exceed customer challenges and needs, while simultaneously preserving our legacy businesses and migrating away from areas of commoditization;
•risks due to aggressive competition in all of our markets and our ability to keep pace with competitors, some of whom may be able to grow faster than us or have greater resources than us, including in areas such as sales and marketing, branding, technological innovation and development, and recruiting and retention;
•risks associated with our ability to properly execute on our software as a service (“SaaS”) transition, including successfully transitioning customers to our cloud platform and the increased importance of subscription renewal rates and term lengths, and risk of increased variability in our period-to-period results based on the mix, terms, and timing of our transactions;
•risks relating to our ability to properly identify and execute on growth or strategic initiatives, manage investments in our business and operations, and enhance our existing operations and infrastructure, including the proper prioritization and allocation of limited financial and other resources;
•risks associated with our ability to or costs to retain, recruit, and train qualified personnel and management in regions in which we operate either physically or remotely, including in new markets and growth areas we may enter, due to competition for talent, increased labor costs, applicable regulatory requirements, or otherwise;
•challenges associated with selling sophisticated solutions and cloud-based solutions, which may incorporate newer technologies, such as artificial intelligence (“AI”), whose adoption, value, and use-cases are still emerging (and may present risks of their own), including with respect to longer sales cycles, more complex sales processes and customer evaluation and approval processes, more complex contractual and information security requirements, and assisting customers in understanding and realizing the benefits of our solutions and technologies, as well as with developing, offering, implementing, and maintaining an enterprise-class, broad solution portfolio;
•risks that we may be unable to maintain, expand, or enable our relationships with partners as part of our growth strategy, including partners with whom we may overlap or compete, while avoiding excessive concentration with one or more partners;
ii
•risks associated with our reliance on third-party suppliers, partners, or original equipment manufacturers (“OEMs”) for certain services, products, or components, including companies that may compete with us or work with our competitors;
•risks associated with our significant international operations, including exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, inflation, increased financial accounting and reporting burdens and complexities, and challenges associated with a significant portion of our cash being held overseas;
•risks associated with a significant part of our business coming from government contracts, and associated procurement processes and regulatory requirements;
•risks associated with our ability to identify suitable targets for acquisition or investment or successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with valuations, legacy liabilities, reputational considerations, capital constraints, costs and expenses, maintaining profitability levels, expansion into new areas, management distraction, post-acquisition integration activities, and potential asset impairments;
•risks associated with complex and changing domestic and foreign regulatory environments, including, among others, with respect to data privacy, AI, cyber/information security, government contracts, anti-corruption, trade compliance, climate change or other environmental, social and governance matters, tax, and labor matters, relating to our own operations, the products and services we offer, and/or the use of our solutions by our customers;
•risks associated with the mishandling or perceived mishandling of sensitive or confidential information and data, including personally identifiable information or other information that may belong to our customers or other third parties, including in connection with our SaaS or other hosted or managed services offerings or when we are asked to perform service or support;
•risks associated with our reliance on third parties to provide certain cloud hosting or other cloud-based services to us or our customers, including the risk of service disruptions, data breaches, or data loss or corruption;
•risks that our solutions or services, or those of third-party suppliers, partners, or OEMs which we use in or with our offerings or otherwise rely on, including third-party hosting platforms, may contain defects, vulnerabilities, or develop operational problems;
•risk that we or our solutions may be subject to security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions;
•risks that our intellectual property (“IP”) rights may not be adequate to protect our business or assets or that others may make claims on our IP, claim infringement on their IP rights, or claim a violation of their license rights, including relative to free or open source components we may use;
•risks associated with leverage resulting from our current debt position or our ability to incur additional debt, including with respect to liquidity considerations, covenant limitations and compliance, fluctuations in interest rates, dilution considerations (with respect to our convertible notes), and our ability to maintain our credit ratings;
•risks that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms or at all;
•risks arising as a result of contingent or other obligations or liabilities assumed in our acquisition of our former parent company, Comverse Technology, Inc. (“CTI”), or associated with formerly being consolidated with, and part of a consolidated tax group with, CTI;
•risks associated with changing accounting principles or standards, tax laws and regulations, tax rates, and the continuing availability of expected tax benefits;
•risks relating to the adequacy of our existing infrastructure, systems, processes, policies, procedures, internal controls, and personnel, and our ability to successfully implement and maintain enhancements to the foregoing, for our current and future operations and reporting needs, including related risks of financial statement omissions, misstatements, restatements, or filing delays;
•risks associated with market volatility in the prices of our common stock and convertible notes based on our performance, third-party publications or speculation, or other factors, and risks associated with actions of activist stockholders;
iii
•risks associated with Apax Partners’ significant ownership position and potential that its interests will not be aligned with those of our common stockholders; and
•risks associated with the February 1, 2021 spin-off (the “Spin-Off”) of our former Cyber Intelligence Solutions business, including the possibility that the Spin-Off transaction does not achieve the benefits anticipated, does not qualify as a tax-free transaction, or exposes us to unexpected claims or liabilities.
These risks, uncertainties, assumptions, and challenges, as well as other factors, are discussed in greater detail in “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the year ended January 31, 2024. You are cautioned not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this report. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under the federal securities laws. If we were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that we would make additional updates or corrections thereafter except as otherwise required under the federal securities laws.

