VRNT - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to Verint Systems’ Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded.

I would now like to introduce your host for today’s conference, Mr. President Development. Vice Senior Roden, of Corporate Alan

You may begin.

Alan Roden

Verint’s everyone, you I’m for you, Doug with operator. our thank afternoon, Good Robinson, and CEO; today. Thank joining and conference Bodner, Verint’s CFO. Dan here call

Before getting that call is today to WebEx slides. accompanying with our a I’d started, like mention

and slides the to Investor today’s at the verint.com, select on real-time the call, Webcast of please you’d like in section website If visit tab, our on click Relations link view these call. during the IR conference click

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

forward-looking the other indicated the uncertainties XXXX Verint’s actual the XX, we cause in could results filings for year please detailed more and Form ended materially and of January make discussion from differ risks For with fiscal see and XX-K those other these to SEC. our statements,

in our results focus non-GAAP include peer between on measures, periods discussed those measures believe financial among The investors as companies. and today comparing measures we

non-GAAP in of GAAP Investor verint.com are provided reconciliation outlook basis. for at release WebEx section non-GAAP today’s and a financial slides to measures. financial Relations the of Our website or earnings Please our on only see targets measures

for and supplemental regarding for used or to have measures a investors superior in included results assessing not other may believes and and those information, Non-GAAP but is isolation from companies. the management to be business because purposes. our information should operating from, non-GAAP when financial our considered meaningful financial comparative is GAAP substitute financial as differ company information provides by uses limitations The useful and informational it

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

Dan Bodner

for a Thank basis you, on today to basis. you Alan. non-GAAP and and our at a million thank results. afternoon, second in review joining Good QX GAAP revenue on $XXX and everyone, first-half came quarter us $XXX million

came $X.XX non-GAAP a reflecting basis basis. impact the came a on in revenue basis. million, EPS in currency, a growth at on X.X% on of $XXX non-GAAP $X.XX and GAAP currency Excluding year-over-year – at an QX constant on

first-half of understand by to our discussion our I two To annual like reviewing would followed tracking segments. a start our by how target, we’re against results,

on Looking X.X% to a basis. growth double-digit basis, revenue and GAAP on constant at X.X% a a increased results, revenue on basis. basis currency first-half our consolidated non-GAAP constant the report first-half, we In a on are currency XX.X% non-GAAP non-GAAP pleased

earnings we growth, revenue. of year-over-year, increased revenue strong non-GAAP to with XX% goal our faster addition In growing EPS consistent than

We’re that also initiatives prior we’ve strategic discussed are that two on making key calls. pleased very good to progress report on we

Engagement Cyber Customer First and Our model Cloud strategy in in software strategy Intelligence. our

we’re customer important in the elevating to operating costs, challenge, a helping detail In would their customers more by I reducing our segment. very to progress review Engagement, like address experience. Customer while

operations. is modernize their help Customer customers automate Engagement Our strategy simplify, and to

we throughout their migration decoupling software processes our by simplify them them seamless. cloud applications infrastructure. communications from help portfolio, modernize making operations artificial We the the operations help and by infusing by We automate help cloud the intelligence value-add them

discussed At seeing strategy our our our momentum. we would well First targets. reviewing are year, we and initiatives, responded our benefits cloud Cloud long-term on provided the of to focus Cloud results. I in like cloud First our the strong of and to Customers the Today, cloud beginning have strategy

revenue Engagement more of than increased On X.X%. increased first-half year, revenue XX.X% GAAP a and Customer currency a the Engagement In revenue, XX% non-GAAP constant the Customer on basis.

