SYS-CON MEDIA Authors: Adrian Bridgwater, Yeshim Deniz, Elizabeth White, Sean Houghton, Glenn Rossman

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Verint Announces Fourth Quarter and Full Year Results

Verint® Systems Inc. (NASDAQ: VRNT), a global leader in Actionable Intelligence® solutions and value-added services, today announced results for the three months and year ended January 31, 2014.

“We are pleased to finish the year strong with non-GAAP results of $257 million of revenue and $0.91 of diluted earnings per share in Q4. For the year, we generated record non-GAAP results of $910 million of revenue, and $2.84 of diluted earnings per share. Non-GAAP EBITDA came in very strong at $227 million, reflecting 10.8% year-over-year growth, driven by a combination of revenue growth and operating leverage,” said Dan Bodner, CEO and President.

Bodner continued, “Our long-term growth strategy is to maintain our leadership in our current markets while identifying adjacent markets in which we can leverage our core competency in Actionable Intelligence. We are focused on three areas of the Actionable Intelligence market: Customer Engagement Optimization, Security Intelligence, and Fraud, Risk and Compliance. We are very excited about the long term opportunities for Verint, as well as our near term prospects, reflected in our guidance for the current year of approximately $1.1 billion of revenue with 25% EBITDA margins on a non-GAAP basis.”

Financial Highlights

Below is selected unaudited financial information for the three months and year ended January 31, 2014 prepared in accordance with generally accepted accounting principles (“GAAP”) and not in accordance with GAAP (“non-GAAP”).

Three Months Ended January 31, 2014 - GAAP       Three Months Ended January 31, 2014 - Non-GAAP
  Revenue: $255.7 million   Revenue: $257.1 million
Operating Income: $39.5 million Operating Income: $65.5 million
Diluted EPS: $0.42 Diluted EPS: $0.91
 
 
Year Ended January 31, 2014 - GAAP Year Ended January 31, 2014 - Non-GAAP
Revenue: $907.3 million Revenue: $910.0 million
Operating Income: $122.3 million Operating Income: $210.0 million
Diluted EPS: $0.99 Diluted EPS: $2.84
 

Financial Outlook

Below is Verint’s non-GAAP outlook for the year ending January 31, 2015.

  • We expect revenue in the range of $1.08 billion to $1.13 billion, and diluted earnings per share in the range of $3.20 to $3.40.
  • For Q1, we expect revenue in the range of $250 million to $260 million reflecting a full quarter of KANA which closed on February 3, 2014, as well as the seasonal trends that are typical in the enterprise software industry. We expect operating margins in Q1 to be similar to the first quarter of last year.

Conference Call Information

We will conduct a conference call today at 4:30 p.m. ET to discuss our results for the three months and year ended January 31, 2014 and outlook for the year ending January 31, 2015. 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 1-800-706-7745 (United States and Canada) and 1-617-614-3472 (international) and the passcode is 41282453. 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, 2015.

About Verint Systems Inc.

Verint® (NASDAQ: VRNT) is a global leader in Actionable Intelligence® solutions. Actionable Intelligence is a necessity in a dynamic world of massive information growth because it empowers organizations with crucial insights and enables decision makers to anticipate, respond, and take action. Our Actionable Intelligence solutions help organizations address three important challenges: Customer Engagement Optimization; Security Intelligence; and Fraud, Risk, and Compliance. Today, more than 10,000 organizations in over 180 countries, including over 80 percent of the Fortune 100, use Verint solutions to improve enterprise performance and make the world a safer place. 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, uncertainties, and assumptions, any of which could cause our actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual 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, valuations, costs and expenses, maintaining profitability levels, management distraction, post-acquisition integration activities, and potential asset impairments; 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 that we may be unable to maintain and enhance relationships with key resellers, partners, and systems integrators; 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 benefits of our solutions 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 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 or other obligations or liabilities assumed in our acquisition of our former parent company, Comverse Technology, Inc. (“CTI”), or associated with formerly being consolidated with, and part of a consolidated tax group with, CTI, or as a result of CTI's former subsidiary, Comverse, Inc. ("Comverse"), being unwilling or unable to provide us with certain indemnities or transition services to which we are entitled; 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 acquisitions. 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, 2014, 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, KANA, LAGAN, VOVICI, GMT, VICTRIO, 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
Consolidated Statements of Operations
(Unaudited)
   
