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VERINT SYSTEMS INC (VRNT)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FYE 2025 revenue and non-GAAP EPS missed Street as several new unbundled SaaS deals slipped, while ARR, cash generation, and cash contribution were ahead of guidance; subscription ARR reached $712M (+5% YoY), record new-deal SaaS ACV was $32M (+30% YoY), and bundled SaaS revenue grew 23% YoY .
  • Management raised FY 2026 subscription ARR guidance to $768M (from $760M), introduced ratable guidance ranges (ARR/cash generation/cash contribution at ±1%) and widened revenue guidance to ±3% given ASC 606 variability; FY 2026 non-GAAP EPS guided to $2.93 at the revenue midpoint .
  • The core narrative is accelerating AI adoption via hybrid cloud with more than 90 Fortune 500 using Verint AI bots; customers report tangible outcomes and larger deployments, supporting ARR growth acceleration into FY 2026 .
  • Catalysts: raised ARR outlook and record new-deal bookings; headwind was unbundled SaaS revenue timing shifting deals beyond Q4, driving headline revenue/EPS miss despite strong ratable metrics and AI momentum .

What Went Well and What Went Wrong

What Went Well

  • Strong ratable metrics: subscription ARR of $712M beat guidance by $8M; cash generation beat by $8M and cash contribution beat by $16M, underscoring underlying growth quality .
  • Record bookings and AI consumption: SaaS ACV from new deals hit a quarterly record of $32M (+30% YoY), with bundled SaaS revenue up 23% YoY; management highlighted large TCV wins and Fortune 500 adoption .
  • Clear FY 2026 framework: raised ARR guidance to $768M with narrow ranges for ratable metrics and reiterated a focus on hybrid cloud to deliver faster ROI without disruptive rip-and-replace initiatives .

What Went Wrong

  • Revenue/EPS miss vs expectations: Q4 revenue was $253.5M vs ~$277M guided and consensus, with non-GAAP EPS $0.99 vs ~1.27 consensus, driven by a few new unbundled SaaS deals slipping; renewals were in line .
  • Unbundled SaaS variability: ASC 606 recognition and deal mix made quarterly revenue trends less meaningful; management widened revenue guidance ±3% for FY 2026 to reflect ongoing variability .
  • Professional services softness: nonrecurring professional services revenue declined YoY ($25.7M vs $28.7M), limiting total revenue growth in the quarter .

Financial Results

Headline Actuals vs Prior Periods

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$265.109 $224.0 $253.546
Diluted EPS - non-GAAP ($USD)$1.07 $0.54 $0.99
Gross Margin % - non-GAAP74.7% 72.0% 76.1%

Actuals vs Wall Street Consensus (S&P Global)

MetricQ4 2025 ConsensusQ4 2025 Actual
Revenue ($USD Millions)$276.824*$253.546
Diluted EPS - non-GAAP ($USD)$1.271*$0.99

Values retrieved from S&P Global.*

Segment Revenue Breakdown

Segment ($USD Millions)Q4 2024Q4 2025
Bundled SaaS revenue$65.756 $80.737
Unbundled SaaS revenue$102.832 $81.122
Optional managed services$10.846 $5.489
Support revenue$31.259 $24.154
Total Recurring revenue$210.693 $191.502
Nonrecurring perpetual$25.750 $36.316
Nonrecurring prof. services & other$28.666 $25.728
Total Revenue$265.109 $253.546

KPIs and Operating Metrics

KPIQ4 FYE 2025YoY
Subscription ARR ($USD Millions)$712 5.2%
Bundled SaaS ARR ($USD Millions)$328 16.5%
SaaS ACV from New Deals ($USD Millions, quarterly)$32.482 30.3%
Cash Generation ($USD Millions, FY)$912.822 +$25.052 vs FY24
Cash Contribution ($USD Millions, FY)$228.073 +$4.369 vs FY24

Margins

MarginQ4 2024Q4 2025
Gross Margin % - GAAP72.0% 73.5%
Gross Margin % - non-GAAP74.7% 76.1%
Operating Margin % - GAAP15.2% 18.3%
Operating Margin % - non-GAAP31.3% 32.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Subscription ARRFY 2026 (Q4 exit)$760M $768M ±1% Raised
Cash GenerationFY 2026N/A$960M ±1% New/Set
Cash ContributionFY 2026N/A$246M (midpoint) New/Set
RevenueFY 2026N/A$960M ±3% Set (wider range)
Non-GAAP Diluted EPSFY 2026N/A$2.93 (at revenue midpoint) Set
RevenueQ1 2026N/A$190–$200M Set
Non-GAAP Diluted EPSQ1 2026N/A~$0.13 Set
ARR Growth (YoY)Q1 2026N/A~6% Set
Amortization of intangiblesQ1/FY 2026N/A~$6M (Q1), ~$24M (FY) Disclosed
Stock-based compQ1/FY 2026N/A~$14–17M (Q1), ~$64–69M (FY) Disclosed