We’re pleased first-half with the line growth, for which guidance is with in this our segment. double-digit annual

our From both a XX% up first-half which non-GAAP non-GAAP the XX% last XX% cloud in the from first-half, XX% of up first-half in and revenue, year. mix last our perspective, maintenance, from Recurring includes revenue, of the represented year. represented cloud in of revenue,

achieving the We’re pace growth. double-digit mix encouraged by the of time the revenue same at while shift,

first-half cloud trends at improved look increased revenue this We’ve SaaS itself see bit the We with market adoption embracing faster. year-over-year, two year, ways. Now our large more more In a the deployment. revenue cloud seen closely. our of customers with let’s in manifest trend XX% non-GAAP cloud growing

the new cloud deploy in second, on-premises to to new First, where choose deployments Verint conversion cloud; existing cloud. software customers deployments the of customers’ Verint and

our reviewed convert base of On at to maintenance Xx installed uplift we calls, an opportunity past least the revenue. of with

revenue our to discussed moves next expectations installed also growth contribute large begin would uplift We few base that to Verint the years, the our over as to cloud. the significantly more of

pleased Xx During report terms to the of validated the uplift. deals customers several for maintenance convert opportunity first-half, early, we the that Verint had And we’re those cloud. to while for the

to the first-half we better new within year-over-year. cloud year-over-year, increased SaaS received and last new share XX% To months year, would ACV increased XX% like the contracts ACV understand of SaaS for data new SaaS In ACV growth, XX period. the our the

the As we expect ACV than SaaS forward, to for look we new increase more XX% full-year.

from to growth, of $X million, ACV of TCV level over pleased deals cloud number with in enterprises. higher which to reflects of interest larger a in increase also addition cloud In report the we’re an

with from first contract year. well the X.X as we In the cloud during first-half, longer XX in average only first-half customers, as of six a we months $X approached bit to verticals many of the year four last average received and million, than large deals cloud customers, the cloud had new year. displacements. the The across TCV duration including years, cut greater than The last compared existing were competitive deals different

in large We of enterprises office the including reducing while to center, operating see different back in to organization marketing our branch, costs. elevated parts cloud organization, the growing help multiple buyers functions. contact to strategy same within experience, and customer This customer across experience, an adoption supports collaborate, drive their

plan with rates a approach recent time our new of to reviewed versus our discussed roadmap. to introduction and Voice strategy of in Turning with renewal ForeSee’s accelerate our improve of the rates renewal acquisition our buy We a platform. we the M&A at Last ForeSee our activities. quarter, VoC the connection low acquisition, Customer build to unified discussed and

QX. new was by A platform industry customers received was It launched analysts. well in and

always but For complete the been example, unified cross-channel providing of customer the innovation.” a “Verint Research solution, have VoC Ventana true said, is view leading-edge, solutions a

the integration and the to and of with progress ForeSee’s share VoC with second-half. the we QX improvement we introduction pleased in expect in that made renewal platform, QX new improved their continued level, rates with I’m from

team. a Moving breaking with run company another This the of of called, very rate recent acquisition. company annual even At to cloud made a more $X of is revenue Transversal. technology end technology million, innovative acquisition QX, around an small an impressive an with tuck-in we

deliver machine bots. as our both buy capabilities accelerating self-service example learning to This artificial better knowledge is is agents acquisition contextual intelligence approach, versus of good and the and build another to of our the roadmap

As providing even strategic previously and we rationale details results. discussed, financial discussing of expect acquisitions, forward, to immaterial going to our continue our the if

well our In to addition automation innovation continue to strategy. execute our strong on cloud momentum, we

machine in artificial innovation learning, was our first-half, industry the by During and intelligence widely recognized analysts. robotics

recognized for in smart in – Report, their another intelligence, Intelligence For firm, artificial and Verint’s success standout in analytics pack. from recent research example, machine AI Forrester Breakthrough, the Conversational learning analytics the innovation platforms, environment language and processing. strong commented natural Artificial robotics, Also, industry Verint

successful In results, first-half summary, as to cloud by of market momentum modernize simplify, with Engagement in in innovation. and saw well very automate and of strategy. improved the Cloud strategy, adoption our First driven the execution Customer our as commitment our strong execution enterprise our we’re cloud, strong pleased We reflecting

Intelligence. Cyber to Turning

broad leader cyber and the with global Cyber across We are security physical portfolio market a markets. security Intelligence,

and investigations. Our security and advanced help capture that and help insights customers gain solutions analyze accelerate data structured data mining unstructured

In basis. will the revenue X.X% expansion growth increased Intelligence sorry, the – on year, revenue revenue currency accelerated of accompanied accelerated discuss months X%, by This about a than was constant which growth Cyber more the I by first was expansion, margin six accomplished by margin shortly.

