VRNT - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Verint Systems Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. President Development. Vice Senior Roden, of Corporate Alan Sir, begin. you may

Alan Roden

Verint's and afternoon you, fiscal XX, am you we Doug issued Bodner, includes this for and release information Prior Thank Verint's here and thank CFO. XXXX. Robinson, Dan a I joining good quarter call, today. January for and our operator year to fiscal President; ended call our with that press CEO financial conference fourth

and Each Form our releases earnings will the filings filed our Our Investor website on on press shortly. available link of the XX-K also under SEC is website. SEC be Relations and

could of Investors I fact Private Act Reform XXXX, I that on Before call forward-looking Securities would and the discussed of of those expectations Actual are the based are statements. other future matters These materially attention forward-looking the to or management's no as The by obligation forward-looking Verint meaning and as forward-looking law, on undue expressed are by these Laws. not them. this implied to current statements call, Federal and to the required date the certain guarantees statements differ forward-looking on Securities may the of Litigation except of revise in made this statements draw turn or are assumes call, contain cautioned statements. performance. results of provisions your the not place update from reliance within

our periods for and we The fiscal could today to measures, materially the we in differ more include make when January please between forward-looking on in and XXXX other indicated detailed as filed focus measures among how our results Form actual discussed the XX, investors For measures cause from Verint's other XX-K of peers. results SEC. ended these financial comparing and non-GAAP see with and uncertainties believe discussion filings year these those risks statements,

GAAP to earnings today's substitute be Please of superior section GAAP Non-GAAP to Investor or on considered should release is for measures. Relations a provided financial to regarding measures limitations business a measures see supplemental from comparative Our from, for non-GAAP financial information, of only financial information and informational our meaningful operating financial as for, in have it financial outlook reconciliation information our basis. by isolation our believes assessing purposes. because website and the in non-GAAP not The provides differ results when uses included companies. other investors the but management useful may those used and company non-GAAP

be at Dan, I end I Before this the to that call our mention want Investor I details the call regarding turn to over upcoming would providing Day. some

to Dan. I’d like turn call Dan? the over to Now,

Dan Bodner

the review Thank Alan. year thank you, guidance believe are continued and raising throughout year. for fourth again and afternoon quarter current ongoing we us momentum are full year joining we our The experienced our and you the QX overachievement the for excellent in solutions our we intelligence we pleased Good We finished everyone strong. to demand for results. and year reflects

improved our capabilities, year, and agility automation execution initiative. back many innovative we the our analytics Looking completed at launched and operational

basis we basis, net were a On billion per and achieved of revenue on $X.XX per loss result diluted $X.XX of annual net Our share. billion share GAAP $X.XX and non-GAAP $X.XX. a of revenue [ph] income

pleased segment. of last believe our laid revenue earning than made now share we results Overall would faster couple growth of with XX% resulting Our expansion later. to over growth to per by will In through in customer like revenue And high increased earnings Starting to growth. investments engagement. revenue we and on I year another are non-GAAP expansion grow the double-digit earnings strategy foundation guidance discuss with objective expect of current Doug for years continued review digit growth. year, our is the and the non-GAAP margin margin growth changes single have and the we we've X%.

Revenue pleased a in increased are quarter. to with XX% QX We the momentum in our year the throughout year-over-year. fourth strong business leading

year of our portion increased full revenue increasing with X% the the For cloud XX%. revenues

fully non-GAAP for our estimated year, margin the year. allocated margin which XX Our approximately to representing operating in came refer expansion at over we prior margin segment of XX.X% as the bps

existing results, In that and addition with pleased as as wins we’ve extensions to are competitive strong large continued we with in QX customers. well financial displacements,

