Verint Systems Inc. (NASDAQ:VRNT) Q4 2019 Earnings Conference Call - Final Transcript
Mar 31, 2020 • 04:30 pm ET
progress we've made in fiscal 2020, particularly, with our 13% increase in estimated fully allocated gross profit, which I believe is a key metric to focus on as we go through our software model transition. The move to a software model in Cyber Intelligence will benefit us in many ways; first, faster innovation and software refresh cycles for our customers; second, greater competitive differentiation; third, higher gross margins; and last, higher operating margins.
Turning to our balance sheet. In Q4, Verint reached a milestone with our total assets exceeding $3 billion. Today, we have a very strong balance sheet with more than $550 million of cash and short-term investments and less than $450 million of net debt. Since our last call, we completed half of our $300 million stock buyback program, repurchasing $150 million of stock overall. Overall, our net debt to adjusted EBITDA ratio is approximately 1.4 times, a low level of leverage for our financial profile. All these numbers exclude the $200 million of proceeds we expect to receive from the first tranche of the Apax investment once closed.
In addition to a strong balance sheet, we believe that Verint's Customer Engagement and Cyber Intelligence Solutions are mission critical to our customers, and then Verint will be well positioned in the market in the event of a recession. In Customer Engagement, the majority of revenue comes from large enterprises concentrated in the financial services, healthcare, utilities, technology and government verticals. In total, more than 75% of our revenue comes from these verticals with less than 5% coming from the hospitality and travel industries. Our solutions help organizations remain compliant, reduce operating costs, eliminate fraud, which are all important objectives in both good and bad economies.
Furthermore, today around 75% of our software revenue is recurring. In Cyber Intelligence, we have customers across more than 100 countries with more than 75% of our revenue coming from government agencies, and the rest from large enterprises. Our customers help keep the world safe and are responsible for maintaining law and order in times of peace, as well as in times of crisis.
Turning to our outlook, we have been closely following the COVID-19 crisis. Considering the rapidly changing conditions arising from COVID-19 and uncertainty around its impact, we are unable to provide guidance for the current year at this time. Long-term, the growth drivers in both Customer Engagement and Cyber Intelligence are intact. Near term, we remain focused on our Cloud First and software model strategies.
With that operator, can we open up the call for questions?