Verint announces company split and $400M minority investment deal

Verint announces company split and $400M minority investment deal

Verint is planning to split into two independent companies, one to focus on customer engagement and one based on its cyber intelligence business. Under the plan, which has been unanimously approved by the Board of Directors, each company will be publicly traded after the separation, which is expected to occur at the end of the next fiscal year on January 31, 2021.

The plan also includes an investment of $400 million by funds advised by Apax Partners private equity advisory firm, in two $200 million tranches. Completion of the transaction is subject to some customary conditions, but is not expected to require a shareholder vote.

“With our customer engagement business approaching $1 billion in annual revenue and our cyber intelligence business approaching $500 million in annual revenue, we believe the two independent, publicly traded companies will both benefit from the separation and be well positioned to pursue their own strategies, drive opportunities to accelerate growth and extend their market leadership,” comments Dan Bodner, Verint CEO. “The separation will make it easier for investors to evaluate and make independent investment decisions in each business. In preparation for the separation, we have taken steps over the last several years to strengthen the two businesses operationally and believe we are now well positioned to execute our separation plan.”

The customer engagement business includes Verint’s voice biometric offerings. Philippines credit card company RCBC Bankard recently began using enhanced voice biometrics from Verint in its call center operations.

Jason Wright will be appointed to Verint’s board to represent Apax Partners with the first tranche, while a mutually agreed independent Director will be added after the final one.

The investment in Series A preferred stock comes at an initial conversion price of $53.50, a 17 percent premium by volume-weighted average over the past 45 days. Verint also announced a $300 million share buyback program.

Verint was rumored to be negotiating a billion-dollar merger with NSO Group in May, 2018.

In Q3 of fiscal 2020, Verint reports GAAP revenue of $325 million and diluted EPS of $0.17, or $331 million in revenue and EPS of $0.94 on a non-GAAP basis. For the past nine months to October 31, 2019, the company reports GAAP revenue of $964 million and diluted EPS of $0.35, or $987 million and $2.48 in diluted EPS on a non-GAAP basis.

“In the third quarter, we experienced more than a 60 percent increase in cloud revenue and more than a 100 percent increase in new SaaS ACV bookings, reflecting our Customer Engagement cloud leadership,” says Bodner in a separate announcement. “Our cloud software is designed for both SMB and enterprise customers and our cloud deployment models are flexible and address the specific cloud journeys of our customers. We are seeing more and more large enterprises embrace cloud and had 23 cloud contracts with a TCV of more than $1 million year-to-date compared to eight cloud contracts in the same period in the prior year.”

Andrew Miller, who was CFO of PTC Inc when it moved to a subscription license model, has also joined Verint’s board of directors, according to the earnings announcement.

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