$X the of in issues. this is orders new of while experience, deploying company. of Management automation leading customer replacing insurance is how previously customer organizations a in This success and investment back-office leading three successful and orders million move cloud This This a and in land how strategy how We how the the orders deployed execution another example additional we Verint, Here cloud simplify, million $X outsourcer, large portfolio displacement $X is and a new Nearly land leading year the cable from orders property business cloud. Knowledge $X and displacing it vendor. are year. their leading our another expand important our to activities inquiries our of customer like Solution telecommunications to in moving and organizations to who for self-service an the displacement detail Solution and deployment orders these This solutions to customer deal. more are a our than strategy. to centers a customer decided example competitive competitive This had to expand elevate operations. orders This from our million solution to subscription of explain some example good from engagement our million subscription More from process three believe is the bringing good Approximately customers. across from our is a are deployed good customer another simplify, billing time. to is opening a casualty accounts, organizations from organizations modernize from in is expanding of orchestrate of operations strategy reducing in of the of to customer looking means contact it's would are the some leading million customer Verint examples. the in our with company. Verint’s This example automate a resolution cloud help enterprise. total this more its automate now self-service is order health behind customers vendor. insurance in of is using both on-premises $X expanding is to year in technical multiple why This expand and modernize good to in a engagement a than customer selected cost. company. solution company. million what legacy who example over I and ability helping This from modernize help and $X orders components and for and operating operations using insurance and

engagement, that First to and designed solutions deploy and we customer to simple environments. are evolving organizations use open, easy simplify to technology to are current into offered and integrate

communications. We of new communications the offering entrants also to communications solutions, while organizations leading Verint’s suitable is is believe of to as Our neutrality. new this the current with approaches now, disruption select providers with providing important compatible solution, neutrality particularly most set open market with flexibility leveraging portfolio going is communication through

transition the including modernize through perpetual cloud hybrid a customer public engagement, cloud organization to or we and license cloud, Second, to cloud our models smooth these of offer models. private model, combinations

is across strategy enterprise. to infuse Our provides throughout share And third, capabilities API-rich easy our portfolio. data portfolio to the organizations our solution the ability automation

across With in errors the Our strategy adherence expanded mind, ensure real-time, customer automation we enjoyable. to experiences offering work, the entire capabilities faster, enterprise. engagement several deliver intelligence and and in have reduce personalized our requirements enable manual that more and the as context position compliance years Verint in are to over last customer this help company

artificial customer longer e-commerce, the in function. one compliance. incorporates engagement a just offering experience a experience, operations, IT market contact our no help marketing, of cost. We customer to operating organizations self-service, analytics the our a well at ready customer technology exceptional and achieve For market, cloud that believe including intelligence the enterprise, our most position organizations and back-office, across us lower contact is responsibility is and in address Today trends latest broadest new shared our branch strategy industry. the centers, in and center the It's

driving the ahead And expect business. Looking current to another growth turning now revenue QX year-over-year. million, segment of as revenue year, growth year Intelligence. annual scale to strong of $XXX we we at Cyber the came in XX% to continue

over margin non-GAAP XX%. approximately Our X prior from the expanded percentage to segment point XX.X% year

We and to trend are accelerate. expansion margin this with pleased expect this

million. five including large worth During and QX, each deals $XX we million world, to around continue between many win deals $X large the

market our large ability double-digit these and growth. year that revenue is intelligence cyber with discuss. our like success pleased believe We are We wins would address another I trends focusing behind are three of customer to to

First, complex. security becoming threats are more

As designed multiple solutions, increased and to and a challenge more to security data capture and are data mining detect, threats. organizations sources the result investigate it neutralize difficult to more find seeking intelligence complexity. advanced analyze from They address

automate analysts operate Second to functions by overcome and and typically this scientists to conduct data mining intelligence data previously and advanced human. them. organizations investigations seeking performed generate require mining are mining to data accelerate insights, Security actionable solutions solutions using data are help organizations that challenge, security solutions and

globally, of generated personnel security can increased intelligence words, for of events. force is better in is to and is resources range third, suspicious lead organizations predict there wide allocate which disparate unknown identify enables However massive qualified looking security effectively, uncover them data multiplier. other are to from previously make intelligence actionable risk force their such future and security intelligence elongated to go that more amounts and or a it multiplier behaviors shortage a intelligence. threats to a sources as prioritize undetected. a to And Predictive correlating investigations Predictive by of predictive organizations connections

