VERINT SYSTEMS INC [VRNT] Filings

10-Q 1 vrnt-20230731.htm 10-Q vrnt-20230731

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, 2023


☐			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

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 York	11747
(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 class

Trading Symbol(s)

Name of each exchange on which registered

The NASDAQ Stock Market, LLC

Common Stock, $.001 par value per share

VRNT

(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 64,271,128 shares of the registrant’s common stock outstanding on August 15, 2023.

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Verint Systems Inc. and Subsidiaries
Index to Form 10-Q
As of and For the Period Ended July 31, 2023
		Page

Cautionary Note on Forward-Looking Statements		ii

Part I.	Financial Information	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	52

Part II.	Other Information	53

Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55

Signature		56

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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, political unrest, armed conflicts (such as the Russian invasion of Ukraine), actual or threatened trade wars, natural disasters, or outbreaks of disease (such as the COVID-19 pandemic), 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 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 SaaS transition, including successfully transitioning customers to our cloud platform and the 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 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 whose adoption and use-cases are still emerging, including with respect to longer sales cycles, more complex sales processes and customer 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, and enable our relationships with partners as part of our growth strategy while avoiding excessive concentration with any one partner;

•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;

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•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, artificial intelligence, 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 software as a service (“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 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

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•risks associated with the February 1, 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, 2023. 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.

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Part I

Item 1. Financial Statements


VERINT SYSTEMS INC. AND SUBSIDIARIES
Index to Condensed Consolidated Financial Statements (Unaudited)
			Page

Condensed Consolidated Balance Sheets as of July 31, 2023 and January 31, 2023			2
Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2023 and 2022			3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended July 31, 2023 and 2022			4
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended July 31, 2023 and 2022			5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2023 and 2022			6
Notes to Condensed Consolidated Financial Statements			7

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VERINT SYSTEMS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	July 31,		January 31,
(in thousands, except share and per share data)	2023		2023
Assets
Current Assets:
Cash and cash equivalents	$	231,296	$	282,099
Short-term investments	1,452		697
Accounts receivable, net of allowance for credit losses of $1.4 million and $1.3 million, respectively	140,031		188,414
Contract assets, net	57,690		60,444
Inventories	15,755		12,628
Prepaid expenses and other current assets	70,637		75,374
Total current assets	516,861		619,656
Property and equipment, net	49,003		64,810
Operating lease right-of-use assets	29,523		37,649
Goodwill	1,362,227		1,347,213
Intangible assets, net	69,812		85,272
Other assets	153,927		159,001
Total assets	$	2,181,353	$	2,313,601

Liabilities, Temporary Equity, and Stockholders' Equity
Current Liabilities:
Accounts payable	$	35,365	$	43,631
Accrued expenses and other current liabilities	119,169		155,944
Contract liabilities	238,738		271,476
Total current liabilities	393,272		471,051
Long-term debt	409,958		408,908
Long-term contract liabilities	12,327		18,047
Operating lease liabilities	33,009		40,744
Other liabilities	70,418		80,381
Total liabilities	918,984		1,019,131
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, 2023 and January 31, 2023, respectively; aggregate liquidation preference and redemption value of $200,867 and $206,067 at July 31, 2023 and January 31, 2023, respectively.	200,628		200,628
Series B Preferred Stock; 200,000 shares issued and outstanding at July 31, 2023 and January 31, 2023, respectively; aggregate liquidation preference and redemption value of $200,867 and $206,067 at July 31, 2023 and January 31, 2023, respectively.	235,693		235,693
Total temporary equity	436,321		436,321
Stockholders' Equity:
Common stock — $0.001 par value; authorized 240,000,000 shares; issued 64,271,000 and 65,404,000 shares; outstanding 64,271,000 and 65,404,000 shares at July 31, 2023 and January 31, 2023, respectively.	64		65
Additional paid-in capital	1,009,269		1,055,157
Accumulated deficit	(48,038)		(45,333)
Accumulated other comprehensive loss	(137,667)		(154,099)
Total Verint Systems Inc. stockholders' equity	823,628		855,790
Noncontrolling interest	2,420		2,359
Total stockholders' equity	826,048		858,149
Total liabilities, temporary equity, and stockholders' equity	$	2,181,353	$	2,313,601

See notes to condensed consolidated financial statements.

