Q1 2025 Verint Systems Inc Earnings Call

Yeah.

Operator: Thank you for standing by, and welcome to Verint's first quarter fiscal year 2025 earnings conference call. At this time, all participants are in a 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 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Matthew Frankel, Investor Relations and Corporate Development Director. Please go ahead.

Speaker Change: Thank you for standing by and welcome to Barents first quarter fiscal year 'twenty 25 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: After the speaker presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone to remove yourself from the queue. You May press star one again.

Speaker Change: I'd now like to hand, the call over to Matthew Frankel Investor Relations and corporate development Director. Please go ahead.

Matthew H. Frankel: 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 to select today's conference call.

Matthew H. Frankel: Thank you operator, good afternoon, and thank you for joining our conference call today, I'm here with Dan Bodner, Baron CEO Grant Highlander, CFO, and Alan Roden Burns Chief Corporate development Officer.

Matthew H. Frankel: Before getting started I'd like to mention that accompanying our call today slide presentation. If you'd like you described in real time during the call. Please visit the IR section of our website at <unk> Dot com.

Speaker Change: On the Investor Relations tab and click on the webcast link and select today's conference call.

Matthew H. Frankel: I'd also like to draw your attention to the fact that certain matters discussed on this call may contain four different statements within the meaning of the Private Security Litigation Reform Act of 1995 and other provisions of the federal securities law. 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 four statements. The forward-looking statements are made at the date of this call and, unless accepted as required by law, Verint assumes no obligation to update or revise them.

Speaker Change: 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.

Matthew H. Frankel: Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Verint'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-gap measures as we believe investors focus on those measures and compare results between periods and among our peer companies.

Speaker Change: 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 are forward.

Speaker Change: Forward looking statements are made as the date of this call and except as required by law firm sees no obligation to update or revise them.

Speaker Change: Investors are cautioned not to place undue reliance on these forward looking statements.

Speaker Change: For more detailed discussion of how these and other risks and uncertainties could cause actual results to differ materially from those indicated its forward looking statements. Please see our Form 10-K for the fiscal year ended January 31, 2020 for our Form 10-Q for the quarter and April 32004, when filed and other filings we make with the SEC.

Speaker Change: The financial measures discussed today include non-GAAP measures as we believe investors focus on those measures and comparing results between periods and among our peer companies increasing todays slide presentation, our earnings release and Investor relation section of the website at <unk> Dot com for a reconciliation of non-GAAP financial measures to GAAP measures non.

Matthew H. Frankel: Please see today's slide presentation, our earnings release, and the investor relations section of our website at barron.com for reconciliation of non-GAAP financial measures to GAAP. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information, but it is included because management's beliefs provide meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparativ The non-GAAP financial measures this company uses have limitations and may differ from those used by other companies.

Speaker Change: non-GAAP financial information should not be considered in isolation from and substitute for or superior to GAAP financial information, but is included because management believes provides meaningful supplemental information regarding our operating results when assessing our business and it useful to investors for informational and comparative purposes. The non.

Speaker Change: GAAP financial measures. The company uses have limitations and may differ from those used by other companies now.

Matthew H. Frankel: Now, I'd like to turn the call over to Dan. Okay Dan?

Speaker Change: Now I'd like to turn the call over to Dan Dan.

Dan Bodner: I'm pleased to report that there was strong momentum in Q1, driven by the strong AI business outcomes that our open platform delivers to our customers. The Verint Open Platform that we produced last year transforms the latest AI technology from any vendor into Tangible AI Business Outcomes, better than any other contact center slot. And because the platform is completely open, we were able to quickly deploy AI-powered bots into a customer's existing workflows. Accelerating Their Time-to-Value, and Q1, revenue, and Non-Gap Diluted EPS came in ahead of our expectations, and we are raising our annual guidance.

Dan: Thank you Matt.

Dan: I'm pleased to report that.

Dan: Momentum continued in Q1.

Dan: Given by the strong AI business outcomes with our open platform delivers to our customers.

Speaker Change: The very top of platform.

Speaker Change: We produced last year, so as far as the latest AI technology from any vendor.

Speaker Change: Tangible AI business outcomes.

Speaker Change: Better than any other contact center platform.

Speaker Change: And because our platform is completely open.

Speaker Change: We're able to click to quickly deploy AI powered thoughts into our customer's existing workflows.

Speaker Change: Hello rating their time to value.

Speaker Change: Q1 revenue and non-GAAP diluted EPS.

Speaker Change: And ahead of our expectations.

Speaker Change: And we are raising our annual guidance.

Dan Bodner: 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. Verint is very well positioned to lead the new CX automation category, which is a differentiated open platform. Contact Center has been challenged for many years to hire more people and deliver higher quality customer experiences today.

Speaker Change: We believe the AI opportunity in the contact center market is very large as brands seek AI powered box to help increase the explanation.

Speaker Change: The market is starting to pivot from telephony centric.

Speaker Change: And data centric platforms and.

Speaker Change: <unk> is very well positioned.

The new CX reclamation category.

Speaker Change: Our differentiated open platform.

Speaker Change: Contact center had been challenged for many years to hire more people.

Speaker Change: And deliver higher quality customer experiences.

Dan Bodner: Contact Center SICK is 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 their investor day last year. We discussed several examples of how Verint bots are helping our customers to reduce costs, as well as driving faster growth for Verint.

Speaker Change: Contact Center FIC CX automation platform.

Speaker Change: Is centered on behavioral data NII.

Speaker Change: To deliver increased workforce capacity and lower labor costs.

Speaker Change: While at the same time elevating customer experience without additional head count.

Speaker Change: More and more brands are seeking a CX automation platform.

Speaker Change: It can deliver tangible business outcomes.

Speaker Change: At our Investor day last year.

Speaker Change: We discussed several examples of our various thoughts.

Speaker Change: Helping our customers to reduce costs.

Speaker Change: As well as driving faster growth for Varian.

Dan Bodner: [inaudible] The economic benefits from AI business outcomes result from lowering the cost of their workforce and increasing customer loyalty, at the same time for variants. The economic benefits come from increasing our addressable market, as brands increase their adoption of variant AI-powered bots. Our momentum continues in Q1. And later, I will review Q1 large wings driven by AI-powered bots and customer case studies demonstrating the strong AI business outcomes we are delivering to our customers.

Speaker Change: But the.

Speaker Change: <unk> benefits from AI business outcomes.

Speaker Change: Results from the lowering the cost of their workforce.

Speaker Change: And increasing customer loyalty.

Speaker Change: At the same time forbearance.

Speaker Change: The economic benefits come from increasing our addressable market.

Speaker Change: As brands increased their adoption of various AI powered box.

Speaker Change: Our momentum continued in Q1.

Speaker Change: And later I will review Q1 large wins driven by AI powered box.

Speaker Change: And customer case studies, demonstrating the strong AI business outcomes, we are delivering to our customers.

Dan Bodner: 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-Gap Gross Margins expanded 260 bits compared to the same quarter in the prior year. Non-gap diluted EPS came in at $0.59.

Speaker Change: Next I would like to review, our first quarter results and trends.

Speaker Change: In Q1 revenue came in at $221 million.

Speaker Change: $7 million ahead of our guidance.

Speaker Change: Our storm innovation continues to drive gross profit growth faster than revenue.

Speaker Change: Our non-GAAP gross margins expanded 260, bips compared to the same quarter in the prior year.

Speaker Change: non-GAAP diluted EPS came in at 59.

Dan Bodner: 5 cents ahead of our guidance and an 11% year-over-year increase. Our stress metrics also came in strong, and Grant will discuss a few results in more detail later. As I mentioned earlier... Verint quickly transforms the latest AI technology into tangible AI business outcomes, better than any other production or vendor. Our open platform is highly differentiated from telephony-centric platforms due to its unique design with behavioral data and Verint DaVinci AI at the platform core. LearnDaVinci X is the factory for a bot.

Speaker Change: Trying to stay ahead of our guidance.

Speaker Change: And then the 11% year over year increase.

Speaker Change: Our stress metrics also came in strong.

Grant A. Highlander: And grant will discuss our Q1 results in more detail later.

Grant A. Highlander: As I mentioned earlier.

Speaker Change: Quickly transforms the latest AI technology into tangible outcomes.

Speaker Change: Outcomes.

Speaker Change: Other than any other contact center vendor.

Speaker Change: Our open platform is highly differentiated from telephony centric platforms.

Speaker Change: Due to its unique design was behavioral data and various da Vinci AI platform core.

Very da Vinci X factory for our box.

Dan Bodner: It leverages the latest commercial, open source, and proprietary AI models to quickly deploy new bots and refresh existing bots. As VerintBot emerged from the Bot Factory, they train continuously in the Bot Gym on relevant behavioral data available in the Vern Platform Data Hub. And finally, Verint 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.