Earnings Call Themes & Trends

TopicQ2 2025 (Sep)Q3 2025 (Dec)Q4 2025 (Mar)Trend
AI/technology initiativesLaunched 40+ bots; tangible outcomes; hybrid cloud emphasized New CX/EX Scoring Bot; tuck-in acquisition; accelerated outcomes 90+ Fortune 500 using AI bots; record ACV; larger deployments Accelerating
Hybrid cloud strategy“AI first” without conversion; open platform Cloud-to-cloud and on-prem integrations; RingCentral partnership Hybrid cloud reduces paralysis; faster outcomes without disruption Reinforced
Bookings mix (new vs conversion)New-deal bundled ACV +39–40%; conversions minimal New-deal ACV +37%; conversions minimal New-deal ACV +30% record; conversions still minimal New-deal led
Bundled vs unbundled revenueBundled +15% YoY; unbundled timing variability Bundled +19% YoY; unbundled strong on renewals Bundled +23% beat; unbundled light; revenue miss Bundled strength; unbundled volatile
Channel partnersPipeline up; longer term leverage expected New CCaaS integrations (RingCentral) Cross-sell model; expecting better contribution over time Building
Macro/tariffs/regulatoryEarly-stage AI “noise” but outcomes driving adoption AI paralysis dissipating; outcomes de-risk adoption Not macro-driven; shifts reflect prioritizing AI over infrastructure Improving sentiment
Capital allocationNew $200M buyback; ~40% FCF target (FY25) Strong FCF growth; ongoing buybacks Revolver to $500M; buybacks largest FCF use Supportive

Management Commentary

  • “In Q4, ARR came in at $712 million, up 5% year-over-year, ahead of our 4% guidance… For the year, we are raising our outlook to $768 million of ARR, representing 8% growth.” — Grant Highlander, CFO .
  • “We delivered record SaaS ACV bookings for new deals with 30% growth year-over-year… a $27 million TCV order (insurance) and a $10 million TCV order (telecom).” — Dan Bodner, CEO .
  • “More than 90 of the Fortune 500 are using Verint’s AI-powered bots to automate workflows… reporting strong AI business outcomes and expanding with us.” — Dan Bodner, CEO .
  • “Unbundled SaaS revenue came in below… renewals in line; a few new unbundled deals did not materialize… we will guide revenue with a wider ±3% range.” — Grant Highlander, CFO .
  • “Hybrid cloud enables faster AI outcomes without disruption… customers can start small, prove outcomes, then scale quickly.” — Dan Bodner, CEO .

Q&A Highlights

  • Unbundled SaaS timing: Miss driven by a few expansion deals at existing customers pushing out; renewals were in line; revenue guidance widened to ±3% to reflect ongoing variability under ASC 606 .
  • Confidence in slipped deals: Predominantly large U.S. financial services customers; expected to materialize during FY 2026; mix does not affect ARR (ratable) .
  • Q1 2026 outlook: Revenue range $190–$200M; non-GAAP EPS ~$0.13; ARR YoY growth ~6% .
  • Channels: Mostly cross-sold with Verint teams; partners gaining capability on select bots; contribution expected to rise over time .
  • Cohort strength: Top 100 customers grew ARR 17% and top 25 grew 24% YoY in Q4, highlighting deepening AI adoption among largest accounts .

Estimates Context

  • Q4 miss vs Street: Revenue $253.5M vs $276.8M consensus; non-GAAP EPS $0.99 vs $1.27 consensus; driven by unbundled SaaS deal timing while bundled SaaS and ARR were strong . Consensus values retrieved from S&P Global.*
  • FY25 miss vs Street: Revenue $909.2M vs $932.6M consensus; non-GAAP EPS $2.62 vs $2.90 consensus; margins expanded but revenue shortfall from unbundled SaaS weighed on EPS . Consensus values retrieved from S&P Global.*
  • FY26 setup: Company guides revenue ~$960M (±3%) and non-GAAP EPS ~$2.93; consensus for FY26 revenue ~$960.1M* and EPS ~$2.94*, implying alignment; Street likely to focus on ARR trajectory and bundled momentum amid unbundled variability . Consensus values retrieved from S&P Global.*

Key Takeaways for Investors

  • AI momentum is the core driver: record new-deal bookings, accelerating bundled SaaS revenue, and raised ARR guidance reinforce an improving ratable growth profile; focus on ARR and cash metrics rather than quarterly revenue noise .
  • Revenue/EPS volatility likely persists: ASC 606 and unbundled mix create quarterly variability; management’s wider revenue guidance acknowledges this; expect Street to lean more on ARR/cash contribution .
  • Deployment model de-risks adoption: hybrid cloud enables “AI first” outcomes without infrastructure changes, shortening sales cycles and expanding cohorts, particularly among largest accounts (top 25/100) .
  • Capital allocation supportive: enhanced $500M revolver with intent to prioritize buybacks; net debt well under 1x LTM EBITDA; FCF up YoY, underpinning equity-friendly stance .
  • Watch Q1 dynamics: guided ARR growth ~6% YoY and revenue $190–$200M with lower unbundled renewals; judge progress on bundled growth and ratable metrics vs guidance .
  • Longer-term thesis: expanding bot portfolio, customer references, and channel leverage support sustained double-digit ARR growth potential and margin expansion, consistent with the company’s automation leadership narrative .
  • Trade setup: near-term weakness from headline misses can reverse on ratable beats and visible bundled strength; catalysts include large AI TCV wins, ARR acceleration milestones, and continued guidance credibility on ratable metrics .