Verint Systems Inc.

Good day, and thank you for standing by. Welcome to Verrent Systems, Inc., fourth, I'm sorry, Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Matthew Frankel. Please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining our conference call today. I'm here with Dan Bodnar, Verans CEO, Grant Highlander, Verans CFO, and Alan Roden, Verans 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 verans.com. Click on the Investor Relations tab, then 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 in this call may contain forward-looking statements within the meaning of the Private Security Critication Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations that are not guaranteed 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, there is no obligation to update or revise them. Investors are cautious not to place undue reliance on these forward-looking statements. For more detailed discussion of how these and other risks and uncertainties could cause variance to actual results and different materiality from those indicated in these forward-looking statements, please see our Form 10-K for the fiscal year ended Jan. 31, 2025, one file, and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures and certain operating metrics. is we believe investors focus on those measures in comparing results between periods and among our peer companies. These include revenue and ARR growth, which are adjusted for the divestiture we effectuated on January 31st, 2024. Please see today's slide presentation, our earnings release, and the investor relations section of our website at varen.com for a reconciliation of non-GAAP financial measures to GAAP measures, as well as for more information about our key operating metrics. 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. Let me begin with ARR growth trends. In Q4, our strong AI momentum continued, driving our ARR growth to 5% ahead of our guidance of 4%. I'm pleased to report that ARR growth accelerated every quarter last year as customers expanded their AI deployments. More and more customers are recognizing the strong AI business outcomes that Varian delivers and are progressing from initial AI experiments to AI adoption at scale. We expect this AI momentum to continue in the current quarter and throughout the year, and we forecast another year of ARR growth acceleration. For Q4 26, we are raising our ARR outlook for a prior guidance of 760 million to 768 million, reflecting 8% growth. Let's take a closer look at the key drivers behind our AI momentum. There are three key drivers behind our acceleration last year, which we believe will drive further acceleration in fiscal 26. The first driver is variance ability to deliver strong and differentiated AI business outcomes. Many of our customers started to deploy variant bots over the last several years and are now reporting strong AI business outcomes, which clearly differentiates variant in the CX market. There are many CX vendors who talk about AI technology, but are unable to walk the talk and demonstrate tangible business outcomes like we do. The second driver is our ability to deliver AI business outcomes faster than any other CX vendor and without customer disruption. With various differentiated hybrid cloud, customers are able to start their AI journey small, prove the desired outcomes in their own production environment, and then quickly scale with various AI deployments in our cloud. And the third driver is our success in seeding many customers with initial bot deployments in prior years. And we expect that this year, these customers will continue to accelerate variant AI consumption. Let me elaborate on these three key growth drivers and give a few customer examples. Starting with the first growth driver are strong and differentiated AI business outcomes. Here are two customer reported AI business outcomes. A healthcare insurer deployed a variant copilot bot and reported around a 30-second reduction in average call time. With 30,000 agents, a 30-second handling time reduction is equivalent to $70 million of agent capacity. The second example is a telecom company, also with 30,000 agents. This customer deployed a variant copilot bot and achieved a 5% increase in agent productivity, which is equivalent to $45 million of agent capacity. In this case, the variant coaching bot not only increased the customer productivity, but in addition, this customer reported increased revenue by improving the performance of their sales agents. Customers are reporting stronger AI business outcomes from Variant than from any other CX vendor. There is a lot of noise and hype in the markets as all CX vendors are today telling an AI technology story, but our competitors cannot report strong ROI case studies like we do. Today, Varence stands out in the CX market as a highly differentiated vendor because our customers are reporting very strong AI business outcomes, and we are excited that many of them are willing to publicly share their success stories. These customer references are really helpful to variants as they are building confidence with other customers because they can hear directly from their peers. Now let's discuss the second growth driver. In