Verint Systems Inc.

Good day, and thank you for standing by. Welcome to the Variant Systems third quarter fiscal 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matthew Frankel, Investment Relations and Corporate Development Director. Please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining our conference call today. I'm here with Dan Bodner, Verint's CEO, Grant Highlander, Verint's CFO, and Alan Roden, Verint's Chief Corporate Development Officer. Before getting started, I'd like to mention that accompanying our call today is a slide presentation. If you'd like to view these slides in real time during the call, please visit the IR section of our website at Verint.com, click on the Investor Relations tab, and click on the webcast link and select today's conference call. I'd also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call and as accepted as required by law. Barron assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements. For more detailed discussion of how these and other risks and uncertainties could cause Barron's actual results to differ materially from those indicated in these forward-looking statements, please see our Form 10-K for the fiscal year ended January 31, 2023, our Form 10-Q for the quarter ended October 31, 2023, when filed, and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures, as we believe investors focus on these measures in comparing results between periods and among our peer companies. Please see today's slide presentation, our earnings release, and the investor relations section of our website at Verint.com for reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information. but is included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Dan. Dan?

Thank you, Matt. I'm pleased to report that our Q3 revenue and non-GAAP diluted EPS came in ahead of our expectations and we are on track to finish the year strong with double-digit revenue growth in the fourth quarter. Today, I will start with a review of our third quarter results. Then I will discuss our key wins, AI trends, and variance platform differentiation. And finally, I will provide a preview of our agenda for Investor Day next week. In Q3, revenue came in at $219 million, and non-GAAP diluted EPS came in at $0.65. In addition to our results coming in ahead of our expectations, we saw several positive trends driven by our AI platform innovation. First, in Q3, more than 50% of our staff bookings included AI-powered bots, which is a significant increase from the prior year. Second, the vast majority of unused SAS ACV bookings came in as bundled SAS. This significant improvement from last year reflects demands for Variant AI, which is offered only in the Variant Cloud. We're pleased to see our bookings shifting to more bundled SAS, as brands seek to leverage AI to increase CX automation and adopt more AI from the Variant platform. and our investor day next week, we'll discuss in much more detail how the various platform enables brands to build a workforce of people and bots working together and the positive impact that customer AI adoption is expected to have on our growth. Let me turn to Q3 wins and pipeline growth. In Q3, we continue to have significant wins across existing customers and new logos. We received more than 30 orders in excess of $1 million TCV as large enterprises across the globe continue to expand and adapt more applications and AI for our platform. These orders included a large order in excess of $20 million TCV from a leading entertainment services company in Europe, a $6 million TCV order from a leading telecom company in North America, and a $4 million TCV order from a leading healthcare company in the US. I'm pleased that each of these three large orders included AI-powered bots. In fact, nine of our 10 largest bundled SaaS deals in Q3 included variant bots. With respect to new logos, in Q3, we again added more than 100 new logos, including large brands such as CarMax, Louis Vuitton, and Sky. Our objective with new logos is to have them expand in our cloud platform and purchase more bots over time. In addition to these orders, I'm pleased to report that as of the end of Q3, our 12-month SaaS pipeline increased more than 20% year-over-year. While we've seen elongated sales cycles this year due to the macroeconomic environment, the demand for CX automation is strong, and customers' growing interest in AI is reflected by our expanding SaaS pipeline. Regarding fiscal 24, we expect to finish the year with double-digit revenue growth in Q4, and later Grant will discuss a Q4 outlook in more detail. Next week at Invest Today, we will review the completion of our SaaS transition over the last three years and discuss the next three years with our next chapter focused on CX automation leadership and growth acceleration. Here's a quick preview of the agenda we plan to cover at Invest Today. First, we will review the last three years following the spin of our cybersecurity business. During this period, our total revenue increased every year while executing a complex SaaS transition with large enterprise customers. Also, as part of this SaaS transition, we invested in building a highly differentiated CX Automation platform, which was launched earlier this year, and we can now shift our focus to execute our next chapter. The second topic of the agenda will focus on the AI opportunity driving our next chapter over the next three years. We will review our CX Automation platform and provide a deep dive into our AI differentiation including the 35 AI-powered bots available in the platform today. We will discuss our go-to-market and the AI opportunity with our large customer base. Verint has a large customer base of enterprise customers, and we support 4 million agents worldwide, helping them to process 30 billion interactions annually. We believe we are well-positioned to augment this 4 million agent workforce in our base with our open platform and AI-powered bots. As the market shifts to a workforce of people and bots working together, we have a significant opportunity in our large customer base and with new logos. The third topic on the agenda is the positive economic impact of increased AI adoption. Going forward, Variant is well positioned for the market shift to more bots and fewer people. Variant deploying more bot licenses with fewer agent licenses will increase our TAM overall and provide us the opportunity to accelerate SaaS revenue growth. To bring this to life, we will provide specific examples of how we monetize our AI capabilities and the resulting positive impact to our long-term financial model. In summary, we're pleased to have overachieved revenue and long-gap saluted EPS in Q3, and are on track to finish the year with strong double-digit revenue growth in Q4. We're also encouraged by the increase in our pipeline, the addition of new logos, and the increase in customer adoption of variant bots. We're excited about our next chapter of growth driven by customer AI adoption and look forward to seeing you at our event today. And now let me hand the call over to Grant. Grant?