another Looking current we the year year, expect to due to forward factors. strong several fiscal

and around threats. on to prevent helping over terror, infrastructure First, data and mining we software focus the to globe organizations countries and government’s, and deployed critical our neutralize already continue in cyber crime is XXX enterprise

provide relationships new deep into used their us to insight help develop we which Our solutions. challenges innovative

and powered offers advanced over Second, deep cyber domain Verint we based decades security. This software, call approach unique mining expertise data on to that intelligence intelligence methodologies. combining intelligence experience, is a two approach of security

security physical have an range of portfolio security a for security deployed intelligence cyber broad organizations. to successfully missions already powered we intelligence address Third, and

Verint intelligence cyber Our model. have solutions mining also portfolio intelligence and into if artificial and our at secure the predictive model can hardware. we cyber intelligence leverages a position of Today data significant software opportunity soft fourth, offer And a business model, a intelligence forefront tomorrow. believe expansion margin more market. evolve more adopts the the latest turnkey for software business market technologies, the in will include the [ph] two free which we over traditional We our solutions model, time, solutions

believe we a few handing Solution we Cyber growth. positioned to leader overall, would as demand to And and over call market Intelligence highlight strong is a for So for like I before are Doug, sustained innovative well points. the

in discussed some as underlying help of providing First, an today effort we in drivers additional metrics understand the prior our to business. calls, investors are

in have latest now the six customer And call Investor following And since non-GAAP year strategy discuss will last in our and to to confidence forward Doug? Second, up increased look and Day third, our where for in our revenue industry our second our earnings annual in raising we turn for call. growth we the we over and guidance Doug. trends are overachievement me and detail we in both engagement QX, let innovation. weeks, time demonstrate coming our the

Douglas Robinson

Good Dan. Thanks, afternoon, Yeah. everyone.

fair adjustments significantly amortization include frequency. including that related revenue between in the acquisition measures adjustments, financial will our between today our GAAP reconciliation in Alan and as measures earnings compensation, financial as and IR can discussion certain and as of financial section our well mentioned acquisition is other non-GAAP non-GAAP acquisitions, intangibles, value amount website. include and vary GAAP related stock in certain our based of Our related measures. non-GAAP expenses, to items release available other Differences A

$XXX also discussion with areas million revenues today adjustments margin. operating I'll foreign In includes Non-GAAP of $XXX revenue, compares generated my million were year, non-GAAP in revenue. in million fourth of $XXX For customer million in intelligence. rates. and engagement and intelligence. $XXX non-GAAP the million cyber $XXX start quarter of This of certain fourth with segment the in related to customer quarter, million metrics it exchange to prior $XXX gross the we cyber revenue the and in engagement margin

in $XXX quarter Americans, revenue in In geography million This $XX year. and in of the APAC. EMEA and prior terms in we in million in APAC $XXX QX $XX Americas, million generated million the million in fourth of compares $XX in EMEA million non-GAAP $XXX of to

year $XXX $XXX revenue. engagement This For non-GAAP prior cyber customer year to generated the segment in million cyber of million $XXX the billion we were with customer million non-GAAP in intelligence. of point $X.XXX billion full Non-GAAP revenues $X.XX $XXX compares in revenue and engagement and intelligence. million in in

geography of to in and America's, in $XXX million $XXX million generated APAC million $XXX This revenue in million terms EMEA prior of compared yea. million America's, in In $XXX EMEA in $XXX in million and we non-GAAP in the APAC. $XXX

margin and year, software other of business segments. similar in close Turning our cloud And that percent have offer over on-premises, same for XX% I'd were with additional our what's that to with expand our like to our model we hybrid customer each an non-GAAP data We and primarily explains in believe our to margins gross software in expansion to solutions time. margins, non-GAAP products a gross fashion. engagement, segment some to services In mix. we the is driving opportunity the in share margin our [ph] you companies services gross and

