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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, 2022
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

vrnt-20220731_g1.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.)
175 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 filerAccelerated filer
Non-accelerated filerSmaller 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 65,207,506 shares of the registrant’s common stock outstanding on August 15, 2022.



Verint Systems Inc. and Subsidiaries
Index to Form 10-Q
As of and For the Period Ended July 31, 2022
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, inflation, economic instability, political unrest, armed conflicts (such as the Russian invasion of Ukraine), natural disasters, climate change or other environmental issues, or outbreaks of disease, such as the COVID-19 pandemic, as well as the resulting impact on information technology spending by enterprises or government customers, on our business;
risks that our customers delay, cancel, or refrain from placing orders, refrain from renewing subscriptions or service contracts, or are unable to honor contractual commitments or payment obligations due to liquidity issues or other challenges in their budgets and business;
risks that restrictions resulting from the COVID-19 pandemic or actions taken in response to the pandemic adversely impact our operations or our ability to fulfill orders, complete implementations, or recognize revenue;
risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; 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 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 have greater resources than us, including in areas such as sales and marketing, branding, technological innovation and development, recruiting and retention, and growth;
risks associated with our ability to properly execute on our cloud transition, including increased importance of subscription renewal rates, 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 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 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, increasing labor costs, applicable regulatory requirements such as vaccination mandates, or otherwise;
challenges associated with selling sophisticated solutions, including with respect to longer sales cycles, more complex sales processes, and assisting customers in understanding and realizing the benefits of our solutions, as well as with developing, offering, implementing, and maintaining a broad solution portfolio;
risks that we may be unable to maintain, expand, and enable our relationships with partners as part of our growth strategy;
risks associated with our reliance on cloud hosting providers and other 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;
ii

risks associated with our significant international operations, exposure to regions subject to political or economic instability, fluctuations in foreign exchange rates, 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 and protection, 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 software as a service (“SaaS”) or other hosted or managed services offerings or when we are asked to perform service or support;
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, develop operational problems, or be vulnerable to cyber-attacks;
risk of security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures, or disruptions;
risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property, claim infringement on their intellectual property rights, or claim a violation of their license rights, including relative to free or open source components we may use;
risks associated with significant 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, or as a result of the successor to CTI’s business operations, Mavenir Inc. (“Mavenir”), being unwilling or unable to provide us with certain indemnities to which we are entitled;
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;
risks associated with Apax Partners’ significant ownership position and potential that its interests will not be aligned with those of our common stockholders; and
iii

risks associated with the 2021 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, 2022. 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)20222022
Assets  
Current Assets:  
Cash and cash equivalents$256,502 $358,805 
Short-term investments718 765 
Accounts receivable, net of allowance for credit losses of $1.4 million and $1.3 million, respectively
148,472 193,831 
Contract assets, net43,092 42,688 
Inventories6,557 5,337 
Prepaid expenses and other current assets70,380 53,752 
  Total current assets525,721 655,178 
Property and equipment, net57,514 64,090 
Operating lease right-of-use assets31,202 35,433 
Goodwill1,315,109 1,353,421 
Intangible assets, net93,370 118,254 
Other assets144,374 134,729 
  Total assets$2,167,290 $2,361,105 
Liabilities, Temporary Equity, and Stockholders' Equity  
Current Liabilities:  
Accounts payable$44,573 $39,501 
Accrued expenses and other current liabilities126,603 168,694 
Contract liabilities229,317 271,271 
  Total current liabilities400,493 479,466 
Long-term debt407,816 406,954 
Long-term contract liabilities14,225 15,872 
Operating lease liabilities28,056 28,457 
Other liabilities42,024 39,456 
  Total liabilities892,614 970,205 
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, 2022 and January 31, 2022, respectively; aggregate liquidation preference and redemption value of $200,867 and $206,067 at July 31, 2022 and January 31, 2022, respectively.
200,628 200,628 
Series B Preferred Stock; 200,000 shares issued and outstanding at July 31, 2022 and January 31, 2022, respectively; aggregate liquidation preference and redemption value of $200,867 and $206,067 at July 31, 2022 and January 31, 2022, respectively.
235,693 235,693 
  Total temporary equity436,321 436,321 
Stockholders' Equity:
Common stock — $0.001 par value; authorized 240,000,000 and 120,000,000 shares; issued 65,208,000 and 66,211,000 shares; outstanding 65,208,000 and 66,211,000 shares at July 31, 2022 and January 31, 2022, respectively.
65 66 
Additional paid-in capital1,054,873 1,125,152 
Accumulated deficit(56,635)(54,509)
Accumulated other comprehensive loss(162,307)(118,515)
Total Verint Systems Inc. stockholders' equity835,996 952,194 
Noncontrolling interest2,359 2,385 
  Total stockholders' equity838,355 954,579 
  Total liabilities, temporary equity, and stockholders' equity$2,167,290 $2,361,105 

