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Verint Announces Second Quarter Results

Verint® Systems Inc. (NASDAQ:VRNT), a global leader in Actionable Intelligence® solutions and value-added services, today announced results for the three and six months ended July 31, 2013.

“In Q2, we delivered $223 million of non-GAAP revenue, and $0.70 of non-GAAP fully diluted earnings per share. We are pleased with our strong Q2 results which reflect our focus on innovation, expanding portfolio of analytical solutions and strong competitive position in the enterprise and security intelligence markets,” said Dan Bodner, CEO and President.

Financial Highlights

Below is selected unaudited financial information for the three and six months ended July 31, 2013 prepared in accordance with generally accepted accounting principles (“GAAP”) and not in accordance with GAAP (“non-GAAP”).

Three Months Ended July 31, 2013 – GAAP

  • Revenue: $222.4 million
  • Operating Income: $31.3 million
  • Diluted EPS: $0.33
         

Three Months Ended July 31, 2013 – Non-GAAP

  • Revenue: $222.8 million
  • Operating Income: $51.4 million
  • Diluted EPS: $0.70

Six Months Ended July 31, 2013 – GAAP

  • Revenue: $427.2 million
  • Operating Income: $45.0 million
  • Diluted EPS: $0.15
               

Six Months Ended July 31, 2013 – Non-GAAP

  • Revenue: $428.2 million
  • Operating Income: $88.1 million
  • Diluted EPS: $1.14
 

Financial Outlook

Below is Verint’s non-GAAP outlook for the year ending January 31, 2014.

  • We expect revenue to increase between 6% and 7% compared to the year ended January 31, 2013
  • We expect fully diluted earnings per share in the range of $2.75 plus or minus 5 cents

Conference Call Information

We will conduct a conference call today at 8:30 a.m. ET to discuss our results for the three and six months ended July 31, 2013 and outlook for the year ending January 31, 2014. An online, real-time webcast of the conference call will be available on our website at www.verint.com. The conference call can also be accessed live via telephone at 1-866-515-2911 (United States and Canada) and 1- 617-399-5125 (international) and the passcode is 51023644. Please dial in 5-10 minutes prior to the scheduled start time.

About Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Tables 2 and 3 as well as "Supplemental Information About Non-GAAP Financial Measures" at the end of this press release. Because we do not predict special items that might occur in the future, and our outlook is developed at a level of detail different than that used to prepare GAAP financial measures, we are not providing a reconciliation to GAAP of our forward-looking financial measures for the year ending January 31, 2014.

About Verint Systems Inc.