for XX% our the cloud. services came two of from generated which to generated recurring professional revenue. was from of and third XX% our sources revenue XX% year and For of Product one thirds close maintenance

business which that In XX%. over renewal gain professional we the this hardware. services. Intelligence, our projects or offer rates turnkey maintenance have Cyber on-premises in include as are Our gross We in efficiencies as further can expand more margins solutions we segment scale than cloud believe time, opportunity our our and

services hardware are we also to Intelligence party gross Our lower from and margins and vendors. margins the overall resell gross non-GAAP Cyber Verint’s than of the third due mix software

services. product, and revenue from year from from of primarily hardware approximately For XX% recurring Last software pass-through and came hardware. was of maintenance, generated from our came cyber XX% the year XX% sources, our revenue XX% including came intelligence

in this over get to we opportunity to Excluding similar pass-through gross and business, our be hardware, margins segment an would customer engagement this our see there time.

fourth a basis Turning income margins on of to of strong we $XX million, operating non-GAAP operating during generated consolidated the with income, XX.X%. operating quarter

our operating year. operating our for operating allocated year, non-GAAP engagement $XXX.X the an a were was operating XX.X%. XX% XX.X% and For cyber of income fully intelligence were with margin our basis, customer On non-GAAP margins non-GAAP million the margins

margins are non-GAAP non-GAAP shown our approximate can You operating XX-K segmentation our our distributing shared fully footnote, which service allocated to expenses in segment by proportionately our segment revenue.

of we We tables fully in allocated estimate also present non-GAAP how operating margins earnings release. our the

EBITDA quarter Our revenue. non-GAAP in at $XX.X of adjusted the XX.X% for came million or

full of came EBITDA million revenue. the adjusted XX.X% or in year, at our non-GAAP For $XXX.X

and of $X.X non-GAAP to income net quarter Now interest translations. expense. related interest primarily $X.X let's and $X.X to of million other other net balance expense exchange the gains, turn fourth million, reflecting In other sheet totaled million expense, of foreign

interest gains, of translations. offsets, and to related $X.X $XX.X foreign of the of exchange million million For again $XX year expense sheet balance other primarily other including net totaled non-GAAP reflecting expense million, full net

Our fourth rate for for quarter XX.X% non-GAAP the year. tax XX.X% and full the was

a As previously, we've NOLs to we for and we discussed rate the our generate non-GAAP rate enjoy in amount of years low expect several jurisdictions. low tax income to tax due

we $XX.X the diluted had shares For million outstanding. quarter, average

of EPS and outstanding. diluted year. have $XX.X For year, we million average results the full a non-GAAP shares drove These for XXX QX for the diluted full $X.X

the to turning Now balance sheet.

term quarter long-term $XXX $XXX from for restricted As excluding a term cash our including with we We ended year million long-term debt net of $XXX costs, and primarily GAAP debt. cash associated XXXX discounts operations short on basis and and of and the million. million, restricted the issuance including with flow XX, cash. was convertible January Cash of had short investments,

single revenue growth we Before discuss revenue approximately cyber the Q&A, customer XX% non-GAAP Starting XX, moving we we operating XXXX. acceleration expect $X.XX more margin what mid earnings of From the to our to X.X% revenue. January are In which digit operating X%. I'd Overall both or growth. like guidance, expect expect margin to intelligence, to we for revenue for In around compared with year raising with we of engagement, current year of of ending X%. margins than year. minus a result is in margin our perspective, plus billion revenue an discussed last X% The expect expansion of we've improve earlier. range a expansion and in

be We expect and exchange foreign million. the our to potential non-GAAP approximately other quarterly interest of expense, impact excluding $X.X

be which could rates, included gains in and for exchange balance results our translations or future Given losses volatility not our sheet guidance. related in are there future to