have million, past We to believe QX, around continue $X trends address an that this win large our of an of four world, reflect the orders In $XX and type approximately with orders average including we calls. on of around each. to large ability to million discussed deals size order market the we

threats second, investigate is a seeking as result, new difficult First, more organization perform are by and organizations are security it detect, and and automation security previously functions And and there humans. shortage neutralize find advanced performed to scientists more becoming mining data capabilities complex. are threats solutions. data cyber And analysts security of intelligence to seeking a and

a benefit existing from with than we’re to more both and these X,XXX customers positioned With portfolio, solution large trends and well customers. new

that expand added customers and approximately to pleased first-half. our to new report XX continue in also we customer the We base,

Historically, strategy services of in integrated to Over included model the large prioritizing this our addition professional the hardware pass-through our and from unbundling software we mining fair investments model Verint last deploying amount under to sold few services, and model the development shift delivered software. to in mining discussed years, to integrated software. and data the a an deals custom data

a software to model. Shifting

investments, Over APIs. made perform deliver the customer third-party hardware standard integrators using last have product some we to our and two development years, customers their of enabling our themselves a third-party and

in quite terms quickly easier software We rapidly and one stop our investments The to in to software the which the the technology provides ability realized making believe customers benefits limited to is shop landscape. integrated to evolving our differentiation. customers improve accountability Customers of critical easier productization, there significant deploy made refresh, openness model our to system benefits a have our competitive we’ve software which that enhancements. implement create them significant for and the software and model, in are is

services. led gross X% software During than at third-party amount we as a we model our faster in and margin hardware strategy, came well pace development in a the first-half, reduction reduction increase consistent reductions These planned pass-through, a of a saw to year-over-year. the originally without in in as

execution double-digit the Overall, pleased in both of of in pass-through Intelligence year. periods, software segment revenue hardware the And strategy. Cyber our the are with excluding we first-half increased

model second progress transition margins In quarter and Customer progressed In software basis, summary, we increased on Engagement, a our our initiatives. first-half, the Cyber with currency two expanded Intelligence, constant plan. digits in increased strategic of And results In we’re we double and year-over-year. cloud momentum. ahead the experienced non-GAAP XX% with revenue and pleased first-half made EPS key we’ve strong our

I results detail. call Now like to the to to our over Doug Doug? turn in more discuss would outlook financial and

Douglas Robinson

Yes. Good Thanks, Dan. afternoon, everyone.

between today in financial available, discussion mentioned, earnings is measures. non-GAAP Our release non-GAAP section IR include of website. measures reconciliation our financial and in our GAAP A and our as will Alan the

between related vary adjustments including amortization GAAP non-GAAP to of intangibles, can include revenue as our certain value and other other compensation, measures amount adjustments, well expenses, financial acquisitions, as acquisition-related that Differences significantly stock-based in frequency. and certain fair items acquisition-related

metrics, also rates. includes foreign adjustments related certain For exchange it to

of and outlook. pleased then first-half fiscal discuss today with and discussing XXXX, first-half start QX our I’ll strong We’re by I’ll our and

midpoint strong of For explain both review and QX very to results, first-half and where the results follow our I’ll QX stand we the year. QX at a

up revenue Non-GAAP year-over-year EPS diluted over basis, at million, second quarter. came Non-GAAP up currency $XXX year’s increase. last a QX. X% with a revenue million, Starting X% a $X.XX X% was was constant non-GAAP On over in QX, year-over-year. $XXX for bit

an reflects later. our acceleration a resulted revenue software plan, in third-party in hardware which Cyber model I’ll QX Our reduction which sales, our Intelligence in discuss

XXX of revenue Cyber operating During and points XXX last Non-GAAP increased basis X.X% acceleration XX.X%, Non-GAAP Intelligence basis operating non-GAAP growth improved on currency basis margins XX% constant model. of non-GAAP gross first-half, we achieved a first-half. the points growth driven margin software our year’s expanded to non-GAAP revenue by was and from XX.X%. strong income the year-over-year by

expanded Non-GAAP increased increased points. by our basis EBITDA ahead year-over-year margins EPS annual XXX guidance XX% XX%. as of of XX%, Adjusted diluted

results currency a X% by QX, Now increased I’d like non-GAAP or constant first-half In to Customer Engagement from year, QX review and X% segment. basis. on last revenue our