Verint® (NASDAQ:VRNT) is a global leader in Actionable Intelligence® solutions. Its portfolio of Enterprise Intelligence Solutions and Security Intelligence Solutions helps organizations Make Big Data Actionable through the ability to capture, analyze and act on large volumes of rich, complex and often underused information sources—such as voice, video and unstructured text. With Verint solutions and value-added services, organizations of all sizes can make more timely and effective decisions. Today, more than 10,000 organizations in over 150 countries, including over 80 percent of the Fortune 100, count on Verint solutions to improve enterprise performance and make the world a safer place. Headquartered in NY, Verint has offices worldwide and an extensive global partner network. Learn more at www.verint.com.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Verint Systems Inc. These forward-looking statements are not guarantees of future performance and they are based on management's expectations that involve a number of risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause actual future results or conditions to differ materially from current expectations include: uncertainties regarding the impact of general economic conditions in the United States and abroad, particularly in information technology spending and government budgets, on our business; risks associated with our ability to keep pace with technological changes and evolving industry standards in our product offerings and to successfully develop, launch, and drive demand for new and enhanced, innovative, high-quality products that meet or exceed customer needs; risks due to aggressive competition in all of our markets, including with respect to maintaining margins and sufficient levels of investment in our business; risks created by the continued consolidation of our competitors or the introduction of large competitors in our markets with greater resources than we have; risks associated with our ability to successfully compete for, consummate, and implement mergers and acquisitions, including risks associated with capital constraints, costs and expenses, maintaining profitability levels, management distraction, post-acquisition integration activities, and potential asset impairments; risks that we may be unable to maintain and enhance relationships with key resellers, partners, and systems integrators; risks relating to our ability to effectively and efficiently execute on our growth strategy, including managing investments in our business and operations and enhancing and securing our internal and external operations; risks associated with our ability to effectively and efficiently allocate limited financial and human resources to business, development, strategic, or other opportunities that may not come to fruition or produce satisfactory returns; risks associated with the mishandling or perceived mishandling of sensitive or confidential information, security lapses, or with information technology system failures or disruptions; risks associated with our significant international operations, including, among others, in Israel, Europe, and Asia, exposure to regions subject to political or economic instability, and fluctuations in foreign exchange rates; risks associated with a significant amount of our business coming from domestic and foreign government customers, including the ability to maintain security clearances for certain projects; risks associated with complex and changing local and foreign regulatory environments in the jurisdictions in which we operate; risks associated with our ability to recruit and retain qualified personnel in regions in which we operate; challenges associated with selling sophisticated solutions, long sales cycles, and emphasis on larger transactions, including in assisting customers in realizing the value they expect and in accurately forecasting revenue and expenses and in maintaining profitability; risks that our intellectual property rights may not be adequate to protect our business or assets or that others may make claims on our intellectual property or claim infringement on their intellectual property rights; risks that our products may contain undetected defects, which could expose us to substantial liability; risks associated with our dependence on a limited number of suppliers or original equipment manufacturers for certain components of our products, including companies that may compete with us or work with our competitors; risks that our customers or partners delay or cancel orders or are unable to honor contractual commitments due to liquidity issues, challenges in their business, or otherwise; risks that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms or at all; risks associated with significant leverage resulting from our current debt position, including with respect to covenant limitations and compliance, fluctuations in interest rates, and our ability to maintain our credit ratings; risks arising as a result of contingent, unknown or unexpected obligations or liabilities of our former parent company, Comverse Technology, Inc. (“CTI”), assumed upon completion of our merger with CTI that was completed on February 4, 2013 (the “CTI Merger”), including regulatory or compliance liabilities, or as a result of parties obligated to provide us with indemnification being unwilling or unable to perform such obligations; risks associated with being a former consolidated subsidiary of CTI and formerly part of CTI's consolidated tax group; risks relating to our reliance on CTI’s former subsidiary, Comverse, Inc. (“Comverse”), to perform certain transition services following the CTI Merger on a timely basis or at all in order for us to comply with certain regulatory requirements; risks relating to our ability to successfully implement and maintain adequate systems and internal controls for our current and future operations and reporting needs and related risks of financial statement omissions, misstatements, restatements, or filing delays; and risks associated with changing tax rates, tax laws and regulations, and the continuing availability of expected tax benefits, including those expected as a result of the CTI Merger. We assume no obligation to revise or update any forward-looking statement, except as otherwise required by law. For a detailed discussion of these risk factors, see our Annual Report on Form 10-K for the fiscal year ended January 31, 2013, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2013, when filed, and other filings we make with the SEC.

VERINT, ACTIONABLE INTELLIGENCE, MAKE BIG DATA ACTIONABLE, CUSTOMER-INSPIRED EXCELLENCE, INTELLIGENCE IN ACTION, IMPACT 360, WITNESS, VERINT VERIFIED, VOVICI, GMT, AUDIOLOG, ENTERPRISE INTELLIGENCE SOLUTIONS, SECURITY INTELLIGENCE SOLUTIONS, VOICE OF THE CUSTOMER ANALYTICS, NEXTIVA, EDGEVR, RELIANT, VANTAGE, STAR-GATE, ENGAGE, CYBERVISION, FOCALINFO, SUNTECH, and VIGIA are trademarks or registered trademarks of Verint Systems Inc. or its subsidiaries. Other trademarks mentioned are the property of their respective owners.

