Verint Systems Inc. (NASDAQ:VRNT) stock rose 6.14% (As on March 28, 11:16:07 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 24. The company’s AI-powered open platform has been well received, driving momentum in bundled SaaS offerings. The company has continued AI investments and commitment to becoming a ‘Rule of 40’ company, balancing growth and profitability. The company ended Q4 with ~1,300 engineers in R&D and Cloud Operations, and adding resources to the Customer Success team to drive AI adoption by the customers. In Q4, the company also aligned the services catalog to the AI offerings by adding value realization services and divesting a manual managed services offering that is being replaced with AI-powered bots.  There is 16% year-over-year increase in Bundled SaaS New ACV bookings in Q4, and over 20% year-over-year increase in Bundled SaaS pipeline as of the end of Q4.

VRNT in the fourth quarter of FY 24 has reported the adjusted earnings per share of $1.07, beating the analysts’ estimates for the adjusted earnings per share of 61.4 cents. The company had reported the adjusted revenue growth of 12 percent to $265 million in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $229 million. This growth was driven by a significant surge in SaaS revenue, which saw an approximate 28% year-over-year increase. Recurring revenue now constitutes 89% of software revenue, up approximately 200 basis points from the previous year, indicating a strong and stable revenue base. Gross Margin is up ~300bps year-over-year and Free Cash Flow is up 20% year-over-year for the full year.

For FY 2025, Verint is raising its outlook, targeting over 40% increase in free cash flow to approximately $180 million. The company plans to use this cash flow primarily for share buybacks to reduce share count further. Looking ahead, Verint is optimistic, providing a non-GAAP outlook for FY 2025 with expected revenue of $930 million, reflecting a 5% year-over-year growth, and a midpoint diluted EPS of $2.89, signaling a 6% increase. This outlook accounts for the divestiture of a managed service offering that generated $25 million in FY 24 revenue. Amortization of intangible assets of approximately $4 million and $17 million, for the three months ending April 30, 2024 and year ending January 31, 2025, respectively. Stock-based compensation expenses are expected to be between approximately $17 million and $19 million, and $70 million and $74 million, for the three months ending April 30, 2024 and year ending January 31, 2025, respectively, assuming market prices for the common stock approximately consistent with current levels.