Non-GAAP look that increased back by which recurring on our report XX%, was basis. increased to constant pleased first-half nearly I’m a you results, As non-GAAP currency XX% revenue at XX%. revenue

from to continue strong XX% benefit high revenue growth for of rates renewal We new from contracts. and recurring approximately

revenue non-GAAP key first-half our XXXX, improving, As XX% of of in year-over-year. XX% strong increase driver in was business the Dan a in during year’s represented of mentioned last the cloud total earlier, XX% as our nearly first-half. revenue Customer non-GAAP our The growth recurring is from segment an fiscal mix our with revenue fundamentally Engagement

up allocated targeted. Estimated as XX had fully non-GAAP gross margins points were basis we

estimated EBITDA adjusted bit Our timing allocated year a last certain expenses. margins due of the from fully declined to

the we for For up the margins year, be around expect to these XX.X%.

to strategy. make about we’re few strong First experiencing like Cloud a the with our I’d comments momentum

increase the large deals number from that customers are an First, starting data faster. is in enterprise to adopt cloud the suggesting of point large important enterprises

As enterprises them different at make easier. you cloud migration and move helping may know, to the this we’re paces,

help The them customer we parity across individual offer user base solutions example, For of opportunities significant allowing their growth seamless and on-premise feature SaaS, provides future a cloud transition. strategies. execute enterprise with our we and size as breadth

strong than while we XX% ACV giving growth, customers growth. months for SaaS the both six evidenced In both been option, new have has the for it solutions. choosing SaaS giving customers in discussed the the for we customer we prior been first saw on-premise as more that and calls by of ACV SaaS – a more Second, quotes quotes regarding year,

trend ACV XX% currently We for the growth around continue expect to year as expect this and well.

constant to Cyber Now me from last on year, turn X% Cyber let revenue currency Intelligence X% non-GAAP a In Intelligence. or basis. QX, increased

on Cyber As accelerating same the or constant Intelligence the segment we our year, at software non-GAAP increased our report revenue pleased basis, the I’m to currency look that on first-half model while back of plan. time X% X.X% Cyber year-over-year, Intelligence for a

As custom our made standard integrators over their our the and have investments, we earlier, hardware years, Dan developments product third-party APIs. third-party two customers themselves and discussed deliver last some enabling to using of perform

in increase led the to fully plan. third-party saw we of margin software and significant the a amount first-half allocated gross we During reduction really resell. fiscal than we of came a estimated our year-over-year faster executed where This in X% XXXX, and pace at the model of well hardware on ahead reduction expected in

and are revenue. Overall, our we objective while hardware overachieve down pleased driving this is an to strategic important first-half, the in low-margin

mentioned revenue year. As first-half of hardware, excluding in the experienced pass-through the growth Dan we double-digit earlier,

estimated investments in fully EBITDA first-half adjusted than software XXX by our continued gross we As points our allocated expansion. basis margin our less model strategy, our increased margin

the issuance had and sheet. long-term restricted balance At and of including turning investments. the discounts we short-term ended of cash investments, $XXX including primarily million and quarter and associated with Now of debt end to long-term the cash our with QX, $XXX convertible and short-term investments million, costs, net and We restricted cash excluding debt.