               

Table 1

Verint Systems Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 
 
Three Months Ended July 31, Six Months Ended July 31,
2013 2012 2013 2012
 
Revenue:
Product $ 97,865 $ 101,990 $ 185,215 $ 193,989
Service and support   124,582     110,436     242,018     215,072  
Total revenue   222,447     212,426     427,233     409,061  
Cost of revenue:
Product 30,090 36,382 61,262 67,274
Service and support 40,170 35,954 78,668 69,606
Amortization of acquired technology and backlog   2,347     3,644     5,985     7,428  
Total cost of revenue   72,607     75,980     145,915     144,308  
Gross profit   149,840     136,446     281,318     264,753  
Operating expenses:
Research and development, net 31,203 30,195 61,231 58,598
Selling, general and administrative 81,364 73,953 163,068 146,676
Amortization of other acquired intangible assets   6,010     6,035     12,043     12,233  
Total operating expenses   118,577     110,183     236,342     217,507  
Operating income   31,263     26,263     44,976     47,246  
Other income (expense), net:
Interest income 166 124 321 254
Interest expense (7,383 ) (7,867 ) (14,571 ) (15,585 )
Loss on extinguishment of debt (173 ) - (9,879 ) -
Other income (expense), net   (2,559 )   (483 )   (4,367 )   151  
Total other expense, net   (9,949 )   (8,226 )   (28,496 )   (15,180 )
Income before provision for income taxes 21,314 18,037 16,480 32,066
Provision for income taxes   2,809     4,772     5,912     7,171  
Net income 18,505 13,265 10,568 24,895
Net income attributable to noncontrolling interest   969     658     2,185     2,253  
Net income attributable to Verint Systems Inc. 17,536 12,607 8,383 22,642
Dividends on preferred stock   -     (3,868 )   (174 )   (7,612 )
Net income attributable to Verint Systems Inc. common shares $ 17,536   $ 8,739   $ 8,209   $ 15,030  
 
Net income per common share attributable to Verint Systems Inc.:
Basic $ 0.33   $ 0.22   $ 0.16   $ 0.38  
Diluted $ 0.33   $ 0.22   $ 0.15   $ 0.38  
 
Weighted-average common shares outstanding:
Basic   52,977     39,712     52,484     39,392  
Diluted   53,637     40,072     53,176     39,938  
 
               

Table 2

Verint Systems Inc. and Subsidiaries

Segment Revenue

(Unaudited)

(In thousands)

 
 
Three Months Ended July 31, Six Months Ended July 31,
2013 2012 2013 2012
 

GAAP Revenue By Segment:

Enterprise Intelligence $ 125,873 $ 116,375 $ 238,796 $ 226,202
 
Video Intelligence 32,136 38,159 60,934 66,837
Communications Intelligence   64,438   57,892   127,503   116,022
Total Video and Communications Intelligence 96,574 96,051 188,437 182,859
       

GAAP Total Revenue

$ 222,447 $ 212,426 $ 427,233 $ 409,061
 

Revenue Adjustments Related to Acquisitions:

Enterprise Intelligence $ 116 $ 1,259 $ 369 $ 3,212
 
Video Intelligence - 712 167 1,492
Communications Intelligence   213   671   411   1,542
Total Video and Communications Intelligence 213 1,383 578 3,034
       

Total Revenue Adjustments Related to Acquisitions

$ 329 $ 2,642 $ 947 $ 6,246

 

 

Non-GAAP Revenue By Segment:

Enterprise Intelligence $ 125,989 $ 117,634 $ 239,165 $ 229,414
 
Video Intelligence 32,136 38,871 61,101 68,329
Communications Intelligence   64,651   58,563   127,914   117,564
Total Video and Communications Intelligence 96,787 97,434 189,015 185,893
       

Non-GAAP Total Revenue

$ 222,776 $ 215,068 $ 428,180 $ 415,307
 
         

Table 3

Verint Systems Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

(In thousands, except per share data)

 
Three Months Ended July 31, Six Months Ended July 31,
2013 2012 2013 2012

Table of Reconciliation from GAAP Gross Profit to Non-GAAP Gross Profit

 
GAAP gross profit $ 149,840 $ 136,446 $ 281,318 $ 264,753
Revenue adjustments related to acquisitions 329 2,642 947 6,246
Amortization of acquired technology and backlog 2,347 3,644 5,985 7,428
Stock-based compensation expenses 682 569 1,079 1,293
M&A and other adjustments   123     (4 )   378     5  
Non-GAAP gross profit $ 153,321   $ 143,297   $ 289,707   $ 279,725  
 

Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP EBITDA

 
GAAP operating income $ 31,263 $ 26,263 $ 44,976 $ 47,246
Revenue adjustments related to acquisitions 329 2,642 947 6,246
Amortization of acquired technology and backlog 2,347 3,644 5,985 7,428
Amortization of other acquired intangible assets 6,010 6,035 12,043 12,233
Stock-based compensation expenses 9,192 5,922 15,425 11,633
M&A and other adjustments   2,268     (1,476 )   8,748     (2,318 )
Non-GAAP operating income   51,409     43,030     88,124     82,468  
 
GAAP depreciation and amortization (1) 12,292 14,169 26,149 28,265
Amortization of acquired technology and backlog (2,347 ) (3,644 ) (5,985 ) (7,428 )
Amortization of other acquired intangible assets (6,010 ) (6,035 ) (12,043 ) (12,233 )
M&A and other adjustments   -     (84 )   -     (84 )
Non-GAAP depreciation and amortization   3,935     4,406     8,121     8,520  
Non-GAAP EBITDA $ 55,344   $ 47,436   $ 96,245   $ 90,988  
 

Table of Reconciliation from GAAP Other Expense, Net to Non-GAAP Other Expense, Net

 
GAAP other expense, net $ (9,949 ) $ (8,226 ) $ (28,496 ) $ (15,180 )
Loss on extinguishment of debt 173 - 9,879 -
Unrealized (gains) losses on derivatives, net 75 (61 ) (336 ) (397 )
M&A and other adjustments   1,118     (93 )   1,297     (89 )
Non-GAAP other expense, net $ (8,583 ) $ (8,380 ) $ (17,656 ) $ (15,666 )
 

Table of Reconciliation from GAAP Provision for Income Taxes to Non-GAAP Provision for Income Taxes

 
GAAP provision for income taxes $ 2,809 $ 4,772 $ 5,912 $ 7,171
Non-cash tax adjustments   1,692     (447 )   1,618     1,012  
Non-GAAP provision for income taxes $ 4,501   $ 4,325   $ 7,530   $ 8,183  
 

Table of Reconciliation from GAAP Net Income Attributable to Verint Systems Inc. to Non-GAAP Net Income Attributable to Verint Systems Inc.

 
GAAP net income attributable to Verint Systems Inc. $ 17,536   $ 12,607   $ 8,383   $ 22,642  
Revenue adjustments related to acquisitions 329 2,642 947 6,246
Amortization of acquired technology and backlog 2,347 3,644 5,985 7,428
Amortization of other acquired intangible assets 6,010 6,035 12,043 12,233
Stock-based compensation expenses 9,192 5,922 15,425 11,633
M&A and other adjustments 3,386 (1,569 ) 10,045 (2,407 )
Loss on extinguishment of debt 173 - 9,879 -
Unrealized (gains) losses on derivatives, net 75 (61 ) (336 ) (397 )
Non-cash tax adjustments   (1,692 )   447     (1,618 )   (1,012 )
Total GAAP net income adjustments   19,820     17,060     52,370     33,724  
Non-GAAP net income attributable to Verint Systems Inc. $ 37,356   $ 29,667   $ 60,753   $ 56,366  
 

Table of Reconciliation from GAAP Net Income Attributable to Verint Systems Inc. Common Shares to Non-GAAP Net Income

Attributable to Verint Systems Inc. Common Shares

 
GAAP net income attributable to Verint Systems Inc. common shares $ 17,536 $ 8,739 $ 8,209 $ 15,030
Total GAAP net income adjustments   19,820     17,060     52,370     33,724  
Non-GAAP net income attributable to Verint Systems Inc. common shares $ 37,356   $ 25,799   $ 60,579   $ 48,754  
 

Table Comparing GAAP Diluted Net Income 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 per common share attributable to Verint Systems Inc. $ 0.33   $ 0.22   $ 0.15   $ 0.38  
 
Non-GAAP diluted net income per common share attributable to Verint Systems Inc. $ 0.70   $ 0.58   $ 1.14   $ 1.11  
 
Shares used in computing GAAP diluted net income per common share   53,637     40,072     53,176     39,938  
 
Shares used in computing non-GAAP diluted net income per common share   53,637     51,060     53,424     50,873  
 
 
(1) Adjusted for patent and financing fee amortization.
 
