Verint Systems Inc.

Thank you for standing by, and welcome to VARNT's first quarter fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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. To remove yourself from the queue, you may press star 1 1 again. I would now like to hand the call over to Matthew Frankel. Investor 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 Bodnar, Varun's CEO, Grant Highlander, Varun's CFO, and Alan Rhodes, Varun'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 varun.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 the date of this call and as accepted as required by law, VARIN assumes no obligation to update or revise them. Investors are cautioned not to place under reliance on these forward-looking statements. For more detailed discussion of how these and other risks and uncertainties could cause VARIN'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, 2024, our Form 10-Q for the quarter ended April 30, 2024, 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 those 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 burn.com for a 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 beliefs provide 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 this 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 strong momentum contained in Q1, driven by the strong AI business outcomes, that our open platform delivers to our customers. The variant open platform that we introduced last year transforms the latest AI technology from any vendor into tangible AI business outcomes better than any other contact center platform. And because the platform is completely open, we're able to quickly deploy AI-powered bots into a customer's existing workflows accelerating their time to value. In Q1, revenue and non-GAAP diluted EPS came in ahead of our expectations, and we are raising our annual guidance. We believe the AI opportunity in the contact center market is very large, as brands seek AI-powered bots to help increase CX automation. The market is starting to pivot from telephony-centric to AI and data-centric platforms, and Variant is very well positioned to lead the new CX Automation category with our differentiated open platform. Contact centers have been challenged for many years to hire more people and deliver higher quality customer experiences. Today, contact centers seek a CX Automation platform that is centered on behavioral data and AI to deliver increased workforce capacity and lower labor costs, while at the same time elevating customer experience without additional headcount. More and more brands are seeking a CX automation platform that can deliver tangible AI business outcomes. At our investor day last year, we discussed several examples of how variant bots are helping our customers to reduce costs as well as driving faster growth for variants. For brands, the economic benefits from AI business outcomes results from the lowering the cost of their workforce and increasing customer loyalty. At the same time, for variants, the economic benefits come from increasing our addressable markets as brands increase their adoption of variant AI-powered bots. Our momentum continued in Q1, and later I will review Q1 large wins driven by AI-powered bots and customer case studies demonstrating the strong AI business outcomes we are delivering to our customers. Next, I would like to review our first quarter results and trends. In Q1, revenue came in at $221 million $7 million ahead of our guidance. Our strong innovation continues to drive gross profit growth faster than revenue, and non-GAAP gross margins expanded 260 bps compared to the same quarter in the prior year. Non-GAAP diluted EPS came in at 59 cents, 5 cents ahead of our guidance, and an 11 percent year-over-year increase. Our SAS metrics also came in strong, and Grant will discuss our Q1 results in more detail later. As I mentioned earlier, Variant quickly transforms the latest AI technology into tangible AI business outcomes better than any other contact center vendor. Our open platform is highly differentiated from telephony-centric platforms due to its unique design with behavioral data and variant DaVinci AI at the platform core. Variant DaVinci acts as the factory for our bots. It leverages the latest commercial, open source, and proprietary AI models to quickly deploy new bots and refresh existing bots. As variant bots emerge from the bot factory, They train continuously in the bot gym on relevant behavioral data available in the Verne platform data hub. And finally, the Verne bots are designed to leverage the same workflows our customers use every day, enabling brands to quickly deploy bots and benefit from AI business outcomes now. Our ability to deliver strong AI business outcomes is reflected in our Q1 momentum, including competitive wins for many of the leading brands in the world. During Q1, we had strong SaaS bookings driven by customer adoption of our AI-powered bots. As a reminder, our bots are only available as bundle SaaS running in the very cloud. And our new bundle SaaS ACV bookings in Q1 came in strong with 25% year-over-year growth. Some of the large wins that we recently announced include a $14 million win for one of the world's largest retailers, which I will discuss in more detail shortly. A $7 million win for Fortune 500 brand, a leading healthcare company adopting four variant bots. a $7 million win for an insurance company, and a $4 million win for a leading health care provider, both adapting variant bots. And finally, a $4 million win for a top five US bank, which is an initial order covering about 12% of their contact center operations, with a fully negotiated option to expand volume. Let's take a closer look at the eight-digit win in Q1. This large retailer is deploying the Variant Open Platform in the cloud to increase CX automation in their contact center. Variant was awarded the $14 million contract due to our differentiated ability to deliver AI business outcomes now. The contract includes deployment of four Variant AI-powered bots. The data insight bot, which enables users to engage in AI-assisted conversations with their data by leveraging multiple AI models to answer natural language questions and to automatically identify anomalies and trends in the customer's data. The transcription bot, which delivers market-leading transcription accuracy, resulting in improved analytics and higher impact for business insights. The Quality Bot, which automatically evaluates customer interactions, resulting in reduced supervisor costs and improved agent coaching. And the Data Reduction Bot, which automates data compliance and protects sensitive personal data. In addition to deploying these four bots, we're also replacing several legacy solutions from two competitors and helping the customer to consolidate dozens of data silos into a single unified data hub, which is critical to the ongoing training of the bots. The Variant Bots are designed to deliver specific AI business outcomes. As customers increase their Variant Bot adoption, they are reporting significant AI business outcomes. Let's take a look at three such case studies that we recently announced. The first case study is a financial services company deploying variant bots to increase self-service containment across 14 million interactions annually. The customer deployed the variant IVA and achieved a successful containment rate of 80% by the variant bot without human agents. This impressive market-leading containment rate drove significant agent capacity. And the extra capacity is being used to extend service hours, to elevate customer experience, and to lower labor costs. The second case study is an insurance company deploying Variant Bots to increase agents' work-life balance by providing agents unlimited schedule flexibility. The insurance company deployed the Variant TimeFlex Bot and saw a 30% reduction in agent attrition. The third case study is a bank deploying Varianbots to help agents improve their upsell skills and increase revenue. As one starts to benefit from increased agent capacity through AI, many are now looking to leverage their agents for additional tasks, such as upselling and increasing revenue. With the various coaching bots guiding the contact center agents in real time on how to effectively sell to customers, the banks saw a 48% increase in upsell close rates. This is an example of how brands are able to leverage increased agent capacity to drive higher revenue. In summary, we're pleased with our large wins in the first quarter. including some of the leading brands in the world selecting variant open platform. We're also pleased with the significant AI business outcomes reported by customers using the variant AI-powered bots. The key driver behind our momentum is our ability to deliver AI business outcomes now, and we believe this is a unique and sustainable differentiator. We expect AI technology to continue to evolve at an even faster pace, as evidenced by frequent Gen AI enhancements from leading AI vendors. But Gen AI models alone do not create AI business outcomes in the contact center. For that, a CX automation platform such as ours is needed, which can combine AI models in a bot factory train these models on fresh, relevant data 24-7, and then embed the AI into existing contact-centered workflows. Variant is benefiting from the fast pace in AI innovation and adoption in the industry. The Variant Open Platform was launched mid-last year, and it's driving a recent momentum, positioning us well to lead the new CX Automation category. Today, we are raising our revenue and non-GAAP diluted EPS guidance for the year. As discussed at our investor day, we're targeting an acceleration in our revenue growth rates to 10% in fiscal 27, consistent with our rule of 48 target. With that, I'll turn it over to Grant to discuss our financials in more detail.