iv
Part I

Item 1.   Financial Statements




1
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
July 31,January 31,
(in thousands, except share and per share data)20242024
Assets  
Current Assets:  
Cash and cash equivalents$207,845 $241,400 
Short-term investments782 686 
Accounts receivable, net of allowance for credit losses of $1.0 million and $1.2 million, respectively
156,953 190,461 
Contract assets, net77,875 66,913 
Inventories15,757 14,209 
Prepaid expenses and other current assets52,592 59,505 
  Total current assets511,804 573,174 
Property and equipment, net49,607 47,704 
Operating lease right-of-use assets28,767 30,118 
Goodwill1,369,311 1,352,715 
Intangible assets, net56,017 57,466 
Other assets168,200 165,247 
  Total assets$2,183,706 $2,226,424 
Liabilities, Temporary Equity, and Stockholders' Equity  
Current Liabilities:  
Accounts payable$27,003 $26,301 
Accrued expenses and other current liabilities105,647 137,433 
Contract liabilities231,459 254,437 
  Total current liabilities364,109 418,171 
Long-term debt411,733 410,965 
Long-term contract liabilities12,832 10,581 
Operating lease liabilities30,329 32,100 
Other liabilities89,638 85,620 
  Total liabilities908,641 957,437 
Commitments and Contingencies
Temporary Equity:
Preferred Stock — $0.001 par value; authorized 2,207,000 shares
Series A Preferred Stock; 200,000 shares issued and outstanding at July 31, 2024 and January 31, 2024, respectively; aggregate liquidation preference and redemption value of $200,667 and $206,067 at July 31, 2024 and January 31, 2024, respectively.
200,628 200,628 
Series B Preferred Stock; 200,000 shares issued and outstanding at July 31, 2024 and January 31, 2024, respectively; aggregate liquidation preference and redemption value of $200,667 and $206,067 at July 31, 2024 and January 31, 2024, respectively.
235,693 235,693 
  Total temporary equity436,321 436,321 
Stockholders' Equity:
Common stock — $0.001 par value; authorized 240,000,000 shares; issued 62,006,000 and 62,738,000 shares; outstanding 62,006,000 and 62,738,000 shares at July 31, 2024 and January 31, 2024, respectively.
62 63 
Additional paid-in capital969,183 979,671 
Retained earnings (accumulated deficit)4,369 (6,723)
Accumulated other comprehensive loss(137,572)(142,962)
Total Verint Systems Inc. stockholders' equity836,042 830,049 
Noncontrolling interest2,702 2,617 
  Total stockholders' equity838,744 832,666 
  Total liabilities, temporary equity, and stockholders' equity$2,183,706 $2,226,424 

See notes to condensed consolidated financial statements.
2
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands, except per share data)2024202320242023
Revenue:
Recurring$163,229 $160,999 $336,757 $327,438 
Nonrecurring46,941 49,166 94,690 99,293 
  Total revenue210,170 210,165 431,447 426,731 
Cost of revenue:  
Recurring36,303 39,567 72,226 79,210 
Nonrecurring26,800 27,372 53,280 54,167 
Amortization of acquired technology1,641 1,937 2,999 3,902 
  Total cost of revenue64,744 68,876 128,505 137,279 
Gross profit145,426 141,289 302,942 289,452 
Operating expenses:  
Research and development, net35,358 34,057 72,088 65,839 
Selling, general and administrative93,178 108,374 186,454 209,653 
Amortization of other acquired intangible assets3,020 6,370 6,085 12,700 
  Total operating expenses131,556 148,801 264,627 288,192 
Operating income (loss)13,870 (7,512)38,315 1,260 
Other income (expense), net:  
Interest income1,596 1,808 3,574 3,790 
Interest expense(2,593)(2,604)(5,184)(5,385)
Other expense, net(2,896)(24)(3,394)— 
  Total other expense, net(3,893)(820)(5,004)(1,595)
Income (loss) before provision for (benefit from) income taxes9,977 (8,332)33,311 (335)
Provision for (benefit from) income taxes4,254 (2,544)12,209 1,819 
Net income (loss)5,723 (5,788)21,102 (2,154)
Net income attributable to noncontrolling interests192 212 330 551 
Net income (loss) attributable to Verint Systems Inc.5,531 (6,000)20,772 (2,705)
Dividends on preferred stock(4,080)(5,200)(9,280)(10,400)
Net income (loss) attributable to Verint Systems Inc. common shares$1,451 $(11,200)$11,492 $(13,105)
Net income (loss) per common share attributable to Verint Systems Inc.:  
Basic$0.02 $(0.17)$0.19 $(0.20)
Diluted$0.02 $(0.17)$0.18 $(0.20)
Weighted-average common shares outstanding:  
Basic61,864 64,294 62,093 64,603 
Diluted62,631 64,294 62,732 64,603 


