VERINT SYSTEMS INC (VRNT)·Q3 2025 Earnings Summary

Executive Summary

• Q3 FYE 2025 revenue was $224.2M, up 2.6% YoY, with GAAP diluted EPS $0.39 and non-GAAP diluted EPS $0.54; overachievement vs internal guidance was driven by unbundled SaaS renewal revenue pulled forward from Q4 into Q3 .
• Bundled SaaS revenue grew 19% YoY; SaaS ARR reached $570.1M, reflecting strong AI momentum and mix-shift to recurring revenue that expanded GAAP gross margins ~80 bps YoY to 70.8% (non-GAAP 72.0%) .
• Management maintained full-year FYE25 non-GAAP guidance at revenue $933M (+/-2%) and diluted EPS $2.90; Investor Day set for Jan 14, 2025 to showcase AI differentiation and review FYE26 model .
• Stock narrative catalysts: accelerated bundled SaaS growth, ARR strength, and proof points of AI business outcomes; near-term revenue timing benefit from early renewals may normalize in Q4 .

What Went Well and What Went Wrong

What Went Well

• “We are pleased with our momentum in AI innovation…our CX Automation Platform supports a hybrid cloud model, enabling…AI-powered bots now,” said CEO Dan Bodner; bundled SaaS revenue growth accelerated to 19% YoY, and new SaaS ACV bookings for new deals rose 37% YoY .
• Gross margin expanded approximately 70 bps YoY on a GAAP basis, supported by recurring revenue mix; non-GAAP gross margin was 72.0% .
• Management maintained FY25 guidance, signaling confidence into year-end and planned to detail FYE26 and long-term AI monetization at Investor Day .

What Went Wrong

• Nonrecurring revenue declined YoY (professional services and perpetual), reflecting less services/hardware and customer prioritization of AI over cloud conversions; nonrecurring revenue fell to $44.3M from $57.4M YoY .
• SG&A intensity remained high (42.8% of GAAP revenue) despite scale benefits, indicating continued investment needs; non-GAAP SG&A was 35.8% of revenue .
• FX and other items pressured other expense; Q3 included ~$2.4M FX charges within $3.4M other expense, net .

Financial Results

Revenue and EPS (quarterly comparison)

Margin comparison (YoY)

Segment/Revenue Mix (Q3 FYE 2025)

KPIs (Q3 FYE 2025)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Dan Bodner: “We are pleased with our momentum in AI innovation and in customers reporting strong, tangible AI business outcomes with the Verint open platform…our CX Automation Platform supports a hybrid cloud model, enabling our customers and partners to leap forward with AI-powered bots now” .
• CFO Grant Highlander: “Q3 revenue came in at $224 million, around $14 million ahead of our guidance…driven by unbundled SaaS renewal revenue coming in during Q3…gross margins expanded approximately 70bps year-over-year…we maintain our full year guidance” .

Q&A Highlights

• Adoption clarity: Management noted AI “paralysis” from market hype is abating as customers prove real-world outcomes in existing ecosystems; sales cycles are improving “every quarter” .
• Partnership strategy: Discussion of the new RingCentral partnership underscored platform openness and incremental opportunity entering 2025 .
• Outcome examples: Management highlighted use cases (e.g., agent knowledge delivery) reducing handle times and driving measurable ROI from bots, supporting ARR growth durability .
• Guidance cadence: Overachievement was from revenue timing (early renewal revenue), with FY25 guidance maintained; implies normalization in Q4 .

Estimates Context

• S&P Global consensus estimates could not be retrieved due to rate-limit errors at the time of this analysis; therefore, comparisons to Wall Street consensus (S&P Global) are unavailable for Q3 FYE 2025. Values would be retrieved from S&P Global if accessible.

Key Takeaways for Investors

• AI-led mix shift is accelerating: Bundled SaaS +19% YoY and SaaS ARR $570.1M underpin recurring margin strength and multi-quarter visibility .
• Near-term beat was timing-based: Unbundled SaaS renewals pulled into Q3 boosted revenue/EPS; expect normalization in Q4 with FY25 guidance held .
• Operating leverage still a work-in-progress: SG&A at 42.8% of revenue and R&D at 16.8% reflect continued investment needs despite margin gains .
• FX remains a watch item: ~$2.4M FX charges hit other expense in Q3; potential continued volatility warrants monitoring .
• Pipeline and partnerships de-risk adoption: Improving sales cycles and ecosystem partnerships (e.g., RingCentral) support AI platform scale into FYE26 .
• Event catalyst: Jan 14, 2025 Investor Day to showcase AI differentiation and FYE26 guidance—an opportunity for the company to reset the long-term AI monetization narrative .
• Trading implications: Momentum plus maintained FY guide suggests constructive near-term setup; watch for any Q4 renewal timing reversals and FX impacts to “quality” of earnings .

Appendix: Additional Data (YoY/Balance Sheet/FCF)

• Adjusted EBITDA: $53.5M in Q3; 23.8% of non-GAAP revenue .
• Recurring gross margin: GAAP 78.5%; non-GAAP 78.8% in Q3 .
• Net debt: $230.7M at Oct 31, 2024; cash and equivalents $182.8M .
• Cash from operations (nine months): $98.2M; continued buybacks and preferred dividends highlight capital allocation priorities .

Sources: Company 8-K press release and reconciliation tables (Dec 4, 2024) ; Business Wire Q2 FYE 2025 press release (Sep 4, 2024) ; Nasdaq Q1 FYE 2025 press release (Jun 4, 2024) ; Q3 FYE 2025 earnings call transcript (Dec 4, 2024) .