Year-to-date, from slightly payments. million, to year down $XX due of and on flow collections a basis timing the last operations was GAAP cash from

from For increase to the full-year, year. operations we over cash last expect

and and Our Moody’s our we’re growth profitability. increased quarter rating the net continued EBITDA BaX is upgraded to X.X, to corporate debt pleased ratio debt that our to during due

Turning to guidance. annual our

X%, perspective, growth XX%. fiscal for reflecting operating non-GAAP year. plus operating an a minus margin or From We we $X.XXX with over in margins of expect just approximately the expect billion, XXXX total of revenue of non-GAAP range XX%

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

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

we be reflecting expect this our year, approximately taxes We amount cash the non-GAAP year. of rate expect X% for to the tax pay to

and we’re shares what of based approximately these Our on estimated $X.XX. expecting cash guidance we for the to at on the be slightly million payments lower we now entities. to Based our midpoint XX.X were is EPS average tax lower various outstanding year, to diluted across non-GAAP tax make than assuming rate revenue the previously approximately diluted expect assumptions guiding

we’d to strong In revenue QX. similar current like followed addition with past non-GAAP consistent will In QX, you is to on annual our our progress. provide the year usual seasonally guidance, to our view QX, which years, how to expect with by be we

in QX. EPS expect be We similar also QX to to

prepared this And concludes our remarks.

please lines So, up you open for the questions. operator, can

Operator

first Instructions] with Daniel [Operator our question you. comes Thank Ives And Securities. from Wedbush

Your is open. line

Daniel Ives

thanks. Yes,

changing cloud just And conversations in you are and from customers? maybe a deal more just there? the and can the you just And maybe perspective to there? things just see strategic are Dan the how maybe you can are deals starting talk about like changing on about talk flow So how with pipeline Doug, changes

Dan Bodner

we just focused. them giving customers we cloud Yes, at the more choosing there think from make majority because are And the think is choice both which changing actually especially seamless the cloud their choosing talking the our is of done end SaaS. at that And things certainly move of ways option. they’re about We’ve the And is been primarily to that is customers to clear conversation I it’s giving a for enterprise at for now process enterprise quite enterprise to the to pace. we’ve change, own see SaaS business sometime, actually sales quotes buying level, it the of them. the

which move parity, the deployments and offer who they Doug without we consideration to maintain users. to security for functionality can important same an the mentioned that retrain And we it’s that is want feature global overall customers that cloud offer. cloud on-prem

scalable operations. pretty have now We a cloud

We’re with $XXX finish year approaching expecting ARR to million. the

cloud partners. partners the we and largest one of AWS, partner of And XXX several is of are one AWS. have the We top

to is deals So we and are HX very contracts. with transition last versus the also of the in duration provide security And million and evidence year cloud. our longer in better customers pricing, better us infrastructure, to $XX million comfortable which make enterprise the help $X scaling HX also the

we growth for new the And real. about the deals, new us talked all XX%. these are year. SaaS is for ACV So in things show that SaaS that trend expectation

will believe the achieve XX% year. for in HX, we So and XX% achieved we we

Daniel Ives

the go back Thanks. queue. in I’ll

Operator

our Samana comes next And Jefferies. you. from question Thank with Samad

Your is open. line

Samad Samana

that type you what’s some questions. early taking of that pattern about future thanks maintenance there of but appreciate moved is from to one early characteristics opportunities? that, questions conversion characteristics customers Dan, you I any I any that you SaaS, I that think for move it’s Hi, sample of the seeing? Is help maintenance seen the know first. to as set, on proof about leading SaaS them you’re for have that have, my think you Maybe particular have small you might there a then And follow-up today. customers? points it. the those When to you’ve

Dan Bodner

good Yes, very a good that’s a – point.

So we we handful us of for it early, provides we to continue customers. – so first, have a points would is was that say target, also but that to we not something only important benefits to the Xx and uplift data validate our

save been a by So and a think moving center lot on arrangement, where money operation that internal internal the and validated. their cloud data the it’s win-win has Verint operations into they cloud of I

move also We customers typically also actually see either to expansion, solution adding or interested that expansion on-prem solutions. as more cloud, in their they the deployment of

all and to by uplift strategic expand these cloud with a more to discussing the some saving to point the decision, We that for future on money customers. us help to customers than do good the strategic that we’ll inflection our just deployment and one that believe us move continue in as changing the in something land it’s So is to the can see the strategy the a addition cloud. enterprises

Samad Samana

ask Doug, follow-up if could then, some And questions. Great. I

if that that into just and maybe on set company FX, guidance, basis does the the there’s And in hit I So about – whether the core overall that’s of out that an $X was size. track should you’ve – business that how lower think year? And would of on But million growing? help think the think I terms that me outside for of just about of to numbers? it’s if acquisition about we targets immaterial the be the $X how still factored organic in impact then, imply million, know that Transversal, the the it’s