See notes to condensed consolidated financial statements.
3
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited) 
 Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)2024202320242023
Net income (loss)$5,723 $(5,788)$21,102 $(2,154)
Other comprehensive income, net of reclassification adjustments:
Foreign currency translation adjustments12,721 7,845 5,661 16,457 
Net (decrease) increase from foreign exchange contracts designated as hedges(61)93 (327)(30)
Benefit from (provision for) income taxes on net decrease from foreign exchange contracts designated as hedges9 (16)56 5 
Other comprehensive income12,669 7,922 5,390 16,432 
Comprehensive income18,392 2,134 26,492 14,278 
Comprehensive income attributable to noncontrolling interests192 212 330 551 
Comprehensive income attributable to Verint Systems Inc.$18,200 $1,922 $26,162 $13,727 
 
See notes to condensed consolidated financial statements.
4
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
 Verint Systems Inc. Stockholders’ Equity  
 Common StockAdditional Paid-in Capital 
 (Accumulated
Deficit) / Retained Earnings
Accumulated Other Comprehensive Loss
Total Verint Systems Inc. Stockholders’ Equity Total Stockholders’ Equity
(in thousands) SharesPar
Value		Treasury
Stock		Non-controlling
Interests
Balances as of January 31, 202462,738 $63 $979,671 $— $(6,723)$(142,962)$830,049 $2,617 $832,666 
Net income— — — — 15,241 — 15,241 138 15,379 
Other comprehensive loss— — — — — (7,279)(7,279)— (7,279)
Stock-based compensation — equity-classified awards— — 16,508 — — — 16,508 — 16,508 
Common stock issued for stock awards and stock bonuses410 — — — — — — — — 
Common stock repurchased and retired(1,234)(1)(38,117)— — — (38,118)— (38,118)
Distribution to noncontrolling interest— — — — — — — (245)(245)
Balances as of April 30, 202461,914 62 958,062 — 8,518 (150,241)816,401 2,510 818,911 
Net income— — — — 5,531 — 5,531 192 5,723 
Other comprehensive income— — — — — 12,669 12,669 — 12,669 
Stock-based compensation — equity-classified awards— — 20,172 — — — 20,172 — 20,172 
Common stock issued for stock awards and stock bonuses559 — 5,939 — — — 5,939 — 5,939 
Common stock repurchased and retired(467)— (14,990)— — — (14,990)— (14,990)
Preferred stock dividends— — — — (9,680)— (9,680)— (9,680)
Balances as of July 31, 202462,006 $62 $969,183 $— $4,369 $(137,572)$836,042 $2,702 $838,744 
Balances as of January 31, 202365,404 $65 $1,055,157 $— $(45,333)$(154,099)$855,790 $2,359 $858,149 
Net income— — — — 3,295 — 3,295 339 3,634 
Other comprehensive income— — — — — 8,510 8,510 — 8,510 
Stock-based compensation — equity-classified awards— — 13,436 — — — 13,436 — 13,436 
Common stock issued for stock awards and stock bonuses475 — — — — — — — — 
Common stock repurchased and retired(1,593)(1)(60,095)— — — (60,096)— (60,096)
Distribution to noncontrolling interest— — — — — — — (245)(245)
Balances as of April 30, 202364,286 64 1,008,498 — (42,038)(145,589)820,935 2,453 823,388 
Net (loss) income— — — — (6,000)— (6,000)212 (5,788)
Other comprehensive income— — — — — 7,922 7,922 — 7,922 
Stock-based compensation — equity-classified awards— — 17,404 — — — 17,404 — 17,404 
Common stock issued for stock awards and stock bonuses388 — 7,735 — — — 7,735 — 7,735 
Common stock repurchased and retired(403)— (13,968)— — — (13,968)— (13,968)
Preferred stock dividends— — (10,400)— — — (10,400)— (10,400)
Distribution to noncontrolling interest— — — — — — — (245)(245)
Balances as of July 31, 202364,271 $64 $1,009,269 $— $(48,038)$(137,667)$823,628 $2,420 $826,048 


See notes to condensed consolidated financial statements.



