Verint Systems Inc. (VRNT) 2025 Q2 Earnings Call Summary

Optimistic Highlights

• Strong AI Momentum

New AI bookings increased over 40% year-over-year in Q2, with Bundled SaaS revenue driven by AI growing 15% year-over-year.

• Revenue and EPS Guidance Maintained

Verint is on track to achieve its fiscal 2025 guidance, maintaining a 5% growth in revenue and $2.90 in non-GAAP diluted EPS.

• Large AI Deals

Verint secured significant contracts, including a $13 million deal with a Fortune 25 brand and a $6.5 million deal with a top 10 U.S. Public Utility Company.

• Customer Success Stories

Customers reported strong AI business outcomes, such as a leading bank creating $10 million in agent capacity and a top BPO avoiding $6 million in self-service fraud attempts.

• Increased Customer Commitment

Term lengths on SaaS renewal contracts increased by about 20% year-over-year, reflecting growing customer confidence in Verint's platform.

Pessimistic Highlights

• Unbundled SaaS Revenue Shortfall

Unbundled SaaS revenue came in lower than expectations due to deal timing, although this does not change the annual guidance.

• Conversion Deals Decline

Bookings from conversion deals decreased year-over-year, as customers focus on AI adoption first and conversions second.

• Q3 Gross Margin and Operating Expenses

Gross margin is expected to be lower in Q3 compared to Q2, with higher operating expenses anticipated.

Company Outlook

• Continued AI Momentum

Verint expects strong AI bookings and Bundled SaaS revenue growth to continue in the second half of the year.

• Long-Term Financial Goals

The company targets 10% revenue growth and a 30% adjusted EBITDA margin by fiscal 2027, driven by AI adoption and market expansion.

• Free Cash Flow and Stock Buybacks

Verint aims for a 40% increase in free cash flow to approximately $180 million for the full year and announced a new $200 million share buyback program over two years.

Q & A Highlights

• Q: Unbundled Deals Push (Joshua Reilly, from Needham)

A: The shortfall was due to the timing of one large deal, unrelated to AI or agent counts. The overall SaaS ARR and customer retention improved, driven by strong AI business outcomes. (Dan Bodner)

• Q: Competitive Landscape Changes (Shaul Eyal, from TD Cowen)

A: Verint's Switzerland approach and ability to deliver AI without infrastructure changes are resonating well. The market is seeing new entrants, but Verint's proven AI business outcomes provide a competitive edge. (Dan Bodner)

• Q: New AI Use Cases (Shaul Eyal, from TD Cowen)

A: Customers are increasingly interested in improving self-service, agent co-pilots, reducing attrition, better coaching, and fraud prevention. Verint's platform supports a wide range of AI-driven business outcomes. (Dan Bodner)

• Q: Bundled SaaS ACV Mix (Billy Fitzsimmons, from Jefferies)

A: AI bookings are ahead of expectations, while conversion deals are down but expected to pick up later. The overall impact on revenue is neutral as unbundled SaaS revenue compensates. (Grant Highlander)

• Q: Bot Billing and Consumption Pricing (Billy Fitzsimmons, from Jefferies)

A: Verint's AI consumption model allows for flexible, volume-based billing with minimum commitments. Customers can easily increase consumption within the term, driving significant economic benefits for Verint. (Dan Bodner)