Douglas Robinson

oriented. Transversal ours. primarily Yes, was technology some combine very had sure. They Yes, wanting to small technology It acquisition. a nice was with

will, business at that wanted as look or the So quarter, ours. – the run much co we some of million of additive book to really to with FX kind offsetting as to we a kind not Verint two like if as headwind, look a kind rate didn’t overall. so It’s the really you just get of continuing a of

Samad Samana

from one think quarter-over-quarter on if slight XQ. And more, indulge revenue. look those in managed core Okay, I’m if think just that Presentation based SaaS, that XQ the is great. I was guys well? you’ll there a non-GAAP at cloud the this two if in maybe looking curious piece, how or us I I And decline then put can as just maybe services me. you I had was just dollar you pieces quarter was help understand just to July think Investor out,

Dan Bodner

Yes.

growth, QX So So about look growth the them of right? deals, rates renewals we new QX, were while And obviously, have revenue XXs. strong improve new we renewals, average of talked you a we combination rate in as cloud we the when XX% below strong renewal still also ForeSee you from accounts comes they’re very at well remember existing in But and the our renewal. expected. renewal in and deals we discussed that also have that

to and But going average. the platform, come hard going sequential definitely, to on on our our the until can renewal in rates an the that’s there impact rates renewal of well. very that’s ForeSee get VoC with growth We improving is – are which coming working is introduction the we

and at when a while get the bookings new revenue when deals, And $XX longer on deals. you SaaS is look growing million SaaS time the XX%, the deals, it’s new the ACV, bigger you between

revenue. little lag that’s and bit a So also the booking a the between of

continue XX% and cloud growth ending revenue, mentioned And ARR million. $XXX – year be the see the and as QX. we in in the about QX see approaching earlier, I we revenue to QX overall, grow ARR So would with

Samad Samana

Great. And last just one housekeeping question.

as maintenance conversions new Is does So that include contract the bucket the SaaS well? SaaS? new ACV that ACV, in that for

Dan Bodner

far. are were they there there will number they new but SaaS number a become over so because hopefully time, contracts. again they a that, and should They growth will a yes, to much include be larger But bigger this will rate. – small do included We Yes. drive

Samad Samana

Great. for questions. really my Thanks, I appreciate again, taking it.

Dan Bodner

Sure.

Operator

Thank Daniel Wedbush from have follow-up a Securities. Ives we And question, you. with a

open. Your line is

Daniel Ives

one you on just just question. the Salesforce the the some given side plans Yes, last be cloud and hiring hiring on may Thanks. Can about talk there? just maybe of plans

Dan Bodner

Yes.

look a you take closer our in our actually you see head were is OpEx growth HX. that if So can first-half, of This a at substantial that investments we expect HX. in

terms drive done So HX. of growth growth to We investments, pretty is and in and HX. in that hiring basically as as we that’s The HX believe good. in between have the well going X mix

million The Engagement, $XXX overall of XX.X% the in first-half, did for number that’s the year. Customer we

that’s in had pretty with years. XX.XX% prior we consistent the that So

in growth that we’re expecting be year. growth are we good end But on of next consider HX. towards the investments, think year we we HX. And the not more we made towards headcount So in pretty if investment it will the

Daniel Ives

Great. Thanks.

Dan Bodner

Sure, Dan.

Operator

from with Hugh Thank comes you. our And next Co. Opp Cunningham question

line is Your open.