5
VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months Ended
July 31,
(in thousands) 20242023
Cash flows from operating activities:  
Net income (loss)$21,102 $(2,154)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation and amortization22,932 42,792 
Stock-based compensation, excluding cash-settled awards41,784 34,156 
Losses on early retirements of debt— 237 
Other, net756 4,500 
Changes in operating assets and liabilities, net of effects of business combinations and divestitures:  
Accounts receivable33,506 49,006 
Contract assets(10,870)3,230 
Inventories(1,528)(3,166)
Prepaid expenses and other assets(1,821)13,668 
Accounts payable and accrued expenses(21,804)(29,506)
Contract liabilities(22,926)(40,697)
Deferred income taxes254 204 
Other, net3,195 (8,938)
Net cash provided by operating activities64,580 63,332 
Cash flows from investing activities:
Cash paid for asset acquisitions and business combinations, including adjustments, net of cash acquired(10,356)(916)
Divestitures, net of cash divested2,300 — 
Purchases of property and equipment(7,868)(8,548)
Purchases of investments(330)(3,180)
Maturities and sales of investments228 2,422 
Cash paid for capitalized software development costs(5,701)(4,388)
Change in restricted bank time deposits, and other investing activities, net— (1,211)
Net cash used in investing activities(21,727)(15,821)
Cash flows from financing activities:
Proceeds from borrowings— 100,000 
Repayments of borrowings and other financing obligations(1,166)(101,191)
Purchases of treasury stock and common stock for retirement(52,912)(74,266)
Preferred stock dividend payments(20,080)(20,800)
Distributions paid to noncontrolling interest(245)(490)
Payments of contingent consideration for business combinations (financing portion)(3,055)(2,601)
Cash received for contingent consideration for business divestitures (financing portion) and other financing activities(20)(222)
Net cash used in financing activities(77,478)(99,570)
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents620 1,257 
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents(34,005)(50,802)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period242,669 282,161 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$208,664 $231,359 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period to the condensed consolidated balance sheets:
Cash and cash equivalents$207,845 $231,296 
Restricted cash and cash equivalents included in prepaid expenses and other current assets819 5 
Restricted cash and cash equivalents included in other assets— 58 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$208,664 $231,359 

See notes to condensed consolidated financial statements.
6
VERINT SYSTEMS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements


1.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
Description of Business
 
Unless the context otherwise requires, the terms “Verint”, “we”, “us”, and “our” in these notes to condensed consolidated financial statements refer to Verint Systems Inc. and its consolidated subsidiaries.

Verint is a leader in customer experience (“CX”) automation. The world’s most iconic brands – including more than 80 of the Fortune 100 companies – use the Verint Open Platform and our team of AI-powered bots to deliver tangible AI business outcomes across the enterprise.

Verint is uniquely positioned to help brands increase CX automation with our differentiated AI-powered Open Platform. Brands today are challenged to delight their customers while facing limited budgets and resources. As a result, organizations are turning to AI-powered platforms specifically designed for the customer engagement domain to increase the level of their CX automation.

Verint is headquartered in Melville, New York, and has approximately 16 offices worldwide, in addition to a number of on-demand, flexible coworking spaces. We have approximately 3,700 employees plus a few hundred contractors around the globe.

Apax Convertible Preferred Stock Investment

On December 4, 2019, we announced that an affiliate (the “Apax Investor”) of Apax Partners (“Apax”) would make an investment in us in an amount of up to $400.0 million. Under the terms of the Investment Agreement, dated as of December 4, 2019 (the “Investment Agreement”), on May 7, 2020, the Apax Investor purchased $200.0 million of our Series A convertible preferred stock (“Series A Preferred Stock”). On February 1, 2021, we completed the spin-off (the “Spin-Off”) of Cognyte Software Ltd. (“Cognyte”), a company limited by shares incorporated under the laws of the State of Israel whose business and operations consist of our former Cyber Intelligence Solutions business. In connection with the completion of the Spin-Off, on April 6, 2021, the Apax Investor purchased $200.0 million of our Series B convertible preferred stock (the “Series B Preferred Stock” and together with the Series A Preferred Stock, the “Preferred Stock”). As of July 31, 2024, Apax’s ownership in us on an as-converted basis was approximately 13.3%. Please refer to Note 9, “Convertible Preferred Stock” for a more detailed discussion of the Apax investment.

Preparation of Condensed Consolidated Financial Statements

The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and on the same basis as the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2024 filed with the U.S. Securities and Exchange Commission (“SEC”). The condensed consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the periods ended July 31, 2024 and 2023, and the condensed consolidated balance sheet as of July 31, 2024, are not audited but reflect all adjustments that, in the opinion of management, are of a normal recurring nature and that are considered necessary for a fair presentation of the results for the periods shown. The condensed consolidated balance sheet as of January 31, 2024 is derived from the audited consolidated financial statements presented in our Annual Report on Form 10-K for the year ended January 31, 2024. Certain information and disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulations of the SEC. Because the condensed consolidated interim financial statements do not include all of the information and disclosures required by GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended January 31, 2024 filed with the SEC. The results for interim periods are not necessarily indicative of a full year’s results.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Verint Systems Inc., and our wholly owned or otherwise controlled subsidiaries. Noncontrolling interests in less than wholly owned subsidiaries are reflected within stockholders’ equity on our condensed consolidated balance sheet, but separately from our stockholders’ equity.

7
Equity investments in companies in which we have less than a 20% ownership interest and cannot exercise significant influence, and which do not have readily determinable fair values, are accounted for at cost, adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer, less any impairment.

We include the results of operations of acquired companies from the date of acquisition. All significant intercompany transactions and balances are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Key estimates in the accompanying condensed consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts, determining the fair value of assets and liabilities assumed in business combinations, recoverability of goodwill, amortization of intangibles, evaluation of contingencies, and the accounting for income taxes. Actual results could differ from those estimates.

