actionable intelligence...2016/12/07 · lawful interception compliance situation intelligence...

© 2016 Verint Systems Inc. All Rights Reserved Worldwide.

December 2016

Actionable Intelligence®


DisclaimersForward Looking StatementsThis presentation contains "forward-looking statements," including statements regarding expectations,predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating toVerint Systems Inc. These forward-looking statements are not guarantees of future performance andthey are based on management's expectations that involve a number of known and unknown risks,uncertainties, assumptions, and other important factors, any of which could cause our actual results todiffer materially from those expressed in or implied by the forward-looking statements. The forward-looking statements contained in this presentation are made as of the date of this presentation and,except as required by law, Verint assumes no obligation to update or revise them, or to providereasons why actual results may differ. For a more detailed discussion of how these and other risks,uncertainties, and assumptions could cause Verint’s actual results to differ materially from thoseindicated in its forward-looking statements, see Verint’s prior filings with the Securities and ExchangeCommission.

Non-GAAP Financial MeasuresThis presentation includes financial measures which are not prepared in accordance with generallyaccepted accounting principles (“GAAP”), including certain constant currency measures. For adescription of these non-GAAP financial measures, including the reasons management uses eachmeasure, and reconciliations of these non-GAAP financial measures to the most directly comparablefinancial measures prepared in accordance with GAAP, please see the appendices to thispresentation, Verint’s earnings press releases, as well as the GAAP to non-GAAP reconciliation foundunder the Investor Relations tab on Verint’s website.

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A Smarter World with Actionable Intelligence®

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© 2016 Verint Systems Inc. All Rights Reserved Worldwide. 4

Crucial insights that enable decision-makers to anticipate, respond and take action

Actionable Intelligence


Global Market Leader

5

10,000+ Customers in approx. 180 Countries

$1 Billion+ Actionable Intelligence Company

4,900 Verint

ProfessionalsWorldwide

More Than 80%

of the Fortune 100


Expansion of Total Addressable Market

Actionable Intelligence is a necessity in a dynamicworld of massive information growth

$3 BILLION

20122016

Total Addressable Market based on Verint estimate.

$8 BILLION


• Over $1B R&D investment in last 10 years

Non-GAAP revenue for year ending 1/31, see appendices for reconciliation. FYE1/31/16 is at constant currency (indicated by the gray bar), see “Supplemental Information About Constant Currency” in appendices for further information.

• 700+ patents & applications

• 1,300 R&D professionals

• Advanced Actionable Intelligence Platform

Culture of Innovation Revenue Growth

Innovation Driving Long-Term Growth


Advanced Actionable Intelligence Platform

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Classification

Correlation

Anomaly Detector

Identity Analyzer

Predictive

Forensics

Pluggable Analyzers

Dashboard

Analysis Workbench

Trending

Case Management

Workflow Management

Collaboration

Next Best Action

Real-time Alert & Notification

Pluggable Visualizations

Data Cleansing

Data Fusion

Data Enrichment

Unstructured to Structured

Data Preparation

Operational

Transactional

Telecommunications

Social Media

Payload and Files

Endpoint

Network

Web

COMMON SERVICES & ADMINISTRATION

ANALYSISENGINES

ENGAGE AND ACT

DATA PROCESSING

DATA CAPTURE


Amazing Things Happen When You Gain Insights From Data

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Customer Engagement Optimization

Advanced Actionable Intelligence Platform

Cyber Intelligence


Customer-centric organizations seek to offer personalized, omnichannel, more effective customer engagement

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Demand for our solutions is being driven by organizations’ needs forintelligence to create an engaged workforce and smarter customer engagements

Customer Engagement Optimization

Engagement Management

Customer Analytics

Security and Compliance

Workforce Optimization


Broad portfolio available in cloud, on-premises or hybrid models directly from Verint and through partners

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Expecting close to 60% of Customer Engagement revenueto be recurring in FYE January 2017

Customer Engagement Optimization Go-to-Market Strategy

Extensive Partner Network

Hybrid CloudDeployment Models

Broad Portfolio:Start Anywhere


Government and enterprises seek innovative solutionsto enhance security

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Demand for our solutions is being driven by organizations’ needs for intelligence to enhance security and make security

operations more effective

Cyber Intelligence

Cyber Security

Situational Intelligence

Government Cyber Intelligence


StrategicConsulting

Managed Services

Implementation

Training

Cloud

Support

Partnering for Customer Success

Hosted


Financial Highlights

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Non-GAAP Revenue Trends

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

F/XAPACEMEAAmericas

$1,158 $1,175$40

$369

$572

$675$704 $727

$796

Note: Financial data is non-GAAP. See appendices for reconciliation. FYE Jan 2016 reported non-GAAP revenue of $1,135 million is $1,175 million at constant currency, as adjusted for the impact of foreign exchange. For further information see “Supplemental Information About Constant Currency” in the appendices.

($ in millions)

$848$910

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Fiscal year ended January 31,


Non-GAAP Revenue by Region and Product/Service

Note: Percentages based on non-GAAP revenue for FYE January 31, 2016.

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40%

60%ProductServices51%

31%

18%AmericasEMEAAPAC


FYE Jan 2017 and Jan 2018 Non-GAAP OutlookFYE Jan 2017 Outlook• Customer Engagement Solutions

• Targeting mid-single digit revenue growth on a constant currency revenue basis• Cyber Intelligence Solutions

• Expect strong finish to the year• Investing for growth, as we believe the decline in security is temporary

FYE Jan 2018 Preliminary Outlook• Customer Engagement Solutions

• Expect mid-single digit revenue growth on a constant currency basis.• Cyber Intelligence Solutions

• Expect mid-to-high single digit revenue growth on a constant currency basis.• Overall, we expect our earnings to grow slightly faster than revenue with some operating

margin improvement

Capital Allocation• Stock repurchase program: More than $100 million still authorized under the program

• Continue our strategy of tuck-in and other acquisitions

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Growing Portfolio(1)CYBER INTELLIGENCE SOLUTIONS

Speech and Text Analytics

Enterprise and Digital Feedback Management

Engagement Analytics

Identity Authentication and Fraud Detection

Quality Management

Recording

Workforce Management

Desktop and Process Analytics

Performance Management—Scorecards, eLearning, Coaching and Gamification

Employee Desktop

Case Management

Knowledge Management

Email and Secure Messaging

Voice and Mobile Self-Service

Web Self-Service and Co-Browse

Private Messaging and Live Chat

Social Engagement

Communities

Banking Fraud and Compliance

Public Safety 911 Centers

Actionable Intelligence Solutions

Cyber Security

Network Intelligence

Off-Air Intelligence

Web Intelligence

Fusion Intelligence

Lawful Interception Compliance

Situation Intelligence

Enterprise Video Management

CUSTOMER ENGAGEMENT SOLUTIONS

~ 2/3

~ 1/3

(1) Based on expected mix for FYE January 2017.Early in our third quarter, we moved part of our video and situation intelligence segment to our enterprise intelligence

segment and part to our cyber intelligence segment. Starting in our third quarter, we reported our results as two segments named Customer Engagement Solutions and Cyber Intelligence Solutions.


Efficient Capital Structure

($ in millions)

Net DebtCapital Structure Highlights

Net Debt/Adjusted EBITDA

As of January 31,

Fiscal year ended January 31,

Notes: -Financial data is non-GAAP. See appendices for reconciliation.-Average interest rate excludes the impact of amortization of discounts and deferred financing fees.-Net debt excludes convertible note discounts and other unamortized discounts and issuance costs associated with our debt, which are required under GAAP. See appendices for reconciliation.

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$523 $501$431 $400 $437

$344$228

$453$391

$490

2008 2009 2010 2011 2012 2013 2014 2015 2016 Q32017

5.5x

3.5x

2.x 2.x 2.2x 1.7x1.x

1.6x 1.5x2.1x

2008 2009 2010 2011 2012 2013 2014 2015 2016 Q32017

Capital Structure (as of 10/31/16)

• $321 million of cash and short-term investments

• $410m of term loans and $400m of convertible notes

• Rating Agencies

• Moody’s: Ba3

• S&P: BB

Track Record of De-Levering

• Net Debt/Adjusted EBITDA : ~2.1x

Low Cost Debt

• Average Interest: ~2.5%

• Average Maturity: ~3.5 years

• Equity

• Expect ~63.1 million average diluted shares for FYE Jan 2017 (excluding benefit from future share repurchases)


Long-Term Growth Opportunity• Leader in Actionable Intelligence Solutions

• Long-term growth opportunity driven by the need to gain insights from data

• Customer Engagement Solutions

• Organizations seeking to optimize customer engagement through actionable intelligence

• Verint offers the industry’s broadest Customer Engagement Optimization portfolio

• Cyber Intelligence Solutions

• Security challenges growing, driving the need for innovative security intelligence

• Verint has a global presence and leading edge security portfolio

• Long history of growth driven by innovation and domain expertise

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Appendices

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About Non-GAAP Financial MeasuresThe following tables include reconciliations of certain financial measures not prepared in accordance with Generally Accepted Accounting

Principles, consisting of non-GAAP revenue, non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin,

non-GAAP other income (expense), net, non-GAAP provision (benefit) for income taxes and non-GAAP effective income tax rate, non-GAAP

net income attributable to Verint Systems Inc., non-GAAP net income per common share attributable to Verint Systems Inc., adjusted

EBITDA, net debt, and constant currency measures to the most directly comparable financial measures prepared in accordance with GAAP.

We believe these non-GAAP financial measures, used in conjunction with the corresponding GAAP measures, provide investors with useful

supplemental information about the financial performance of our business by:

• facilitating the comparison of our financial results and business trends between periods, including by excluding certain items

that either can vary significantly in amount and frequency, are based upon subjective assumptions, or in certain cases are

unplanned for or difficult to forecast,

• facilitating the comparison of our financial results and business trends with other technology companies who publish similar

non-GAAP measures, and

• allowing investors to see and understand key supplementary metrics used by our management to run our business, including

for budgeting and forecasting, resource allocation, and compensation matters.

We also make these non-GAAP financial measures available because a number of our investors have informed us that they find this

supplemental information useful.