Three Months Ended January 31,

   Year Ended January 31,   

(in thousands, except per share data) 2014   2013 2014   2013
Revenue:
Product $ 129,289 $ 108,394 $ 416,478 $ 389,787
Service and support 126,456   120,567   490,814   449,755  
Total revenue 255,745   228,961   907,292   839,542  
Cost of revenue:
Product 42,974 29,054 137,558 121,748
Service and support 41,025 39,672 156,593 145,444
Amortization of acquired technology and backlog 4,349   3,688   12,269   14,812  
Total cost of revenue 88,348   72,414   306,420   282,004  
Gross profit 167,397   156,547   600,872   557,538  
Operating expenses:
Research and development, net 34,604 29,576 126,539 115,906
Selling, general and administrative 86,845 85,335 327,385 317,637
Amortization of other acquired intangible assets 6,469   6,100   24,662   24,442  
Total operating expenses 127,918   121,011   478,586   457,985  
Operating income 39,479   35,536   122,286   99,553  
Other income (expense), net:
Interest income 400 152 963 531
Interest expense (7,793 ) (7,751 ) (29,780 ) (31,034 )
Losses on extinguishment of debt (9,879 )
Other expense, net (15,262 ) (1,097 ) (20,275 ) (1,286 )
Total other expense, net (22,655 ) (8,696 ) (58,971 ) (31,789 )
Income before provision for income taxes 16,824 26,840 63,315 67,764
Provision for (benefit from) income taxes (7,330 ) (454 ) 4,539   8,960  
Net income 24,154 27,294 58,776 58,804
Net income attributable to noncontrolling interest 1,267   1,405   5,019   4,802  
Net income attributable to Verint Systems Inc. 22,887 25,889 53,757 54,002
Dividends on preferred stock   (3,951 ) (174 ) (15,472 )
Net income attributable to Verint Systems Inc. common shares $ 22,887   $ 21,938   $ 53,583   $ 38,530  
 
Net income per common share attributable to Verint Systems Inc.:
Basic $ 0.43   $ 0.55   $ 1.01   $ 0.97  
Diluted $ 0.42   $ 0.50   $ 0.99   $ 0.96  
 
Weighted-average common shares outstanding:
Basic 53,518   40,114   52,967   39,748  
Diluted 54,540   51,797   53,878   40,312  
 
Table 2
VERINT SYSTEMS INC. AND SUBSIDIARIES
Segment Revenue
(Unaudited)
   
Three Months Ended January 31,

   Year Ended January 31,   

(in thousands) 2014   2013 2014   2013
GAAP Revenue By Segment:
Enterprise Intelligence $ 134,208 $ 142,474 $ 498,901 $ 490,478
Video Intelligence 32,167 27,381 120,388 119,457
Communications Intelligence 89,370   59,106   288,003   229,607
GAAP Total Revenue $ 255,745   $ 228,961   $ 907,292   $ 839,542
 
Revenue Adjustments Related to Acquisitions:
Enterprise Intelligence $ 1,254 $ 834 $ 1,946 $ 4,489
Video Intelligence 93 167 1,933
Communications Intelligence 86   232   616   2,112
Total Revenue Adjustments Related to Acquisitions $ 1,340   $ 1,159   $ 2,729   $ 8,534
 
Non-GAAP Revenue By Segment:
Enterprise Intelligence $ 135,462 $ 143,308 $ 500,847 $ 494,967
Video Intelligence 32,167 27,474 120,555 121,390
Communications Intelligence 89,456   59,338   288,619   231,719
Non-GAAP Total Revenue $ 257,085   $ 230,120   $ 910,021   $ 848,076
 
Table 3
VERINT SYSTEMS INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results
(Unaudited)
   
Three Months Ended January 31,

    Year Ended January 31,    

(in thousands, except per share data) 2014   2013 2014   2013
 

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

 
GAAP gross profit $ 167,397 $ 156,547 $ 600,872 $ 557,538
Revenue adjustments related to acquisitions 1,340 1,159 2,729 8,534
Amortization of acquired technology and backlog 4,349 3,688 12,269 14,812
Stock-based compensation expenses 657 743 2,437 2,857
M&A and other adjustments 2,568   123   2,952   535  
Non-GAAP gross profit $ 176,311   $ 162,260   $ 621,259   $ 584,276  
 

