Verint Systems betting on skills in helping corporates tackle hackers

NEW YORK: A company that helps governments monitor their citizens is now peddling its expertise to corporate America.

Verint Systems, which makes software that sifts through communications such as text messages, phone calls and e-mail to help combat terrorism and crime, is touting its intelligence expertise to help companies defend themselves against hackers.

“Advanced cyberattacks are well-planned, targeted and stealth,” chief executive officer Dan Bodner said on a June 3 conference call with analysts. “The mitigation approach needs to be based on intelligence tactics.” Bodner said he plans to unveil the new cybersecurity products for corporations at a conference in Las Vegas this week.

Verint’s sales push comes as the United States government is trying to balance the fight against terrorism with concerns over the privacy of its citizens.

With corporate America besieged by computer-systems intruders from around the world bent on stealing confidential information, bringing business to a halt or simply embarrassing ostensibly sophisticated enterprises, Verint is betting its skill at helping governments will give it an edge in the competition for private-sector contracts.

Intelligence demand

“This is a natural tangential market opportunity for Verint,” Daniel Ives, an analyst with FBR Capital Markets who has a buy rating on Verint, said in an e-mail.

“While clear challenges are ahead given the competition in the space, we believe Verint has the right product arsenal and strategy to be successful.” Congress voted last week to stop its top spy or- ganisation, the National Security Agency, from collecting bulk data records on Americans’ phone calls.

Even so, privacy concerns haven’t curbed demand for cybersecurity intelligence in either the public or private sectors, said Jeff Kessler, an analyst with Imperial Capital in New York.

“Despite the fact that privacy is a primary concern among Western states, the growth of analytics to decipher abnormal events and abnormal communications has not stopped in any of these Western countries, and has not slowed either,” he said.

Verint, based in Melville, New York, went public in 2002 as the security unit of Comverse Technology Inc., which sold recording software to help call centers monitor customer service.

Government customer

Verint’s lawful interception business, which enables phone companies to tap lines for law enforcement, has evolved into a communications and cyber intelligence segment that made up 31 per cent of revenue in the previous fiscal year. About sixty percent of sales came from using data to help companies improve interactions with customers and make work flow more efficient.

The company surpassed $1 billion in sales for the first time in the fiscal year ended on January 31, 2015, and plans to double its revenue from cybersecurity this year, Bodner told investors June 3. Even if it achieves that goal, revenue from cybersecurity will be less than $100 million and come mostly from government clients, he said.

$100 million contract

Verint delighted analysts on a March 25 conference call when it announced a contract for a cybersecurity project with a government valued at more than $100 million. The stock shot up 6.2 per cent the next day.

One challenge for Verint may be bringing those types of projects to a smaller scale that individual companies can afford, said Jonathan Ho, an analyst with William Blair & Co. in Chicago.

Alan Roden, head of investor relations for Verint, declined to comment. on the company’s cyberstrategy. Verint’s chief competitor, Ra’Anana, Israel-based Nice Systems, is taking an opposite tack. It sold its own communications intelligence business last month to Israeli defense company Elbit Systems for as much as $158 million. By contrast, Verint’s communications intelligence business had $359 million in revenue in fiscal year 2015.

“The business model of selling software to enterprises, versus collection and interception projects to governments, is very different,” Nice CEO Barak Eilam wrote in an e-mailed response to questions about the sale