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About Non-GAAP Financial MeasuresNon-GAAP financial measures should not be considered in isolation as substitutes for, or superior to, comparable GAAP financial

measures. The non-GAAP financial measures we present have limitations in that they do not reflect all of the amounts associated with our

results of operations as determined in accordance with GAAP, and these non-GAAP financial measures should only be used to evaluate our

results of operations in conjunction with the corresponding GAAP financial measures. These non-GAAP financial measures do not represent

discretionary cash available to us to invest in the growth of our business, and we may in the future incur expenses similar to or in addition to

the adjustments made in these non-GAAP financial measures. Other companies may calculate similar non-GAAP financial measures

differently than we do, limiting their usefulness as comparative measures.

Our non-GAAP financial measures are calculated by making the following adjustments to our GAAP financial measures:

• Revenue adjustments related to acquisitions. We exclude from our non-GAAP revenue the impact of fair value adjustments required

under GAAP relating to acquired customer support contracts, which would have otherwise been recognized on a stand-alone basis. We

believe that it is useful for investors to understand the total amount of revenue that we and the acquired company would have

recognized on a stand-alone basis under GAAP, absent the accounting adjustment associated with the business acquisition. Our non-

GAAP revenue also reflects certain adjustments from aligning an acquired company’s revenue recognition policies to our policies. We

believe that our non-GAAP revenue measure helps management and investors understand our revenue trends and serves as a useful

measure of ongoing business performance.

• Amortization of acquired technology and other acquired intangible assets. When we acquire an entity, we are required under GAAP to

record the fair values of the intangible assets of the acquired entity and amortize those assets over their useful lives. We exclude the

amortization of acquired intangible assets, including acquired technology, from our non-GAAP financial measures because they are

inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. We also exclude these

amounts to provide easier comparability of pre- and post-acquisition operating results.

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About Non-GAAP Financial Measures• Stock-based compensation expenses. We exclude stock-based compensation expenses related to restricted stock awards, stock bonus

programs, bonus share programs, and other stock-based awards from our non-GAAP financial measures. We evaluate our performance

both with and without these measures because stock-based compensation is typically a non-cash expense and can vary significantly over

time based on the timing, size and nature of awards granted, and is influenced in part by certain factors which are generally beyond our

control, such as the volatility of the price of our common stock. In addition, measurement of stock-based compensation is subject to varying

valuation methodologies and subjective assumptions, and therefore we believe that excluding stock-based compensation from our non-

GAAP financial measures allows for meaningful comparisons of our current operating results to our historical operating results and to other

companies in our industry.

• Unrealized gains and losses on certain derivatives, net. We exclude from our non-GAAP financial measures unrealized gains and losses on

certain foreign currency derivatives which are not designated as hedges under accounting guidance. We exclude unrealized gains and

losses on foreign currency derivatives that serve as economic hedges against variability in the cash flows of recognized assets or liabilities,

or of forecasted transactions. These contracts, if designated as hedges under accounting guidance, would be considered “cash flow”

hedges. These unrealized gains and losses are excluded from our non-GAAP financial measures because they are non-cash transactions

which are highly variable from period to period. Upon settlement of these foreign currency derivatives, any realized gain or loss is included in

our non-GAAP financial measures.

• Amortization of convertible note discount. Our non-GAAP financial measures exclude the amortization of the imputed discount on our

convertible notes. Under GAAP, certain convertible debt instruments that may be settled in cash upon conversion are required to be

bifurcated into separate liability (debt) and equity (conversion option) components in a manner that reflects the issuer’s assumed non-

convertible debt borrowing rate. For GAAP purposes, we are required to recognize imputed interest expense on the difference between our

assumed non-convertible debt borrowing rate and the coupon rate on our $400.0 million of 1.50% convertible notes. This difference is

excluded from our non-GAAP financial measures because we believe that this expense is based upon subjective assumptions and does not

reflect the cash cost of our convertible debt.

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About Non-GAAP Financial Measures• Acquisition Expenses, net. In connection with acquisition activity (including with respect to acquisitions that are not consummated), we incur

expenses, including legal, accounting, and other professional fees, integration costs, changes in the fair value of contingent consideration

obligations, and other costs. Integration costs may consist of information technology expenses as systems are integrated across the

combined entity, consulting expenses, marketing expenses, and professional fees, as well as non-cash charges to write-off or impair the

value of redundant assets. We exclude these expenses from our non-GAAP financial measures because they are unpredictable, can vary

based on the size and complexity of each transaction, and are unrelated to our continuing operations or to the continuing operations of the

acquired businesses.

• Restructuring Expenses. We exclude restructuring expenses from our non-GAAP financial measures, which include employee termination

costs, facility exit costs, certain professional fees, asset impairment charges, and other costs directly associated with resource realignments

incurred in reaction to changing strategies or business conditions. All of these costs can vary significantly in amount and frequency based on

the nature of the actions as well as the changing needs of our business and we believe that excluding them provides easier comparability of

pre- and post-restructuring operating results.

• Impairment Charges and Other Adjustments. We exclude from our non-GAAP financial measures asset impairment charges other than those

associated with restructuring or acquisition activity, rent expense for redundant facilities, and gains or losses on sales of property, all of which

are unusual in nature and can vary significantly in amount and frequency.

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About Non-GAAP Financial Measures• Non-GAAP income tax adjustments. We exclude our GAAP provision (benefit) for income taxes from our non-GAAP measures of net

income attributable to Verint Systems Inc., and instead include a non-GAAP provision for income taxes, determined by applying a non-

GAAP effective income tax rate to our income before provision for income taxes, as adjusted for the non-GAAP items described above.

The non-GAAP effective income tax rate is generally based upon the income taxes we expect to pay in the reporting year. We adjust our

non-GAAP effective income tax rate to exclude current-year tax payments or refunds associated with prior-year income tax returns and

related amendments which were significantly delayed as a result of our previous extended filing delay. Our GAAP effective income tax

rate can vary significantly from year to year as a result of tax law changes, settlements with tax authorities, changes in the geographic mix

of earnings including acquisition activity, changes in the projected realizability of deferred tax assets, and other unusual or period-specific

events, all of which can vary in size and frequency. We believe that our non-GAAP effective income tax rate removes much of this

variability and facilitates meaningful comparisons of operating results across periods. Our non-GAAP effective income tax rate for the year

ending January 31, 2017 is currently approximately 9%, and was 8.1% for the year ended January 31, 2016. We evaluate our non-GAAP

effective income tax rate on an ongoing basis and it can change from time to time. Our non-GAAP income tax rate can differ materially

from our GAAP effective income tax rate.

• In-process research and development. For periods ended prior to February 1, 2009, we excluded from our non-GAAP financial measures

the fair value of any incomplete in-process research and development project of an acquired company that had not yet reached

technological feasibility and had no known alternative future use, and was therefore charged to our operating results in the period of the

acquisition, under then-applicable accounting guidance. These expenses were excluded from our non-GAAP financial measures because

they could vary significantly based upon the size and nature of the associated business acquisition. It should also be noted that such

charges are no longer recognized under GAAP.

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About Non-GAAP Financial Measures• Other legal expenses (recoveries). We exclude from our non-GAAP financial measures other legal fees and settlements associated with

litigations assumed in connection with acquisitions. We excluded these items from our non-GAAP financial measures because they are

not reflective of our ongoing operations.

• Expenses related to our previous extended filing delay. We exclude from our non-GAAP financial measures expenses related to our

restatement of previously filed financial statements and our extended filing delay. These expenses included professional fees and

related expenses as well as expenses associated with a special cash retention program. These expenses were excluded from our non-

GAAP financial measures because they were unusual in nature and not reflective of our ongoing operations.

• Losses on early retirements of debt. We exclude from our non-GAAP financial measures losses on early retirements of debt attributable

to refinancing or repaying our debt because these charges can vary significantly in amount and frequency, are difficult to predict, and

may result from actions we take in response to conditions in the capital markets which are out of our control.

• Settlement with OCS. In the year ended January 31, 2007, we recorded a charge related to our July 31, 2006 settlement with the Office

of Chief Scientist in Israel (“OCS”), pursuant to which we exited a royalty-bearing program and the OCS accepted a settlement of our

royalty obligations under this program. We exclude from our non-GAAP financial measures expenses associated with exiting this

program because this was an unusual, nonrecurring transaction which was not reflective of our ongoing operations.

• Gain on sale of land. We exclude from our non-GAAP financial measures the gain from the sale of a parcel of land during the year

ended January 31, 2007. This gain is excluded from our non-GAAP financial measures because this was an unusual, nonrecurring

transaction which was not reflective of our ongoing operations.

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About Non-GAAP Financial MeasuresAdjusted EBITDA

Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before interest expense, interest income, income taxes, depreciation

expense, amortization expense, revenue adjustments related to acquisitions, restructuring expenses, acquisition expenses, and other

expenses excluded from our non-GAAP financial measures as described above. We believe that adjusted EBITDA is also commonly used by

investors to evaluate operating performance between competitors because it helps reduce variability caused by differences in capital

structures, income taxes, stock-based compensation accounting policies, and depreciation and amortization policies. Adjusted EBITDA is also

used by credit rating agencies, lenders, and other parties to evaluate our creditworthiness.

Net Debt

Net Debt is a non-GAAP measure defined as the sum of long-term and short-term debt on our consolidated balance sheet, excluding

unamortized discounts and issuance costs, less the sum of cash and cash equivalents, restricted cash and bank time deposits, and short-term

investments. We use this non-GAAP financial measure to help evaluate our capital structure, financial leverage, and our ability to reduce debt

and to fund investing and financing activities, and believe that it provides useful information to investors.

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Supplemental Information About Constant CurrencyBecause we operate on a global basis and transact business in many currencies, fluctuations in foreign currency exchange rates can

affect our consolidated U.S. dollar operating results. To facilitate the assessment of our performance excluding the effect of foreign

currency exchange rate fluctuations, we calculate our GAAP and non-GAAP revenue, cost of revenue, and operating expenses on both

an as-reported basis and a constant currency basis, allowing for comparison of results between periods as if foreign currency

exchange rates had remained constant. We perform our constant currency calculations by translating current-period foreign currency

results into U.S. dollars using prior-period average foreign currency exchange rates or hedge rates, as applicable, rather than current

period exchange rates. We believe that constant currency measures, which exclude the impact of changes in foreign currency

exchange rates, facilitate the assessment of underlying business trends.

