Verint's Q1 2011 and PSIM Acquisition Price ExaminedBy John Honovich, Published on Jun 08, 2011
In this note, we examine the financial performance of Verint's video surveillance division and the acquisition price paid for Rontal, the PSIM supplier Verint acquired in April.
Reviewing the Q1 2011 Verint 10k statement, the following key points are worth noting:
- Total company revenue was up slightly from $172 Million in Q1 2010 to $176 Million in Q1 2011
- However, the Video Intelligence segment (i.e., video surveillance), fell slightly (-5%) from $31.5 Million in Q1 2010 to $30.2 Million in Q1 2011. Verint said that this was "primarily due a reduction in revenue recognized from prior fiscal years’ multiple-element arrangements"
- The revenue decline continues the trend from 2010 with similar revenue decline in the previous quarter.
- Gross margins were up slightly from 58% to 60% year over year "primarily due to a change in the product mix" (we suspect this means less recorder appliances and more VMS software).
- For the Rontal acquisition, Verint disclosed that "total consideration for this acquisition, including potential future contingent consideration, will be less than $20.0 million." This is line with the original anonymous report speculating an acquisition price in the $10 Million range. The report also confirmed how small Rontal's revenue is, noting, "The impact of this acquisition was not material to our condensed consolidated financial statement."
We see these as poor results for Verint. Even Vicon, a company whose revenue has been pummeled in the last few years, is now increasing revenue in the same time period. Worse, Axis increased their revenue by a large rate than all of Verint's revenue for Q1 2011. Bottom line, Verint is losing ground.