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)2022202120222021
Revenue:
Recurring$166,440 $156,178 $325,807 $300,631 
Nonrecurring56,459 58,439 114,998 114,890 
  Total revenue222,899 214,617 440,805 415,521 
Cost of revenue:  
Recurring40,852 37,636 81,880 75,712 
Nonrecurring30,700 30,505 62,768 60,385 
Amortization of acquired technology3,553 4,426 7,192 8,810 
  Total cost of revenue75,105 72,567 151,840 144,907 
Gross profit147,794 142,050 288,965 270,614 
Operating expenses:  
Research and development, net33,956 31,792 64,903 60,940 
Selling, general and administrative105,705 91,376 208,587 179,022 
Amortization of other acquired intangible assets6,623 7,345 13,467 14,673 
  Total operating expenses146,284 130,513 286,957 254,635 
Operating income1,510 11,537 2,008 15,979 
Other income (expense), net:  
Interest income498 23 697 46 
Interest expense(1,863)(2,199)(3,364)(7,218)
Losses on early retirements of debt   (2,474)
Other income, net467 156 2,141 4,206 
  Total other expense, net(898)(2,020)(526)(5,440)
Income before provision for income taxes612 9,517 1,482 10,539 
Provision for income taxes2,848 4,201 3,144 4,129 
Net (loss) income(2,236)5,316 (1,662)6,410 
Net income attributable to noncontrolling interests176 316 464 611 
Net (loss) income attributable to Verint Systems Inc.(2,412)5,000 (2,126)5,799 
Dividends on preferred stock(5,200)(5,200)(10,400)(8,522)
Net loss attributable to Verint Systems Inc. common shares$(7,612)$(200)$(12,526)$(2,723)
Net loss per common share attributable to Verint Systems Inc.:  
Basic$(0.12)$ $(0.19)$(0.04)
Diluted$(0.12)$ $(0.19)$(0.04)
Weighted-average common shares outstanding:  
Basic64,958 65,194 64,948 65,417 
Diluted64,958 65,194 64,948 65,417 

See notes to condensed consolidated financial statements.
3

VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited) 
 Three Months Ended
July 31,
Six Months Ended
July 31,
(in thousands)2022202120222021
Net (loss) income$(2,236)$5,316 $(1,662)$6,410 
Other comprehensive (loss) income, net of reclassification adjustments:
Foreign currency translation adjustments(13,783)1,653 (43,673)4,261 
Distribution of Cognyte Software Ltd.   17,123 
Net increase (decrease) from foreign exchange contracts designated as hedges43 12 (145)(54)
Net increase from interest rate swap prior to dedesignation as a hedge   1,014 
Net increase from settlement of interest rate swap due to partial early retirement of Term Loan   12,017 
(Provision for) benefit from income taxes on net increase (decrease) from foreign exchange contracts and interest rate swap designated as hedges(7)(2)26 9 
Other comprehensive (loss) income(13,747)1,663 (43,792)34,370 
Comprehensive (loss) income(15,983)6,979 (45,454)40,780 
Comprehensive income attributable to noncontrolling interests176 316 464 611 
Comprehensive (loss) income attributable to Verint Systems Inc.$(16,159)$6,663 $(45,918)$40,169 
 
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 Other Comprehensive Loss
Total Verint Systems Inc. Stockholders’ Equity Total Stockholders’ Equity
(in thousands) SharesPar
Value
Treasury
Stock
Accumulated
Deficit
Non-controlling
Interests
Balances as of January 31, 202266,211 $66 $1,125,152 $ $(54,509)$(118,515)$952,194 $2,385 $954,579 
Net income— — — — 286 — 286 288 574 
Other comprehensive loss— — — — — (30,045)(30,045)— (30,045)
Stock-based compensation — equity-classified awards— — 16,011 — — — 16,011 — 16,011 
Common stock issued for stock awards and stock bonuses466 1 (1)— — — — —  
Treasury stock acquired(2,000)— — (105,666)— — (105,666)— (105,666)
Balances as of April 30, 202264,677 67 1,141,162 (105,666)(54,223)(148,560)832,780 2,673 835,453 
Net (loss) income— — — — (2,412)— (2,412)176 (2,236)
Other comprehensive loss— — — — — (13,747)(13,747)— (13,747)
Stock-based compensation — equity-classified awards— — 23,362 — — — 23,362 — 23,362 
Common stock issued for stock awards and stock bonuses531 — 6,427 — — — 6,427 — 6,427 
Treasury stock acquired— — — (14)— — (14)— (14)
Treasury stock retired— (2)(105,678)105,680 — — — —  
Preferred stock dividends— — (10,400)— — — (10,400)— (10,400)
Distribution to noncontrolling interest— — — — — — — (490)(490)
Balances as of July 31, 202265,208 $65 $1,054,873 $ $(56,635)$(162,307)$835,996 $2,359 $838,355 