Unless otherwise indicated, our financial outlook for revenue, operating margin, and diluted earnings per share, which is provided on a

non-GAAP basis, reflects foreign currency exchange rates approximately consistent with rates in effect when the outlook is provided.

We also incur foreign exchange gains and losses resulting from the revaluation and settlement of monetary assets and liabilities that

are denominated in currencies other than the entity’s functional currency. We periodically report our historical non-GAAP diluted net

income per share both inclusive and exclusive of these net foreign exchange gains or losses. Our financial outlook for diluted earnings

per share includes net foreign exchange gains or losses incurred to date, if any, but does not include potential future gains or losses.

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GAAP to Non-GAAP Reconciliation

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($ in millions)

FYE January 31, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 April 30, 2016 July 31, 2016 October 31, 2016 Revenue ReconciliationGAAP revenue 368.8$ 534.5$ 669.5$ 703.6$ 726.8$ 782.6$ 839.5$ 907.3$ 1,128.4$ 1,130.3$ 245.4$ 261.9$ 258.9$ Revenue adjustments related to acquisitions - 37.3 5.9 - - 13.6 8.6 2.7 29.8 4.3 3.6 2.3 1.1 Non-GAAP revenue 368.8$ 571.8$ 675.4$ 703.6$ 726.8$ 796.2$ 848.1$ 910.0$ 1,158.2$ 1,134.6$ 249.0$ 264.2$ 260.0$

Gross Profit ReconciliationGAAP gross profit 177.5$ 304.5$ 411.3$ 463.7$ 488.5$ 514.3$ 557.5$ 600.9$ 713.3$ 701.4$ 144.7$ 159.5$ 155.7$ GAAP gross margin 48.1% 57.0% 61.4% 65.9% 67.2% 65.7% 66.4% 66.2% 63.2% 62.1% 59.0% 60.9% 60.1%Revenue adjustments related to acquisitions - 37.3 5.9 - - 13.6 8.6 2.7 29.8 4.3 3.6 2.3 1.1 Amortization of acquired technology and backlog 3.7 7.6 9.0 8.0 9.1 12.4 14.8 12.3 31.0 35.8 9.2 9.1 9.7 Settlement w ith OCS 19.2 - - - - - - - - - - - - Stock-based compensation expenses 1.7 4.5 5.4 5.9 6.2 3.3 2.9 2.4 6.2 7.2 1.5 2.3 1.8 Acquisition expenses - - - - - - - 2.2 3.4 0.1 (0.2) 0.2 - Restructuring expenses - - - - - 0.4 0.5 0.3 0.6 3.0 0.9 - 0.8 Impairment charges 3.9 0.4 - - - - - 0.5 - 3.2 - - - Other adjustments - - - - - - - - - - - - - Expenses related to restatement and extended f iling delay - 2.4 - - - - - - - - - - - Non-GAAP gross profit 206.0$ 356.7$ 431.6$ 477.6$ 503.8$ 544.0$ 584.3$ 621.3$ 784.3$ 755.0$ 159.7$ 173.4$ 169.1$ Non-GAAP gross margin 55.9% 62.4% 63.9% 67.9% 69.3% 68.3% 68.9% 68.3% 67.7% 66.5% 64.1% 65.6% 65.0%

Three Months Ended

GAAP Non GAAP Rec UPDATED NEW

($ in millions)

Three Months EndedThree Months EndedThree Months EndedThree Months EndedKana Three Months Ended

FYE January 31,2006200720082009201020112012Apr 30, 2012Jul 31, 2012Oct 31, 2012Jan 31, 20132013April 30, 2013July 31, 2013October 31, 2013January 31, 20142014April 30, 2014July 31, 2014October 31, 2014January 31, 20152015April 30, 2015July 31, 2015 (1)October 31, 2015January 31, 20162016Q1 Q2 Q3Q4April 30, 2016July 31, 2016October 31, 2016January 31, 20172017

Revenue Reconciliation

GAAP revenue$ 278.8$ 368.8$ 534.5$ 669.5$ 703.6$ 726.8$ 782.6$ 196.6$ 212.4$ 201.5$ 229.0$ 839.5$ 204.8$ 222.5$ 224.3$ 255.7$ 907.3$ 257.4$ 276.8$ 282.6$ 311.7$ 1,128.4$ 269.5$ 295.9$ 284.0$ 280.8$ 1,130.3$ 28.8$ 34.4$ 35.3$ 40.2$ 245.4$ 261.9$ 258.9

Revenue adjustments related to acquisitions- 0- 037.35.9- 0- 013.63.62.61.11.28.60.60.30.51.42.711.97.95.93.929.80.81.21.31.04.30.40.20.20.13.62.31.1

Non-GAAP revenue$ 278.8$ 368.8$ 571.8$ 675.4$ 703.6$ 726.8$ 796.2$ 200.2$ 215.1$ 202.6$ 230.1$ 848.1$ 205.4$ 222.8$ 224.8$ 257.1$ 910.0$ 269.3$ 284.7$ 288.5$ 315.6$ 1,158.2$ 270.3$ 297.1$ 285.3$ 281.8$ 1,134.6$ 29.2$ 34.5$ 35.5$ 40.3$ 249.0$ 264.2$ 260.0$ - 0$ - 0

Gross Profit Reconciliation

GAAP gross profit$ 144.1$ 177.5$ 304.5$ 411.3$ 463.7$ 488.5$ 514.3$ 128.3$ 136.4$ 136.2$ 156.5$ 557.5$ 131.5$ 149.8$ 152.2$ 167.4$ 600.9$ 154.6$ 174.3$ 181.5$ 203.0$ 713.3$ 166.4$ 177.3$ 178.5$ 179.1$ 701.4$ 14.7$ 19.8$ 19.6$ 21.0$ 144.7$ 159.5$ 155.7

GAAP gross margin51.7%48.1%57.0%61.4%65.9%67.2%65.7%65.3%64.2%67.6%68.4%66.4%64.2%67.3%67.9%65.5%66.2%ERROR:#DIV/0!60.1%63.0%64.2%65.1%ERROR:#DIV/0!63.2%61.7%59.9%62.9%63.8%62.1%51.1%57.5%55.5%52.2%59.0%60.9%60.1%


Amortization of acquired technology and backlog5.03.77.69.08.09.112.43.83.63.73.714.83.62.41.94.312.36.48.68.18.031.08.09.99.18.935.81.71.71.71.79.29.19.7

Settlement with OCS- 019.2- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Stock-based compensation expenses- 01.74.55.45.96.23.30.70.60.80.72.90.40.70.70.72.41.11.21.22.86.20.62.32.22.17.2- 0- 0- 0- 01.52.31.8

Acquisition expenses- 0- 0- 0- 0- 0- 0- 02.23.40.1(0.2)0.2- 0

Restructuring expenses- 0- 0- 0- 0- 00.40.50.30.63.00.9- 00.8

Impairment charges3.90.4- 0- 0- 0- 0- 00.5- 03.2- 0- 0- 0

Other adjustments- 0- 0- 0- 0- 0- 0- 0- 0- 00.40.1- 00.30.1- 02.5- 04.50.1(1.1)0.5- 00.43.20.22.5- 0- 0- 0- 0- 0- 0- 0- 0

Expenses related to restatement and extended filing delay- 0- 02.4- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Non-GAAP gross profit$ 149.1$ 206.0$ 356.7$ 431.6$ 477.6$ 503.8$ 544.0$ 136.4$ 143.3$ 142.2$ 162.3$ 584.3$ 136.4$ 153.3$ 155.3$ 176.3$ 621.3$ - 0$ 178.5$ 192.1$ 195.6$ 218.2$ - 0$ 784.3$ 176.2$ 193.9$ 191.3$ 193.6$ 755.0$ 17.3$ 22.2$ 22.0$ 23.3$ 159.7$ 173.4$ 169.1$ - 0$ - 0

Non-GAAP gross margin 53.5%55.9%62.4%63.9%67.9%69.3%68.3%68.1%66.6%70.2%70.5%68.9%66.4%68.8%69.1%68.6%68.3%ERROR:#DIV/0!66.3%67.5%67.8%69.1%ERROR:#DIV/0!67.7%65.2%65.3%67.0%68.7%66.5%59.3%64.2%61.9%57.8%64.1%65.6%65.0%

($ in millions)



Operating Income (Loss) Reconciliation

GAAP operating (loss) income$ 4.1$ (47.3)$ (114.6)$ (15.0)$ 65.7$ 73.1$ 86.5$ 21.0$ 26.3$ 16.8$ 35.5$ 99.6$ 13.7$ 31.3$ 37.8$ 39.5$ 122.3$ 1.0$ 11.5$ 24.4$ 42.3$ 79.1$ 9.6$ 8.7$ 22.3$ 27.2$ 67.9$ (0.4)$ 4.2$ 4.5$ 0.7$ (11.3)$ 3.7$ 5.5

As a percentage of GAAP revenue1.5%-12.8%-21.4%-2.2%9.3%10.1%11.0%10.7%12.4%8.3%15.5%11.9%6.7%14.1%16.9%15.4%13.5%ERROR:#DIV/0!0.4%4.2%8.6%13.6%ERROR:#DIV/0!7.0%3.6%2.9%7.9%9.7%6.0%-1.4%12.2%12.8%1.8%-4.6%1.4%2.1%

Revenue adjustments related to acquisitions- 0- 037.35.9- 0- 013.63.62.61.11.28.60.60.30.51.42.711.97.95.93.929.80.81.21.31.04.30.40.20.20.13.62.31.1- 0- 0


Amortization of other acquired intangible assets1.33.219.725.222.321.522.96.26.06.16.124.46.06.06.26.524.711.211.611.411.045.210.710.710.910.843.12.62.62.62.411.311.510.2