year, to be not reform of at accounting cash pay on we We of taxes regard a do results under approximate diluted approximately $XX.X current the the year, our midpoint large to of act, effective year. material the million see a an required to new expect overall guidance to for the changes of to in at revenue be expect expecting the change are XX% XXX. this $X.XX, guidance our expect our pronouncement rate of from our With new our assumptions guidance. the and increase tax the reflects cash these for given non-GAAP outstanding $X.XX much the amount respect is US do we to prior amounts reflecting average beginning year, our impact for going already NOLs, diluted assuming approximately forward. we taxes the and non-GAAP EPS we With Based our us not revenue XXX which tax shares

some provide the on our the of modeling to annual addition In purposes. progression guidance, to like year color for we'd you

million. non-GAAP $XXX expect to the revenue we in QX in of XXX revenue, million For range

operating we're QX. growth dollars than million growth year In my followed to remarks. continue finish open conclusion, believe given we QX strong prepared With sustained are to few up QX for QX to and increase cyber invest our and a margins recent expenses This intelligence. by questions. and positioned in for our can both we pleased Relative QX in seasonally concludes and increases levels. the we we to for sequential operator, engagement strong expect momentum, customer the expect We usual well lines that,

Operator

you. Certainly. Eyal line the question [Operator Instructions] Shaul with from our And first Oppenheimer. of comes Thank

is Your open. line

Shaul Eyal

some Dan, quarter Thank guidance the second year time, Doug, the quarterly row on the Dan, you. so guidance, heels in again so confidence have beat, afternoon. didn't time improved on Good a when with congratulations raise for fiscal that the we a drivers more in the and congratulations. the underlying second provide guidance in you the that to are elevated the beat what of quarterly row? the Alan, for

Dan Bodner

Yeah. Thank you, Shaul.

So growth drivers its I would say the in first market.

last shortage are making years, the see well. for that automation see the favorable of the this unstructured These actionable prepared serve. into think intelligence to simplifying, being scientists last we'll company markets we And engagement, been in of believe two all discussed overall especially investment automate drivers demand are continue in multiplier. of a certainly We drivers in growth and threats, data all customer we and more is driving cloud investments demand think automation, predictive the the And the to I and across them customers. for spending cyber, we intelligence, to and modernize be force it’s for that to started the we've - analytics address the and moving complexity and preparing we and year. and fruits data I growth year this automation analytics

last operation business, to ready positive momentum execution; we is areas in a are agility to we we the environment. moving well in these way see and with the we and environment feel customer and And the market see the positive saw globally willing two thirdly, leaders starting our and completion customers that where had from and and and our year government spending into spend it's the we are we we initiative intelligence both engagement like on positive are that future. think year of execute I Secondly, cyber growth drivers spending and the enterprises and

execution. to good a spending good be have now, place of driver, So right we and combination it's strong strong a where really

Shaul Eyal

you it. Got follow know, thoughts very a it. investments is activity? of it I or Got maybe Any may. well. more specific if appears allocating cloud along coming And accelerating Dan, towards fresh that

Dan Bodner

in usually are solution is more and of the to looking Cloud market, they on definitely are And cloud spending more their spending. the in while they customers expand a driver modernizing. capabilities Yeah. to and moving are and the cloud also growth interested transition,

requirements but So modernize omnichannel, automate, such the when and – the or moving cloud. new we simplify, about same modernization customers engagements talk generally time into is the future, to moving also customer addressing as

We with moved contract help their them are customers hybrid choice to the We to time was into communication move were a and on talked examples, other the same and others of some and like Verint of customers to where examples cloud to have some the choose million communication to with before business at smooth cloud vendor that neutrality a the transition. move positioned application about cloud. solution the expand with the customers well strategy and $X prem some the for they best able cloud. In to our keep

cloud So they strategy pace really and help for of hear positive a a lot to the is hybrid is from our them. of feel differentiator the them move we right that comments at how we customers great

