Verint Surveillance Revenue Steep Drop

By: John Honovich, Published on Dec 05, 2012

Verint's painful decline in (or perhaps out of) the surveillance market continues. In their most recent quarterly report for Q3 2012, revenue for Verint's video surveillance division dropped 22%. In this note, we examine the long-term trend since 2007, compared to Avigilon and Axis, why this is happening and what this means for Verint.

Verint said the cause of the steep drop was 'a few large customers':

"Video Intelligence revenue decreased approximately 22%, or $7.0 million, from $32.2 million in the three months ended October 31, 2011 to $25.2 million in the three months ended October 31, 2012. The decrease was primarily attributable to a $7.3 million decrease in product revenue primarily due to a reduction in product deliveries associated with a few large customers, partially offset by an increase in product deliveries to other customers, in the three months October 31, 2012."

Verint seems to live and die by a relatively small number of large corporate or government accounts (Wal-Mart being the most famous but certainly many other big organizations). While Verint may be holding on to most of the historic accounts, it does not seem they are doing well at winning new accounts that seem to be overwhelmingly going to the likes of Milestone, Genetec, etc.

Now, Verint's surveillance revenue is at an annual run rate of ~$100 million USD though as recently as 2007 and 2009, comparable division revenue was $144 million.

Additionally, while gross margins are still fairly solid, given the companies high pricing, they did decline notably:

"Product gross margins in our Video Intelligence segment decreased to 53% in the three months ended October 31, 2012 , compared to 56% in the three months ended October 31, 2011 due to a decrease in product revenue, resulting in lower absorption of overhead costs."

Comparing the Decline

In 5 years, Verint's surveillance revenue has declined ~30% from ~$144 million to ~$100 million. However, this does not capture the full magnitude of the problem. In the meantime, the overall surveillance market has grown. Even if you estimate a modest 10% annual rate, for Verint to stay on pace, 2012 revenue should have been ~$230 million.

In the interim, many companies have caught up or zoomed past Verint. For example:

  • Avigilon, a company with a similar end to end model, had not even a million in 2007 sales when Verint was doing ~$144 million. Now, this quarter (Q3 2012), the two companies had the same revenue.
  • Back in 2007, Axis was not even double Verint's revenue (~$250 million to ~$144 million). Now, Axis does more than 6 times the revenue of Verint.

Given Verint's tightly controlled channel model and its limited innovation, the company has clearly fallen way beyond the market and it is not clear how they can come back save a massive shift in strategy.

Comments : PRO Members only. Login. or Join.

Related Reports on Financial Updates

ASCMA / Monitronics Declares Chapter 11 Bankruptcy on May 22, 2019
Monitronics is entering into Chapter 11 bankruptcy. The company, also called Ascent Capital Group Inc., aka ASCMA, aka Brinks Home Security,...
Milestone Execs on Financials, China and Future on Apr 29, 2019
Milestone has released a 44-page annual report for 2018, an atypical and unrequired move for a subsidiary of a large company, however, Milestone...
ADT Stock Drops After Announcing Loss And Amazon Delay on Mar 12, 2019
ADT's stock price dropped significantly after reporting heavy losses and delays in its Amazon partnership, as seen in the screenshot below: In...
Hikvision 2018 Revenue Tops $7 Billion USD But Growth Slows To Low on Feb 15, 2019
Hikvision's annual revenue topped $7 billion for the first time in 2018, although growth slowed sharply. In this post, we analyze the latest...
Barnes Buchanan 2019: Despite 'Strange Narrative' Great Time To Be In Security on Feb 11, 2019
A "strange narrative" is being spun, said Michael Barnes [link no longer available] at the 2019 Barnes Buchanan Conference. However, despite that...
Hikvision Growth Declines Q3 2018 on Oct 22, 2018
Hikvision's growth continues to decline in 2018 going from: Q1 - 33% Q2 - 22% Q3 - 14.6% In this note, we examine Hikvision's newest Q3...
Axis Strong US Growth, Flat EMEA - Q3 2018 Financials on Oct 18, 2018
This spring, Axis had its best financials in many years (see Axis Strong Q2 2018 Results). However, over the summer, Axis had many products sold...
Axis Strong Q2 2018 Results on Aug 20, 2018
Axis reported strong Q2 2018 financial results and, for the first time in many years, Axis grew faster than Hikvision. However, the company's...
Hikvision Strong Domestically, International Business Struggles on Jul 25, 2018
Hikvision's H1 2018 results are out. Overall revenue growth has sharply dropped, with the company acknowledging their "facing geopolitical...
Arlo IPO Filing Reveals Key Financial and Competitive Details on Jul 09, 2018
Arlo is going to IPO at a projected valuation greater than Axis. Now, Arlo has released their 175-page Form S1 Registration Statement for its...

Most Recent Industry Reports

Alarm Veteran "Demands A Criminal Investigation" Of UL on Oct 18, 2019
The Interceptor's Project pressure against UL continues to rise. Following Keith Jentoft's allegation that "UL Has Blood On Their Hands", Jentoft...
Camect "Worlds Smartest Camera Hub" Tested on Oct 18, 2019
Camect is a Silicon Valley startup that claims the "Smartest AI Object Detection On The Market", detecting not only people and vehicles, but...
Hikvision Global News Reports Directory on Oct 17, 2019
Hikvision has received the most global news reporting of any video surveillance company, ever, ranging from the WSJ, the Financial Times, Reuters,...
Camera Calculator V3.1 Release Improves User Experience on Oct 17, 2019
IPVM has released a new version of our Camera Calculator, V3.1, with significant user experience improvements, a new development plan, and an...
Securing Access Control Installations Tutorial on Oct 17, 2019
The physical security of access control components is critical to ensuring that a facility is truly secure. Otherwise, the entire system can be...
Access Control Course Fall 2019 - Last Chance on Oct 17, 2019
Register Now - Fall 2019 Access Control Course. Thursday, October 17th is the last day to register. IPVM offers the most comprehensive access...
US DoD Comments on Huawei, Hikvision, Dahua Cyber Security Concerns on Oct 16, 2019
A senior DoD official said the US is "concerned" with the cybersecurity of Hikvision, Dahua, and Huawei due to "CCP" (China Communist Party)...
Pelco Sarix Pro3 Camera Tested on Oct 16, 2019
Pelco has released their Sarix Professional Series 3 cameras, claiming "more security detail in challenging scenes with excellent low light and...
IPVM Camera Calculator User Manual / Guide on Oct 16, 2019
Learn how to use the IPVM Camera Calculator. The guide below includes instructions, images, gifs, and videos demonstrating and explaining the...
Altronix Claims Tango 'Eliminates Electricians' on Oct 15, 2019
Power supply provider Altronix claims its new Tango power supply 'eliminates the need for an electrician, dedicated conduit and wire runs'. In...