Significant Accounting Policies

There have been no material changes in our significant accounting policies during the six months ended July 31, 2024, as compared to the significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2024.

Recently Adopted Accounting Pronouncements

There have been no recently adopted accounting pronouncements since the filing of our Annual Report on Form 10-K for the year ended January 31, 2024 that may have a material impact on our condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Effective

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will require public companies to report incremental segment information on an annual and interim basis, including enhanced disclosures of significant segment expenses included within each reported measure of segment profit or loss. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied retrospectively. We plan to adopt ASU No. 2023-07 effective for the annual report on Form 10-K for the year ending January 31, 2025 and subsequent interim periods, and are currently evaluating the impact of this standard on our condensed consolidated financial statement disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which will require greater disaggregation of a reporting entity’s effective tax rate reconciliation as well as income taxes paid. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis, with early adoption and retrospective adoption permitted. We are currently evaluating the impact of this standard on our condensed consolidated financial statement disclosures.


2.    REVENUE RECOGNITION

We derive our revenue primarily from providing customers the right to access our cloud-based solutions, the right to use our software for an indefinite or specified period of time, and related services and support based on when access or control of the software passes to our customers or the services are provided, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transactions, including mandatory government charges that are passed through to our customers.

We determine revenue recognition through the following five steps:

•Identification of the contract, or contracts, with a customer
•Identification of the performance obligations in the contract
8
•Determination of the transaction price
•Allocation of the transaction price to the performance obligations in the contract
•Recognition of revenue when, or as, performance obligations are satisfied.

We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

Disaggregation of Revenue

The following table provides a disaggregation of our recurring and nonrecurring revenue. Recurring revenue is the portion of our revenue that we believe is likely to be renewed in the future. The recurrence of these revenue streams in future periods depends on a number of factors including contractual periods and customers' renewal decisions.

•Recurring revenue primarily consists of:
◦Software as a service (“SaaS”) revenue, which consists predominately of bundled SaaS (software access rights with standard managed services) and unbundled SaaS (software licensing rights accounted for as term-based licenses whereby customers have a license to our software with related support for a specific period).
▪Bundled SaaS revenue is recognized over time.
▪Unbundled SaaS revenue is recognized at a point in time, except for the related support which is recognized over time. Unbundled SaaS contracts are eligible for renewal after the initial fixed term, which in most cases is between a one- and three-year time frame. Unbundled SaaS can be deployed in the cloud, either by us or a cloud partner.
◦Optional managed services revenue.
◦Support revenue, which consists of initial and renewal support on our perpetual licenses.
•Nonrecurring revenue primarily consists of our perpetual licenses, hardware, installation services, business advisory consulting and training services, and patent license royalties.

Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)2024202320242023
Recurring revenue:
Bundled SaaS revenue$71,593 $62,066 $137,288 $121,519 
Unbundled SaaS revenue59,511 51,375 134,799 109,070 
Total SaaS revenue131,104 113,441 272,087 230,589 
Optional managed services revenue5,569 12,165 10,737 25,030 
Support revenue26,556 35,393 53,933 71,819 
Total recurring revenue163,229 160,999 336,757 327,438 
Nonrecurring revenue:
Perpetual revenue23,834 25,212 48,734 49,546 
Professional services and other revenue23,107 23,954 45,956 49,747 
Total nonrecurring revenue46,941 49,166 94,690 99,293 
Total revenue$210,170 $210,165 $431,447 $426,731 

Contract Balances

The following table provides information about accounts receivable, contract assets, and contract liabilities from contracts with customers:

(in thousands)July 31, 2024January 31, 2024
Accounts receivable, net$156,953 $190,461 
Contract assets, net$77,875 $66,913 
Long-term contract assets, net (included in other assets)$38,208 $31,379 
Contract liabilities$231,459 $254,437 
Long-term contract liabilities$12,832 $10,581 

9
We receive payments from customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for goods or services that we have transferred to a customer when that right is conditional on something other than the passage of time. The majority of our contract assets represent unbilled amounts related to multi-year unbundled SaaS contracts and arrangements where our right to consideration is subject to the contractually agreed upon billing schedule. We expect billing and collection of a majority of our contract assets to occur within the next twelve months and asset impairment charges related to contract assets were immaterial in the six months ended July 31, 2024 and 2023. As of July 31, 2024, two partners, both authorized global resellers of our solutions, accounted for more than 10% of our aggregated accounts receivable and contract assets; Partner A was approximately 13% and Partner B was approximately 11%. As of January 31, 2024, Partner A and Partner B each accounted for approximately 14% of our aggregated accounts receivable and contract assets. Credit losses relating to these customers have historically been immaterial.

Contract liabilities represent consideration received or consideration which is unconditionally due from customers prior to transferring goods or services to the customer under the terms of the contract. Revenue recognized during the six months ended July 31, 2024 and 2023 from amounts included in contract liabilities at the beginning of each period was $168.2 million and $174.9 million, respectively.