5


Verint Systems Inc. Stockholders’ Equity  
Common StockAdditional Paid-in Capital  
Accumulated Other Comprehensive Loss
Total Verint Systems Inc. Stockholders’ Equity Total Stockholders’ Equity
(in thousands) SharesPar
Value
Treasury
Stock
Accumulated
Deficit
Non-controlling
Interests
Balances as of January 31, 202165,773 $70 $1,726,166 $(208,124)$(113,797)$(136,878)$1,267,437 $15,127 $1,282,564 
Net income— — — — 799 — 799 295 1,094 
Other comprehensive income, excluding the distribution of Cognyte Software Ltd. — — — — — 15,584 15,584 — 15,584 
Distribution of Cognyte Software Ltd. — — (281,665)— — 17,123 (264,542)(12,870)(277,412)
Stock-based compensation — equity-classified awards— — 14,253 — — — 14,253 — 14,253 
Common stock issued for stock awards and stock bonuses827 1 (1)— — — — —  
Common stock repurchased and retired(1,058)(1)(49,580)— — — (49,581)— (49,581)
Treasury stock acquired(543)— — (25,868)— — (25,868)— (25,868)
Purchases of capped calls, net of taxes— — (32,416)— — — (32,416)— (32,416)
Cumulative effect of adoption of ASU No. 2020-06, net of taxes— — (43,445)— 44,875 — 1,430 — 1,430 
Balances as of April 30, 202164,999 70 1,333,312 (233,992)(68,123)(104,171)927,096 2,552 929,648 
Net income— — — — 5,000 — 5,000 316 5,316 
Other comprehensive income— — — — — 1,663 1,663 — 1,663 
Stock-based compensation — equity-classified awards— — 15,984 — — — 15,984 — 15,984 
Common stock issued for stock awards and stock bonuses456 — — — — — — —  
Settlement of conversion premium upon maturity of 2014 Notes1,250 — (59,139)59,131 — — (8)— (8)
Common stock received from exercise of Note Hedges(1,250)— 57,695 (57,692)— — 3 — 3 
Common stock received from exercise of Note Hedges related to repurchased 2014 Notes(42)— 1,959 (1,959)— — — —  
Purchases of capped calls, net of taxes— — (25)— — — (25)— (25)
Treasury stock acquired(1)— — (12)— — (12)— (12)
Preferred stock dividends— — (7,656) — — (7,656)— (7,656)
Distribution to noncontrolling interest— — — — — — — (245)(245)
Balances as of July 31, 202165,412 $70 $1,342,130 $(234,524)$(63,123)$(102,508)$942,045 $2,623 $944,668 

See notes to condensed consolidated financial statements.
6

VERINT SYSTEMS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months Ended
July 31,
(in thousands) 20222021
Cash flows from operating activities:  
Net (loss) income$(1,662)$6,410 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization35,348 37,669 
Stock-based compensation, excluding cash-settled awards44,053 34,489 
Change in fair value of future tranche right (15,810)
Non-cash losses on derivative financial instruments, net 14,374 
Losses on early retirements of debt 2,474 
Other, net7,631 (878)
Changes in operating assets and liabilities, net of effects of business combinations:  
Accounts receivable41,641 55,664 
Contract assets(1,600)(1,334)
Inventories(1,344)(206)
Prepaid expenses and other assets(28,580)(27,926)
Accounts payable and accrued expenses(6,289)(27,271)
Contract liabilities(38,626)(33,466)
Deferred income taxes(301)(16,521)
Other, net(3,591)(815)
Net cash provided by operating activities — continuing operations46,680 26,853 
Net cash used in operating activities — discontinued operations (12,294)
Net cash provided by operating activities46,680 14,559 
Cash flows from investing activities:
Cash paid for business combinations, including adjustments, net of cash acquired (7,000)
Purchases of property and equipment(10,160)(7,575)
Maturities and sales of investments250 45,640 
Purchases of investments(250) 
Cash paid for capitalized software development costs(3,816)(3,697)
Change in restricted bank time deposits, and other investing activities, net22 22 
Net cash (used in) provided by investing activities(13,954)27,390 
Cash flows from financing activities:
Proceeds from issuance of preferred stock 198,731 
Proceeds from borrowings 315,000 
Repayments of borrowings and other financing obligations(1,675)(311,335)
Settlement of 2014 Notes (386,887)
Purchases of capped calls (41,060)
Payments of debt-related costs(224)(10,531)
Purchases of treasury stock and common stock for retirement(105,666)(75,460)
Preferred stock dividend payments(20,800)(12,856)
Distributions paid to noncontrolling interest(490)(245)
Payment for termination of interest rate swap (16,502)
Net cash transferred to Cognyte Software Ltd. (114,657)
Dividend and other settlements received from Cognyte Software Ltd.  38,280 
Payments of contingent consideration for business combinations (financing portion), and other financing activities(3,582)(4,390)
Net cash used in financing activities(132,437)(421,912)
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents(2,575)340 
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents(102,286)(379,623)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period358,868