cloud, XX% in row. in second year a grew So we now

a clearly a perspective, accelerate, have very efficient. So certainly it's it with predict, for be margin something we allows hard growth the portfolio we driver. us cloud. accelerate, to And it's are to but developed also may scale It where entire that a from our may ready in well it's very

have - a provider cloud an agreement with completed is that agreement. global now a we We infrastructure

efficient very well need. cost are for also anywhere in global So cloud customers we give to they way. infrastructure effective and And them a positioned

level any for right we feel thing cloud is Verint. acceleration that on the So

Shaul Eyal

Thank Dan. you,

Operator

you. Thank

Goldman line Borges question Gabriela Sachs. Our next of comes from with the

open. is line Your

Gabriela Borges

how But I on Dan, just And you the Good spending intelligence some business talk detail to pertains activity a the did to intelligence? specifically what XQ, year-to-date of qualitative you afternoon. backlog, types look you gave quarter. in when when shed the catalyzing comments and cyber are the cyber what your the earlier. if you little could customer’s to maybe are at as translate more deal are on that expectations? Congrats in Thanks. on the XXXX, could, some projects light it relative then technologies

Dan Bodner

Yes.

contributed us So started year backlog. in February thirds place to the which growth also very and than I a actually that grew is the give good also We cyber the spending And be about to with on of and overall. the trends we intelligence. obviously a environment already quite confidence a bit had year Xst discussed healthy backlog cyber year in pipeline and more two pipeline the in

So that's mining that ROI. another point have solutions the know, we that data you within really see customers data

because in about they preparing more data is And looking money, resources different part and have - are is before security run performed invested we So best while much that but practical And and where deploy intelligence, in to intelligence believe the to and their scientists we effective. security, we security in analyzing it's makes very improve They of lot as on cost-effective think and and of the data really have That to and previously can need from some our many predictive leverage sources, have time the for make organizations doing to mining you another scientists data multiplier come we've by which you automate to also driver market humans. data at predictive also is making strong functions needed. cyber of know, they for solutions, of more that prioritize the data be you the were - how operate what and the it actionable, how automation it to of analysts they operation know, employ. been force typically in really they technology, type it many capture very based the with to a technology. needed great solution we the allows terms data of mining a the same spend buy organizations said solution

great not security resources also but So there is just also in operation, applying the ROI, overall. intelligence their

technology very cyber one and to and So they are that their improve is new in we in as country intelligence is motivated customers know intelligence the think you interested citizens. that that been technology that collection always the obviously available, our use new that provide to to technology security and spend market – the to become

Gabriela Borges

I margin like profile helpful. the margins positive margin or the with think has a are about That's level. that on XX% way what follow gross ceiling a where up look company, mix of I been Is ceiling look term if that might historically for could And go to if the on that could gross right longer the the [ph] seeing? benefit you

Dan Bodner

for Part last several of modeling margin and create modeling agility times, create ongoing year the was initiative to expansion. this a operational last we discussed year

We now. have completed this initiative

So we're driving now to where the model.

you Let me give some numbers.

segments. intelligence. to expansion OpEx to engagement XX, can that intelligence, bps we So each bps prove drive than we growth last year where XX the of going lot having we're about in of leverage. a we is accelerate in margin Where cyber in to expect we by more and have cyber margins year while improved XX the This margin margin in - operating customer and

look accelerate time. looking year point developed this delivering and So are to mining expansion we the you a continue software point, and at the In you if cyber to we margin really intelligence know, to are and - in cyber accelerate data half over trend gross software our more hardware of customers and the the reducing R&D to see obviously We software are hardware it's customers themselves. turnkey that deliver the model source basically engineers. organization the getting comfortable XX% is also preferred Verint that that margin. because But intelligence,

for making our year themselves. customers We to it in easier productizing the also source and have invested last hardware

And XX%, XX.X we'll based will diminishes cyber we leverage time. which components drive, been last and were down improve on looking in that faster customer margin The addition drive around we have and were margin grow our efficiencies expansion - the engagement, the OpEx – as still continue component margin, some and is the focus continue OpEx In that sorry, will than expansion us well margin efficiencies expansion comes to is engagements. leverage hardware drive looking we for which cloud we efficiencies. in So and XX% customer earnings as see acceleration we year over growth improvement. as year can services margin to has also margin The growth can engagement this to and to gross we revenue. professional

Gabriela Borges

I detail. appreciate Thank you. the

Dan Bodner

Sure.