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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)	2023		2022		2023		2022
Revenue:
Recurring	$	160,999	$	166,440	$	327,438	$	325,807
Nonrecurring	49,166		56,459		99,293		114,998
Total revenue	210,165		222,899		426,731		440,805
Cost of revenue:
Recurring	39,567		40,852		79,210		81,880
Nonrecurring	27,372		30,700		54,167		62,768
Amortization of acquired technology	1,937		3,553		3,902		7,192
Total cost of revenue	68,876		75,105		137,279		151,840
Gross profit	141,289		147,794		289,452		288,965
Operating expenses:
Research and development, net	34,057		33,956		65,839		64,903
Selling, general and administrative	108,374		105,705		209,653		208,587
Amortization of other acquired intangible assets	6,370		6,623		12,700		13,467
Total operating expenses	148,801		146,284		288,192		286,957
Operating (loss) income	(7,512)		1,510		1,260		2,008
Other income (expense), net:
Interest income	1,808		498		3,790		697
Interest expense	(2,604)		(1,863)		(5,385)		(3,364)
Other (expense) income, net	(24)		467		—		2,141
Total other expense, net	(820)		(898)		(1,595)		(526)
(Loss) income before (benefit from) provision for income taxes	(8,332)		612		(335)		1,482
(Benefit from) provision for income taxes	(2,544)		2,848		1,819		3,144
Net loss	(5,788)		(2,236)		(2,154)		(1,662)
Net income attributable to noncontrolling interests	212		176		551		464
Net loss attributable to Verint Systems Inc.	(6,000)		(2,412)		(2,705)		(2,126)
Dividends on preferred stock	(5,200)		(5,200)		(10,400)		(10,400)
Net loss attributable to Verint Systems Inc. common shares	$	(11,200)	$	(7,612)	$	(13,105)	$	(12,526)

Net loss per common share attributable to Verint Systems Inc.:
Basic	$	(0.17)	$	(0.12)	$	(0.20)	$	(0.19)
Diluted	$	(0.17)	$	(0.12)	$	(0.20)	$	(0.19)

Weighted-average common shares outstanding:
Basic	64,294		64,958		64,603		64,948
Diluted	64,294		64,958		64,603		64,948

See notes to condensed consolidated financial statements.

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VERINT SYSTEMS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
(in thousands)	2023		2022		2023		2022
Net loss	$	(5,788)	$	(2,236)	$	(2,154)	$	(1,662)
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments	7,845		(13,783)		16,457		(43,673)
Net increase (decrease) from foreign exchange contracts designated as hedges	93		43		(30)		(145)
(Provision for) benefit from income taxes on net increase (decrease) from foreign exchange contracts designated as hedges	(16)		(7)		5		26
Other comprehensive income (loss)	7,922		(13,747)		16,432		(43,792)
Comprehensive income (loss)	2,134		(15,983)		14,278		(45,454)
Comprehensive income attributable to noncontrolling interests	212		176		551		464
Comprehensive income (loss) attributable to Verint Systems Inc.	$	1,922	$	(16,159)	$	13,727	$	(45,918)

See notes to condensed consolidated financial statements.

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VERINT SYSTEMS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Verint Systems Inc. Stockholders’ Equity
	Common Stock			Additional Paid-in Capital						Accumulated Other Comprehensive Loss		Total Verint Systems Inc. Stockholders’ Equity				Total Stockholders’ Equity
(in thousands)	Shares	Par Value				Treasury Stock		Accumulated Deficit						Non-controlling Interests
Balances as of January 31, 2023	65,404	$	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 bonuses	475	—		—		—		—		—		—		—		—
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, 2023	64,286	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 bonuses	388	—		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, 2023	64,271	$	64	$	1,009,269	$	—	$	(48,038)	$	(137,667)	$	823,628	$	2,420	$	826,048

Balances as of January 31, 2022	66,211	$	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 bonuses	466	1		(1)		—		—		—		—		—		—
Treasury stock acquired	(2,000)	—		—		(105,666)		—		—		(105,666)		—		(105,666)
Balances as of April 30, 2022	64,677	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 bonuses	531	—		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, 2022	65,208	$	65	$	1,054,873	$	—	$	(56,635)	$	(162,307)	$	835,996	$	2,359	$	838,355

See notes to condensed consolidated financial statements.