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

 
GAAP operating income $ 39,479 $ 35,536 $ 122,286 $ 99,553
Revenue adjustments related to acquisitions 1,340 1,159 2,729 8,534
Amortization of acquired technology and backlog 4,349 3,688 12,269 14,812
Amortization of other acquired intangible assets 6,469 6,100 24,662 24,442
Stock-based compensation expenses 9,837 6,890 34,991 25,208
M&A and other adjustments 3,976   7,597   13,036   16,623  
Non-GAAP operating income 65,450   60,970   209,973   189,172  
GAAP depreciation and amortization (1) 15,201 13,936 53,757 54,936
Amortization of acquired technology and backlog (4,349 ) (3,688 ) (12,269 ) (14,812 )
Amortization of other acquired intangible assets (6,469 ) (6,100 ) (24,662 ) (24,442 )
M&A and other adjustments (14 )   (14 ) (84 )
Non-GAAP depreciation and amortization 4,369   4,148   16,812   15,598  
Non-GAAP EBITDA $ 69,819   $ 65,118   $ 226,785   $ 204,770  
 

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

 
GAAP other expense, net $ (22,655 ) $ (8,696 ) $ (58,971 ) $ (31,789 )
Loss on extinguishment of debt 9,879
Unrealized (gains) losses on derivatives, net (953 ) 276 (704 ) 133
M&A and other adjustments 12,187   222   13,831   1,139  
Non-GAAP other expense, net $ (11,421 ) $ (8,198 ) $ (35,965 ) $ (30,517 )
 

Table of Reconciliation from GAAP Provision for (Benefit From) Income Taxes to Non-GAAP Provision for Income Taxes

 
GAAP provision for (benefit from) income taxes $ (7,330 ) $ (454 ) $ 4,539 $ 8,960
Non-cash tax adjustments 10,686   4,814   11,164   9,201  
Non-GAAP provision for income taxes $ 3,356   $ 4,360   $ 15,703   $ 18,161  
 

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. $ 22,887   $ 25,889   $ 53,757   $ 54,002  
Revenue adjustments related to acquisitions 1,340 1,159 2,729 8,534
Amortization of acquired technology and backlog 4,349 3,688 12,269 14,812
Amortization of other acquired intangible assets 6,469 6,100 24,662 24,442
Stock-based compensation expenses 9,837 6,890 34,991 25,208
M&A and other adjustments 16,163 7,819 26,867 17,762
Loss on extinguishment of debt 9,879
Unrealized (gains) losses on derivatives, net (953 ) 276 (704 ) 133
Non-cash tax adjustments (10,686 ) (4,814 ) (11,164 ) (9,201 )
Total GAAP net income adjustments 26,519   21,118   99,529   81,690  
Non-GAAP net income attributable to Verint Systems Inc. $ 49,406   $ 47,007   $ 153,286   $ 135,692  
 

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 $ 22,887 $ 21,938 $ 53,583 $ 38,530
Total GAAP net income adjustments 26,519   21,118   99,529   81,690  
Non-GAAP net income attributable to Verint Systems Inc. common shares $ 49,406   $ 43,056   $ 153,112   $ 120,220  
 

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. $ 0.42   $ 0.50   $ 0.99   $ 0.96  
 
Non-GAAP diluted net income per common share attributable to Verint Systems Inc. $ 0.91   $ 0.91   $ 2.84   $ 2.64  
 
Shares used in computing GAAP diluted net income per common share 54,540   51,797   53,878   40,312  
 
Shares used in computing non-GAAP diluted net income per common share 54,540   51,797   54,001   51,355  
 
(1) Adjusted for patent and financing fee amortization.
 
Table 4
VERINT SYSTEMS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
 
January 31,
(in thousands, except share and per share data) 2014   2013
Assets
Current Assets:
Cash and cash equivalents $ 378,618 $ 209,973
Restricted cash and bank time deposits 6,423 11,128
Short-term investments 32,049 13,593
Accounts receivable, net of allowance for doubtful accounts of $1.2 million and $1.8 million, respectively 194,312 168,415
Inventories 10,693 15,014
Deferred cost of revenue 10,818 6,253
Deferred income taxes 9,002 10,447
Prepaid expenses and other current assets 52,476   66,830  
Total current assets 694,391   501,653  
Property and equipment, net 40,145 38,161
Goodwill 853,389 829,909
Intangible assets, net 132,847 144,261
Capitalized software development costs, net 8,483 6,343
Long-term deferred cost of revenue 9,843 7,742
Long-term deferred income taxes 9,783 10,342
Other assets 24,026   25,858  
Total assets $ 1,772,907   $ 1,564,269  
 