In-process research and development2.9- 06.7- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)2.6- 08.7(4.3)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Stock-based compensation expenses1.218.831.136.044.246.827.95.75.96.76.925.26.29.29.79.835.011.514.412.615.954.414.919.016.414.364.5- 0- 0- 04.515.316.414.0

Expenses related to restatement and extended filing delay- 03.741.428.754.528.91.0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land- 0(0.8)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Acquisition expenses- 0- 0- 00.81.76.811.611.418.77.01.72.93.5

Restructuring expenses- 03.35.70.2- 02.53.32.33.017.44.92.34.9

Impairment charges25.023.326.0- 0- 0- 0- 00.5- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 03.2- 0- 0- 0

Other adjustments- 0- 011.03.2- 03.53.0(0.8)(1.5)11.37.61.76.52.20.34.0(1.2)9.04.62.37.51.77.39.53.28.51.00.10.20.31.30.10.20.1

Non-GAAP operating income$ 17.1$ 25.5$ 75.4$ 120.4$ 195.6$ 184.6$ 176.6$ 39.4$ 43.0$ 45.7$ 61.0$ 189.2$ 36.7$ 51.4$ 56.4$ 65.5$ 210.0$ - 0$ 51.0$ 58.6$ 64.7$ 88.6$ - 0$ 262.9$ 51.3$ 59.0$ 63.2$ 70.7$ 244.2$ 4.3$ 8.9$ 9.4$ 10.7$ 34.8$ 48.4$ 49.0$ - 0$ - 0

As a percentage of non-GAAP revenue6.1%6.9%13.2%17.8%27.8%25.4%22.2%19.7%20.0%22.6%26.5%22.3%17.9%23.1%25.1%25.5%23.1%ERROR:#DIV/0!18.9%20.6%22.4%28.1%ERROR:#DIV/0!22.7%19.0%19.9%22.1%25.1%21.5%14.8%25.9%26.4%26.5%14.0%18.3%18.9%

Other Income (Expense) Reconciliation

GAAP other income (expense), net$ 8.0$ 7.8$ (55.2)$ (43.9)$ (41.5)$ (34.6)$ (40.3)$ (31.8)$ (18.5)$ (9.9)$ (7.8)$ (22.7)$ (59.0)$ (14.3)$ (16.3)$ (8.1)$ (19.0)$ (57.7)$ (7.9)$ (11.8)$ (12.3)$ (12.6)$ (44.7)$ (4.6)$ (13.8)$ (9.6)

Losses on early retirements of debt- 0- 0- 0- 0- 0- 08.1- 09.70.2- 0- 09.97.15.5- 0- 012.5- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Unrealized (gains) losses on derivatives, net- 0- 026.7(1.8)(8.0)(6.0)(0.4)0.1(0.4)0.10.6(1.0)(0.7)0.7(0.9)(1.6)1.6(0.1)0.4(0.3)(0.1)- 0- 00.30.10.1

Amortization of convertible note discount- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 01.12.42.46.02.52.52.52.610.12.62.72.7

Acquisition expenses- 0- 0- 0- 0- 00.11.213.80.53.00.1- 0- 0

Restructuring expenses- 0- 0- 0- 0- 0- 0- 0- 0- 00.40.2- 0(0.2)

Impairment charges- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 02.4- 0

Other adjustments- 0- 0- 0- 0- 0- 0- 0- 00.11.00.312.3- 00.1- 0(0.1)0.6- 0- 00.21.61.4- 0- 0- 0- 0

Non-GAAP other income (expense), net$ 8.0$ 7.8$ (28.5)$ (45.7)$ (49.5)$ (40.6)$ (32.5)$ - 0$ - 0$ - 0$ - 0$ (30.5)$ (9.1)$ (8.6)$ (6.9)$ (11.4)$ (36.0)$ (6.4)$ (10.6)$ (7.4)$ (14.4)$ (38.8)$ (5.0)$ (9.4)$ (8.3)$ (8.6)$ (31.2)$ (1.4)$ (8.6)$ (7.0)$ - 0$ - 0

($ in millions, except share and per share data; shares in thousands)

Three Months EndedThree Months EndedThree Months EndedThree Months EndedThree Months Ended

FYE January 31,2006200720082009201020112012Apr 30, 2012Jul 31, 2012Oct 31, 2012Jan 31, 20132013April 30, 2013July 31, 2013October 31, 2013January 31, 20142014April 30, 2014July 31, 2014October 31, 2014January 31, 20152015April 30, 2015July 31, 2015 (1)October 31, 2015January 31, 20162016April 30, 2016July 31, 2016October 31, 2016January 31, 20172017

Tax Provision Reconciliation

GAAP provision for (benefit from) income taxes$ 9.6$ 0.1$ 27.7$ 19.7$ 7.1$ 9.9$ 5.5$ 9.0$ 3.1$ 2.8$ 6.0$ (7.3)$ 4.5$ (42.1)$ 5.5$ 4.8$ 16.8$ (15.0)$ 0.9$ 2.6$ 1.6$ (4.2)$ 1.0$ 0.3$ 1.1$ 3.4

GAAP effective income tax rate0.4%-16.3%-33.4%29.4%25.8%12.0%-16.3%-16.3%-16.3%-16.3%13.2%-16.3%-16.3%-16.3%-16.3%7.2%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%-70.1%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%4.1%-2.1%-10.6%-82.4%

Non-GAAP tax adjustments(5.4)3.2(23.6)(16.4)4.6(1.4)11.19.2(0.1)1.7(1.2)10.711.246.4(1.2)(0.1)(10.5)34.63.01.73.28.416.22.72.60.6

Non-GAAP provision for income taxes$ 4.2$ 3.3$ 4.1$ 3.3$ 11.7$ 8.5$ 16.6$ - 0$ - 0$ - 0$ - 0$ 18.2$ 3.0$ 4.5$ 4.8$ 3.4$ 15.7$ - 0$ 4.3$ 4.3$ 4.7$ 6.3$ - 0$ 19.6$ - 0$ 3.9$ 4.3$ 4.8$ 4.2$ - 0$ 17.2$ 3.0$ 3.7$ 4.0$ - 0$ - 0

Non-GAAP effective income tax rate9.9%8.8%4.4%8.0%6.3%11.5%11.4%9.0%8.8%8.1%8.9%9.1%9.6%

Net (Loss) Income Attributable to Verint Systems Inc. Reconciliation

GAAP net (loss) income attributable to Verint Systems Inc.$ 1.7$ (40.5)$ (198.6)$ (80.4)$ 15.6$ 25.6$ 37.0$ 54.0$ (9.2)$ 17.5$ 22.5$ 22.9$ 53.8$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)$ (8.2)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.881.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.445.4

Non-GAAP net income attributable to Verint Systems Inc.$ 20.1$ 29.1$ 41.8$ 69.6$ 133.0$ 132.5$ 123.8$ - 0$ - 0$ - 0$ - 0$ 135.7$ 23.4$ 37.4$ 43.1$ 49.4$ 153.3$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ 37.2$ - 0$ - 0

Net (Loss) Income Attributable to Verint Systems Inc. Common Shares

GAAP net (loss) income attributable to Verint Systems Inc. common shares$ 1.7$ (40.5)$ (207.3)$ (93.5)$ 2.0$ 11.4$ 22.2$ 38.5$ (9.3)$ 17.5$ 22.5$ 22.9$ 53.6$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)$ (8.2)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.8- 0- 0- 0- 081.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.445.4

Non-GAAP net income attributable to Verint Systems Inc. common shares$ 20.1$ 29.1$ 33.1$ 56.5$ 119.4$ 118.3$ 109.0$ - 0$ - 0$ - 0$ - 0$ 120.2$ 23.3$ 37.4$ 43.1$ 49.4$ 153.1$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ 37.2$ - 0$ - 0

GAAP diluted net (loss) income per common share attributable to Verint Systems Inc.$ (1.26)$ (6.43)$ (2.88)$ 0.06$ 0.31$ 0.56$ 0.96$ 0.99$ 0.52$ 0.28$ (0.28)$ (0.19)$ (0.13)

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.$ 0.62$ 0.88$ 1.00$ 1.65$ 3.09$ 2.79$ 2.47$ 2.64$ 0.44$ 0.70$ 0.80$ 0.91$ 2.84$ 0.72$ 0.72$ 0.84$ 1.06$ 3.35$ 0.66$ 0.70$ 0.78$ 0.90$ 3.04$ 0.46$ 0.57$ 0.59

GAAP diluted weighted-average shares used in computing net income (loss) per common share32,15632,22132,39433,12737,17939,49940,31253,87859,37462,92162,25862,66862,895

Additional weighted-average anti-dilutive shares applicable to non-GAAP net income per common share attributable to Verint Systems Inc823814440-------676260355

Additional weighted-average shares from assumed conversion of preferred stock into common stock applicable to non-GAAP net income per common share attributable to Verint Systems Inc--9,4649,83610,22310,62411,043123----- 0

Non-GAAP diluted weighted-average shares used in computing net income per common share32,62032,97933,03542,29842,96347,40250,12351,35553,26653,63753,94654,54054,00155,01858,17961,49262,08159,37462,38962,77362,77862,90062,92162,93462,92863,250

($ in millions)



Adjusted EBITDA Reconciliation

GAAP net (loss) income attributable to Verint Systems Inc.$ 1.7$ (40.5)$ (198.6)$ (80.4)$ 15.6$ 25.6$ 37.0$ - 0$ - 0$ - 0$ - 0$ 54.0$ (9.2)$ 17.5$ 22.5$ 22.9$ 53.8$ - 0$ 28.0$ (12.3)$ 10.7$ 4.6$ - 0$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ (17.5)$ (11.7)$ (8.2)$ - 0$ - 0

Net income attributable to noncontrolling interest0.81.01.11.81.53.03.64.85.05.51.11.30.81.34.61.30.60.8

Provision (benefit) for income taxes9.60.127.719.77.19.95.5-0-0-0-09.03.12.86.0(7.3)4.5-0(42.1)5.54.816.8-0(15.0)0.92.61.6(4.2)1.0-0-0-0-00.31.13.4-0-0