Speaker Change: It Leverages the latest commercial open source and proprietary AI models.

Speaker Change: To quickly deploy new bots and refresh existing box.

Speaker Change: A very bought emerged from the Bot factory.

Speaker Change: <unk> continuously in the ballgame on relevant behavioral data available in the very platform data hub.

Speaker Change: And finally, the various parts are designed to leverage the same workflows our customers use every day.

Speaker Change: Enabling <unk> to quickly deploy box.

Speaker Change: And if rates from AI business outcomes now.

Dan Bodner: 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 boards are only available as bundled SAS running in the Verint Cloud, and our new bundled SaaS ACV bookings in Q1 came in strong with 25% year-over-year growth. Some of the large wins that were recently announced include a $14 million win for one of the world's largest retailers, which I will discuss in more detail shortly.

Speaker Change: Our ability to deliver strong AI business outcomes is reflected in our Q1 momentum.

Speaker Change: Including competitive wins.

Speaker Change: For many of the leading brands in the world.

Speaker Change: During Q1, we had strong SaaS bookings.

Speaker Change: Driven by customer adoption of our AI powered box.

Speaker Change: As a reminder, our bullets are only available as bundled SaaS running into very cloud.

Speaker Change: And our new bundled SaaS ACB bookings in Q1 came.

Speaker Change: Came in strong with 25% year over year growth.

Speaker Change: Some of the large wins that were recently announced include.

Speaker Change: A $14 million win for one of the worlds largest retailers, which I will discuss in more detail shortly.

Dan Bodner: $7,000,000 win for Fortune 500 brands, a leading healthcare company adopting four variant boxes; $7 million win for an insurance company, and a $4 million win for a leading health care provider. Both adapting very well, and finally, a $4 million win for the top 5 US banks, 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.

Speaker Change: A $7 million win for a fortune 500 brands.

Speaker Change: Healthcare company adapting for very box.

Speaker Change: A $7 million win for an insurance company.

Speaker Change: And a 4 million dollar win for a leading health care provider.

Speaker Change: Adapting very box.

Speaker Change: And finally, a 4 million dollar win for a top five U S Bank.

Speaker Change: Which is an initial order covering about 12% of their contact center operations.

Speaker Change: It was a fully negotiated the option to expand volume.

Speaker Change: Let's take a closer look at the eight digit win in Q1.

Dan Bodner: This large retailer is deploying the Verint open platform in the cloud to increase CX automation in their contact center. Verint was awarded the $14 million contract due to our differentiated ability to deliver AI business outcomes now. The contract includes the deployment of four Verint AI-powered bots. The Data Insight Bot 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 subscription bot, which delivers market-leading subscription accuracy.

Speaker Change: This large retailer is deploying the various open platform in the cloud to increase the X inflammation in their contact center.

Speaker Change: <unk> was awarded a $14 million contract.

Due to our differentiated ability to deliver AI business outcomes now.

Dan Bodner: Resulting in improved analytics and higher impact for business insights, 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 are 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.

Speaker Change: The contract includes deployment of for various AI powered box.

Speaker Change: The data inside bot.

Speaker Change: Which enables user to engage in AI assisted conversations with their data by.

Speaker Change: By leveraging multiple AI models to answer natural language questions.

Speaker Change: And to automatically identify anomalies and trends in the customer's data.

Speaker Change: The subscription box, which delivers market leading transcription accuracy.

Speaker Change: Resulting in improved analytics and higher impact from business effects.

Speaker Change: The co op you bought.

Speaker Change: Which automatically evaluate customer interactions, resulting in reduced supervisory cost and improved agent coach Inc.

Speaker Change: And the data reduction box, which automates data compliance and protect sensitive personal data.

Speaker Change: In addition to deploying the four box.

Speaker Change: We also replacing several legacy solutions from two competitors.

Speaker Change: And helping the customer to consolidate dozens of data silos.

Speaker Change: Into a single unified data hub.

Speaker Change: Which is critical to the ongoing training of the box.

Dan Bodner: The Variant Bots are designed to deliver specific AI business outcomes. If customers increase their variant block 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 virtual bots to increase self-service containment across 14 million interactions annually. The customer deployed the Verint IVA and achieved a successful containment rate of 80% by the Verint bot without human agents.

Speaker Change: The very box are designed to deliver specific AI business outcomes.

Speaker Change: As customers increase their various buck adoption.

Speaker Change: They are reporting significant AI business outcomes.

Dan Bodner: With this impressive, market-leading, containment rate, you have significant engine 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 VariBot to increase agent work-life balance by providing agents with 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.

Speaker Change: Let's take a look at three such case studies that we recently announced.

Speaker Change: The first case study.

Speaker Change: He is a financial services company deploying very box to increase self service containment.

Speaker Change: Of course 14 million interactions annually.

Speaker Change: The customer deploy divert Iga and achieved the successful containment rates of 80% by the very bought without human agents.

Speaker Change: This impressive market leading containment rate.

Speaker Change: Drove significant edge of capacity.

Speaker Change: And the extra capacity is being used to extend service hours to elevate the customer experience and to lower labor costs.

Speaker Change: The second case study is an insurance company.

Speaker Change: Deploying very boss to increased agents work life balance.

Speaker Change: By providing agents unlimited schedule flexibility.

Speaker Change: Insurance company deployed the very complex bot.

Speaker Change: So a 30% reduction in agent attrition.

Speaker Change: The third case study is the bank <unk>.

Dan Bodner: Deploying VariBots to help agents improve their upsell skills and increase revenue is where it 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 Verint Coaching Board. Guiding the contact center agents in real time on how to effectively sell to customers, the bank saw a 48% increase in upsell close rates.

Speaker Change: Deploying very box to help agents improve their upsell scales and increased revenue.

Speaker Change: Is where it starts to benefit from increased agent capacity through AI, mainly.

Speaker Change: Many are now looking to leverage their agents for additional tasks, such as Upselling and increasing revenue.

Speaker Change: We've been very coaching box <unk>.

Speaker Change: Driving the contact center agents in real time on how to effectively sell to customers.

Speaker Change: The bank saw a 48% increase in upsell close rate.

Dan Bodner: This is an example of how brands are able to leverage increased agent capacity to drive higher revenue. [inaudible] We're pleased with our large wins in the first quarter, including some of the leading brands in the world, selecting variants, and opening plots. We're also pleased with the significant AI business outcome reported by customers using the Variant AI Powered Bot. 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 GNI enhancement... from Living Air Vanduul.

Speaker Change #100: This is an example of our brands are able to leverage increased agent capacity to drive higher revenue.

Speaker Change #101: In summary.

Speaker Change #102: We're pleased with our large wins in the first quarter, including some of the leading brands in the world selecting very open platform.

Speaker Change #103: We're also pleased with the significant AI business outcomes.

Speaker Change #104: Reported by customers using the various AI powered bots.

Speaker Change #105: The key driver behind our momentum is our ability to deliver AI business outcomes now.

Speaker Change #105: And we believe this is a unique and sustainable differentiator.

Speaker Change #105: We expect AI technology to continue to evolve at an even faster pace as evidenced by frequent Jenny I enhancements from leading vendors.

Dan Bodner: 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 work. Verint is benefiting from the fast pace of AI innovation and adoption in the industry. The Verint Open Platform was launched mid last year, and it's driving recent momentum, positioning us well to lead the new CX automation category.

But Jeremy I model alone do not create AI business outcomes in the contact center.

Speaker Change #105: Forget.

Speaker Change #106: CX automation platform, such as ours is needed.

Speaker Change #107: Which can combine AI models in a broad factory.

Speaker Change #107: These models on fresh relevant data 24 seven.

Speaker Change #107: And then embed AI into existing contact center workflows.

Speaker Change #108: Variant is benefiting from the fast pace in AI innovation and adoption in the industry.

Speaker Change #108: The very top of the platform was launched mid last year.

Speaker Change #109: And it's driving our recent momentum.

Speaker Change #110: Positioning us well to lead the new CX automation category.

Grant A. Highlander: Today, we are raising our revenue and non-GAAP diluted EPS guidance for the year. As discussed at our investor conference today, 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.

Speaker Change #111: Today, we are raising our revenue and non-GAAP diluted EPS guidance for the year.

Speaker Change #112: As discussed at our Investor day, we're targeting an acceleration in our revenue growth rate to 10% in fiscal 'twenty seven.

Speaker Change #112: Consistent with our rule of 48 targets.

Grant A. Highlander: With that I'll turn it over to grant to discuss our financials in more detail.

Grant A. Highlander: Thanks, Dan. Good afternoon, everyone.

Grant A. Highlander: Thanks, Dan Good afternoon, everyone.

Grant A. Highlander: Our discussion today will include non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available, as Matt mentioned, in our earnings release and in the IR section of our website. Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures, including fair value revenue adjustments, amortization of acquisition-related intangibles, certain other acquisition and divestiture-related expenses, and stock-based compensation expenses.

Our discussion today will include non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available as Matt mentioned in our earnings release and in the IR section of our website.

Grant A. Highlander: Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures, including fair value revenue adjustments amortization of acquisition related intangibles certain other acquisition and divestiture related expenses.

Speaker Change #113: <unk> based compensation expenses accelerated lease costs.

Grant A. Highlander: Accelerated lease costs, IT facilities, and infrastructure realignment, as well as certain other items that can vary significantly in amount and frequency from period to period. Let me start with an overview of our strong Q1 results. Adjusted revenue increased 5% year-over-year to $221 million, $7 million ahead of our guidance. As a reminder, our 5% adjusted revenue growth reflects the quality managed services divestiture we completed at the end of last fiscal year. When looking at the $7 million overachievement, about half was due to contract values coming in higher than anticipated.

Speaker Change #113: Facilities and infrastructure realignment as well as certain other items that can vary significantly in amount and frequency from period to period.

Grant A. Highlander: And the other half was due to contracts closing earlier than planned; non-gap gross margins came in strong at 72.4%, up 260 basis points year over year. We are pleased with our gross margin and believe our ability to increase gross margin reflects the strength of our AI innovation and the AI business outcomes we deliver to our customers. The combination of our revenue overachievement and strong gross margin drove non-GAP diluted EPS of $0.59, $0.05 ahead of guidance and up 11% year over year. Our strong first quarter results were driven by our continued SAS momentum. In Q1, SAS revenue increased by 20% year over year.

Speaker Change #114: Let me start with an overview of our strong Q1 results.

Speaker Change #115: Adjusted revenue increased 5% year over year to $221 million.

Speaker Change #116: $7 million ahead of our guidance.

Speaker Change #117: As a reminder, our 5% adjusted revenue growth reflects the quality managed services divestiture, we completed at the end of last fiscal year.

Speaker Change #117: When looking at the 7 million over achievement about half was due to contract values coming in higher than anticipated and.

Speaker Change #117: And the other half was due to contracts closing earlier than planned.

Speaker Change #118: non-GAAP gross margins came in strong at 72, 4% up 260 basis points year over year.

Speaker Change #119: We are pleased with our gross margin and believe our ability to increase gross margins reflects the strength of our AI innovation and the AI business outcomes, we delivered to our customers.

Speaker Change #120: The combination of our revenue over achievement and strong gross margin drove non-GAAP diluted EPS of <unk> 59.

Speaker Change #120: <unk> ahead of guidance and up 11% year over year.

Speaker Change #121: Our strong first quarter results were driven by our continued SaaS momentum.

Speaker Change #121: In Q1, SaaS revenue increased 20% year over year.

Grant A. Highlander: Bundled SAS new ACV bookings, which is a leading indicator for AI momentum, increased 25% year-over-year, as 80% of our bundled SAS bookings were contracts that included AI-powered bots. It's important to note that many of our customers initially purchased bots for a portion of their potential AI volume. And our flexible consumption pricing model provides Verint a natural path for revenue growth as brands increase their consumption of our bots. Another SAS metric that relates to AI adoption is term length.

Speaker Change #122: Bundled SaaS, new ACB bookings, which is a leading indicator for AI momentum.

Speaker Change #123: Increased 25% year over year is 80% of our bundled SaaS bookings were contracts that included AI powered bots.

Speaker Change #124: It's important to note that many of our customers initially purchased bots for a portion of their potential AI volume at our flexible consumption pricing model provides a natural path for revenue growth as brands increase their consumption of our bonds.

Speaker Change #125: Another SaaS metrics that relates to AI adoption is term links.

Grant A. Highlander: In Q1, I am pleased to report that our average SAS contract term length was about 30% longer than a year ago. We believe these longer-term links reflect growing customer confidence in the direction of our open platform and commitment to Verint CF's automation strategy. The third SAS metric related to AI momentum is bundled SAS pipeline. As of the end of Q1, our advanced stage pipeline for the remainder of the year was up more than 20% year over year, with over 80% of the pipeline including bots, reflecting the fact that our AI innovation is only available in the Verint cloud.

Speaker Change #126: In Q1, I am pleased to report that we saw our average SaaS contract term lengths about 30% longer than a year ago.

Speaker Change #127: We believe these longer term lengths reflect growing customer confidence in the direction of our open platform and commitment to <unk> CX automation strategy.

Speaker Change #127: A third SaaS metric related to AI and momentum is bundled SaaS pipeline.

Speaker Change #128: As of the end of Q1, our advanced stage pipeline for the remainder of the year was up more than 20% year over year with over 80% of the pipeline, including box, reflecting the fact that our AI innovation is only available in the cloud.

Grant A. Highlander: Our other SAS metrics were also strong across the board and can be found on our IR dashboard. I would like to talk more about our AI business outcome strategy with our large customer. Today, Verint delivers workflows to about 4 million contact center agents.

Speaker Change #128: Our other SaaS metrics were also strong across the board and can be found on our IR dashboard.

Speaker Change #129: I would like to talk more about our AI business outcome strategy with our large customer base.

Speaker Change #130: Today, Barrick delivers workflows to about 4 million contact center agents.

Grant A. Highlander: As discussed at our Investor Day, we are enhancing these workflows with AI-powered bots, which expand the Verint revenue opportunity significantly. To monetize this opportunity, we offer our customer base a hybrid cloud architecture, enabling them to quickly deploy Verint's latest AI innovation in our cloud without the need for large, disruptive, and risky rip-and-replace programs for their existing systems. Also... Our flexible AI consumption pricing model enables our customer base to deploy bots at low volumes initially and then easily expand as they prove the value from the AI business outcomes we deliver.

Speaker Change #131: As discussed at our Investor Day, we are enhancing these workflows with AI powered bots, which expand the revenue opportunity significantly.

Barrick: To monetize this opportunity we offer our customer base, a hybrid cloud architecture, enabling them to quickly deploy barents latest AI innovation in our cloud without the need for large disruptive and risky rip and replace programs for their existing systems.

Barrick: Also.

Barrick: Our flexible AI consumption pricing model enables our customer base that deploy bots at low volumes initially.

Barrick: And then easily expand as they prove the value from the AI business outcomes, we deliver.

Grant A. Highlander: We also provide our customers future-proof pricing strategies that allow them to redirect investments from agent-based applications toward investments in AI-powered bots. We see customers in our base increasing their agent capacity with AI-powered bots and using the extra capacity in multiple ways, to elevate the customer experience, to eliminate hiring, to empower agents with upsell offers, and to reduce labor costs.

Barrick: We also provide our customers future proof pricing strategies that allow them to redirect investments from agent based applications toward investments in AI powered bots.

Barrick: We see customers in our base, increasing their agent capacity with AI powered bots and using the extra capacity in multiple ways.

To elevate customer experience to eliminate hiring to empower agents with upsell offers.

Speaker Change #133: And to reduce labor costs.

Grant A. Highlander: We believe our ability to deploy bots with a flexible consumption model will enable us to accelerate our revenue growth as strong AI business outcomes drive more adoption of our bots and greater volume consumption by our customers. Turning to our guidance for fiscal 25, given our strong start to the year, we are bumping up our revenue and EPS guidance for the full year on a non-gap basis. Our revenue outlook for fiscal 25 is now $933 million, reflecting a bit more than 5% growth compared to fiscal 24 adjusted revenue.

Speaker Change #134: We believe our ability to deploy black box with a flexible consumption model will enable us to accelerate our revenue growth as strong AI business outcomes drive more adoption of our bots and a greater volume consumption by our customers.

Speaker Change #135: Turning to our guidance for fiscal 'twenty five given our strong start to the year, we are bumping up our revenue and EPS guidance for the full year.

Speaker Change #135: On a non-GAAP basis.

Speaker Change #136: Our revenue outlook for fiscal 'twenty five is now $933 million.

Speaker Change #137: Reflecting a bit more than 5% growth compared to fiscal 'twenty for adjusted revenue.

Grant A. Highlander: We expect gross margin to increase again this year, and we are raising our gross margin expansion guidance from 100 basis points to approximately 150 basis points year over year. The combination of revenue growth and continued margin expansion is expected to drive operating income up high single digits for the year faster than our revenue. And for diluted EPS, we now expect $2.90 at the midpoint of our revenue guidance. Regarding below-the-line assumptions, we expect interest and other expense to average around $500,000 per quarter. Net income from a non-controlling interest of around $250,000 per quarter.

Speaker Change #138: We expect gross margin to increase again this year and we are raising our gross margin expansion guidance from 100 basis points to approximately 150 basis points year over year.

Speaker Change #138: The combination of revenue growth and continued margin expansion is expected to drive operating income up high single digits for the year faster than our revenue growth.

Speaker Change #139: And for diluted EPS, we now expect $2 90 at the midpoint of our revenue guidance.

Speaker Change #139: Regarding below the line assumptions, we expect interest and other expense net to average around $500 per quarter.

Speaker Change #140: Net income from a noncontrolling interest of around $250000 per quarter.

Grant A. Highlander: And for the full year, we expect a cash tax rate of around 12% and around $72.5 million fully diluted share. Let me also discuss how we see the year progressing. We expect bundled and unbundled SAS dynamics to be similar to last year. For bundled SAS, we expect revenue to increase sequentially throughout the year. In fact, we expect our bundled SAS revenue growth rates to accelerate each quarter on a year-over-year basis. For unbundled SAS, we expect the quarterly cadence of revenue to be similar to last year, driven by the timing of unbundled renewal.

Speaker Change #140: And for the full year, we expect a cash tax rate of around 12% and around $72 5 million fully diluted shares.

Speaker Change #141: Let me also discuss how we see the year progressing.

Speaker Change #141: We expect bundled and unbundled SaaS dynamics to be similar to last year.

Speaker Change #142: For bundled SaaS, we expect revenue to increase sequentially throughout the year.

Speaker Change #142: In fact, we expect our bundled SaaS revenue growth rates to accelerate each quarter on a year over year basis.

Speaker Change #142: For unbundled SaaS, we expect the quarterly cadence of revenue to be similar to last year, driven by the timing of unbundled renewals.

Grant A. Highlander: For Q2 total revenue, we expect a range of $210 million to $214 million, reflecting a sequential increase in bundled revenue to more than $70 million driven by AI adoption, a lower amount of unbundled SASH revenue compared to Q1, driven by the volume of renewable contracts in Q2, and a sequential decrease in non-recurring revenue and support, as expected. For EPS at the midpoint of the Q2 revenue range, we expect non-GAP diluted EPS to be $0.52.

Speaker Change #143: For Q2 total revenue, we expect a range of $210 million to $214 million, reflecting a sequential increase in bundled revenue to more than $70 million driven by AI adoption.

Speaker Change #143: A lower amount of unbundled SaaS revenue compared to Q1, driven by the Q2 volume of renewable contracts.

Speaker Change #143: And a sequential decrease in nonrecurring revenue and support is expected.

Speaker Change #144: For EPS at the midpoint of the Q2 revenue range, we expect non-GAAP diluted EPS to be 52.

Grant A. Highlander: Looking at the second half of the year, we expect revenue in Q3 to be similar to Q2 and to finish the year with a strong Q4 driven by both strong bundled SAS growth and a large volume of unbundled renewals similar to last year. Turning to our balance sheet, we continue to be in a very good financial position. Our net debt remains well under one times last 12 month EBITDA and is further supported by our strong cash flow.

Speaker Change #145: Looking at the second half of the year, we expect revenue in Q3 to be similar to Q2 and finished the year with a strong Q4, driven by both strong bundled SaaS growth and a large volume of unbundled renewal similar to last year.

Speaker Change #146: Turning to our balance sheet, we continue to be in a very good financial position.

Speaker Change #146: Our net debt remains well under one times last 12 month EBITDA and is further supported by our strong cash flow.

Grant A. Highlander: With regard to cash flow, we are targeting a greater than 40% increase in free cash flow to approximately $180 million for the full year. As we previously discussed, our largest use of cash generation is expected to be stock buyback. In Q1, we purchased approximately $37 million of shares of common stock, and in Q2, we will continue buying back shares as part of our previously announced $200 million stock buyback program.

Speaker Change #147: And with regard to cash flow, we are targeting a greater than 40% increase in free cash flow to approximately $180 million for the full year.

As we previously discussed our largest use of cash generation is expected to be stock buybacks in.

Speaker Change #148: In Q1, we purchased approximately $37 million of shares of common stock and in Q2, we will continue buying back shares as part of our previously announced $200 million stock buyback program.

Grant A. Highlander: In summary, we are pleased to have exceeded both our revenue and non-GAP diluted EPS guidance in Q1. We are pleased with our strong bundled SaaS bookings growth, large wins with some of the world's leading brands, and significant AI business outcomes reported by our customers. As we discussed today, Verint's AI-powered bots deliver economic benefits to our customers and also to Verint. We are focused on accelerating the deployment of AI-powered bots to our large customer base.

Speaker Change #149: In summary.

Speaker Change #150: We are pleased to have exceeded both our revenue and non-GAAP diluted EPS guidance in Q1.

Speaker Change #151: We are pleased with our strong bundled SaaS bookings growth large wins with some of the world's leading brands and.

Speaker Change #152: And significant AI business outcomes reported by our customers.

Speaker Change #153: As we discussed today <unk> AI powered bots deliver economic benefits to our customers and also to variant.

Speaker Change #154: We are focused on accelerating the deployment of AI powered bots to our large customer base.

Grant A. Highlander: And finally, we are pleased to raise both revenue and EPS guidance for the current year as we work towards becoming a Rule of 40 company in fiscal 27, with revenue acceleration and margin expansion along the way. With that, Operator, please open the line for questions.

Speaker Change #155: And finally, we are pleased to raise both revenue and EPS guidance for the current year as we work towards becoming a rule of 40 company in fiscal 2007 with revenue acceleration and margin expansion along the way.

Speaker Change #156: With that operator, please open the line for questions.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the question queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Shaul Eyal of TD Cohen. Please go ahead.

Speaker Change #157: As a reminder to ask a question you will need to press star one on your telephone to remove yourself from the question queue. You May Press Star one again, please standby, while we compile the Q&A roster.

Shallow Yao: Our first question comes from the line of shallow Yao of TD Cowen. Please go ahead.

Shaul Eyal: Thank you. Good afternoon, gentlemen. Congratulations on the beaten race.

Speaker Change #159: Thank you good afternoon gentlemen, congrats.

Dan Bodner: Dan, I want to ask you about the recent string of sizable contract announcements. Look, you know, I've been covering this name for decades now. And I cannot recall the pace or even the amount, the number of sizable transactions that have been announced just over the course of the past few weeks. What's driving that? Is that pure demand? Is that Gen AI responding with customers? And maybe I can also squeeze in just a macro level question. We've been getting, maybe I should say, mixed views about macros within the software arena. How do you view the current macro environment?

Speaker Change #160: On the Beach Grace.

Dan I wanted to ask.

Speaker Change #160: The reason.

Speaker Change #161: Think of sizeable contract announcements, but I've been covering this name for decades now.

Speaker Change #162: And I cannot recall.

Speaker Change #163: Pace or even the amount the number of sizable transactions that have been announced get somebody calls over the past few weeks.

Speaker Change #164: What's driving that is that <unk>.

Speaker Change #165: Demand is that Gen AI resonated with customers it.

Speaker Change #166: And maybe if I can also squeeze in just a macro level question.

Speaker Change #167: We've been getting maybe if you'd say mixed views about.

Speaker Change #167: The macro within the software arena.

Speaker Change #168: How do you see the current macro environment. Thank you.

Dan Bodner: Thank you.

Speaker Change #169: Thank you sure.

Speaker Change #169: I'll answer the first question first.

Dan Bodner: Thank you, Shaul. I'll answer the first question first. So yes, we do have momentum, and I believe these large deals represent the confidence and commitment to our strategy that we see from customers. First, it's important to note that we've announced large contracts from world-leading brands. They are leaders in their segments, and they are basically endorsing open platforms. It is not just the size of the contract.

Speaker Change #170: So yes, we do have momentum and I believe these large deals represents confidence and commitment to our strategy that we see from customers.

Dan Bodner: But these are leading customers choosing Variant as the core platform in their business. And being the core platform, in addition to buying bots, which is obviously a focus, they're also consolidating solutions from other vendors into the Variant platform. So part of this announcement is displacement, and part of it is bot expansion. The second important thing about this announcement is that, um...

Speaker Change #171: It's important to note that we have announced large contracts from world leading brands.

There are leaders in their segments.

Speaker Change #172: <unk> basically endorsing our open platform. So it is not just the size of the contract.

Speaker Change #172: But these are leading customers choosing <unk> as the core platform into contact center.

Speaker Change #173: And being the <unk>.

Speaker Change #174: The core platform in addition to buying thoughts which is obviously.

Speaker Change #175: Our focus they also consolidated solutions from other vendors into the Darden platform.

So part of this announcement is displacement and part of it is bought expansion.

Speaker Change #176: The second important thing about this announcement is that.

Dan Bodner: These customers are, again, large, complex, and they want to adopt bots. But they're also not so interested in AI technology. They are interested in AI business outcomes that are delivered at the Karnak Center. As you can see from the announcement, they deployed different bots. Each one is choosing the bots that are right for them at this point in time, and the platform is open and modular, so they can choose the bots that make sense based on their business priorities. But also, I think we mentioned that they are using relatively low consumption at the beginning.

Speaker Change #177: This this customers are again there are large.

Speaker Change #177: Flex.

Speaker Change #178: And they want to adopt box.

We're also not so interested in the AI technology.

Speaker Change #179: AI business outcomes that are delivered in the contact center.

Speaker Change #180: So you can see from the announcement they deploy a different box. Each one is choosing the bots that are right for them at this point in time and the platform is open and modular so they can choose the box that makes sense.

Speaker Change #180: Based on their business priorities.

Speaker Change #180: But also I think we mentioned that.

Speaker Change #181: They are using a relatively low consumption at the beginning.

Dan Bodner: And what they want to do is basically want to prove the AI business outcomes, and then they increase the consumption over time. So they don't have to come up with all the budgets up front. We are an open platform, so we are flexible. They don't have to commit to a very large rip and replace project. They can do it at more, you know, the pace they like.

Speaker Change #181: And.

Speaker Change #182: What they want to do is they basically want to prove the AI business outcomes and then they increase the consumption over time. So they don't have to come up with all the budget upfront. We are an open platform. So we are flexible they don't have to commit to a very large rip and replace projects. They can do it.

Speaker Change #182: On a more.

Speaker Change #182: At the pace that they like and to deliver the outcomes. They will pay for themselves. So what we hear from these customers.

Dan Bodner: And as they deliver the outcomes, they will pay for themselves. So what we hear from these customers is, you know, they'll be able to get more budgets and continue to increase consumption if they're able to save costs for labor and for extra agent capacity. So the second question was around macroeconomics in Q1.

Speaker Change #182: They will be able to get more budgets and continue to increase consumption.

Speaker Change #182: As they are able to save save cost.

Speaker Change #182: For labor and for extra Asia capacity.

Speaker Change #182: So.

Speaker Change #183: Second question was around.

Speaker Change #183: My comments in Q1.

Dan Bodner: I'm So for us, Q1 was a strong quarter, basically across all key metrics, including leading indicators, so booking for BanzoSUS was 25% up. Very important that we saw an increase in term length by 30%, which means customers are committing for longer terms as they buy into the Verint strategy, not just buying products. And we also had the bundled SAS pipeline for the remainder of the year was also up 20%.

Speaker Change #184: So for US Q1 was a strong quarter basically across all key metrics.

Speaker Change #185: Including leading indicators so looking for us bundle sites was 25% up.

Speaker Change #186: Very important that we saw an increase of term length.

Speaker Change #187: By 30%, which means customers are committing for a longer term as they buy into the various strategy not just buying product.

Speaker Change #188: And we also had the.

Speaker Change #189: The bundled SaaS pipeline for the remainder of the year is also up 4% to 20%.

Dan Bodner: And that's where our AI innovation is in the bundle SaaS. And, of course, that's where we generate the AI business outcomes that customers are looking for. So if I had to kind of assess the customer sentiment in Q1, I would say customers are focused on AI business outcomes that generate significant ROI. So they're willing to invest when they see the benefit, and they see greater economic benefits in the investment.

Speaker Change #190: And Thats, where our AI innovation is in the.

Speaker Change #191: But with SaaS and of course, that's where we generate the AIA business outcomes that customers are looking for.

Speaker Change #192: So if I if I ask you kind of assess.

Speaker Change #193: First the customer sentiments in Q1.

Speaker Change #193: I would say customers are focused on AI business outcomes.

Speaker Change #194: This outcome generates significant ROI. So they are willing to invest when they see the benefit and they see greater economic benefits and the investment.

Dan Bodner: And while customers are more cautious about investing in software, they clearly want to invest in tangible business outcomes now. So Verint is well positioned to do both. First, we're well positioned to deliver strong AI business outcomes. But I believe we can deliver them now with quick time to value, based on the design of the open platform.

Speaker Change #194: And while customers be more cautious about investing in software they clearly want to invest in tangible business outcomes now.

Speaker Change #195: So first is well positioned to do both first we're well positioned to deliver strong AD business outcomes.

Speaker Change #196: But I believe also we can deliver them now with quick time to value.

Based on the design of the open platform.

Speaker Change #197: Thank you so much.

Speaker Change #197: Thank you.

Speaker Change #198: Our next question.

Joshua Christopher Reilly: comes from the line of Joshua Reilly of Needham.

Speaker Change #198: It comes from the line of Joshua Reilly of Needham.

Dan Bodner: All right, thanks for taking my questions and nice job on execution here in the quarter. Maybe just starting off, can you help us understand, you know, as AI is increasingly, maybe accelerating is the right word in terms of adoption in the contact center, what are you hearing from customers in terms of their plans to slow contact center seat growth or ultimately reduce seats? And are you finding that the comment about time to value is actually accelerating here? Is that actually leading customers to come back and buy more sooner than you would have expected previously?

Speaker Change #199: Alright, Thanks for taking my questions and nice job on execution here in the quarter maybe.

Speaker Change #200: Maybe just starting off can you help us understand as AI and increasingly maybe accelerating is the right word in terms of adoption in the contact center. What are you hearing from customers in terms of their plans to slow contact center seat growth are ultimately reduce speed.

Speaker Change #200: And are you finding that.

Speaker Change #201: The comment about time to value and vaccine accelerating here is that actually leading customers to come back and buy more sooner than you would've expected previously.

Dan Bodner: Yes, so first on the agent count... So when we look, obviously, at the end of the quarter, at our customer base, and we didn't see a decline in the number of agents. Unknown Speaker, But we also do see customers are increasing the consumption of bots. So they create an edge of capacity, and this extra capacity at this point, it's mainly used to avoid hiring.

Speaker Change #202: Yes, so first on the on the agent count.

Speaker Change #202: So when we look we look obviously at the end of the quarter at our customer base.

Speaker Change #202: And we.

Speaker Change #202: We didn't see a decline in the number of agents.

Speaker Change #203: But we also do see customers are increasing their consumption of box. So they create agent capacity and this extra capacity at this point.

Speaker Change #204: Is mainly used to avoid hiring.

Dan Bodner: Many of our customers have been on the lookout to hire, which is not easy, and they didn't necessarily have the budget, so they now use the capacity to avoid hiring. They also are giving agents, in some cases, more time so they can increase customer sentiment and improve customer experience. And we started to see a fairly new thing, which is giving agents new tasks that they didn't have before, such as increasing revenue by upselling offers to customers after they deliver a positive experience. And one of the biggest outcomes that I highlighted that I thought was very interesting than before was a bank that actually did have extra capacity.

Speaker Change #205: Many of our customers have been on the outlook to hire which is not easy and.

Speaker Change #207: They didn't have the budget necessarily so they now use the capacity to avoid hiring.

Speaker Change #206: They also are giving agents in some cases more time, so they can increase the customer sentiment improve customer experience.

Speaker Change #210: And we starting to see also a fairly new thing, which is getting agents new tasks that they didn't have before such as being.

Speaker Change #208: Increasing revenue so upsell Inc.

Speaker Change #208: Offers to customers.

Speaker Change #208: They delivered a positive experience.

Speaker Change #209: One of the biggest outcomes that I highlighted that I thought it was very interested.

Speaker Change #209: Before it was.

Speaker Change #209: I think that actually did have extra capacity.

Unknown Attendee: Unknown Attendee, Shaul Eyal, Daniel Bergstrom, Jeffrey Bretana, Samad Samana, Daniel Bergstrom, to improve the sales performance, and they achieved a 48% increase in sales by those agents. And this was done by the AI basically, telling the agents what the best time during the call to offer something. I'm matching the offer today, you know, to the customer.

Speaker Change #211: It will test the agents to sell but they found that the agents are not really very good at selling.

Speaker Change #212: So they actually used a very coaching bots.

Speaker Change #213: To improve the sales performance.

And they achieved 48% increase in sales.

Speaker Change #213: By those agents.

Speaker Change #214: And this was done by the AI basically.

Turning to agents what is the best time during the call to offer something.

Speaker Change #215: Matching the offer today to the customers. So it's more specific about the customer history and preferences.

Dan Bodner: So it's more specific about the customer history and preferences. And also, very interesting is that the coaching bot was suggesting to the agents what language they could use to overcome objections for themselves.

Speaker Change #215: And also very interesting is that.

Speaker Change #215: <unk> bought was suggesting to the agents.

Speaker Change #216: What language they can use to overcome objections for SaaS.

Dan Bodner: And of course, you know, there are a lot of different ways to approach customers and get them to be interested when they originally called not for buying anything but for resolving an issue. So I think that as an industry, we'll see a lot of different usage for the extra capacity. But I think that, as you mentioned, there is growing interest in creating AI business outcomes, and customers don't really want to consume AI and pay for tokens.

Speaker Change #216: And of course.

Speaker Change #216: There's a lot of different ways to approach customers and get them to be interested.

Speaker Change #217: When they actually.

Speaker Change #217: Originally called not for buying anything but for resolving issue.

Speaker Change #218: So I think that.

Speaker Change #219: As an industry, we will see a lot of different usage for the extra capacity.

But.

Speaker Change #220: I think that as you mentioned there is growing interest in creating AI business outcomes.

Speaker Change #221: And customers don't really want to consume AI and pay for tokens.

Dan Bodner: But they're very happy when we sell them based on a unit of measure that they can, you know, connect the return on investment directly with boss consumption, and this creates significant savings. The TimeFlexBot, reducing agent attrition by 30%, uh... that's millions of dollars for a large conduct center uh... it's very expensive to hire and train agents uh... and of course, it's not just reducing the attrition but also improving the engagement by employees and morale. So there are a lot of different benefits, and we think the industry is just starting to realize you know how they And not every customer is just trying to reduce the number of agents. They're mostly looking at how they can use their human agents more effectively and augment those user agents with more and more bots.

Speaker Change #222: But we're very happy when we sell them based on the unit of measure that they can.

Speaker Change #220: Man.

Speaker Change #220: Connect.

Speaker Change #220: Return on investment directly with the <unk> consumption.

Speaker Change #220: And this creates a significant saving.

Speaker Change #223: The conflicts bots, reducing agent attrition, 30%.

Speaker Change #223: That's millions of dollars for large contact center.

Speaker Change #224: It's very expensive to hire and train agents.

Speaker Change #225: And of course, it's not just reducing debt attrition, but also improving the in gateway engagements by employees and morale.

Speaker Change #225: So theres a lot of different benefits and.

Speaker Change #226: We think the industry is just starting to realize how are they going to use that benefits.

Speaker Change #227: And not every customer is just wrong.

Turning to reduce the number of agents.

Speaker Change #227: Mostly looking at how they can use their human agents more effectively and augments dose used with <unk> agents with more and more box.

Joshua Christopher Reilly: Got it. That's super helpful.

Speaker Change #228: Got it that's Super helpful. And then just on the unbundled SaaS growth.

Dan Bodner: And then just on the unbundled staff growth, you know, clearly above what we expected for the quarter. Can you just help us understand what is driving the greater than expected activity with partners? Is it a few big deals that came in? And maybe help us understand the magnitude of the deals that were pulled forward here for the unbundled revenue. Thank you.

Speaker Change #229: Clearly above what we expected for the quarter can you just help us understand what is driving the greater than expected activity with partners is that a few big deals that came in and and maybe help us understand the magnitude of the deals that were pulled forward here for the unbundled revenue. Thank you.

Dan Bodner: Yeah, so when we launched the platform, we talked about it being a hybrid cloud platform, and hybrid cloud means that you can actually have part of the solution or the platform running in unbundled mode, and other running in bundled. So all our AI innovation is in the cloud, so customers have to buy that in bundled. But many of these large products are now having both unbundled and bundled in the same order, and many, many customers are now having this type of hybrid platform.

Speaker Change #230: Yes, so when we launched the platform we talked about it's a hybrid cloud platform.

Speaker Change #231: And <unk> that you can actually have part of the solution to the platform running an unbundled and other running in bundle. So all AI innovation is in the cloud to customers have to buy that in bundle.

Speaker Change #231: But many of these large products are now having both unbundle and bundle in the same over there and many many customers are now have.

Speaker Change #232: This type of hybrid platforms.

Dan Bodner: And with that, you know, I actually exceeded my expectations in terms of customer reaction because, typically, the Connexin Avengers are approaching customers, and they all have one message: you have to rip and replace everything and start over again in the cloud. Verint came with the opposite message: keep what you have.

Speaker Change #232: And with that.

Speaker Change #232: I actually.

Speaker Change #233: This is all we achieved my expectations in terms of customer reaction.

Speaker Change #233: Because.

Speaker Change #234: Typically the kind of tenant vendors are approaching customers and they all have one message you have to rip and replace everything and start over again in the cloud.

Speaker Change #235: Various gamers the opposite message.

Dan Bodner: If you like it, if it's working, just keep it and add AI right now. The problem with ripping-and-replacement is not just that it's a long and risky project, but you also delay the innovation, the AI innovation. So the idea of AI now is that you have to really deploy it on a small scale and have it work with your existing ecosystem. And this is what Verint does. So many of these customers actually kept their telephony on-prem.

Speaker Change #236: Keep what you have if you like if it's working just keep it in Ed AI right now.

Speaker Change #236: The problem is reaping replacement is not just that it's a long and risky project, but you also delay the innovation AI innovation. So the idea of AI now.

Speaker Change #236: It has to really deploy it on a small scale basis and have it work with your existing ecosystem.

Speaker Change #237: And this is what bearing does so many of these customers actually kept our telephony on prem they kept various applications and other applications from other vendors on Prem.

Dan Bodner: They kept Verint applications and other applications from other vendors on-premises. There's no dependency; they can move to AI innovation now by putting bots in the cloud. And the way that works is that because we gave them that flexibility, they also felt more comfortable to expand on-prep. And that's why we have an interest in unbounded, and that's why we were able to... at www.thevenusproject.com. And when they feel it's the right time, they can convert the legacy to bundled SaaS, but that doesn't slow them down because they already have bundled SaaS I got it.

Speaker Change #237: There is no dependency they can they can move to aggravation now with putting Boston the cloud.

Speaker Change #237: And the way that works is that because we gave them that flexibility also sales more comfortable to expand on prep and Thats why we have an increase in unbundle and Thats why we were able to.

Speaker Change #237: Those deals earlier and actually get larger deals on an unbundled because they're comfortable that they don't have to throw it away. They can keep it as long as they want.

And when they feel it's the right time that could convert the legacy to bundle for us, but it is a slow them down because they already have bundle saw some variance with AI.

Speaker Change #237: Generating business outcomes now.

Dan Bodner: Got it. That's helpful. Thank you. Thank you. Our next question comes from the line of Stephen Raftick of Wedbush Securities. Hi, this is Stephen Warhoff.

Speaker Change #238: Got it that's helpful. Thank you.

Speaker Change #239: Thank you.

Stephen Raftick: comes from the line of Stephen Raftick of Wedbush Securities.

Speaker Change #240: Next question.

Speaker Change #241: Comes from the line of Stephen <unk>.

Speaker Change #240: <expletive>.

Stephen <unk>: Wedbush Securities.

Stephen <unk>: Yes.

Stephen <unk>: Hi. This is speaking we're halfway gone in for Dan Ives. Thanks for taking my question and congratulations on the great quarter.

Just wanted to talk a little bit about the competitive landscape that you got seeing because you talked a little bit about how you are replacing a bunch of legacy vendors in.

Stephen <unk>: In the quarter with the AI chat box, but how would you describe it competitive landscape of what Youre seeing right now and what are your expectations over the next 12 months.

Dan Bodner: So, we see today in the CX automation market, and this is how we refer to the market, but there are basically two sets of competitors. They are telephony-centric competitors with telephony-centric platforms, and there are AI and data-centric competitors. What customers really look for, they focus on shifting to vendors that can deliver AI business outcomes. Customers are less interested in the technology and much more in, you know, what is the business outcome that you can actually deliver now?

Speaker Change #243: So we see today in the CX automation market and this is how we refer to the market.

Speaker Change #243: But there are basically two sets of competitors.

Speaker Change #243: They are our telephony centric competitors, we still currently centric platforms.

And there are AI and data centric platforms.

Speaker Change #243: So.

Speaker Change #243: <unk>.

Speaker Change #243: What customers really look for.

Speaker Change #244: They focus to shift two vendors.

Speaker Change #245: That can deliver AI business outcomes customers are less interested in the technology and much more in what is the business outcome that you can actually deliver now.

Dan Bodner: So I think there is a growing realization that a telephone in the cloud does not generate AI business outcomes. But we see, obviously, telephony vendors trying to catch up with data and AI in their platforms. And then, of course, there's Variant.

Speaker Change #246: So I think there is a growing.

Speaker Change #246: Realization that telephony and the cloud does not generate AI business outcomes.

Speaker Change #246: But we see obviously telephony vendors trying to catch up with data and AI.

In their platforms.

Speaker Change #246: And then of course Theres variant.

Dan Bodner: From the get-go, we put data and DaVinci AI at the core of the platform. So we are now really able to innovate very, very quickly. And we also, not just because the platform is open, but we're bringing any innovation from the high scalers. So they generate new Gen AI models, they are in our platform within days, and we test them, we vet them for cost performance, we train those models on the data that we have in the platform, and we embed them into the existing workflows that we deliver to our customers. So we're able to very, very quickly turn the latest and greatest AI models into more powerful bots. So I think that... That's really impressive to our customers.

Speaker Change #247: We from the get go we put data and da Vinci AI at the core of the platform.

Speaker Change #248: So we are now we have been able to innovate very very quickly.

Speaker Change #248: And we also.

Speaker Change #249: Not just because the platform is open we're bringing any innovation from the high scanners.

Speaker Change #249: They generate new Gen AI models they are in our platform.

Speaker Change #249: Within days.

Speaker Change #249: <unk>.

Speaker Change #249: We test them with FAA and for cost performance, we train those models on the beta that we have in the platform, we embed them into the existing workflows that we deliver to our customers. So we're able to very very quickly.

Speaker Change #249: Turn the latest and greatest AI models into more powerful bots.

Speaker Change #250: So I think that.

Dan Bodner: It's not so much, you know, the PowerPoints; there are lots of them, almost every vendor today in the market is talking about AI. But it's really the design. Is it more telephony-centric with AI attached? Or is it very data and AI-centric and focused on quickly delivering, [inaudible] So. You know, the question is where this market is going.

Speaker Change #250: That's really impressive to our customers is not so much.

Speaker Change #250: The powerpoints, there's lots of.

Speaker Change #251: Almost every vendor today in the market is talking about AI.

Speaker Change #252: But it's really the design is it more of telephony centric with AI.

Speaker Change #252: Attached.

Or is it very data and AI centric and and a focus on quickly delivering.

Speaker Change #252: Hey outcomes without we can replace without the.

Speaker Change #252: They need to.

Speaker Change #252: Go through a complete overall, if youre infrastructure before you can actually get AI to work for you.

So.

Speaker Change #252: The question is where this market is going.

Dan Bodner: There's a very fast pace of AI innovation. So clearly, I think the market is going to open up to platforms. Open is responding very well with our customers, and we have very large customers, so Open is very, very important. It's perhaps less important in the S&B space today, but I think the leadership we see from the top guys is, you know, open, allows them to future-proof their investment. [inaudible] Unknown Attendee, Shaul Eyal, Dan Bodner, Jaime Meritt, Rob Scudiere, Steve Seger, Jeffrey, They can't train the bots with so many data silos. So a very, very big initiative was IT to try to consolidate all these data silos. And it became a very long data architecture project. We came in with the platform, and we have adapters.

Speaker Change #252: There is a very fast pace of.

Speaker Change #252: Innovation, So clearly I think the market is going to open platforms.

Speaker Change #252: Our brand is resonating very well with our customers.

Speaker Change #252: We have very large customers, who have opened is very very important.

Speaker Change #252: It's.

Perhaps less important in the SMB space today, but I think the leadership.

Speaker Change #252: The leadership, we see from the top guys.

Speaker Change #253: It is open allows them to future proof their investment.

Speaker Change #255: They're not really just buying feature and function is that bank platform that can be.

Speaker Change #253: Frank.

Speaker Change #253: Any innovation in AI technology quickly and again the data is critical so.

When I talked about the $14 million.

Speaker Change #254: Deal one of their big focus was to have several dozen data silos.

Speaker Change #254: <unk> trained the box with so many data silos.

Speaker Change #254: So very very big initiative was.

Speaker Change #256: Ill try to started to consolidate all these data silos and it became a very long data architecture.

Speaker Change #256: Project.

Speaker Change #257: We came in with the platform and we have adapters.

Dan Bodner: So we could bring all these data cells to Unified Data Hub quickly and then, of course, get the bots to continue to train and become more and more accurate and effective. So this is where the industry is going, right? It's open, and it's being able to future-proof AI investments so you don't get stuck with an AI model that could be stale in six months. It's bringing data together that is critical, not just for today, but for any AI innovation to have the right data available.

Speaker Change #257: So we could bring all these data centers to a unified data hub quickly.

And then of course get support the bots to continue to train and become more and more accurate and effective.

Speaker Change #257: So this is where the interest is growing right. It's open it's being able to future proof investments. So you don't get stuck with an AI model that can be scaled in six months.

Speaker Change #257: It's bringing data together that is critical not just for today, but for any AI innovation to have the right data available.

Dan Bodner: And of course, it's an open platform where you can choose what you need, so you're not doing big projects for the sake of changing the ecosystem, but you really are being able to, on a modular basis, solve one problem at a time.

Speaker Change #257: And of course, it's an open platform, where you can choose what you need. So you are not doing big projects for the sake of changing ecosystem, but you really are being able to on a modular basis solve one problem at a time.

Speaker Change #258: Great. Thank you.

Operator: Thank you. Again, to ask a question, please press star 11 on your telephone. Again, that's star 11 on your telephone to ask a question. Our next question comes from the line of Samad Samana from Jeffrey.

Speaker Change #259: Thank you again to ask a question. Please press star one on your telephone again Thats Star one one on your telephone to ask a question.

Speaker Change #260: Our next question.

Speaker Change #261: Comes from the line of <unk>.

Jefferies: <unk> <unk> of Jefferies.

Samad Saleem Samana: Hey guys, this is Billy Fitzsimmons on for Samad. Looking across the headlines over the past several weeks, obviously, a lot of large wins, as we've talked about, but maybe just to double-click on this, Dan, can you walk through some of these deals at a high level? Who did you displace? What was the mix of expansions and first net new wins? What got these deals over the finish line? Bots obviously played a big role, but any specific bots or product that you think had an outsized impact?

Speaker Change #263: Hey, guys. This is billings at Simmons on for some odd looking.

Speaker Change #264: Looking across the headlines over the past several weeks, obviously a lot of a lot of large wins as we've talked about but maybe just to double click on this Dan can you can you walk through some of these deals at a high level.

Dan: Displace what's the mix of expansions for net new wins work out these deals over the finish line bots, obviously played a big role, but any specific lots of products that you think had an outsized impact and then I'll also throw in there just to be crystal clear, Dan Youre pretty clear you did not see or have not seen steep declines.

Samad Saleem Samana: And then I'll also throw in there just to be crystal clear, Dan, you're pretty clear you did not see or have not seen seat declines. Maybe in a different way, has the mix of seed expansions versus ARPU uplift changed materially with some of these recent large deals compared to maybe large, large deals years prior?

Speaker Change #265: Maybe in a different way has the mix of seed expansion for arc to uplift changed materially with with some of these recent large deals compared to maybe large large deals gear's prior thank you.

Dan Bodner: Thank you.

Dan Bodner: Yeah, so if you look at the common threads of all these deals, they're focusing on AI business outcomes now. In some cases, when we look at some of these deals that were competitive with an RFP, um... you would assume that all the players, all the SCCAS players, were there.

Speaker Change #266: Yeah. So if you look at the common threads.

Speaker Change #265: All these deals.

Speaker Change #265: It's focusing on.

Speaker Change #265: AI business outcomes now.

Speaker Change #265: In some cases, when we look at some of these deals that were competitive with an RFP.

Speaker Change #267: You would assume that all the players I'll discuss players were there.

Dan Bodner: And typically today, you know, customers can get five to 10 different responses from different vendors. A lot of vendors are trying to participate in this. So in most cases, what causes the customer to move away from the traditional SICAS approach to variant was a message of, you know, AI business outcomes now. That's how we start, and that's where we get the customer's attention. Now, the big discussion following that is what business outcomes they actually want now.

Speaker Change #268: And typically today customers can get five to 10 different responses from different vendors because there are a lot of vendors are trying to play in this market.

Speaker Change #268: So.

In most cases.

<unk>.

Speaker Change #268: Cost of customer to move away from the traditional <unk> approach to variance.

Speaker Change #268: Was a message of AI business outcomes now.

Speaker Change #268: So that's how we start and Thats, where we get the customers attention.

Speaker Change #269: Now the big.

Speaker Change #269: Discussion following that is what gives us outcomes they actually want now.

Dan Bodner: And you can see that different customers are focusing on different pain points. We, because the platform is completely open and modular, are taking a consultative approach with customers. We're not trying to dictate that you have to do X before Y and then Z.

Speaker Change #269: And you can see the different customers are focusing on different pain points.

Speaker Change #269: Because the platform is completely open and modular.

Speaker Change #269: We're taking a consultative approach with customers, we're not trying to dictate that you have to do X before y and Z.

Dan Bodner: But we're trying to understand what they're trying to solve, and we have a bot to solve it. So we usually start with, you know, one, two, three, four bots. And then we go into a discussion of what volume you want to consume initially. And that's a budget issue. So if they have a big budget, they will buy, you know, all the consumption up front. But in most cases, they buy, you know, 50%, 25% of their potential consumption because they have a limited budget and they know that as they deliver the outcomes, they're going to get more budgets because they're going to see the...

Speaker Change #270: But we're trying to understand what they're trying to solve and we have a bot.

Speaker Change #270: To solve it.

Speaker Change #271: So we usually start with a 1234 box.

Speaker Change #271: And then we go into a discussion of what is the volume that you want to consume initially.

Speaker Change #271: And Thats a budget issue so if they have a big budget.

Speaker Change #271: We'll buy all the consumption upfront.

Speaker Change #271: But in most cases, they by 50% and 25% of their potential consumption.

Speaker Change #271: They have limited budgets and they know that as they deliver the outcomes, they're going to get more budgets because they are going to see the.

Dan Bodner: Cost reduction, and it's going to be easy for them to go and get new budgets when, you know, the product pays for itself. And remember, a box we sell them on, you pay for what you eat, and it's not based on API calls or tokens; it's based on, You need to measure metrics that connoisseur people can measure. So.

Speaker Change #272: Cost reduction and they're going to it's going to be easy for them to grow and get new budget when.

Speaker Change #272: The product pays for itself.

Speaker Change #273: And remember a box.

Speaker Change #273: We sell them on a you pay for what you eat.

Speaker Change #274: And it's not based on API calls or tokens, it's based on.

Speaker Change #275: Unit of measure metrics that clinics and people can measure.

Dan Bodner: Once we kind of agree on which bots they need, what level of consumption, then, you know, the conversation will pivot to: Okay, but we don't have all the data we need. So we can expand the platform to consolidate more data silos for them. Because the more data you have in the variant platform, the more powerful the business outcomes become. The boss just becomes much more accurate.

Speaker Change #275: So.

And once we kind of agree on which bought they need what level of consumption.

Speaker Change #275: Then the conversation will prefer to.

Speaker Change #276: Okay, but we don't have all the data we need so we can expand also in the platform to consolidate more data service to them because the more data you have in the various platform the more powerful the business outcomes become.

Speaker Change #276: The box becomes just much more accurate.

Dan Bodner: In some cases, like I mentioned before, it will be, while we're doing this, here are one or two solutions from competitors we don't like. So why don't we just consolidate? We're not necessarily asking the customers to consolidate. We focus on, you know, delivering new AI business outcomes, but in these large projects, very often they also decide they just don't like a vendor. This could become part of the deal. So that's kind of, you know, typically what we see customers love: they don't have to, they're not forced to convert to the cloud, the legacy stuff. They all love it. And they can really focus their budget and energy on getting new stuff and not doing... the Infrastructure Overhaul Project.

Speaker Change #276: In some cases like I mentioned before it will be while we're doing this here are one or two solutions from competitors, we don't like.

Speaker Change #277: So why don't we just consolidated.

We're not necessarily asking the customers to consolidate.

Speaker Change #277: We we focus on delivering new AI business outcomes, but it is large projects very often they also decide they just don't like a vendor and.

Speaker Change #277: This could become part of the.

Speaker Change #277: The deal.

Speaker Change #277: So that's kind of.

Speaker Change #277: Typically what we see customers loved it they don't have to they are not forced to convert to the cloud the legacy stuff.

Speaker Change #277: All of it.

Speaker Change #277: And they really can focus their budget and energy on getting new stuff and not doing.

Speaker Change #277: Infrastructure overhaul projects.

Dan Bodner: [inaudible] In terms of, you know, the second part of your question was related to what we see with the agents. I would say that, you know, most of our customers feel like they are behind in terms of hiring. They know that, you know, that they're not giving their employees the flexibility. They're not giving the customers the experience.

Speaker Change #277: In terms of.

Speaker Change #277: The second part of your question was related to what we see with.

Speaker Change #277: The agents.

Speaker Change #277: I would say that most of our customers feel like they are behind in terms of hiring.

Speaker Change #277: <unk>.

Speaker Change #278: They know that they are not.

Speaker Change #278: Getting their employees the flexibility they are not giving the customers the experiences.

Dan Bodner: So I think the industry still is now right now is in an early stage where they are trying to augment agents, but are not looking to reduce the number of agents. When we look at our base... We don't know what customers are, really doing with their agents. We just, you know, we have agents count, but I'll give you some interesting things that are going on, because of the flexibility of the platform. So we have an airline, that have employees that are at the gate. And when the slide is delayed.

Speaker Change #278: So I think the industry still is not right now.

Speaker Change #278: In an early stage, where they are trying to augment agents.

Speaker Change #278: But not.

Speaker Change #278: Looking to reduce the number of agents when we look at our base.

Speaker Change #278: We don't know what customers are.

Speaker Change #278: Really doing was there.

Speaker Change #278: Agents, we just we have agent count, but I'll give you some interesting things that are going on.

Speaker Change #278: Because of the flexibility of the platform. So we are an airline.

Speaker Change #278: That have.

Speaker Change #278: Sure.

Speaker Change #278: Employees that are at the gate.

Dan Bodner: They are sending these employees to do contact center work because they have extra workforce capacity at the gate. And why not? They may have two hours that they can just respond to some customer questions. And it doesn't have to be voice calls, right? It could be chat or social media calls.

Speaker Change #278: And when the flight is delayed they are.

Speaker Change #279: Sending these employees contact center work.

Speaker Change #279: Because they have extra workforce capacity at the gate.

Speaker Change #279: And.

Speaker Change #280: Why not they may have two hours that they can just respond to some customers questions and it doesn't have to be voice calls variety of it could be charged with social media call.

Dan Bodner: So our platform has a lot of flexibility to use the human workforce across the call center branch and back office. And at the same time, we see our customers are scheduling bots because they're looking at the workforce as a larger workforce of people and bots. And the more they have bots, it becomes more of a natural part of the work to decide what kind of capacity they have between people and bots and how they allocate the capacity to the whole volume that they expect.

Speaker Change #281: So our platform is a loss of <unk> ability to use the human workforce across.

Speaker Change #281: The condensate Eric branch and back office.

Speaker Change #281: And at the same time, we see our customers are scaling.

Speaker Change #281: <unk> because theyre looking at their workforce.

Speaker Change #281: The largest workforce of people bought.

And the more they have bought it becomes more.

Speaker Change #281: Nacho.

Speaker Change #282: The work has to decide what kind of capacity they have between people and box and how to allocate the capacity today.

Speaker Change #282: Core volume that they expect.

Dan Bodner: So this is all new thinking. I don't think I can report right now a very clear trend of what customers are going to do with the capacity that has been created by AI. But I can say clearly that when we talk to customers about AI business outcomes, they all focus on... Okay, that's going to give me extra capacity, and here's what I'm going to do, because that's how they actually build their ROI model.

Speaker Change #282: So this is all new thinking.

Speaker Change #282: <unk>.

Speaker Change #283: I don't think I can report right now a very clear trend of what customers are going to do is the capacity that has been created by AI.

Speaker Change #283: But I can say clearly that when.

Speaker Change #283: When we talk to customers about.

Speaker Change #283: AI business outcomes, they all focus on.

Speaker Change #283: That's going to give me X.

Speaker Change #283: Extra capacity and here's what I'm going to do because thats, how they actually build their ROI models.

Dan Bodner: Awesome, super helpful caller. Thank you very much. Thank you. I would now like to turn off the conference.

Speaker Change #284: Awesome Super helpful color. Thank you very much.

Matthew H. Frankel: I would now like to turn the conference back to Matthew Frankel for closing remarks, sir. Mr. Frankel.

Speaker Change #285: Thank you.

Speaker Change #286: I would now like to turn the conference back to Matthew Franco for closing remarks, Sir.

Speaker Change #287: Mr. Frankel your line is muted.

Matthew H. Frankel: I think we're done. Can you hear me? Yes. Yes. Oh, all right.

Matthew H. Frankel: I think we are done.

Speaker Change #288: Can you hear me.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Matthew H. Frankel: Oh, all right. Sorry about that. Thank you, everyone, for joining us. I was just saying, please feel free to reach out with any questions you have, and we'll look forward to talking again soon. Have a good night.

Speaker Change #288: Go ahead, Mr. Frankel, alright, sorry about that thank you everyone for joining.

Matthew H. Frankel: I was just saying please feel free to reach out with any questions you have.

Speaker Change #288: We will look forward to talking to you.

Matthew H. Frankel: Again soon have a good night.

Speaker Change #289: Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change #289: Okay.

Speaker Change #289: Okay.

Speaker Change #289: [music].

Speaker Change #289: Yes.

Speaker Change #289: Okay.

Okay.

Speaker Change #289: Yes.

Speaker Change #289: Okay.

Okay.

Speaker Change #289: Okay.

Speaker Change #289: Okay.

Speaker Change #289: Okay.

Speaker Change #289: [music].