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VERINT SYSTEMS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended July 31,
(in thousands)	2023		2022
Cash flows from operating activities:
Net loss	$	(2,154)	$	(1,662)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	42,792		35,348
Stock-based compensation, excluding cash-settled awards	34,156		44,053
Losses on early retirements of debt	237		—
Other, net	4,500		7,631
Changes in operating assets and liabilities, net of effects of business combinations and divestitures:
Accounts receivable	49,006		41,641
Contract assets	3,230		(1,600)
Inventories	(3,166)		(1,344)
Prepaid expenses and other assets	13,668		(28,580)
Accounts payable and accrued expenses	(29,506)		(6,289)
Contract liabilities	(40,697)		(38,626)
Deferred income taxes	204		(301)
Other, net	(8,938)		(3,591)
Net cash provided by operating activities	63,332		46,680

Cash flows from investing activities:
Cash paid for asset acquisitions and business combinations, including adjustments, net of cash acquired	(916)		—
Purchases of property and equipment	(8,548)		(10,160)
Maturities and sales of investments	2,422		250
Purchases of investments	(3,180)		(250)
Cash paid for capitalized software development costs	(4,388)		(3,816)
Change in restricted bank time deposits, and other investing activities, net	(1,211)		22
Net cash used in investing activities	(15,821)		(13,954)

Cash flows from financing activities:
Proceeds from borrowings	100,000		—
Repayments of borrowings and other financing obligations	(101,191)		(1,675)
Payments of debt-related costs	(232)		(224)
Purchases of treasury stock and common stock for retirement	(74,266)		(105,666)
Preferred stock dividend payments	(20,800)		(20,800)
Distributions paid to noncontrolling interest	(490)		(490)
Payments of contingent consideration for business combinations (financing portion), and other financing activities	(2,591)		(3,582)
Net cash used in financing activities	(99,570)		(132,437)
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents	1,257		(2,575)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	(50,802)		(102,286)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	282,161		358,868
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	231,359	$	256,582

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	$	231,296	$	256,502
Restricted cash and cash equivalents included in prepaid expenses and other current assets	5		23
Restricted cash and cash equivalents included in other assets	58		57
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	231,359	$	256,582

See notes to condensed consolidated financial statements.

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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 helps the world’s most iconic brands continuously elevate the customer experience (“CX”) and reduce operating costs. More than 10,000 organizations in 175 countries – including over 85 of the Fortune 100 companies – rely on Verint’s open customer engagement platform to harness the power of data and artificial intelligence (“AI”) to maximize CX automation.

Through the Verint Customer Engagement Cloud Platform, we offer our customers and partners solutions that are based on AI and are developed specifically for customer engagement. These solutions automate workflows across enterprise silos to optimize the workforce expense and at the same time drive an elevated consumer experience. Our customers, which span a diverse set of verticals, including financial services, healthcare, utilities, technology, and government, include large enterprises with thousands of employees, as well as small to medium sized business organizations.

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 4,100 passionate employees plus a few hundred contractors around the globe exclusively focused on helping brands provide Boundless Customer Engagement™.

Spin-Off of Cognyte Software Ltd.

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. The Spin-Off of Cognyte was completed by way of a pro rata distribution in which holders of Verint’s common stock, par value $0.001 per share, received one ordinary share of Cognyte, no par value, for every share of common stock of Verint held of record as of the close of business on January 25, 2021. After the distribution, we do not beneficially own any ordinary shares of Cognyte and no longer consolidate Cognyte into our financial results for periods ending after January 31, 2021. The Spin-Off was intended to be generally tax-free to our stockholders for U.S. federal income tax purposes.

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”). 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, 2023, Apax’s ownership in us on an as-converted basis was approximately 12.9%. 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, 2023 filed with the U.S. Securities and Exchange Commission (“SEC”), except for the recently adopted accounting pronouncements described below. The condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the periods ended July 31, 2023 and 2022, and the condensed consolidated balance sheet as of July 31, 2023, 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, 2023 is derived from the audited consolidated financial statements presented in our Annual Report on Form 10-K for the year ended January 31, 2023. 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

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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, 2023 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.

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. 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, 2023, 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, 2023.

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which adds contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue recognition guidance. We adopted this standard on a prospective basis for the annual and interim periods beginning February 1, 2023. The adoption of this standard did not have any impact on our condensed consolidated financial statements as the ultimate impact is dependent on the size and frequency of future acquisitions and does not affect contract assets or contract liabilities related to acquisitions completed prior to the adoption date.