Remaining Performance Obligations

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. The majority of our arrangements are for periods of one to three years, although the contract term can extend up to five years.

We elected to exclude amounts of variable consideration attributable to sales- or usage-based royalties in exchange for a license of our IP from the remaining performance obligations. The timing and amount of revenue recognition for our remaining performance obligations are influenced by several factors, including seasonality, the timing of renewals, the timing of delivery of software licenses, the average length of the contract terms, and foreign currency exchange rates.

The following table provides information about when we expect to recognize our remaining performance obligations:

(in thousands)July 31, 2024January 31, 2024
Remaining performance obligations:
Expected to be recognized within 1 year$425,468 $464,600 
Expected to be recognized in more than 1 year275,241 279,702 
Total remaining performance obligations
$700,709 $744,302 


3.    NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO VERINT SYSTEMS INC.

The following table summarizes the calculation of basic and diluted net income (loss) per common share attributable to Verint Systems Inc. for the three and six months ended July 31, 2024 and 2023:

Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands, except per share amounts) 2024202320242023
Net income (loss)$5,723 $(5,788)$21,102 $(2,154)
Net income attributable to noncontrolling interests192 212 330 551 
Net income (loss) attributable to Verint Systems Inc.5,531 (6,000)20,772 (2,705)
Dividends on preferred stock(4,080)(5,200)(9,280)(10,400)
Net income (loss) attributable to Verint Systems Inc. for basic net loss per common share 1,451 (11,200)11,492 (13,105)
Dilutive effect of dividends on preferred stock— — — — 
Net income (loss) attributable to Verint Systems Inc. for diluted net income (loss) per common share$1,451 $(11,200)$11,492 $(13,105)
Weighted-average shares outstanding: 
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Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands, except per share amounts) 2024202320242023
Basic61,864 64,294 62,093 64,603 
Dilutive effect of employee equity award plans767 — 639 — 
Dilutive effect of 2021 Notes— — — — 
Dilutive effect of assumed conversion of preferred stock— — — — 
Diluted62,631 64,294 62,732 64,603 
Net income (loss) per common share attributable to Verint Systems Inc.:
Basic$0.02 $(0.17)$0.19 $(0.20)
Diluted$0.02 $(0.17)$0.18 $(0.20)

We excluded the following weighted-average potential common shares from the calculations of diluted net income (loss) per common share during the applicable periods because their inclusion would have been anti-dilutive:

Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands) 2024202320242023
Common shares excluded from calculation:  
Restricted and performance stock-based awards734 1,477 1,234 1,779 
Series A Preferred Stock5,498 5,498 5,498 5,498 
Series B Preferred Stock3,980 3,980 3,980 3,980 

In periods for which we report a net loss attributable to Verint Systems Inc. common shares, basic net loss per common share and diluted net loss per common share are identical since the effect of all potential common shares is anti-dilutive and therefore excluded.

For the three and six months ended July 31, 2024, the average price of our common stock did not exceed the $62.08 per share conversion price of our 2021 Notes, and other requirements for the 2021 Notes (as defined in Note 7, “Long-Term Debt”), to be convertible were not met. The 2021 Notes will have a dilutive impact on net income per common share at any time when the average market price of our common stock for a quarterly reporting period exceeds the conversion price.

The Capped Calls (as defined in Note 7, “Long-Term Debt”) do not impact our diluted earnings per common share calculations as their effect would be anti-dilutive. The Capped Calls are generally intended to reduce the potential dilution to our common stock upon any conversion of the 2021 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2021 Notes, in the event that at the time of conversion our common stock price exceeds the $62.08 conversion price, with such reduction and/or offset subject to a cap of $100.00.

Further details regarding the 2021 Notes and Capped Calls appear in Note 7, “Long-Term Debt”.

The weighted-average common shares underlying the assumed conversion of the Preferred Stock, on an as-converted basis, were excluded from the calculations of diluted net income (loss) per common share for the three and six months ended July 31, 2024 and 2023, as their effect would have been anti-dilutive. Further details regarding the Preferred Stock investment appear in Note 9, “Convertible Preferred Stock”.


4.    CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS

The following tables summarize our cash, cash equivalents, and short-term investments as of July 31, 2024 and January 31, 2024:

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July 31, 2024
(in thousands) Cost BasisGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Cash and cash equivalents:
Cash and bank time deposits$172,893 $— $— $172,893 
Money market funds34,454 — — 34,454 
U.S. Treasury bills498 — — 498 
Total cash and cash equivalents$207,845 $— $— $207,845 
Short-term investments:
Bank time deposits$782 $— $— $782 
Total short-term investments$782 $— $— $782 

January 31, 2024
(in thousands)Cost BasisGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Cash and cash equivalents:
Cash and bank time deposits$155,504 $— $— $155,504 
Money market funds85,647 — — 85,647 
U.S. Treasury Bills
249 — — 249 
Total cash and cash equivalents$241,400 $— $— $241,400 
Short-term investments:
Bank time deposits$686 $— $— $686 
Total short-term investments$686 $— $— $686 

Bank time deposits which are reported within short-term investments consist of deposits held outside of the United States with maturities of greater than 90 days, or without specified maturity dates which we intend to hold for periods in excess of 90 days. All other bank deposits are included within cash and cash equivalents.

