Verint Systems Inc. (VRNT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong financial performance with record bookings, high AI ARR growth, and a positive outlook. The share buyback program and raised guidance further support a positive sentiment. Despite competitive pressures and economic factors, Verint's differentiation in AI and strong customer adoption provide confidence. The Q&A section reveals strong demand for AI, successful upselling, and high retention rates, enhancing the positive outlook. With a market cap of approximately $2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
Key Financial Performance
Annual Recurring Revenue (ARR) $720 million expected for Q2, reflecting 8% year-over-year growth; driven by increased customer usage of AI-powered bots.
Revenue $208 million for Q1 2026, with a year-over-year increase; primarily due to the timing of two large unbundled SaaS deals.
Non-GAAP Diluted EPS $0.29 for Q1 2026, with a year-over-year increase; overachievement attributed to strong revenue performance.
AI ARR $354 million, representing a 24% year-over-year increase; growth driven by increased adoption of AI functionality in customer solutions.
Free Cash Flow Expected to be $145 million for the full year, reflecting a 12% increase; driven by 8% ARR growth and cash contribution margin expansion.
Net Debt 1x last 12-month EBITDA; indicates a strong financial position.
Stock Buybacks Approximately 2.5 million common shares bought back during the quarter; reflects capital allocation strategy.
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Operating Highlights
AI-Powered Bots: Verint's platform delivers more than 50 bots designed to automate specific manual CX workflows, creating significant value for customers.
AI ARR Growth: AI ARR increased 24% year-over-year, reaching $354 million, representing close to 50% of subscription ARR.
Large Deals: Secured a $13 million TCV order from a leading insurance company and a $14 million TCV order from a leading health care company.
Market Positioning: Verint is positioned as a pure-play CX automation company, focusing on AI-driven solutions to enhance customer experience.
ARR Growth: ARR growth accelerated to 6% year-over-year, with expectations to exit the year with 8% growth.
Free Cash Flow: Expected free cash flow growth of approximately 12% to $145 million for the full year.
Hybrid Cloud Model: Verint's unique hybrid cloud design allows customers to maintain existing solutions while adopting new AI-powered solutions.
Cash Generation Model: Introduced a cash generation model to track growth trends and mitigate unbundled SaaS revenue volatility.
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Risk or Challenges
Competitive Pressures: Verint faces competitive pressures in the CX automation market, particularly from other vendors that may also be leveraging AI technology to enhance customer experience.
Regulatory Issues: The company must navigate regulatory challenges that could impact its operations and compliance, particularly in the context of data privacy and security.
Supply Chain Challenges: There are potential supply chain challenges that could affect the availability of resources necessary for deploying AI solutions and maintaining service levels.
Economic Factors: Economic fluctuations may impact customer spending on technology solutions, which could affect Verint's revenue growth and ARR targets.
Revenue Volatility: The company experiences revenue volatility associated with unbundled SaaS deals, which can complicate financial forecasting and performance tracking.
Debt Management: Verint's financial strategy includes managing its net debt, which is currently at 1x last 12-month EBITDA, and ensuring it can meet obligations without issuing new convertible notes.
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Guidance & Outlook
AI Momentum: ARR growth accelerated to 6%, reflecting continued AI momentum. Verint aims to exit the year with 8% year-over-year growth in ARR.
Large Deals: Secured a $13 million TCV order from a leading insurance company and a $14 million TCV order from a leading health care company, showcasing strong demand for AI solutions.
AI ARR Growth: AI ARR increased 24% year-over-year, reaching $354 million, and is expected to continue growing more than 20% for the year.
Hybrid Cloud Model: Verint's hybrid cloud design allows customers to maintain existing solutions while adopting new AI-powered solutions, facilitating faster AI adoption.
Revenue Guidance: Targeting $960 million of revenue for the year, with a range of plus/minus 3%.
EPS Guidance: Expecting non-GAAP diluted EPS of $2.93 at the midpoint.
Free Cash Flow Guidance: Expecting approximately 12% increase in free cash flow to $145 million for the full year.
Q2 Revenue Expectation: Expecting around $200 million of revenue in Q2 and diluted EPS of $0.26.
ARR Guidance: Expecting ARR to increase to approximately $720 million in Q2 and exit the year with around $768 million of ARR.
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Shareholder Return Plan
Share Buyback Program: During the quarter, Verint bought back approximately 2.5 million common shares.
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Key Q&A
Q:How does Verint differentiate itself in the AI space given the current noise and what trends are you seeing in AI voice chatbot usage?
A:Verint differentiates with proven AI outcomes reported by leading brands and hybrid cloud benefits that allow customers to layer AI on existing infrastructure without major investments. The market is in the early stages of AI adoption, with a 24% growth in AI ARR in Q1.