Other (income) expense, net(8.0)(7.8)55.243.941.534.640.3-0-0-0-031.818.59.97.822.759.0-014.316.38.119.0-057.77.911.812.312.644.7-0-0-0-04.613.89.6-0-0

GAAP depreciation & amortization (1)17.819.345.353.547.846.851.013.613.713.713.954.913.912.312.415.253.822.625.224.324.496.524.326.626.326.0103.20.50.40.40.527.527.927.6

Revenue adjustments related to acquisitions- 0-037.35.9-0-013.63.62.61.11.28.60.60.30.51.42.7-011.97.95.93.9-029.80.81.21.31.0-04.30.40.20.20.13.62.31.1-0-0-0

Stock-based compensation expenses1.218.831.136.044.246.827.95.75.96.76.925.26.29.29.79.835.0-011.514.412.615.9-054.414.919.016.414.364.5- 0- 0- 04.515.316.414.0- 0- 0

Settlement with OCS- 019.2-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

In-process research and development2.9-06.7-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)2.6-08.7(4.3)-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Expenses related to restatement and extended filing delay- 03.741.428.754.528.91.0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land- 0(0.8)-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Acquisition expenses-0-0-00.81.76.8-0-0-0-011.6-0-0-0-011.4-0-0-0-0-0-018.7-0-0-0-0-0-07.01.72.93.5

Restructuring expenses-03.35.50.2-02.5-0-0-0-03.3-0-0-0-02.3-0-0-0-0-0-03.0-0-0-0-0-0-017.34.92.24.1

Impairment charges21.122.926.0-0-0-0-0-0-0-0-0-0-0-0-00.5-0-0-0-0-0-0-0-0-0-0-0-0-03.2- 0- 0- 0

Other adjustments- 0-010.93.2-02.72.8(0.8)(1.5)11.37.61.66.52.20.34.0(1.2)-09.04.62.37.5-01.7-07.39.53.28.5-01.00.10.20.31.30.20.20.1- 0- 0- 0

Adjusted EBITDA$ 28.5$ 34.1$ 93.0$ 139.5$ 213.2$ 200.0$ 192.0$ 22.1$ 20.7$ 32.9$ 29.6$ 204.8$ 39.6$ 54.2$ 59.2$ 68.7$ 226.8$ - 0$ 55.2$ 61.6$ 68.7$ 92.1$ - 0$ 283.2$ 56.8$ 64.9$ 69.5$ 77.0$ 268.4ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 41.9$ 55.7$ 56.0$ - 0$ - 0

(1) Adjusted for patent and financing fee amortization.

Proof of Non-GAAP EBITDA on old schedule$ 28.5$ 34.1$ 93.0$ 139.5$ 213.2$ 200.0$ 192.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 204.8ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 226.8ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 283.2$ 56.9$ 65.0$ 268.4ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ - 0

Proof (0.0)(0.0)(0.0)0.00.00.0(0.0)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!0.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0(0.1)(0.1)-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!55.7

Total items to add to Adjusted EBITDA rec- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Proof including items above to add to Adjusted EBITDA(0.0)(0.0)(0.0)0.00.00.0(0.0)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!0.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0(0.1)(0.1)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!41.955.7

GAAP Non GAAP REVENUE Reconcili

($ in millions)


April 30, 2015July 31, 2015October 31, 2015January 31, 2016April 30, 2016July 31, 2016October 31, 2016January 31, 2016Oct 31, 2012Jan 31, 20132013April 30, 2013July 31, 2013October 31, 2013January 31, 20142014April 30, 2014July 31, 2014October 31, 2014January 31, 20152015April 30, 2015July 31, 2015 (2)October 31, 2015January 31, 20162016April 30, 2016July 31, 2016October 31, 2016January 31, 20172017

GAAP Revenue by Segment:

Customer Engagement$ 165.6$ 174.8$ 175.7$ 178.9$ 168.9$ 177.3$ 172.8

Cyber Intelligence103.9121.1108.4101.976.584.686.1

GAAP Total Revenue$ 269.5$ 295.9$ 284.1$ 280.8$ 245.4$ 261.9$ 258.9

Revenue Adjustments Related to Acquisitions:


Cyber Intelligence0.20.60.10.10.10.2-0

Total Revenue Adjustments Related to Acquisitions$ 0.9$ 1.2$ 1.2$ 1.0$ 3.6$ 2.3$ 1.1

Non-GAAP Revenue by Segment:


Cyber Intelligence104.1121.7108.5102.076.684.886.1

Non-GAAP Total Revenue$ 270.4$ 297.1$ 285.3$ 281.8$ 249.0$ 264.2$ 260.0

Totals166.3175.4176.8179.8172.4179.4173.9

104.1121.7108.510276.684.886.1

270.4297.1285.3281.8249.0264.2260

check- 0- 0- 0- 0- 0- 0- 0

269.5295.9284.1280.8245.4261.9258.9

4.33.62.31.1

Tax calc

Years FYEThree Months Ended

20072008200920102011201220132014201520164/30/167/31/1610/31/16

GAAP operating income (loss)(47,139)(114,630)(15,026)65,67973,10586,47899,553122,28679,11167,852(11,291)3,749

GAAP other expense, net7,796(55,186)(43,880)(41,471)(34,580)(40,321)(31,789)(58,971)(57,708)(44,672)(4,572)(13,769)

GAAP provision for income taxes14127,72919,6717,1089,9405,5328,9604,539(14,999)9523301,058

GAAP effective income tax rate-0.4%-16.3%-33.4%29.4%25.8%12.0%13.2%7.2%-70.1%4.1%-2.1%-10.6%ERROR:#DIV/0!

Non-cash tax adjustments3,182(23,616)(16,352)4,553(1,412)11,0979,20111,16434,62116,2132,6442,586

Non-GAAP provision for income taxes3,3234,1133,31911,6618,52816,62918,16115,70319,62217,1652,9743,644-

Non-GAAP effective income tax rate9.9%8.8%4.4%8.0%6.3%11.5%11.4%9.0%8.8%8.1%8.9%9.1%ERROR:#DIV/0!

Non-GAAP operating income (loss)25,63275,405120,444195,627176,553176,553189,172209,973262,903244,21434,79548,411

Non-GAAP other expense, net7,796(28,483)(45,687)(49,520)(40,566)(32,509)(30,517)(35,965)(38,783)(31,231)(1,354)(8,484)

GAAP Non GAAP Rec OLD

($ in millions)




GAAP revenue$ 278.8$ 368.8$ 534.5$ 669.5$ 703.6$ 726.8$ 782.6$ 196.6$ 212.4$ 201.5$ 229.0$ 839.5$ 204.8$ 222.5$ 224.3$ 255.7$ 907.3$ 257.4$ 276.8$ 282.6$ 311.7$ 1,128.4$ 269.5$ 295.9$ 284.0$ 280.8$ 1,130.3$ 28.8$ 34.4$ 35.3$ 40.2$ 245.4$ 261.9$ 258.9


Non-GAAP revenue$ 278.8$ 368.8$ 571.8$ 675.4$ 703.6$ 726.8$ 796.2$ 200.2$ 215.1$ 202.6$ 230.1$ 848.1$ 205.4$ 222.8$ 224.8$ 257.1$ 910.0$ 269.3$ 284.7$ 288.5$ 315.6$ 1,158.2$ 270.3$ 297.1$ 285.3$ 281.8$ 1,134.6$ 29.2$ 34.5$ 35.5$ 40.3$ 249.0$ 264.1$ 260.0$ - 0$ - 0


GAAP gross profit$ 144.1$ 177.5$ 304.5$ 411.3$ 463.7$ 488.5$ 514.3$ 128.3$ 136.4$ 136.2$ 156.5$ 557.5$ 131.5$ 149.8$ 152.2$ 167.4$ 600.9$ 154.6$ 174.3$ 181.5$ 203.0$ 713.3$ 166.4$ 177.3$ 178.5$ 179.1$ 701.4$ 14.7$ 19.8$ 19.6$ 21.0$ 144.7$ 159.5$ 156.3

GAAP gross margin51.7%48.1%57.0%61.4%65.9%67.2%65.7%65.3%64.2%67.6%68.4%66.4%64.2%67.3%67.9%65.5%66.2%ERROR:#DIV/0!60.1%63.0%64.2%65.1%ERROR:#DIV/0!63.2%61.7%59.9%62.9%63.8%62.1%51.1%57.5%55.5%52.2%59.0%60.9%60.4%




Stock-based compensation expenses- 01.74.55.45.96.23.30.70.60.80.72.90.40.70.70.72.41.11.21.22.86.20.62.32.22.17.2- 0- 0- 0- 01.52.31.8

Acquisition expenses- 0- 0- 0- 0- 0- 0- 02.23.40.1(0.2)0.2- 0

Restructuring expenses- 0- 0- 0- 0- 00.40.50.30.63.00.90.10.8

Impairment charges3.40.4- 0- 0- 0- 0- 00.5- 03.2- 0- 0- 0

Other adjustments- 0- 0- 0- 0- 0- 0- 0- 0- 00.40.1- 00.30.1- 02.5- 04.50.1(1.1)0.5- 00.43.20.22.5- 0- 0- 0- 0- 0- 0- 0- 0

Expenses related to restatement and extended filing delay- 0- 02.4- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Non-GAAP gross profit$ 149.1$ 206.0$ 356.7$ 431.6$ 477.6$ 503.8$ 544.0$ 136.4$ 143.3$ 142.2$ 162.3$ 584.3$ 136.4$ 153.3$ 155.3$ 176.3$ 621.3$ - 0$ 178.5$ 192.1$ 195.6$ 218.2$ - 0$ 784.3$ 176.2$ 193.9$ 191.3$ 193.6$ 755.0$ 17.3$ 22.2$ 22.0$ 23.3$ 159.7$ 173.4$ 169.1$ - 0$ - 0

Non-GAAP gross margin 53.5%55.9%62.4%63.9%67.9%69.3%68.3%68.1%66.6%70.2%70.5%68.9%66.4%68.8%69.1%68.6%68.3%ERROR:#DIV/0!66.3%67.5%67.8%69.1%ERROR:#DIV/0!67.7%65.2%65.3%67.0%68.7%66.5%59.3%64.2%61.9%57.8%64.1%65.6%65.0%