In August 2022, the Inflation Reduction Act (the "IRA") was signed into law. The IRA establishes a new book minimum tax of 15% on consolidated adjusted GAAP pre-tax earnings for corporations with average income in excess of $1 billion and is effective for us in tax years beginning after December 31, 2022. We do not expect to be subject to the corporate minimum tax. In addition, the IRA also introduced a nondeductible 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. During the six months ended July 31, 2023, the calculated excise tax was $0.4 million and was recognized as part of the cost basis of shares acquired in our consolidated statement of stockholders' equity. We do not expect taxes due on future repurchases of our shares to have a material effect on our business.

In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting from December 31, 2022 to December 31, 2024. We expect to elect various optional expedients for contract modifications related to financial instruments affected by the reference rate reform through the effective date of December 31, 2024, as extended by ASU 2022-06. The application of this guidance did not have any impact on our consolidated financial statements.

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New Accounting Pronouncements Not Yet Effective

There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on our condensed consolidated financial statements and related 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

•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.

•Nonrecurring revenue primarily consists of our perpetual licenses, hardware, installation services, business advisory consulting and training services, and patent license royalties.

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	Three Months Ended July 31,				Six Months Ended July 31,
(in thousands)	2023		2022		2023		2022
Recurring revenue:
Bundled SaaS revenue	$	62,066	$	54,679	$	121,519	$	103,964
Unbundled SaaS revenue	51,375		47,875		109,070		93,320
Total SaaS revenue	113,441		102,554		230,589		197,284
Optional managed services revenue	12,165		15,778		25,030		31,691
Support revenue	35,393		48,108		71,819		96,832
Total recurring revenue	160,999		166,440		327,438		325,807
Nonrecurring revenue:
Perpetual revenue	25,212		30,790		49,546		64,048
Professional services revenue	23,954		25,669		49,747		50,950
Total nonrecurring revenue	49,166		56,459		99,293		114,998
Total revenue	$	210,165	$	222,899	$	426,731	$	440,805

Contract Balances

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


(in thousands)	July 31, 2023		January 31, 2023
Accounts receivable, net	$	140,031	$	188,414
Contract assets, net	$	57,690	$	60,444
Long-term contract assets, net (included in other assets)	$	34,014	$	37,950
Contract liabilities	$	238,738	$	271,476
Long-term contract liabilities	$	12,327	$	18,047

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, 2023 and 2022. As of July 31, 2023, 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 16% and Partner B was approximately 15%. As of January 31, 2023, Partner A and Partner B each accounted for approximately 15% 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, 2023 and 2022 from amounts included in contract liabilities at the beginning of each period was $174.9 million and $170.5 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 up to three years, with a significant portion being one year or less.

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 is 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.

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


(in thousands)	July 31, 2023		January 31, 2023
Remaining performance obligations:
Expected to be recognized within 1 year	$	426,906	$	464,346
Expected to be recognized in more than 1 year	254,336		262,695
Total remaining performance obligations	$	681,242	$	727,041

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

The following table summarizes the calculation of basic and diluted net loss per common share attributable to Verint Systems Inc. for the three and six months ended July 31, 2023 and 2022:


	Three Months Ended July 31,				Six Months Ended July 31,
(in thousands, except per share amounts)	2023		2022		2023		2022
Net loss	$	(5,788)	$	(2,236)	$	(2,154)	$	(1,662)
Net income attributable to noncontrolling interests	212		176		551		464
Net loss attributable to Verint Systems Inc.	(6,000)		(2,412)		(2,705)		(2,126)
Dividends on preferred stock	(5,200)		(5,200)		(10,400)		(10,400)
Net loss attributable to Verint Systems Inc. for basic net loss per common share	(11,200)		(7,612)		(13,105)		(12,526)
Dilutive effect of dividends on preferred stock	—		—		—		—
Net loss attributable to Verint Systems Inc. for diluted net loss per common share	$	(11,200)	$	(7,612)	$	(13,105)	$	(12,526)

Weighted-average shares outstanding:
Basic	64,294		64,958		64,603		64,948
Dilutive effect of employee equity award plans	—		—		—		—
Dilutive effect of 2021 Notes	—		—		—		—
Dilutive effect of assumed conversion of preferred stock	—		—		—		—
Diluted	64,294		64,958		64,603		64,948

Net loss per common share attributable to Verint Systems Inc.:
Basic	$	(0.17)	$	(0.12)	$	(0.20)	$	(0.19)
Diluted	$	(0.17)	$	(0.12)	$	(0.20)	$	(0.19)

We excluded the following weighted-average potential common shares from the calculations of diluted net 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)	2023	2022	2023	2022
Common shares excluded from calculation:
Restricted stock-based awards	1,477	2,580	1,779	2,075
Series A Preferred Stock	5,498	5,498	5,498	5,498
Series B Preferred Stock	3,980	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.