Operator

Thank you.

the from Paul Our Coster JPMorgan. with next question comes line of

is line open. Your

Paul Coster

and products Thanks side intelligence on a Yeah. Dan, more cyber also with taking of software orientation, we've before here of desire been intense questions. my for of the sort a more move the sale. towards

different this time? what's So

Dan Bodner

two I to things the readier we for to And years last it the are move made investments making productization make customers if two interested to software to different to One hardware doing themselves. that. are is the market we is was investment think in easier is in more Paul. customers see second they source over and That software, that the the in hardware integrate customer for it models. think easier the into

to I had the suggesting time to pace that about business is margins. And nothing. So going I'm you - same situation but can we I that our you may am it's remember the not happen, it's where that expand predict engagement the not know that intelligence right believe we for and cyber you market had close XX% also to we now know, hardware customer with

Paul Coster

it's Is side cloud deploy they're moving pass-through to hybrid dispense sort More else something intelligence to need hardware. the are with on? just going able or there now customers for because cyber and is of to the on easiest it the those

Dan Bodner

cyber to hardware software products party or So sell intelligence way hardware either we already same and in customers a of third the enterprise first, sourcing and our organization using software sector. are the integrate in their we do the own and - model IT comfortable the we then some in sell already

And servers, with think - the some throat investment I because I - made So that made day, sometimes choke. are one have really and think we progress easier at to it product to components. the have the nature to the more end products and make of that storage just customers these the hardware it's desire network because to we need And other we of products the we complete investment made. of

prefer I a this over it. And but don't to So do software themselves a integrator expect integration, local either turnkey vendor they the they they time use they do think or do to model. just

Paul Coster

and last complete you of is two recognize different is there between thinking these leading limited them two My create two shareholder two to separated businesses, executives on. is so latest these value? Okay. them, businesses the on that of a What the question synergies separation

Dan Bodner

year for was strengthen execution the through in you discussed to for align going focused our were the we better improved know, and you team teams, this to main was in of know, different things not in did identities compensation this to brand the our capturing distinctive of vision technology and you analyzing on create focused some underlying automation more that really performance, But purpose data, that in process. the management management execution that data, to we each be know, we always And been the the - and but and you is business. is is plan It's management So know, for customer you insights know, develop our agility is initiatives intelligence the the analytics to mostly unique about these those customers, functions automating actual technology segments. that on getting the behind needs more laser markets. of and our last

So we value now same know, both where agility creating are we the you time of the shareholder on focused right and through and at completed are we businesses growing expanding is margins. separation

Paul Coster

very you much. Thank okay. Well,

Operator

Blair. comes of Thank our William next line you. with the And Ho from question Jonathan

open. is line Your

Jonathan Ho

thinking you're out wanted start your the little bit in customer with Good on-premise of among you is afternoon. that cloud I seeing maybe their to color transition that How the overflow? Are for base your today. what this a more just and the cloud any move we terms should in to of or down actually shut for infrastructure in actually seeing asking be about space? customers trends

Dan Bodner

we that on solutions, part bigger would expansion. solutions, So the usually more examples growth when on-prem, I they prem, comes that today as couple shutting our much customers they as give but most They a it are had prem buying of on before so new initiative down also do not moving moved about cloud. to from of of part capabilities. did a

want that happen the around you does solution. prem are so having just add day at customers say still capabilities and know, most expand move along you to move with looking if in but they that one customers new point to know, not to do will working drag and budget just cases common to something not and to automation decide they cloud on the it. they they it it's very It So to want there we much Because is see it's frequent.

