02:17 PM EDT, 06/05/2024 (MT Newswires) -- Verint Systems ( VRNT ) reported a solid start to its fiscal year with stronger-than-expected Q1 revenue and earnings driven by rising demand for its bundled software as a service, or SaaS, products, Wedbush said in a note Wednesday.

"We continue to believe that Verint's ( VRNT ) SaaS story has built more momentum over the past few quarters and is now well-positioned to capitalize on its current demand pipeline while further embedding [artificial intelligence] capabilities into its [customer experience] platform... and improving [return on investment] to expand its market share within the space," analysts including Daniel Ives said in the note.

The company reported SaaS annual recurring revenue of $537.7 million, up 9% year-over-year, as the company saw a 20% growth in its bundled SaaS pipeline, with more customers adopting Verint's ( VRNT ) Open platform, Wedbush said.

The company raised its 2025 guidance, "reflecting further growth for its AI chatbots which continue to drive customer demand and bottom-line expansion," according to the note.

Verint ( VRNT ) expects gross margins to rise to around 73%, with operating income growing in the high single digits year-over-year. AI implementations are driving further revenue and margin growth for 2025, while the company maintains its free cash flow target of $180 million, reflecting over 40% growth, the note said.

Wedbush maintained its outperform rating on Verint ( VRNT ) and raised its price target to $42 from $37.

Price: 33.94, Change: +5.72, Percent Change: +20.27