Liabilities, Preferred Stock, and Stockholders' Equity
Current Liabilities:
Accounts payable $ 65,656 $ 47,355
Accrued expenses and other current liabilities 178,674 176,972
Current maturities of long-term debt 6,555 5,867
Deferred revenue 162,124 163,252
Deferred income taxes 474   764  
Total current liabilities 413,483   394,210  
Long-term debt 635,830 570,822
Long-term deferred revenue 13,661 13,562
Long-term deferred income taxes 13,358 10,261
Other liabilities 63,457   60,196  
Total liabilities 1,139,789   1,049,051  
Preferred Stock - $0.001 par value; authorized 2,207,000 and 2,500,000 shares at January 31, 2014 and 2013, respectively. Series A convertible preferred stock; 0 and 293,000 shares issued and outstanding at January 31, 2014 and 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 53,907,000 and 40,460,000 shares; outstanding 53,605,000 and 40,158,000 shares at January 31, 2014 and 2013, respectively. 54 40
Additional paid-in capital 924,663 580,762
Treasury stock, at cost - 302,000 shares at January 31, 2014 and 2013, respectively. (8,013 ) (8,013 )
Accumulated deficit (250,005 ) (303,762 )
Accumulated other comprehensive loss (39,725 ) (44,225 )
Total Verint Systems Inc. stockholders' equity 626,974 224,802
Noncontrolling interest 6,144   4,874  
Total stockholders' equity 633,118   229,676  
Total liabilities, preferred stock, and stockholders' equity $ 1,772,907   $ 1,564,269  
 
Table 5
VERINT SYSTEMS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
 
Year Ended January 31,
(in thousands) 2014   2013
Cash flows from operating activities:
Net income $ 58,776 $ 58,804
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 55,968 57,097
Provision for doubtful accounts 1,112 734
Stock-based compensation - equity portion 30,173 21,004
Provision for deferred income taxes 2,553 328
Excess tax benefits from stock award plans (64 ) (139 )
Non-cash (gains) losses on derivative financial instruments, net (346 ) 399
Loss on extinguishment of debt 9,879
Other non-cash items, net (1,964 ) (5,297 )
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable (23,387 ) (13,809 )
Inventories 3,105 (1,957 )
Deferred cost of revenue (6,148 ) 11,421
Prepaid expenses and other assets 33,487 (17,577 )
Accounts payable and accrued expenses 23,444 (598 )
Deferred revenue (1,994 ) (6,104 )
Other liabilities (6,513 ) 19,078
Other, net 203   1  
Net cash provided by operating activities 178,284   123,385  
 
Cash flows from investing activities:
Cash paid for business combinations, including adjustments, net of cash acquired (32,767 ) (660 )
Purchases of property and equipment (15,725 ) (16,045 )
Purchases of investments (197,749 ) (13,593 )
Sales and maturities of investments 178,820
Settlements of derivative financial instruments not designated as hedges (359 ) (270 )
Cash paid for capitalized software development costs (6,668 ) (3,916 )
Change in restricted cash and bank time deposits, including long-term portion, and other investing activities, net 10,252   (1,212 )
Net cash used in investing activities (64,196 ) (35,696 )
 
Cash flows from financing activities:
Proceeds from borrowings, net of original issuance discount 646,750 384
Repayments of borrowings and other financing obligations (586,126 ) (22,035 )
Payments of debt issuance and other debt-related costs (7,754 ) (217 )
Proceeds from exercises of stock options 10,896 2,605
Cash received in CTI Merger 10,370
Dividends paid to noncontrolling interest (3,579 ) (3,070 )
Purchases of treasury stock (615 )
Excess tax benefits from stock award plans 64 139
Payments of contingent consideration for business combinations (financing portion) (16,087 ) (6,497 )
Other financing activities    
Net cash provided by (used in) financing activities 54,534   (29,306 )
Effect of exchange rate changes on cash and cash equivalents 23   928  
Net increase in cash and cash equivalents 168,645 59,311
Cash and cash equivalents, beginning of period 209,973   150,662  
Cash and cash equivalents, end of period $ 378,618   $ 209,973  
 

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.

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 expect to pay related to current year income, 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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"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
There's Big Data, then there's really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at Big Data Expo®, Hannah Smalltree, Director at Treasure Data, discussed how IoT, Big D...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...
The term culture has had a polarizing effect among DevOps supporters. Some propose that culture change is critical for success with DevOps, but are remiss to define culture. Some talk about a DevOps culture but then reference activities that could lead to culture change and there are those that talk about culture change as a set of behaviors that need to be adopted by those in IT. There is no question that businesses successful in adopting a DevOps mindset have seen departmental culture change, ...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
SYS-CON Media announced today that Skytap blog on "DevOps Journal" exceeded 84,000 story reads. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Noel Wurst is the managing content editor at Skytap. Skytap provides SaaS-based dev/test environments to the enterprise. Skytap solution removes the inefficiencies and constraints that comp...