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For the three and six months ended July 31, 2023, the average price of our common stock did not exceed the $62.08 per share conversion price of our 2021 Notes (as defined in Note 7, “Long-Term Debt”), and other requirements for the 2021 Notes 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 loss per common share for the three and six months ended July 31, 2023 and 2022, 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, 2023 and January 31, 2023:


	July 31, 2023
(in thousands)	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and bank time deposits	$	138,124	$	—	$	—	$	138,124
Money market funds	57,816		—		—		57,816
Commercial paper	34,858		—		—		34,858
U.S. Treasury bills	498		—		—		498
Total cash and cash equivalents	$	231,296	$	—	$	—	$	231,296

Short-term investments:
Bank time deposits	$	1,452	$	—	$	—	$	1,452
Total short-term investments	$	1,452	$	—	$	—	$	1,452


	January 31, 2023
(in thousands)	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and bank time deposits	$	134,289	$	—	$	—	$	134,289
Money market funds	96,941		—		—		96,941
Commercial paper	50,869		—		—		50,869
Total cash and cash equivalents	$	282,099	$	—	$	—	$	282,099

Short-term investments:
Bank time deposits	$	697	$	—	$	—	$	697
Total short-term investments	$	697	$	—	$	—	$	697

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.

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During the six months ended July 31, 2023 and 2022, proceeds from maturities and sales of short-term investments were $2.4 million and $0.3 million, respectively.

5. BUSINESS COMBINATIONS, ASSET ACQUISITIONS, AND DIVESTITURES

Six Months Ended July 31, 2023

We did not complete any business combinations during the six months ended July 31, 2023.

Year Ended January 31, 2023

During the year ended January 31, 2023, we completed two business combinations:

•In August 2022, we completed the acquisition of a company with conversational AI technology including six employees.

•In January 2023, we completed the acquisition of a provider of appointment scheduling solutions including approximately 20 employees.

These business combinations were not material to our consolidated financial statements.

The combined consideration for these business combinations was approximately $38.4 million, including $26.1 million of combined cash paid at the closings, contingent consideration with an estimated fair value of $12.2 million, and purchase price adjustments of $0.1 million. The combined consideration was partially offset by $4.2 million of combined cash received in the acquisitions. The contingent consideration had a maximum payout amount of approximately $21.4 million as of the respective acquisition dates, and is contingent upon the achievement of certain performance targets over periods extending through January 2026. Cash paid for these business combinations was funded by cash on hand.

The combined purchase prices were allocated to intangible assets, including the recognition of $6.0 million of developed technology, $4.2 million of customer relationships, and $0.1 million of trade names. The acquisitions resulted in the recognition of $25.6 million of goodwill, of which $5.1 million is deductible for income tax purposes and $20.5 million is not deductible. Included among the factors contributing to the recognition of goodwill in these transactions were synergies in products and technologies, and the addition of skilled, assembled workforces.

The combined transaction and related costs, consisting primarily of professional fees and integration expenses were $0.2 million and $0.4 million for the three and six months ended July 31, 2023, respectively. All transaction and related costs were expensed as incurred and are included in selling, general and administrative expenses.

Revenue and net income (loss) attributable to these acquisitions for the three and six months ended July 31, 2023 were not material.

Other Business Combination Information

For the three months ended July 31, 2023, we recorded a benefit of $2.4 million, and for the six months ended July 31, 2023 and 2022, we recorded a benefit of $2.2 million and $0.2 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. There were no changes in the fair values of our contingent consideration obligations for the three months ended July 31, 2022. The aggregate fair values of the remaining contingent consideration obligations associated with business combinations was $7.9 million at July 31, 2023, of which $5.2 million was recorded within accrued expenses and other current liabilities, and $2.7 million was recorded within other liabilities.

Payments of contingent consideration earned under these agreements were $2.8 million and $4.8 million for the three months ended July 31, 2023 and 2022, respectively, and $3.1 million and $7.5 million for the six months ended July 31, 2023 and 2022, respectively.

