Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Thursday, Evercore ISI analyst Peter Levine revised the price target for Verint Systems (NASDAQ:VRNT) stock, reducing it to $23.00 from the previous $34.00 while maintaining an In Line rating. The stock, currently trading near its 52-week low with a market capitalization of $1.35 billion, appears undervalued according to InvestingPro analysis. Levine’s commentary highlighted that Verint Systems reported mixed fourth-quarter results, missing revenue expectations by approximately $23 million compared to consensus. Despite the miss, the company maintains a healthy gross profit margin of 71.5% and has demonstrated revenue growth of 4.45% over the last twelve months. A significant factor in this shortfall was a delay in several unbundled expansion deals, which are anticipated to close in fiscal year 2026. One major financial customer’s decision to implement a more structured rollout accounted for roughly $18 million of the revenue miss. InvestingPro subscribers have access to 7 additional key insights about VRNT’s financial health and growth prospects.
The analyst pointed out that Verint’s revenue recognition for its unbundled SaaS offerings, where customers host the software on their own data centers, allows the company to recognize about two-thirds of that revenue upfront, as opposed to bundled traditional SaaS delivery. This model can lead to variability in reported numbers, while Annual Recurring Revenue (ARR) is expected to provide a more normalized view of the business trajectory.
Despite the top-line miss, it was noted that all scheduled renewals and net new deals closed as expected. The market’s reaction to the results was deemed somewhat exaggerated by Levine, with the assumption being that the results indicated structural demand issues. However, he suggested that fluctuations in revenue may occur due to the mix of term and SaaS deals within a given quarter, with term deals leading to higher upfront recognized revenue, and a higher proportion of SaaS deals resulting in optically lower revenue due to the lack of upfront recognition.
Levine emphasized the importance of focusing on ARR as a key metric, considering it a more reliable indicator of underlying growth. Management marginally increased their fiscal year 2026 ARR guidance, projecting an 8% year-over-year growth. Although the revenue guidance was issued with a wider range to accommodate potential deal mix shifts, the analyst believes it may not be fully de-risked. Nonetheless, ARR growth is expected to accelerate sequentially over the next four quarters. With a P/E ratio of 22.65 and strong free cash flow yield, detailed analysis available in InvestingPro’s comprehensive research report suggests potential upside for investors willing to look past near-term volatility.
In other recent news, Verint Systems Inc. reported its fourth-quarter 2025 earnings, which fell short of expectations. The company posted an earnings per share (EPS) of $0.99, missing the anticipated $1.27, and reported revenue of $254 million, below the forecasted $276.99 million. Despite this, Verint raised its annual recurring revenue (ARR) outlook for fiscal 2026 to $768 million, representing an 8% growth. The company highlighted its strong focus on AI-powered customer experience solutions, which continue to gain traction among clients, including over 90 Fortune 500 companies. Verint also reported a 17% increase in bundled SaaS revenue for the full year. Analysts from Needham and Company and Evercore noted that Verint’s strong AI business outcomes are resonating well with customers. The company expects continued momentum in AI adoption and customer expansion, projecting revenue guidance of $960 million with a non-GAAP diluted EPS midpoint of $2.93.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.