During the six months ended July 31, 2024 and 2023, proceeds from maturities and sales of short-term investments were $0.2 million and $2.4 million, respectively.


5.    BUSINESS COMBINATIONS, ASSET ACQUISITIONS, AND DIVESTITURES

Six Months Ended July 31, 2024

During the six months ended July 31, 2024, we completed two business combinations:

•In April 2024, we completed the acquisition of an AI-powered analytics company, including fourteen employees. Pursuant to the terms of the purchase agreement, the purchase price consisted of $8.8 million of cash paid at closing, contingent consideration with an estimated fair value of $3.4 million, and the acquisition date fair value of our previously held investment via a simple agreement for future equity (“SAFE”), which was approximately $1.7 million. Further discussion regarding this SAFE investment appears in Note 12, “Fair Value Measurements”. We recognized intangible assets of $5.2 million for developed technology, $0.2 million for the acquired customer relationships, and goodwill of $8.3 million. The acquisition qualified as a stock transaction for tax purposes. This transaction was not material to our condensed consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted.

•In May 2024, we completed the acquisition of a provider of cloud-based call-back solutions, including nine employees. This transaction resulted in the recognition of $3.4 million of goodwill, $0.3 million of acquired customer relationships, and $1.0 million of developed technology intangible assets, but was not material to our condensed consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted.
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Year Ended January 31, 2024

During the year ended January 31, 2024, we completed the acquisition of a provider of solutions for workforce scheduling automation, including three employees. This transaction resulted in increases to goodwill, customer relationships, and acquired technology intangible assets, but was not material to our condensed consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted.

Revenue and net income (loss) attributable to this acquisition for the six months ended July 31, 2024 was not material.

Other Business Combination Information

For the three months ended July 31, 2024 and 2023, we recorded a charge of $0.2 million and benefit of $2.4 million, respectively, and for the six months ended July 31, 2024 and 2023, we recorded benefits of $0.2 million and $2.2 million, respectively, within selling, general and administrative expenses for changes in the fair values of contingent consideration obligations associated with business combinations, which was based on our historical business combinations achieving certain objectives and milestones. The aggregate fair values of the remaining contingent consideration obligations associated with business combinations was $8.3 million at July 31, 2024, of which $3.6 million was recorded within accrued expenses and other current liabilities, and $4.7 million was recorded within other liabilities.

Payments of contingent consideration earned under these agreements were $0.8 million and $2.8 million for the three months ended July 31, 2024 and 2023, respectively, and $4.0 million and $3.1 million for the six months ended July 31, 2024 and 2023, respectively.

Asset Acquisition

In July 2023, we entered into an agreement to acquire source code that qualified as an asset acquisition and made an initial deposit payment of $1.0 million upon the execution of the contract and incurred direct transaction costs related to such asset acquisition of $0.2 million. The agreement also stipulates the establishment of additional milestone payments totaling $3.0 million, of which $2.0 million was deposited into a third-party escrow account in connection with the closing of the transaction. These milestone payments are contingent upon the successful delivery of the source code and the attainment of specific developmental objectives subject to reduction by certain amounts paid under a separate transition services agreement entered into by the parties. During the year ended January 31, 2024, we made $1.8 million in milestone payments to the seller, of which $0.8 million was released from the escrow account upon the achievement of certain source code delivery and integration milestones. During the six months ended July 31, 2024, we made an additional $0.5 million of integration milestone payments to the seller, which were released from the escrow account. The remaining $0.7 million of milestone payments remains in the third-party escrow account, is classified as restricted cash, and is included in prepaid expenses and other current assets on our condensed consolidated balance sheet as of July 31, 2024.

The transaction also provides for additional consideration that is contingent upon achieving certain performance targets for the years ending January 31, 2025 and 2026 of up to $5.0 million, with a minimum of $2.0 million guaranteed over the period, contingent upon achieving the milestones outlined above by the agreed upon dates, plus the opportunity to receive additional payments from us based on any revenue we receive from sales of products based on the acquired technology in adjacent markets. During the six months ended July 31, 2024, we made a $0.3 million noncontingent prepayment against the first period earn-out. Contingent consideration is not recorded in an asset acquisition until the contingency is resolved (when the contingent consideration is paid or becomes payable) or when probable and reasonably estimable.

Divestitures

On January 31, 2024, we completed the sale of a services business for manual quality managed services. We sold the business to the former managers, who were our employees. Today, our platform includes an AI-powered solution for automating the quality monitoring process. We expect our customers to adopt AI over time and believe that a people centric managed services offering is no longer core to our offering.