($ in millions)




GAAP operating (loss) income$ 4.1$ (47.3)$ (114.6)$ (15.0)$ 65.7$ 73.1$ 86.5$ 21.0$ 26.3$ 16.8$ 35.5$ 99.6$ 13.7$ 31.3$ 37.8$ 39.5$ 122.3$ 1.0$ 11.5$ 24.4$ 42.3$ 79.1$ 9.6$ 8.7$ 22.3$ 27.2$ 67.9$ (0.4)$ 4.2$ 4.5$ 0.7$ (11.3)$ 3.7$ 5.5

As a percentage of GAAP revenue1.5%-12.8%-21.4%-2.2%9.3%10.1%11.0%10.7%12.4%8.3%15.5%11.9%6.7%14.1%16.9%15.4%13.5%ERROR:#DIV/0!0.4%4.2%8.6%13.6%ERROR:#DIV/0!7.0%3.6%2.9%7.9%9.7%6.0%-1.4%12.2%12.8%1.8%-4.6%1.4%2.1%

Revenue adjustments related to acquisitions- 0- 037.35.9- 0- 013.63.62.61.11.28.60.60.30.51.42.711.97.95.93.929.80.81.21.31.04.30.40.20.20.13.62.21.1- 0- 0

Amortization and impairment of acquired technology and backlog5.04.37.69.08.09.112.43.83.63.73.714.83.62.41.94.312.36.48.68.18.031.08.09.99.18.935.81.71.71.71.79.29.19.1

Amortization of other acquired intangible assets1.33.219.725.222.321.522.96.26.06.16.124.46.06.06.26.524.711.211.611.411.045.210.710.710.910.843.12.62.62.62.411.311.510.9


In-process research and development2.9- 06.7- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)2.6- 08.7(4.3)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Stock-based compensation expenses1.218.831.136.044.246.827.95.75.96.76.925.26.29.29.79.835.011.514.412.615.954.414.919.016.414.364.5- 0- 0- 04.515.316.414.0

Expenses related to restatement and extended filing delay- 03.741.428.754.528.91.0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land- 0(0.8)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Impairments of goodwill and other acquired intangible assets21.122.926.0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Acquisition expenses- 0- 0- 00.81.76.811.611.418.77.01.72.93.5

Restructuring expenses- 03.35.70.2- 02.53.32.33.017.44.92.44.9

Impairment charges3.40.4- 0- 0- 0- 0- 00.5- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 03.2

Other adjustments- 0- 011.03.2- 03.53.0(0.8)(1.5)11.37.61.76.52.20.34.0(1.2)9.04.62.37.51.77.39.53.28.51.00.10.20.31.30.10.2- 0

Non-GAAP operating income$ 17.1$ 25.5$ 75.4$ 120.4$ 195.6$ 184.6$ 176.6$ 39.4$ 43.0$ 45.7$ 61.0$ 189.2$ 36.7$ 51.4$ 56.4$ 65.5$ 210.0$ - 0$ 51.0$ 58.6$ 64.7$ 88.6$ - 0$ 262.9$ 51.3$ 59.0$ 63.2$ 70.7$ 244.2$ 4.3$ 8.9$ 9.4$ 10.7$ 34.8$ 48.4$ 49.0$ - 0$ - 0

As a percentage of non-GAAP revenue6.1%6.9%13.2%17.8%27.8%25.4%22.2%19.7%20.0%22.6%26.5%22.3%17.9%23.1%25.1%25.5%23.1%ERROR:#DIV/0!18.9%20.6%22.4%28.1%ERROR:#DIV/0!22.7%19.0%19.9%22.1%25.1%21.5%14.8%25.9%26.4%26.5%14.0%18.3%18.9%


GAAP other income (expense), net$ 8.0$ 7.8$ (55.2)$ (43.9)$ (41.5)$ (34.6)$ (40.3)$ (31.8)$ (18.5)$ (9.9)$ (7.8)$ (22.7)$ (59.0)$ (14.3)$ (16.3)$ (8.1)$ (19.0)$ (57.7)$ (7.9)$ (11.8)$ (12.3)$ (12.6)$ (44.7)$ (4.6)$ (13.8)$ (9.6)


Unrealized (gains) losses on derivatives, net- 0- 026.7(1.8)(8.0)(6.0)(0.4)0.1(0.4)0.10.6(1.0)(0.7)0.7(0.9)(1.6)1.6(0.1)0.4(0.3)(0.1)- 0- 00.30.10.1

Amortization of convertible note discount- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 01.12.42.46.02.52.52.52.610.12.62.72.7

Acquisition expenses- 0- 0- 0- 0- 00.11.213.80.53.00.1- 0- 0

Restructuring expenses- 0- 0- 0- 0- 0- 0- 0- 0- 00.40.20.1(0.2)

Impairment charges- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 02.4- 0

Other adjustments- 0- 0- 0- 0- 0- 0- 0- 00.11.00.312.3- 00.1- 0(0.1)0.6- 0- 00.21.61.4- 0- 0- 0- 0

Non-GAAP other income (expense), net$ 8.0$ 7.8$ (28.5)$ (45.7)$ (49.5)$ (40.6)$ (32.5)$ - 0$ - 0$ - 0$ - 0$ (30.5)$ (9.1)$ (8.6)$ (6.9)$ (11.4)$ (36.0)$ (6.4)$ (10.6)$ (7.4)$ (14.4)$ (38.8)$ (5.0)$ (9.4)$ (8.3)$ (8.6)$ (31.2)$ (1.4)$ (8.5)$ (7.0)$ - 0$ - 0

($ in millions, except share and per share data)




GAAP provision for (benefit from) income taxes$ 9.6$ 0.1$ 27.7$ 19.7$ 7.1$ 9.9$ 5.5$ 9.0$ 3.1$ 2.8$ 6.0$ (7.3)$ 4.5$ (42.1)$ 5.5$ 4.8$ 16.8$ (15.0)$ 0.9$ 2.6$ 1.6$ (4.2)$ 1.0$ 0.3$ 1.1$ 3.4

GAAP effective income tax rate0.4%-16.3%-33.4%29.4%25.8%12.0%-16.3%-16.3%-16.3%-16.3%13.2%-16.3%-16.3%-16.3%-16.3%7.2%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%-70.1%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%4.1%-2.1%-10.6%-82.4%

Non-GAAP tax adjustments(5.4)3.2(23.6)(16.4)4.6(1.4)11.19.2(0.1)1.7(1.2)10.711.246.4(1.2)(0.1)(10.5)34.63.01.73.28.416.22.72.60.6

Non-GAAP provision for income taxes$ 4.2$ 3.3$ 4.1$ 3.3$ 11.7$ 8.5$ 16.6$ - 0$ - 0$ - 0$ - 0$ 18.2$ 3.0$ 4.5$ 4.8$ 3.4$ 15.7$ - 0$ 4.3$ 4.3$ 4.7$ 6.3$ - 0$ 19.6$ - 0$ 3.9$ 4.3$ 4.8$ 4.2$ - 0$ 17.2$ 3.0$ 3.7$ 4.0$ - 0$ - 0

Non-GAAP effective income tax rate9.9%8.8%4.4%8.0%6.3%11.5%11.4%9.0%8.8%8.1%8.9%9.1%9.6%


GAAP net (loss) income attributable to Verint Systems Inc.$ 1.7$ (40.5)$ (198.6)$ (80.4)$ 15.6$ 25.6$ 37.0$ 54.0$ (9.2)$ 17.5$ 22.5$ 22.9$ 53.8$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)$ (8.2)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.881.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.445.4

Non-GAAP net income attributable to Verint Systems Inc.$ 20.1$ 29.1$ 41.8$ 69.6$ 133.0$ 132.5$ 123.8$ - 0$ - 0$ - 0$ - 0$ 135.7$ 23.4$ 37.4$ 43.1$ 49.4$ 153.3$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ 37.2$ - 0$ - 0


GAAP net (loss) income attributable to Verint Systems Inc. common shares$ 1.7$ (40.5)$ (207.3)$ (93.5)$ 2.0$ 11.4$ 22.2$ 38.5$ (9.3)$ 17.5$ 22.5$ 22.9$ 53.6$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)$ (8.2)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.8- 0- 0- 0- 081.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.445.4

Non-GAAP net income attributable to Verint Systems Inc. common shares$ 20.1$ 29.1$ 33.1$ 56.5$ 119.4$ 118.3$ 109.0$ - 0$ - 0$ - 0$ - 0$ 120.2$ 23.3$ 37.4$ 43.1$ 49.4$ 153.1$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ 37.2$ - 0$ - 0

GAAP diluted net (loss) income per common share attributable to Verint Systems Inc.$ (1.26)$ (6.43)$ (2.88)$ 0.06$ 0.31$ 0.56$ 0.96$ 0.99$ 0.52$ 0.28$ (0.28)$ (0.19)$ (0.13)

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.$ 0.62$ 0.88$ 1.00$ 1.65$ 3.09$ 2.79$ 2.47$ 2.64$ 0.44$ 0.70$ 0.80$ 0.91$ 2.84$ 0.72$ 0.72$ 0.84$ 1.06$ 3.35$ 0.66$ 0.70$ 0.78$ 0.90$ 3.04$ 0.46$ 0.57$ 0.59

GAAP diluted weighted-average shares used in computing net income (loss) per common share32,15632,22132,39433,12737,17939,49940,31253,87859,37462,92162,25862,66862,895

Additional weighted-average anti-dilutive shares applicable to non-GAAP net income per common share attributable to Verint Systems Inc823814440-------676260355

Additional weighted-average shares from assumed conversion of preferred stock into common stock applicable to non-GAAP net income per common share attributable to Verint Systems Inc--9,4649,83610,22310,62411,043123----- 0

Non-GAAP diluted weighted-average shares used in computing net income per common share32,62032,97933,03542,29842,96347,40250,12351,35553,26653,63753,94654,54054,00155,01858,17961,49262,08159,37462,38962,77362,77862,90062,92162,93462,92863,250

($ in millions)




