Verint Q1 FYE26 slides: AI ARR surges 24% as company targets 8% exit growth

Introduction & Market Context

Verint Systems Inc (NASDAQ:VRNT) presented its first quarter fiscal year 2026 results on June 4, 2025, highlighting accelerating growth in Annual Recurring Revenue (ARR) and strong AI adoption despite an earnings per share miss. The market responded positively to the presentation, with Verint’s stock rising 2.98% to $18.14 in after-hours trading and continuing to surge 20.99% to $22.19 in pre-market trading the following day.

The customer experience automation leader reported Q1 revenue of $208 million, exceeding analyst expectations of $195.03 million, while non-GAAP diluted EPS came in at $0.29, below the forecasted $0.34. Despite the earnings shortfall, investors appeared to focus on Verint’s accelerating growth trajectory and AI momentum.

Quarterly Performance Highlights

Verint reported continued acceleration in ARR growth, reaching 6% year-over-year in Q1 FYE26, up from 5% in Q4 FYE25. This represents the fourth consecutive quarter of ARR growth acceleration, as the company continues its strategic shift toward AI-powered customer experience solutions.

As shown in the following chart of quarterly ARR growth:

The company secured two significant deals in Q1, including a $13 million Total (EPA:TTEF) Contract Value (TCV) order from a leading insurance provider and a $14 million TCV order from a leading healthcare company. These eight-digit deals demonstrate Verint’s ability to win substantial contracts in competitive markets.

The following slide highlights these major Q1 deals:

Particularly noteworthy is how the $14 million healthcare deal contributed to ARR growth. The customer’s ARR nearly doubled from $8.0 million in Q1 FYE25 to $15.6 million in Q1 FYE26, with AI ARR accounting for $8.6 million of the total. This example illustrates how Verint’s hybrid cloud design facilitates AI adoption among its customers.

The breakdown of this ARR increase is illustrated here:

AI-Driven Growth Strategy

The most impressive aspect of Verint’s Q1 performance was the acceleration in AI ARR growth, which reached 24% year-over-year, up from 18% in Q4 FYE25. AI ARR now stands at $354 million, representing approximately half of the company’s total ARR.

The following chart demonstrates this acceleration in AI ARR growth:

Verint’s presentation emphasized customer success stories that validate its AI-driven approach. The company showcased multiple examples of customers achieving significant business outcomes through its AI solutions, including a telecommunications company that increased sales by $30 million, a bank that saved $10 million through AI-driven self-service, and a mortgage lender that increased its Net Promoter Score from +3 to +39 through real-time agent coaching.

These customer outcomes are detailed in the following slide:

During the earnings call, CEO Dan Bodier emphasized the company’s focus on rapid AI adoption, stating, "We are not just showing a nice lab demo. We are actually encouraging our customers to go to production right away." This practical approach to AI implementation appears to be resonating with customers, as evidenced by the strong growth in AI ARR.

Financial Outlook

Verint provided guidance for both Q2 FYE26 and the full fiscal year. For Q2, the company expects revenue of $200 million and non-GAAP diluted EPS of $0.26, noting that Q2 revenue will be influenced by the timing of unbundled SaaS renewals.

For the full fiscal year 2026, Verint projects:

• Revenue of $960 million (±3%)
• Non-GAAP diluted EPS of $2.93
• 8% ARR growth by year-end
• 12% free cash flow growth

The company’s financial guidance is summarized in the following slide:

Verint’s cash generation model shows expected Q4 ARR of $768 million, representing 8% growth year-over-year. The company also anticipates non-recurring revenue of $192 million, resulting in total cash generation of $960 million. After accounting for non-GAAP COGS and operating expenses of $715 million, Verint expects a cash contribution of $245 million and free cash flow of $145 million.

The detailed cash generation model is presented here:

Balance Sheet and Capital Allocation

Verint reported a strong balance sheet with low net leverage, providing financial flexibility to pursue growth opportunities. The company also demonstrated its commitment to returning capital to shareholders by repurchasing approximately 2.5 million shares in Q1 FYE26.

This share buyback activity is notable given the stock’s significant decline over the past year. Prior to the earnings announcement, Verint’s stock was trading near $17.61, well below its 52-week high of $38.17 but above its 52-week low of $14.15.

Market Response & Conclusion

The market’s positive reaction to Verint’s Q1 results suggests that investors are focusing on the company’s accelerating growth trajectory and AI momentum rather than the EPS miss. The stock’s significant pre-market surge of 20.99% to $22.19 indicates renewed investor confidence in Verint’s strategy and execution.

Verint summarized its position with three key points: "ARR Growth Acceleration Driven by Growing AI Adoption," "Expect to Exit FYE26 with 8% ARR Growth," and "Expect 12% Free Cash Flow Growth in FYE26."

As shown in this summary slide:

While challenges remain, including increased competition in the AI customer experience market and execution risks associated with scaling AI deployments, Verint’s Q1 FYE26 presentation demonstrates that the company is successfully leveraging its AI capabilities to drive growth and deliver measurable business outcomes for its customers.

With a strong pipeline of AI opportunities and continued ARR growth acceleration, Verint appears well-positioned to capitalize on the increasing demand for AI-powered customer experience solutions in the coming quarters.

Full presentation:

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