We estimated the sale price under the sale agreement to be $6.0 million based on (i) the estimated fair value of our share of the future adjusted operating income (as defined in the sale agreement) of the business, to be paid annually over a minimum of six years following the transaction closing date, (ii) the amount by which the closing working capital of the business exceeds the working capital target, and (iii) the estimated amount of future collections of outstanding receivables as of the closing date from a certain customer, net of certain expenses. We determined the estimated fair value of the contingent consideration with the
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assistance of a third-party valuation specialist and estimates made by management. During the three months ended January 31, 2024, we recognized a pre-tax loss on the sale of $9.7 million, which was recorded as part of selling, general, and administrative expenses in our consolidated statement of operations, and included $0.8 million of cumulative foreign translation loss that was released from accumulated other comprehensive loss and divestiture-related expenses were not material. As part of the transaction, we divested $6.5 million of cash, most of which was intended as reimbursement for certain liabilities assumed by the buyer, as well as $1.0 million of tangible net assets, $0.5 million of intangible assets, and $6.8 million of goodwill. The divested services business generated $6.4 million and $13.2 million of revenue during the three and six months ended July 31, 2023, respectively, and several hundred employees dedicated to this managed services business were transferred or terminated as part of the transaction. During the six months ended July 31, 2024, we received $2.5 million of the outstanding receivables as of the closing date.

In March 2023, we completed the sale of an insignificant product line that we inherited as part of a legacy acquisition and that no longer fit with our current business priorities or strategic direction. The total consideration for the sale was $0.7 million, which is payable to us in three equal installments through March 2025, the first installment of which was received in July 2023, and the second installment of which was received in February 2024. The transaction reduced goodwill by $0.3 million and intangible assets by $0.2 million and resulted in a gain of approximately $0.2 million during the six months ended July 31, 2023.

These divestitures did not meet the criteria to be reported as discontinued operations in our condensed consolidated financial statements as our decision to divest these businesses did not represent a strategic shift that would have a major effect on our operations and financial results.


6.    INTANGIBLE ASSETS AND GOODWILL
 
Acquisition-related intangible assets, excluding certain intangible assets previously acquired that were fully amortized and intangible assets of the businesses we divested which were removed from our condensed consolidated balance sheets, consisted of the following as of July 31, 2024 and January 31, 2024:
 
 July 31, 2024
(in thousands)CostAccumulated
Amortization		Net
Intangible assets with finite lives:   
Customer relationships$457,470 $(420,255)$37,215 
Acquired technology239,633 (220,860)18,773 
Trade names3,729 (3,700)29 
Distribution network2,440 (2,440)— 
Total intangible assets$703,272 $(647,255)$56,017 
 
 January 31, 2024
(in thousands)CostAccumulated
Amortization		Net
Intangible assets with finite lives:   
Customer relationships$455,184 $(412,587)$42,597 
Acquired technology231,815 (217,006)14,809 
Trade names3,727 (3,667)60 
Distribution network2,440 (2,440)— 
    Total intangible assets$693,166 $(635,700)$57,466 

Total amortization expense recorded for acquisition-related intangible assets was $4.7 million and $8.3 million for the three months ended July 31, 2024 and 2023, respectively, and $9.1 million and $16.6 million for the six months ended July 31, 2024 and 2023, respectively. The reported amount of net acquisition-related intangible assets can fluctuate from the impact of changes in foreign currency exchange rates on intangible assets not denominated in U.S. dollars.

Estimated future amortization expense on finite-lived acquisition-related intangible assets is as follows:

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(in thousands) 
Years Ending January 31,Amount
2025 (remainder of year)$8,787 
202617,914 
202714,120 
20289,250 
20294,323 
2030 and thereafter1,623 
   Total$56,017 
 
There were no impairments of acquired intangible assets during the six months ended July 31, 2024 and 2023.

Goodwill activity for the six months ended July 31, 2024 was as follows: 

(in thousands)Amount
Six Months Ended July 31, 2024:
Goodwill, gross, at January 31, 2024$1,408,758 
Accumulated impairment losses through January 31, 2024(56,043)
   Goodwill, net, at January 31, 20241,352,715 
Foreign currency translation4,827 
Business combinations, including adjustments to prior period acquisitions11,769 
   Goodwill, net, at July 31, 2024$1,369,311 
Balance at July 31, 2024 
Goodwill, gross, at July 31, 2024$1,425,354 
Accumulated impairment losses through July 31, 2024(56,043)
   Goodwill, net, at July 31, 2024$1,369,311 

No events or circumstances indicating the potential for goodwill impairment were identified during the six months ended July 31, 2024.


7.    LONG-TERM DEBT

The following table summarizes our long-term debt at July 31, 2024 and January 31, 2024:

July 31,January 31,
(in thousands)20242024
2021 Notes$315,000 $315,000 
Revolving Credit Facility100,000 100,000 
Less: unamortized debt discounts and issuance costs(3,267)(4,035)
Total debt411,733 410,965 
Less: current maturities— — 
Long-term debt$411,733 $410,965