GAAP net (loss) income attributable to Verint Systems Inc.$ 1.7$ (40.5)$ (198.6)$ (80.4)$ 15.6$ 25.6$ 37.0$ - 0$ - 0$ - 0$ - 0$ 54.0$ (9.2)$ 17.5$ 22.5$ 22.9$ 53.8$ - 0$ 28.0$ (12.3)$ 10.7$ 4.6$ - 0$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ (17.5)$ (11.7)$ (8.2)$ - 0$ - 0

Net income attributable to noncontrolling interest0.81.01.11.81.53.03.64.85.05.51.11.30.81.34.61.30.60.8

Provision (benefit) for income taxes9.60.127.719.77.19.95.5-0-0-0-09.03.12.86.0(7.3)4.5-0(42.1)5.54.816.8-0(15.0)0.92.61.6(4.2)1.0-0-0-0-00.31.13.4-0-0

Other (income) expense, net(8.0)(7.8)55.243.941.534.640.3-0-0-0-031.818.59.97.822.759.0-014.316.38.119.0-057.77.911.812.312.644.7-0-0-0-04.613.89.6-0-0

GAAP depreciation & amortization (1)17.819.345.353.547.846.851.013.613.713.713.954.913.912.312.415.253.822.625.224.324.496.524.326.626.326.0103.20.50.40.40.527.527.927.6

Revenue adjustments related to acquisitions- 0-037.35.9-0-013.63.62.61.11.28.60.60.30.51.42.7-011.97.95.93.9-029.80.81.21.31.0-04.30.40.20.20.13.62.21.1-0-0-0

Stock-based compensation expenses1.218.831.136.044.246.827.95.75.96.76.925.26.29.29.79.835.0-011.514.412.615.9-054.414.919.016.414.364.5- 0- 0- 04.515.316.414.0- 0- 0

Settlement with OCS- 019.2-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

In-process research and development2.9-06.7-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)2.6-08.7(4.3)-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Expenses related to restatement and extended filing delay- 03.741.428.754.528.91.0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land- 0(0.8)-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Impairments of goodwill and other acquired intangible assets21.122.926.0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0-0

Acquisition expenses-0-0-00.81.76.8-0-0-0-011.6-0-0-0-011.4-0-0-0-0-0-018.7-0-0-0-0-0-07.01.72.93.5

Restructuring expenses-03.35.50.2-02.5-0-0-0-03.3-0-0-0-02.3-0-0-0-0-0-03.0-0-0-0-0-0-017.34.92.44.2

Impairment charges3.40.4-0-0-0-0-0-0-0-0-0-0-0-0-00.5-0-0-0-0-0-0-0-0-0-0-0-0-03.2- 0- 0- 0

Other adjustments- 0-010.93.2-02.72.8(0.8)(1.5)11.37.61.66.52.20.34.0(1.2)-09.04.62.37.5-01.7-07.39.53.28.5-01.00.10.20.31.30.20.2- 0- 0- 0- 0

Adjusted EBITDA$ 28.5$ 37.5$ 93.4$ 139.5$ 213.2$ 200.0$ 192.0$ 22.1$ 20.7$ 32.9$ 29.6$ 204.8$ 39.6$ 54.2$ 59.2$ 68.7$ 226.8$ - 0$ 55.2$ 61.6$ 68.7$ 92.1$ - 0$ 283.2$ 56.8$ 64.9$ 69.5$ 77.0$ 268.4ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 41.9$ 55.8$ 56.0$ - 0$ - 0


Proof of Non-GAAP EBITDA on old schedule$ 28.5$ 34.0$ 93.0$ 139.5$ 213.2$ 200.0$ 192.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 204.8ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 226.8ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ 283.2$ 56.9$ 65.0$ 268.4ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!$ - 0

Proof (0.0)3.50.40.00.00.0(0.0)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!0.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0(0.1)(0.1)-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!55.8

Total items to add to Adjusted EBITDA rec- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Proof including items above to add to Adjusted EBITDA(0.0)3.50.40.00.00.0(0.0)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!0.0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!-0(0.1)(0.1)ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!41.955.8

Notes

($ in millions)

FYE January 31,


GAAP revenue

Revenue adjustments related to acquisitions

Non-GAAP revenue


GAAP gross profit

GAAP gross margin


Amortization and impairment of acquired technology and backlog

Settlement with OCS

Stock-based compensation expenses

Other adjustments

Expenses related to restatement and extended filing delay

Non-GAAP gross profit

Non-GAAP gross margin

($ in millions)

FYE January 31,


GAAP operating (loss) income

As a percentage of GAAP revenue


Amortization and impairment of acquired technology and backlog

Amortization of other acquired intangible assets

Settlement with OCS

In-process research and development

Other legal expenses (recoveries)No note on this… is this an other???



Gain on sale of land

Other adjustments

Non-GAAP operating income

As a percentage of non-GAAP revenue


GAAP other income (expense), net

Losses on early retirements of debt

Unrealized (gains) losses on derivatives, net

Amortization of convertible note discount

Other adjustments

Non-GAAP other income (expense), net


FYE January 31,


GAAP provision for (benefit from) income taxes

GAAP effective income tax rate

Non-cash tax adjustments

Non-GAAP provision for income taxes

Non-GAAP effective income tax rate


GAAP net (loss) income attributable to Verint Systems Inc.

Total GAAP net (loss) income adjustments

Non-GAAP net income attributable to Verint Systems Inc.


GAAP net (loss) income attributable to Verint Systems Inc. common shares

Total GAAP net (loss) income adjustments

Non-GAAP net income attributable to Verint Systems Inc. common shares

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.

Shares used in computing non-GAAP diluted net income per common share (in 000's)

($ in millions)

FYE January 31,


GAAP net (loss) income attributable to Verint Systems Inc.

Net income attributable to noncontrolling interest

Provision (benefit) for income taxes

Other (income) expense, net

GAAP depreciation & amortization (1)



Settlement with OCS

In-process research and development

Other legal expenses (recoveries)


Gain on sale of land

Other adjustments

Adjusted EBITDA


Proof of Non-GAAP EBITDA on old schedule

Proof

Total items to add to Adjusted EBITDA rec

Proof including items above to add to Adjusted EBITDA

EPS Rec

($ in millions)




GAAP operating (loss) income$ 4.1$ (47.3)$ (114.6)$ (15.0)$ 65.7$ 73.1$ 86.5$ 21.0$ 26.3$ 16.8$ 35.5$ 99.6$ 13.7$ 31.3$ 37.8$ 39.5$ 122.3$ 1.0$ 11.5$ 24.4$ 42.3$ 79.1$ 9.6$ 8.7$ 22.3$ 27.2$ 67.9$ (0.4)$ 4.2$ 4.5$ 0.7$ (11.3)$ 3.7

As a percentage of GAAP revenue1.5%-12.8%-21.4%-2.2%9.3%10.1%11.0%10.7%12.4%8.3%15.5%11.9%6.7%14.1%16.9%15.4%13.5%ERROR:#DIV/0!0.4%4.2%8.6%13.6%ERROR:#DIV/0!7.0%3.6%2.9%7.9%9.7%6.0%-1.4%12.2%12.8%1.8%-4.6%1.4%

Revenue adjustments related to acquisitions- 0- 037.35.9- 0- 013.63.62.61.11.28.50.60.30.51.42.711.97.95.93.929.80.81.21.31.04.30.40.20.20.13.62.2ERROR:#REF!ERROR:#REF!ERROR:#REF!

Amortization and impairment of acquired technology and backlog5.07.78.09.08.09.112.43.83.63.73.714.83.62.41.94.312.36.48.68.18.031.08.09.99.18.935.81.71.71.71.79.29.1

Amortization of other acquired intangible assets1.33.219.725.222.321.522.96.26.06.16.124.46.06.06.26.524.711.211.611.411.045.210.710.710.910.843.12.62.62.62.411.311.5

Settlement with OCS- 019.2- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

In-process research and development2.9- 06.7- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)2.6- 08.7(4.3)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Stock-based compensation expenses1.218.831.136.044.246.827.95.75.96.76.925.26.29.29.79.835.011.514.412.615.954.414.919.016.414.364.5- 0- 0- 04.515.316.4

Expenses related to restatement and extended filing delay- 03.741.428.754.528.91.0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land- 0(0.8)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other adjustments- 021.137.234.90.95.212.3(0.8)(1.5)11.37.616.66.52.20.34.013.09.04.62.37.523.47.39.53.28.528.60.10.20.31.36.75.5

Non-GAAP operating income$ 17.1$ 25.5$ 75.4$ 120.4$ 195.6$ 184.6$ 176.6$ 39.4$ 43.0$ 45.7$ 61.0$ 189.2$ 36.7$ 51.4$ 56.4$ 65.5$ 210.0$ - 0$ 51.0$ 58.6$ 64.7$ 88.6$ - 0$ 262.9$ 51.3$ 59.0$ 63.2$ 70.7$ 244.2$ 4.3$ 8.9$ 9.4$ 10.7$ 34.8$ 48.4ERROR:#REF!ERROR:#REF!ERROR:#REF!

