- Jeffrey Alton & Bill Feingold
Verint is bringing $300 million in convertible senior notes due 2021 to market in conjunction with a 5,000,000 equity share offering.
The pros seem to outweigh the cons on the new Verint deal. Verint, a former division of old convertible mainstay Comverse technology, provides all manner of big-data analytics, including security and government applications.
With the issue and concurrent equity-offering proceeds being used to pay off the credit line used in the acquisition earlier this year of KANA Software, overall leverage is fairly modest. With a credit spread likely in the 300-400 range depending on tastes, and volatility somewhere around 30, models will probably find the new bond straddling fair value. For a balanced, registered issue with reasonably good optics, that sounds good enough, even as the calendar appears to be heating up and the secondary market perhaps softening a touch.
The seven-year maturity probably hurts theoretical value just a bit and forces the decent optics--probably a good tradeoff right now.
Verint’s business is to offer customers a suite of big data products, either selling clients an initial module and upselling them to more modules in the suite or more recently, selling the entire suite of products. Traditionally, Verint was focused on the narrower segment of workforce optimization, analyzing interactions between the workforce and customers. The KANA acquisition brought CRM capabilities to extend reach and analyze customer data through a number of channels at once such as email, chat, phone, etc. Verint also offers cyber security products and closed a $100 million cyber security deal last quarter.
Total revenue for fiscal 2014 ended January 31 was $416.5 million and net income was $53.6 million, or $0.99 per diluted share. First quarter GAAP revenue including the KANA acquisition was $257 million with operation income of $1 million and diluted EPS of $0.51. VRNT most recently raised revenue guidance for the full year by $30 million to a range of $1.11 billion to $1.16 billion translating to increased earnings guidance of 10 cents to a range of $3.20 to $3.40.