       
Table 4
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
 
July 31, January 31,
2013 2013
 
Assets
Current Assets:
Cash and cash equivalents $ 229,184 $ 209,973
Restricted cash and bank time deposits 8,225 11,128
Short-term investments 118,370 13,593
Accounts receivable, net of allowance for doubtful accounts of $1.4 million and $1.8 million, respectively 164,937 168,415
Inventories 14,173 15,014
Deferred cost of revenue 4,428 6,253
Prepaid expenses and other current assets   65,108     77,277  
Total current assets   604,425     501,653  
Property and equipment, net 37,432 38,161
Goodwill 821,040 829,909
Intangible assets, net 124,203 144,261
Capitalized software development costs, net 6,724 6,343
Long-term deferred cost of revenue 10,358 7,742
Other assets   62,145     36,200  
Total assets $ 1,666,327   $ 1,564,269  
 
Liabilities, Preferred Stock, and Stockholders' Equity
Current Liabilities:
Accounts payable $ 48,183 $ 47,355
Accrued expenses and other current liabilities 159,591 177,736
Current maturities of long-term debt 6,615 5,867
Deferred revenue   159,121     163,252  
Total current liabilities   373,510     394,210  
Long-term debt 638,877 570,822
Long-term deferred revenue 13,261 13,562
Other liabilities   90,948     70,457  
Total liabilities   1,116,596     1,049,051  

Preferred Stock - $0.001 par value; authorized 2,500,000 shares.

Series A convertible preferred stock; Issued and outstanding 0 and 293,000

shares as of July 31, 2013 and January 31, 2013, respectively;

aggregate liquidation preference and redemption value of $365,914 at January 31, 2013.

  -     285,542  
Commitments and Contingencies
Stockholders' Equity:

Common stock - $0.001 par value; authorized 120,000,000 shares.

Issued 53,620,000 and 40,460,000 shares; outstanding 53,318,000 and

40,158,000 shares as of July 31, 2013 and January 31, 2013, respectively.

53 40
Additional paid-in capital 899,965 580,762
Treasury stock, at cost - 302,000 shares as of July 31, 2013 and January 31, 2013. (8,013 ) (8,013 )
Accumulated deficit (295,379 ) (303,762 )
Accumulated other comprehensive loss   (53,783 )   (44,225 )
Total Verint Systems Inc. stockholders' equity 542,843 224,802
Noncontrolling interest   6,888     4,874  
Total stockholders' equity   549,731     229,676  
Total liabilities, preferred stock, and stockholders' equity $ 1,666,327   $ 1,564,269  
 
         
Table 5
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
 
Six Months Ended July 31,
2013 2012
 
 
Cash flows from operating activities:
Net income $ 10,568 $ 24,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 27,284 28,265
Stock-based compensation – equity portion 13,688 10,994
Non-cash gains on derivative financial instruments, net (676 ) (131 )
Loss on extinguishment of debt 9,879 -
Other non-cash items, net 795 (6,123 )
 
Changes in operating assets and liabilities, net of effects of CTI Merger:
Accounts receivable 2,517 (13,295 )
Inventories 332 3,599
Deferred cost of revenue (662 ) 12,292
Prepaid expenses and other assets 19,941 5,022
Accounts payable and accrued expenses (8,446 ) (7,528 )
Deferred revenue (3,143 ) (18,315 )
Other, net   581     (424 )
Net cash provided by operating activities   72,658     39,251  
 
Cash flows from investing activities:
Purchases of short-term investments (124,990 ) -
Maturities of short-term investments 20,000 -
Cash paid for business combinations, including adjustments - (660 )
Purchases of property and equipment (5,624 ) (6,180 )
Settlements of derivative financial instruments not designated as hedges 340 (266 )
Cash paid for capitalized software development costs (1,604 ) (2,298 )
Changes in restricted cash and bank time deposits, including long-term portion 5,707 1,811
Other investing activities   (182 )   -  
Net cash used in investing activities   (106,353 )   (7,593 )
 