Hugh Cunningham

Hi, guys, thanks question. for taking my

relatively is on This one First the is side. Intelligence Cyber simple.

there double you’re markets, market. cetera? et seeing trying which important specifically, encouraging. you’re So sort markets emerging And commodities, of seeing understand very hardware, to saying is excluding revenue digits, in you’re in that And the to leverage what what markets, I’m the grew

Dan Bodner

clear. Yes,

hardware. the address just first me let So

the pass-through couple to why So the down. This clear is because excluding making metric – this are we why hardware of of for we’re gave a driving this it. in hardware, be we it’s intentionally that’s now really will and obviously this about we decline growth. acceleration, happy last year-over-year. XX% excluding we hardware But number, and be see a year in HX and Actually, year years

overall, happy is portfolio excluding the in HX. XX% growing So hardware we’re that

we customers are terror. new technology is are combat the need and to into that And of across there. big need really the security strong. the is advanced so clearly for government solution data technology the threats that environment, the crime challenges from putting mining looking and for perspective macro help certainly them hear Now and agencies increasing are globe And the for advanced

spending. be question emerging more to a forth there’ll And be Obviously, markets is, need their globe. and economic they this so to impacted able is keep in still across not that budget evidence about can that, we But impact be say and point, that environment funding. negatively to to buy, there has able have order can a at changing seen the I been any

Hugh Cunningham

– just and in that you Cyber the I point same any forget, On sort want where sense on get can to you can you said may that far where to revenue this, you hardware margins or if have do for business, you down basically? Intelligence, it how down have get Dan, of get it,

Dan Bodner

Yes, yes, absolutely.

development was ahead the last hardware also to But expect certainly model. XX% year which hardware, achieving from services long-term X% in we hardware the a specifically, it we – in are to So and the of plan, be reduction. than reduction, less to benefits on addition we’re trying see the

software, they another ask they it services. APIs, customers to some can development for And them. don’t with have in to of So to do trend develop it reduction Verint customized need that also do that that’s

revenue the XXXX, last target fiscal include our look implementation total from services year, gave XX% X-X%, you So three-year target, gave XX%. three-year but targets overall, was this – is that we we total our by down quarter XX% at development revenue. if we and last includes that to to expect The of professional which services, in our XX% come XX%, include Cyber came hardware, services, of

will that’s our increase a XX% XX%. reduction, gross margin So about to that

margin we model. see cyber business gross growing software a businesses XX% as our a with So

see more subscriptions. starting to also We’re

standard we cycle as these is buy to not customers the but they software And very that of need to more growing. that good model, refresh trends think financial faster able also see current. software discussed, all much part recurring order benefits only we keep the So from their business Verint are as in benefit and being get the

Hugh Cunningham

One CE, Sure. Thank last you. Dan. question on

picture question. a of big Just sort

what the frequently questions if signs we’re One sort the now. right happens is of marketplace getting down or the about some turns confusing economy in there fairly of out

customers some you. the the Our And immunity in investments intelligence, business slowing your your things for platform, generate Customer announcement learning machine at more in downturn you in Voice your that of decouple economy. and a you of fact, macro from of artificial respond this to as with things like give to or it? a may you sense new Can of economy, is sort sort how about you look and this start these that talk

Dan Bodner

Yes.

don’t I in reduce we sum Engagement want of operating customer hear it help – customers to very elevating only well, kind experience, in see think least customer not our reduce it the existence to we that do is they that costs. from because well, customers really an This What or to while – experience. want whole all erosion is do. at they the you Customer costs,

service when of that’s why that reduction on seen industry the automation expense more come very down, turned not costs $X spending the at a and with be has it And sure focus, is to analytics in the cost of in focus So economy than past, – negative very dependent workforce. customer in operating the trillion the one does was But it’s lot customer dissatisfaction. the we’ve make to of reduction because our a strong on estimate, people. on what in

do trick. their more our barriers, productive? we reducing achieve cost. strategic to we typically it’s shifting workforce not with And to is to goal less focus there the a on, or the just proven low-cost how How workforce So again, make can can workforce their overseas

achieving while them reduce So to technology demand their costs, to strategic be objective. in more will allow

Hugh Cunningham

appreciate taking and for I Thanks questions, my it.

Dan Bodner

Hugh. Sure, Yes.

Operator

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

Alan Roden

Have and a Thank everyone, thanks, for you, joining our tonight. operator, call evening. great

Operator

thank the program. This participating you gentlemen, and for in today’s conference. Ladies concludes

great a You have disconnect. all Everyone, day. may

Verint Systems (VRNT) 4 Sep 192020 Q2 Earnings call transcript