Asset Acquisition

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In July 2023, we entered into an agreement to acquire source code that qualifies 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 purchase deposit payment and direct transaction costs were capitalized as other assets in our condensed consolidated balance sheets as of July 31, 2023. The acquisition agreement stipulates the establishment of additional milestone payments totaling $3.0 million. These milestone payments are contingent upon the successful delivery of the source code and the attainment of specific developmental objectives within the upcoming twelve months and will be reduced by any amounts paid under a separate transition services agreement, which the parties have also entered into. During August 2023, $2.0 million of these milestone payments was paid into a third-party escrow account in accordance with the transaction agreement, and $1.0 million was paid to the seller upon satisfaction of the source code delivery milestone.

The transaction also provides for additional consideration 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, 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. 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.

Divestiture

In March 2023, we completed the sale of an insignificant product line that we inherited as part of a legacy acquisition and did not 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. 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, which was recorded within other (expense) income, net in our condensed consolidated statement of operations.

6. INTANGIBLE ASSETS AND GOODWILL

Acquisition-related intangible assets, excluding certain intangible assets previously acquired that were fully amortized and removed from our condensed consolidated balance sheets, consisted of the following as of July 31, 2023 and January 31, 2023:


	July 31, 2023
(in thousands)	Cost		Accumulated Amortization		Net
Intangible assets with finite lives:
Customer relationships	$	461,273	$	(405,376)	$	55,897
Acquired technology	228,829		(215,007)		13,822
Trade names	4,495		(4,402)		93
Distribution network	2,440		(2,440)		—
Total intangible assets	$	697,037	$	(627,225)	$	69,812


	January 31, 2023
(in thousands)	Cost		Accumulated Amortization		Net
Intangible assets with finite lives:
Customer relationships	$	458,013	$	(390,113)	$	67,900
Acquired technology	229,317		(212,065)		17,252
Trade names	4,479		(4,359)		120
Distribution network	2,440		(2,440)		—
Total intangible assets	$	694,249	$	(608,977)	$	85,272

Total amortization expense recorded for acquisition-related intangible assets was $8.3 million and $10.2 million for the three months ended July 31, 2023 and 2022, respectively, and $16.6 million and $20.7 million for the six months ended July 31, 2023 and 2022, 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
2024 (remainder of year)	$	15,928
2025	16,878
2026	15,474
2027	11,684
2028	6,967
2029 and thereafter	2,881
Total	$	69,812

There were no impairments of acquired intangible assets during the six months ended July 31, 2023 and 2022.

Goodwill activity for the six months ended July 31, 2023 was as follows:


(in thousands)	Amount
Six Months Ended July 31, 2023:
Goodwill, gross, at January 31, 2023	$	1,403,256
Accumulated impairment losses through January 31, 2023	(56,043)
Goodwill, net, at January 31, 2023	1,347,213
Foreign currency translation and other	14,874
Business combinations, including adjustments to prior period acquisitions	140
Goodwill, net, at July 31, 2023	$	1,362,227

Balance at July 31, 2023
Goodwill, gross, at July 31, 2023	$	1,418,270
Accumulated impairment losses through July 31, 2023	(56,043)
Goodwill, net, at July 31, 2023	$	1,362,227

No events or circumstances indicating the potential for goodwill impairment were identified during the six months ended July 31, 2023.

7. LONG-TERM DEBT

The following table summarizes our long-term debt at July 31, 2023 and January 31, 2023:


	July 31,		January 31,
(in thousands)	2023		2023
2021 Notes	$	315,000	$	315,000
Term Loan	—		100,000
Revolving Credit Facility	100,000		—
Less: unamortized debt discounts and issuance costs	(5,042)		(6,092)
Total debt	409,958		408,908
Less: current maturities	—		—
Long-term debt	$	409,958	$	408,908

2021 Notes

On April 9, 2021, we issued $315.0 million in aggregate principal amount of 0.25% convertible senior notes due April 15, 2026 (the “2021 Notes”), unless earlier converted by the holders pursuant to their terms. The 2021 Notes are unsecured and pay interest in cash semiannually in arrears at a rate of 0.25% per annum.

We used a portion of the net proceeds from the issuance of the 2021 Notes to pay the costs of the Capped Calls described below. We also used a portion of the net proceeds from the issuance of the 2021 Notes, together with the net proceeds from the April 6, 2021 issuance of $200.0 million of Series B Preferred Stock, to repay a portion of the outstanding indebtedness under

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our Credit Agreement described below, to terminate an interest rate swap, and to repurchase shares of our common stock. The remainder is being used for working capital and other general corporate purposes.