Unless the context otherwise requires, the terms "Verint"“Verint”, "we"“we”, "us"“us”, and "our"“our” in these notes to condensed consolidated financial statements refer to Verint Systems Inc. and its consolidated subsidiaries.

Verint is a global leader in Actionable Intelligence solutions. Actionable Intelligence is a necessity in a dynamic world of massive information growth because it empowers organizations with crucial insights and enables decision makers to anticipate, respond, and take action. With Verint solutions and value-added services, organizations of all sizes and across many industries can make more informed, timely, and effective decisions. Today, over 10,000 organizations inhelps brands provide Boundless Customer Engagement™. For more than 180 countries,two decades, the world’s most iconic brands – including over 80 percentmore than 85 of the Fortune 100 usecompanies – have trusted Verint to provide the technology and domain expertise they require to effectively build enduring customer relationships. Through the Verint Cloud Platform, we offer our customers and partners solutions that are based on artificial intelligence (AI) and analytics to automate workflows across enterprise silos to optimize customer engagementworkforce expense and make the worlddrive an elevated consumer experience. These solutions are used by approximately 10,000 organizations in 175 countries across a safer place.diverse set of verticals, including financial services, healthcare, utilities, technology, and government. Our customers include large enterprises with thousands of employees, as well as small to medium sized business (SMB) organizations.

Verint delivers its Actionable Intelligence solutions through two operating segments:is headquartered in Melville, New York, and has more than 40 offices worldwide. We have approximately 4,300 professionals around the globe exclusively focused on helping brands provide Boundless Customer Engagement SolutionsEngagement™.

On February 1, 2021, we completed the previously announced 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.Solutions business (the “Cognyte 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 1 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 (the “Record Date”). 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.

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”), the Apax Investor purchased $200.0 million of our Series A convertible preferred stock (“Series A Preferred Stock”) in an issuance that closed on May 7, 2020. In connection with the completion of the Spin-Off, 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”) in an issuance that closed on April 6, 2021. As of April 30, 2021, Apax’s ownership in us on an as-converted basis is approximately 12.9%. Please refer to Note 14, "Segment Information"9, “Convertible Preferred Stock” for further details regarding our operating segments.a more detailed discussion of the Apax investment.

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. The COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption despite progress made in recent months in the development and distribution of vaccines and the economic recovery since the first half of 2020. The outbreak has reached all of the regions in which we do business, and governmental authorities around the world have established leadership positions in Actionable Intelligence by developing highly-scalable, enterprise-class softwareimplemented numerous measures attempting to contain and services with advanced, integrated analytics for both unstructuredmitigate the effects of the virus, including travel bans and structured information. Our innovative solutions are developed by a large researchrestrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, and development (“R&D”) team comprised of approximately 1,400 professionals and backed by more than 800 patents and patent applications worldwide.

The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"(“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, 2021 filed with the U.S. Securities and Exchange Commission ("SEC"(“SEC”), except for the year ended January 31, 2017.recently adopted accounting pronouncements described below. The condensed consolidated statements of operations, comprehensive income (loss) income,, stockholders’ equity, and cash flows for the periods ended October 31, 2017April 30, 2021 and 2016,2020, and the condensed consolidated balance sheet as of October 31, 2017,April 30, 2021, are not audited but reflect all adjustments that 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, 20172021 is derived from the audited consolidated financial statements presented in our Annual Report on Form 10-K for the year ended January 31, 2017.2021. 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 filed with the SEC for the year ended January 31, 2017.2021 filed with the SEC. The results for interim periods are not necessarily indicative of a full year’s results.

The accompanying condensed consolidated financial statements include the accounts of Verint Systems Inc., and our wholly owned or otherwise controlled subsidiaries, and a joint venture in which we hold a 50% equity interest.  The joint venture is a variable interest entity in which we are the primary beneficiary.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'stockholders’ equity. We hold an option to acquire the noncontrolling interests in two2 majority owned subsidiaries and we account for the option as

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

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.

Following the Spin-Off, we began to operate as a pure-play customer engagement company and determined that presenting our revenue and cost of revenue as recurring and nonrecurring would be a more meaningful representation of the contracts. Unbilled accounts receivable on such contracts were $60.5 millionnature of our offerings, provide greater transparency and $39.7 million at October 31, 2017clarity to users of the financial statements, and January 31, 2017, respectively.

Prior to the Spin-Off, we had 2 reportable segments—Customer Engagement and Cyber Intelligence. Upon completion of the Spin-Off, we are a pure-play customer engagement company that operates as a single reporting segment as our Chief Executive Officer, who is our chief operating decision maker, or CODM, reviews the financial information presented on a consolidated basis for purposes of October 31, 2017, we have unbilled accounts receivable on certain complex projects for which the underlying billing milestones are still in progressallocating resources and have remained unbilled for periods in excess of one year, and in some cases, for several years. Unbilled accounts receivable on these projects have declined significantly over the past year. We have no history of uncollectible accounts on such projects and believe that collection of all unbilled amounts is reasonably assured. We expect billing and collection of all unbilled accounts receivable to occur within the next twelve months.evaluating financial performance.

OurThere have been no material changes in our significant accounting policies areduring the three months ended April 30, 2021, 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, 2017. There were no material changes to our significant2021, other than the recently adopted accounting policies during the nine months ended October 31, 2017.pronouncements described below.

Upon adoption of ASU No. 2020-06, we no longer record the conversion feature of our 2014 convertible senior notes in equity. Instead, we combined the previously separated equity component with the liability component, which together is classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense. Similarly, the portion of issuance costs previously allocated to equity was reclassified to debt and amortized as interest expense. Accordingly, we recorded a decrease to accumulated deficit of approximately $44.9 million, a decrease to additional paid-in capital of $43.4 million, a decrease to temporary equity of $4.8 million, an increase to current maturities of long-term debt of $4.4 million, a decrease to deferred tax liabilities of $0.9 million, cumulative charge to retained deficit, a $1.3 million reduction to other current assets, and a $0.4 millionan increase in other assets.debt issuance costs of $0.1 million. There was no impact to earnings per share as a result of the adoption.