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 at the 2019 Barnes Buchanan Conference. However, despite that narrative, it is a "great...
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

History of Video Surveillance on Jul 19, 2019
The video surveillance market has changed significantly since 2000, going from VCRs to emerging into an AI cloud era.  The goal of this history...
Mobile Access Usage Statistics 2019 on Jul 18, 2019
The ability to use mobile phones as access credentials is one of the biggest trends in a market that historically has been slow in adopting new...
New GDPR Guidelines for Video Surveillance Examined on Jul 18, 2019
The highest-level EU data protection authority has issued a new series of provisional video surveillance guidelines. While GDPR has been in...
Wyze AI Analytics Tested - Beats Axis and Hikvision on Jul 17, 2019
$20 camera disruptor Wyze has released free person detection deep learning analytics to all of their users, claiming users will "Only get notified...
Anyvision Aims For 2022 Revenue of $1 Billion on Jul 17, 2019
Only 3 video surveillance manufacturers do a billion dollars or more in annual revenue - Hikvision, Dahua, and Axis. Now, Anyvision plans to join...
HD Analog vs IP Guide on Jul 16, 2019
For years, HD resolution and single cable signal/power were IP camera advantages, with analog cameras limited to much lower resolution and...
How To Troubleshoot Wiegand Reader Problems - Inverted Wiring on Jul 16, 2019
Wiegand is the dominant method of connecting access readers, but problems can arise for installers. In fact, one of the most difficult reader...
ZeroEyes Gun Detection Startup on Jul 16, 2019
A gun detection video analytics startup, ZeroEyes, is being led by a group of 6 former Navy SEALs, aiming to "save lives" by using AI to assist...
Motorola Acquires Watchguard, Adds to Vigilant And Avigilon on Jul 15, 2019
2 years ago, Motorola had no position nor relevancy to video surveillance. Now, they own major video surveillance, LPR and body camera providers...
Hikvision Global News Reports Directory on Jul 15, 2019
Hikvision has received the most global news reporting of any video surveillance company, ever, ranging from the WSJ, the Financial Times, Reuters,...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact