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Verint Systems Exceeds Q2 Expectations, Raises FY22 Guidance

Verint Systems Inc. (VRNT), the customer engagement company, exceeded second-quarter expectations aided by continued momentum in its cloud business and raised its full-year Fiscal 2022 guidance.

Verint reported earnings of $0.58 per share, lower than the Q2 FY21 earnings of $0.78 per share but meaningfully higher than analysts’ estimates of $0.42 per share. (See Verint Systems stock charts on TipRanks)

Revenue grew 5% year-over-year to $215 million and beat the Street’s estimate of $207.74 million. Cloud revenue increased 43% year-over-year and remaining performance obligations (RPO) jumped 29% to $627 million.

Commenting on the results, CEO Dan Bodner, said, “We believe that more and more brands are embracing digital-first engagement and that we are uniquely positioned to help them with our open, partner-friendly, infrastructure-agnostic cloud platform.”

Bodner added, “We continue to rapidly innovate our cloud platform to power the workforce of people and bots, to embrace an enterprise-wide customer experience culture, and to harness data to drive more AI and analytics into their business.”

Based on the company’s expectations of continued momentum in the cloud business, the company raised its full-year Fiscal 2022 guidance.

For FY22, Verint now forecasts earnings of $2.25 per share compared to the consensus estimate of $2.23 per share. Also, revenue for FY22 is now expected to be approximately $872 million (+/-2%), while the consensus estimate is pegged at $863 million.

Additionally, the company projects third-quarter earnings and revenue of $0.53 per share and $215 – $220 million, respectively.

Following Verint’s strong quarterly performance, Cowen & Co. analyst Shaul Eyal maintained a Buy rating on the stock with a price target of $75, implying 70.1% upside potential to current levels.

Eyal believes that the company is well-positioned to accelerate growth and improve profitability backed by factors including strong cloud business momentum, VRNT being halfway through its transition to a subscription-based model, and its key metrics all showing significant improvements.

The analyst said, “We expect accelerating revenue growth as VRNT’s cloud-focused strategy gains traction. We expect improving profitability as management enhances operating efficiency in the wake of the Cognyte spin-off. At the same time, we expect expanded valuation multiples as a higher cloud mix and increased levels of recurring revenue improve top-line visibility.”

With 3 unanimous Buys, the stock commands a Strong Buy consensus rating. The average Verint Systems price target of $65.33 implies 48% upside potential to current levels. Shares have gained 68.6% over the past year.

Also, Verint Systems scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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