of So cloud. with about we growth the when growth in customers business from in is expanding solutions new majority talk our XX% the the

Jonathan Ho

then the maybe XX% in of you Got know, just it. revenue that's pass-through hardware. terms And of

maybe should is embedded on guidance but that it's what what in side. margin, your there relatively way goes you away low know, in the already know, know maybe can any us You is help we understand over component you you is the guidance? the percentage I assume know

Dan Bodner

Yes.

said XX% operating expect year. the in is XX% you operating - intelligence margin resulting improved to the that more hardware. we is change the margin partially current cyber and for margin more we from to what know reflects So point from And that – in improvement XX% a the that than than

already cloud we the it's into guided. - into that built model the So

Jonathan Ho

you. Thank

Dan Bodner

Sure.

Operator

of comes Jeff Thank the our Capital. Kessler with question you. from next line And Imperial

is line open. Your

Jeff Kessler

Thank you. Two questions.

describe would cyber of - of predictive and convergence, you lot the trying – added First, cyber - a its product doesn't you've of a but that is be point some a To the here a reach believe There have minority extent multiplier. still so Cruise balance point been – that it. working you from - back Minority is force to race to to out in in involved there that there lot provide gets provide value value seems Report, a I race looking on? a you as who a product area, what say particularly trying are say, be analysis to actually would let has Tom physical which at to a and in a companies effective, a there pulled a companies you people

Dan Bodner

you're a is of are It's Yeah. right. market. Looks to that its trying a also but in hot lot market, participate this there - companies

I have that we technology. think great

close very XXXX you customer are a on cases more the focused that on high machine focused engineers know, more XXXX engagement, but technology cyber, some know, and focused company engineers use learning. across our you of of is concentration have that of We are use some intelligence - it's cases obviously in on predictive

much operational terms agree, around being applied needs company as think about in pointed you intellectual of more the a it's and is how has Verint whether not many good out so what in of part also really technology technology know, and about of a to that's the But it's to solve And got problems but agility operational what's technology, just got has So leverage, not about property effectively. expect, needed sure not expertise of create done was synergies I much business was about this I the we've to a that We understanding cases you to agility problem but a and in it. technology the the solve And why really customer practical. - we're that that customers we over better are discussions what technology, years. very we company, they two cases, making domain a we I and from lot had more do better, we are trying have much what the that with the relationship use solve. about it getting think last

apply you certainly which technology how accelerate what you is well and know, getting So know, the really growth the we margin is to better solve there. are suggest, ability and to customer can our you we problems

Jeff Kessler

Okay.

bought into you've based more to it And of that Platforms, awards the to own are and to the of customers moving in that area. types wondering with software Does imply a as year going which your are also that past Situational cyber. be I'm based fiscal their bought somewhat them be fall platforms you by or to some – buying integrators customers – or comfortable you're Second say hardware won couple in software for this helping question, hopefully while hardware? you consultants, - your Awareness which be going is more that working more

Dan Bodner

some delivering And we going. bring is education Part customer in that's in integrators integrator - involving and Absolutely. cases and our along, integrator you to us expect they the of the this where in but the that's user other know, and the the cases of model. choose will end hardware, them

value knows where and integrate market added integrators software and how going. our that's to and in we're Our who hardware, software the their that’s

Jeff Kessler

much. great. Okay, very Thank you

Dan Bodner

Okay.

Operator

would remarks. for turn Roden I like call further Thank you. And I'm showing to closing no this Mr. Alan questions back the now time. at to

Alan Roden

you, Thank operator.

our Investor Day in our on Before event details Engagement opportunity Monday to like demos user I place interact our call ending business. to upcoming provide regarding with an Customer and annual Dallas, XXth the take connection Investor The event from management, include our presentations would May some directly will Day, will product for customers. own with in

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Operator

And for have all does may today's program. Ladies This in Everyone conclude day. great you and conference. a participating gentlemen, thank the you disconnect.

Verint Systems (VRNT) 28 Mar 182018 Q4 Earnings call transcript