Q:Can you provide examples of successful upselling from smaller initial deals?
A:A healthcare company expanded from $5 million to $13 million in ARR by increasing consumption of 18 bots purchased at different levels. An insurance company grew from $2 million to $5 million, and a media company from $3 million to $9 million in ARR.
Q:What is the implication of AI voice chatbot adoption on WFM seat renewals?
A:While some customers are reducing agents due to AI, the total number of seats remains around 4 million. AI is driving 50% of ARR growth at 24%, indicating a shift in revenue sources.
Q:Where do you see the adoption curve for AI-driven voicebots?
A:The market is in the early stages of adoption, with increasing pressure from boards for real value from AI. While there are success stories, caution remains due to past poor experiences with AI.
Q:What is your confidence in the second half ramp for ARR?
A:The company is confident in achieving 8% ARR growth based on a strong pipeline and historical seasonality trends.
Q:Can you share metrics around AI ARR net retention and upsells at renewal?
A:AI ARR is growing at 24%, with high retention rates. The company focuses on subscription ARR growth as a key driver.
Q:What are customers saying about the macro environment and its impact on your guidance?
A:Customers are focused on value and ROI in less than 6 months, moving away from long-term projects. There is strong demand and interest in AI.
Q:How does Verint differentiate itself in a competitive AI landscape?
A:Verint differentiates through its established relationships with leading brands, a platformmatic view of AI in CX, and an open AI model that incorporates various AI technologies.
Q:What bots are working well and what challenges do customers face in adoption?
A:All bots are receiving positive feedback, but some require behavioral changes from employees, which can slow adoption.
Q:How should working capital trend as you grow bundled SaaS?
A:As ARR grows, cash generation will improve, leading to less working capital burn and increased free cash flow.
Q:Review of Unclear Management Responses
A:Management avoided providing specific metrics on AI ARR net retention and upsells at renewal, indicating a lack of clarity on detailed performance metrics.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI capability
AI solution
ARR digit
ARR health
ARR usage
CEO CFO
CEO Grant
CX automation
CX base
CX vendor
CX workflow
Chairman CEO
Cloud cloud
Co Inc
Conference Instructions
Cowen Research
Development Reilly
Director Investor
Division Conference
Division Fitzsimmons
Division Peter
Division Shaul
Division Timothy
ET day
Equities
LLC Research
Research Division
TCV order
adoption AI
bot CX
brand
care customer
deal TCV
environment
health care
platform Today
portion ARR
target ARR
value AI
VRNT Transcript
Verint Systems Inc. (VRNT) Q1 2026 Earnings Call Transcript
Positive6-4
The earnings call reflects strong financial performance with record bookings, high AI ARR growth, and a positive outlook. The share buyback program and raised guidance further support a positive sentiment. Despite competitive pressures and economic factors, Verint's differentiation in AI and strong customer adoption provide confidence. The Q&A section reveals strong demand for AI, successful upselling, and high retention rates, enhancing the positive outlook. With a market cap of approximately $2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
Verint Systems Inc. (VRNT) Q4 2025 Earnings Call Transcript
Positive3-26
Verint demonstrated strong financial performance with AI-driven revenue growth, exceeding guidance in several areas. Despite some unbundled SaaS deals not materializing, the company maintains optimistic guidance and a new $200 million buyback program. The partnership with RingCentral and positive Q&A insights about customer confidence in AI deployments further bolster sentiment. Given the market cap of $2 billion, the positive developments and strategic initiatives should result in a positive stock price movement of 2% to 8% over the next two weeks.
Verint Systems Inc. (VRNT) Q4 2025 Earnings Call Transcript
Positive3-26
Verint's earnings call reveals strong financial performance with revenue exceeding guidance and a positive outlook for Q4. The stock buyback program and increased ARR guidance further boost sentiment. Despite some competitive pressures and regulatory concerns, the company's AI-driven growth and customer success stories are compelling. The Q&A indicates confidence in closing delayed deals and expanding market share. Given the $2 billion market cap, these factors suggest a positive stock price movement of 2% to 8% in the next two weeks.
Verint Systems Inc. (VRNT) Q3 2025 Earnings Call Transcript
Positive12-5
The earnings call highlights strong financial performance, with revenue exceeding guidance and growth in SaaS ARR and free cash flow. The new partnership with RingCentral and the share repurchase program are positive catalysts. Despite competitive pressures and economic uncertainties, the company maintains its revenue and EPS guidance. The Q&A section supports market share gains and improved sales cycles, enhancing the overall sentiment. Given the small-cap market cap, the stock is likely to react positively, with an expected price increase of 2% to 8%.
VRNT Report
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