addition to delivering stronger AI business outcomes than other vendors, we're also delivering these strong outcomes faster than any other CX vendor and without disrupting the customer's operation or ecosystem. Various CX automation platforms can be deployed in a hybrid cloud to deliver faster AI outcomes. So why is hybrid cloud so important to our customers? Brands have many different CX workflows, which are mostly manual and require a large, expensive human workforce to operate. Automating these CX workflows is an increasingly important priority for brands. However, they are looking to achieve this automation without embarking on big, rip and replace infrastructure projects that can take years to deploy and which do not guarantee AI business outcomes at the end. The very hybrid cloud approach to automating CX workflows is what the market is looking for and is resonating well with customers. With Variant, they can quickly automate existing workflows without disruption. They are able to start their AI journey with a small initial deployment, prove the desired outcomes, and then quickly scale and benefit from a large ROI. Also, customers get peace of mind that they can keep their existing technology systems on premises or in the cloud and layer Variant bots on top quickly. This means that customers can continue to work with their existing AI, CRM, and communications vendors as they did before and add Variant hybrid cloud on top to automate their CX workflows now. Let's look at Variant's hybrid cloud in action. Throughout fiscal 25, many brands deployed Variant bots in hybrid cloud model, starting small and then growing usage as they proved the desired AI business outcomes. For example, a leading financial services company has expanded in the Variant platform with hybrid cloud in fiscal 25. They added seven bots, and increased their usage over time, resulting in ARR more than doubling from 1.6 million in Q4 24 to 3.5 million in Q4 25. Another example is a leading telecom company expanding their variant platform with hybrid cloud. They added three co-pilot bots to their existing variant on-premises solutions resulting in ARR growing from 1.4 million in Q4 24 to 4.1 million in Q4 25. And the third example is a leading insurance company that expanded their usage of a variant bot resulting in ARR growing from 2.3 million in Q4 24 to 4.3 million in Q4 25. These are three examples for customers achieving fast AI outcomes with hybrid cloud without long and expensive rip and replace projects. These are also good examples of customers that receded with initial AI deployments last year, and we expect these customers to increase their usage and expand with additional bots over time. The third key driver for ARR growth acceleration is the customer AI seeding that we started in prior years. Let's look at a customer's journey over multiple years. This telecom customer started their AI journey with variance in fiscal 23, and over a two year period added 10 bots, growing ARR for a few hundred thousand dollars in fiscal 23, to $2.1 million in fiscal 24, and then accelerated to ARR of 8.5 million in fiscal 25. Customers are increasing consumption of our bots over time, as the economics are very favorable with significant ROI. The CX market is in an early stage of AI adoption, and we've been seeding our customer base with AI. We're pleased that today more than 90 of the Fortune 500 largest brands in the world are already using Variant AI-powered bots to automate their CX workflows. These are leading brands and we expect them to scale and to serve as strong reference customers to influence adoption in the rest of the market. Now let's take a look at Q4 bookings and key customer wins. In Q4, we delivered record SaaS ACV bookings for new deals with 30% growth year over year. Our record bookings and key wins were driven by customers reporting strong and fast AI outcomes and sharing their success stories with other customers. Here are examples of two large Q4 wins. A $27 million TCV order from an insurance company for renewal and usage expansion of the Verit platform. And a $10 million TCV order from a telecom company to automate CX workflows and increase agent capacity. There are two main reasons behind these large competitive wins. First, more and more brands are fatigued by the AI noise and are looking for vendors that can deliver proven, tangible, and strong AI business outcomes now. And second, brands are looking for vendors with hybrid cloud that can deploy AI solutions with no disruption and with a show-me-first approach. In summary, we experienced strong AI momentum throughout last year. We finished fiscal 25 with record bookings and ARR growth acceleration and are raising the outlook for the current year to 8% ARR growth. We deliver stronger and faster AI business outcomes, better than any other vendor in the CX market, and behind our growth outlook is the proven value that we create for our customers. We believe the customer AI seeding that we did in prior years will benefit us in fiscal 26 and beyond. Our proven differentiation makes us a CX Automation category leader and well positioned for double digit ARR growth longer term. And now, let me turn it over to Grant. Grant?