As a percentage of non-GAAP revenue6.1%6.9%13.2%17.8%27.8%25.4%22.2%19.7%20.0%22.6%26.5%22.3%17.9%23.1%25.1%25.5%23.1%ERROR:#DIV/0!18.9%20.6%22.4%28.1%ERROR:#DIV/0!22.7%19.0%19.9%22.1%25.1%21.5%14.8%25.9%26.4%26.5%14.0%18.3%


GAAP other income (expense), net$ 8.0$ 7.8$ (55.2)$ (43.9)$ (41.5)$ (34.6)$ (40.3)$ (31.8)$ (18.5)$ (9.9)$ (7.8)$ (22.7)$ (59.0)$ (14.3)$ (16.3)$ (8.1)$ (19.0)$ (57.7)$ (7.9)$ (11.8)$ (12.3)$ (12.6)$ (44.7)$ (4.6)$ (13.8)


Unrealized (gains) losses on derivatives, net- 0- 026.7(1.8)(8.0)(6.0)(0.4)0.1(0.4)0.10.6(1.0)(0.7)0.7(0.9)(1.6)1.6(0.1)0.4(0.3)(0.1)- 0- 00.30.1

Amortization of convertible note discount- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 01.12.42.46.02.52.52.52.610.12.62.7

Other adjustments- 0- 0- 0- 0- 0- 00.11.20.11.00.312.313.80.1- 0(0.1)0.60.5- 00.21.61.43.40.32.5

Non-GAAP other income (expense), net$ 8.0$ 7.8$ (28.5)$ (45.7)$ (49.5)$ (40.6)$ (32.5)$ - 0$ - 0$ - 0$ - 0$ (30.5)$ (9.1)$ (8.6)$ (6.9)$ (11.4)$ (36.0)$ (6.4)$ (10.6)$ (7.4)$ (14.4)$ (38.8)$ (5.0)$ (9.4)$ (8.3)$ (8.6)$ (31.2)$ (1.4)$ (8.5)$ - 0$ - 0$ - 0





GAAP provision for (benefit from) income taxes$ 9.6$ 0.1$ 27.7$ 19.7$ 7.1$ 9.9$ 5.5$ 9.0$ 3.1$ 2.8$ 6.0$ (7.3)$ 4.5$ (42.1)$ 5.5$ 4.8$ 16.8$ (15.0)$ 0.9$ 2.6$ 1.6$ (4.2)$ 1.0$ 0.3$ 1.0

GAAP effective income tax rate0.4%-16.3%-33.4%29.4%25.8%12.0%-16.3%-16.3%-16.3%-16.3%13.2%-16.3%-16.3%-16.3%-16.3%7.2%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%-70.1%-16.3%-16.3%-16.3%-16.3%-16.3%-16.3%4.1%-2.1%-10.6%

Non-cash tax adjustments(5.4)3.2(23.6)(16.4)4.6(1.4)11.19.2(0.1)1.7(1.2)10.711.246.4(1.2)(0.1)(10.5)34.63.01.73.28.416.22.72.7

Non-GAAP provision for income taxes$ 4.2$ 3.3$ 4.1$ 3.3$ 11.7$ 8.5$ 16.6$ - 0$ - 0$ - 0$ - 0$ 18.2$ 3.0$ 4.5$ 4.8$ 3.4$ 15.7$ - 0$ 4.3$ 4.3$ 4.7$ 6.3$ - 0$ 19.6$ - 0$ 3.9$ 4.3$ 4.8$ 4.2$ - 0$ 17.2$ 3.0$ 3.7$ - 0$ - 0$ - 0

Non-GAAP effective income tax rate9.9%8.8%4.4%8.0%6.3%11.5%11.4%9.0%8.8%8.1%8.9%9.3%


GAAP net (loss) income attributable to Verint Systems Inc.$ 1.7$ (40.5)$ (198.6)$ (80.4)$ 15.6$ 25.6$ 37.0$ 54.0$ (9.2)$ 17.5$ 22.5$ 22.9$ 53.8$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.881.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.4

Non-GAAP net income attributable to Verint Systems Inc.$ 20.1$ 29.1$ 41.8$ 69.6$ 133.0$ 132.5$ 123.8$ - 0$ - 0$ - 0$ - 0$ 135.7$ 23.4$ 37.4$ 43.1$ 49.4$ 153.3$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ - 0$ - 0$ - 0


GAAP net (loss) income attributable to Verint Systems Inc. common shares$ 1.7$ (40.5)$ (207.3)$ (93.5)$ 2.0$ 11.4$ 22.2$ 38.5$ (9.3)$ 17.5$ 22.5$ 22.9$ 53.6$ 28.0$ (12.3)$ 10.7$ 4.6$ 30.9$ (0.4)$ (7.1)$ 7.6$ 17.5$ 17.6$ (17.5)$ (11.7)

Total GAAP net (loss) income adjustments18.469.6240.4150.0117.4106.986.8- 0- 0- 0- 081.732.619.920.626.599.511.554.141.061.5168.141.751.141.739.2173.646.747.4

Non-GAAP net income attributable to Verint Systems Inc. common shares$ 20.1$ 29.1$ 33.1$ 56.5$ 119.4$ 118.3$ 109.0$ - 0$ - 0$ - 0$ - 0$ 120.2$ 23.3$ 37.4$ 43.1$ 49.4$ 153.1$ 39.5$ 41.8$ 51.7$ 66.1$ 199.0$ 41.3$ 44.0$ 49.3$ 56.7$ 191.2$ 29.2$ 35.7$ - 0$ - 0$ - 0

Shares used in computing non-GAAP diluted net income per common share (in 000's)32,62032,97933,03542,29842,96347,40250,12351,35553,26653,63753,94654,54054,00155,01858,17961,49262,08159,37462,38962,77362,77862,90062,92162,93462,928


CALCULATION FOR EPS:

Revenue adjustments related to acquisitions-37,2545,890--13,5998,5342,72929,7274,3753,5542,229

Amortization and impairment of acquired technology and backlog7,6648,0189,0248,0219,09412,40014,81212,26931,00435,7749,1809,134

Amortization of other acquired intangible assets3,16419,66825,24922,26821,46022,90224,44224,66245,16343,13011,26611,466

Settlement with OCS19,158--------- 0--

In-process research and development-6,682-------- 0--

Other legal expenses (recoveries)-8,708(4,292)------- 0--

Stock-based compensation expenses18,79131,06136,01144,24546,81927,91125,20834,99154,45864,54915,34016,388

Expenses related to restatement and extended filing delay3,65641,42228,68154,51128,920----- 0--

Gain on sale of land(765)--------- 0--

Losses on early retirements of debt-----8,136-9,87912,546- 0--

Unrealized (gains) losses on derivatives, net-26,703(1,807)(8,049)(5,986)(417)133(704)(129)(3)258134

Amortization of convertible note discount--------6,01410,1232,6142,650

Other adjustments21,10337,22234,9079035,18813,35617,76226,86723,93431,8557,0927,948

Non-GAAP tax adjustments(3,182)23,61616,352(4,553)1,412(11,097)(9,201)(11,164)(34,621)(16,213)(2,644)(2,655)

Total69,589240,354150,015117,346106,90786,790----81,690----99,529- 0- 0- 0- 0- 0- 0168,096- 0- 0- 0- 0- 0- 0173,59046,66047,294

Shares used in computing non-GAAP diluted net income per common share (in 000's)32,62032,97933,03542,29842,96347,40250,12351,35553,26653,63753,94654,54054,00155,01858,17961,49262,08159,37462,38962,77362,77862,90062,92162,93462,928

CALCULATION:




Table of Reconciliation from GAAP Diluted Net Loss Per Common Share Attributable to Verint Systems Inc. to Non-GAAP Diluted Net Income Per Common Share Attributable to Verint Systems Inc.

GAAP diluted net income (loss) per common share attributable to Verint Systems Inc.(1.26)(6.43)(2.88)0.060.310.560.960.990.520.2800(0.28)(0.19)

Revenue adjustments related to acquisitions- 01.130.14- 0- 00.27- 0- 0- 0- 00.17- 0- 0- 0- 00.05- 0- 0- 0- 0- 0- 00.50- 0- 0- 0- 0- 0- 00.06950.060.04- 0- 0- 0- 0

Amortization and impairment of acquired technology and backlog0.230.240.210.190.190.25- 0- 0- 0- 00.29- 0- 0- 0- 00.23- 0- 0- 0- 0- 0- 00.52- 0- 0- 0- 0- 0- 00.56860.150.15

Amortization of other acquired intangible assets0.100.600.600.520.450.46- 0- 0- 0- 00.48- 0- 0- 0- 00.46- 0- 0- 0- 0- 0- 00.76- 0- 0- 0- 0- 0- 00.68550.180.18

Settlement with OCS0.58- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

In-process research and development- 00.20- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Other legal expenses (recoveries)- 00.26(0.10)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Stock-based compensation expenses0.570.940.851.030.990.56- 0- 0- 0- 00.49- 0- 0- 0- 00.65- 0- 0- 0- 0- 0- 00.92- 0- 0- 0- 0- 0- 01.02590.240.26

Expenses related to restatement and extended filing delay0.111.250.681.270.61- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Gain on sale of land(0.02)- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0

Losses on early retirements of debt- 0- 0- 0- 0- 00.16- 0- 0- 0- 0- 0- 0- 0- 0- 00.18- 0- 0- 0- 0- 0- 00.21- 0- 0- 0- 0- 0- 0- 0- 0- 0

Unrealized (gains) losses on derivatives, net- 00.81(0.04)(0.19)(0.13)(0.01)- 0- 0- 0- 00.00- 0- 0- 0- 0(0.01)- 0- 0- 0- 0- 0- 0(0.00)- 0- 0- 0- 0- 0- 0(0.0000)0.000.00

Amortization of convertible note discount- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 00.10- 0- 0- 0- 0- 0- 00.16090.040.04

Other adjustments0.641.130.830.020.110.27- 0- 0- 0- 00.35- 0- 0- 0- 00.50- 0- 0- 0- 0- 0- 00.40- 0- 0- 0- 0- 0- 00.50630.110.13

Non-GAAP tax adjustments(0.10)0.710.39(0.11)0.03(0.22)- 0- 0- 0- 0(0.18)- 0- 0- 0- 0(0.21)- 0- 0- 0- 0- 0- 0(0.58)- 0- 0- 0- 0- 0- 0(0.2577)(0.04)(0.04)

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.0.850.850.672.792.572.29- 0- 0- 0- 02.55- 0- 0- 0- 02.83- 0- 0- 0- 0- 0- 03.35- 0- 0- 0- 0- 0- 03.040.460.56

Non-GAAP diluted net income per common share attributable to Verint Systems Inc.$ 0.62$ 0.88$ 1.00$ 1.65$ 3.09$ 2.79$ 2.47$ 2.64$ 0.44$ 0.70$ 0.80$ 0.91$ 2.84$ 0.72$ 0.72$ 0.84$ 1.06$ 3.35$ 0.66$ 0.70$ 0.78$ 0.90$ 3.04$ 0.46$ 0.57

Rounded:




Table of Reconciliation from GAAP Diluted Net Loss Per Common Share Attributable to Verint Systems Inc. to Non-GAAP Diluted Net Income Per Common Share Attributable to Verin

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