Cash flows from financing activities:
Proceeds from borrowings, net of original issuance discount 646,750 -
Repayments of borrowings and other financing obligations (582,263 ) (3,486 )
Payments of debt issuance and other debt-related costs (7,754 ) (159 )
Cash received in CTI Merger 10,370 -
Proceeds from exercises of stock options 2,649 1,395
Purchases of treasury stock - (615 )
Payments of contingent consideration for business combinations (financing portion)   (15,373 )   (5,140 )
Net cash provided by (used in) financing activities   54,379     (8,005 )
Effect of exchange rate changes on cash and cash equivalents   (1,473 )   (1,065 )
Net increase in cash and cash equivalents 19,211 22,588
Cash and cash equivalents, beginning of period   209,973     150,662  
Cash and cash equivalents, end of period $ 229,184   $ 173,250  
 

Verint Systems Inc. and Subsidiaries
Supplemental Information About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. Tables 2 and 3 include a reconciliation of each non-GAAP financial measure presented in this press release to the most directly comparable GAAP financial measure. Non-GAAP financial measures should not be considered in isolation or as a substitute for 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.

We believe that the non-GAAP financial measures we present provide meaningful supplemental information regarding our operating results primarily because they exclude certain non-cash charges or items that we do not believe are reflective of our ongoing operating results when budgeting, planning and forecasting, determining compensation, and when assessing the performance of our business with our individual operating segments or our senior management. We believe that these non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among our peer companies. However, those companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

Adjustments to Non-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 standalone basis. We exclude these adjustments from our non-GAAP financial measures because these are not reflective of our ongoing operations.

Amortization of acquired intangible assets, including acquired technology and backlog. 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 and backlog, from our non-GAAP financial measures. These expenses are excluded from our non-GAAP financial measures because they are non-cash charges. In addition, these amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Thus, we also exclude these amounts to provide better comparability of pre- and post-acquisition operating results.

Stock-based compensation expenses. We exclude stock-based compensation expenses related to stock options, restricted stock awards and units, stock bonus plans and phantom stock from our non-GAAP financial measures. These expenses are excluded from our non-GAAP financial measures because they are primarily non-cash charges. In prior periods, we also incurred (and excluded from our non-GAAP financial measures) significant cash-settled stock compensation expense due to our previous extended filing delay and restrictions on our ability to issue new shares of common stock to our employees.

M&A and other adjustments. We exclude from our non-GAAP financial measures legal, other professional fees and certain other expenses associated with acquisitions, whether or not consummated, and certain extraordinary transactions, including reorganizations, restructurings and expenses associated with the CTI Merger. Also excluded are changes in the fair value of contingent consideration liabilities associated with business combinations. These expenses are excluded from our non-GAAP financial measures because we believe that they are not reflective of our ongoing operations.

Unrealized (gains) losses on derivatives, net. We exclude from our non-GAAP financial measures unrealized gains and losses on foreign currency derivatives not designated as hedges. These 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 and which we believe are not reflective of our ongoing operations.

Loss on extinguishment of debt. We exclude from our non-GAAP financial measures loss on extinguishment of debt attributable to refinancing or repaying our debt because we believe it is not reflective of our ongoing operations.

Non-cash tax adjustments. We exclude from our non-GAAP financial measures non-cash tax adjustments, which represent the difference between the amount of taxes we actually paid and our GAAP tax provision on an annual basis. On a quarterly basis, this adjustment reflects our expected annual effective tax rate on a cash basis.

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SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2016 Silicon Valley. The 19th Cloud Expo and 6th @ThingsExpo will take place on November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Interne...
"We formed Formation several years ago to really address the need for bring complete modernization and software-defined storage to the more classic private cloud marketplace," stated Mark Lewis, Chairman and CEO of Formation Data Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
Most organizations prioritize data security only after their data has already been compromised. Proactive prevention is important, but how can you accomplish that on a small budget? Learn how the cloud, combined with a defense and in-depth approach, creates efficiencies by transferring and assigning risk. Security requires a multi-defense approach, and an in-house team may only be able to cherry pick from the essential components. In his session at 19th Cloud Expo, Vlad Friedman, CEO/Founder o...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
In addition to all the benefits, IoT is also bringing new kind of customer experience challenges - cars that unlock themselves, thermostats turning houses into saunas and baby video monitors broadcasting over the internet. This list can only increase because while IoT services should be intuitive and simple to use, the delivery ecosystem is a myriad of potential problems as IoT explodes complexity. So finding a performance issue is like finding the proverbial needle in the haystack.
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...