When a company decides to split into separately traded entities, then the market generally reacts in a big way. That is what happened with VRNT stock on Thursday after Verint Systems Inc. (NASDAQ:VRNT) announced that its consumer engagement and cyber intelligence businesses are going to be split up.
The two businesses will be spun off into separate publicly traded companies, and that resulted in an impressive rally in Verint stock as investors piled onto it.
The split is expected to be concluded soon after the end of the company’s fiscal year in 2020, according to the announcement by Verint. The Chief Executive Officer of the company, Dan Bodner, said in a statement that considering the current revenue of the two businesses, it would be better if they were separated and pursued their “own strategies.”
The customer engagement business is well on its way to generating $1 billion in yearly revenue, while the cyber intelligence business is fast approaching the $500 million mark in the same metric.
At the time of writing, VRNT stock is up 9.40% at $52.31.
Bodner stated that “both [will] benefit from the separation and be well-positioned to pursue their own strategies, drive opportunities to accelerate growth and extend their market leadership.”
Over the years, it has been seen that companies often cleave off thriving businesses if it is being weighed down by the performance of other divisions. However, in this case, Verint has separated two businesses that are both thriving, and hence, there is a certain degree of optimism among investors.
In a separate press release, the company reported adjusted third-quarter results, including 94 cents a share on revenue of $331 million. Analysts were estimating the company to report a profit of 85 cents a share on sales of $333 million.
VRNT stock is over about 22% so far this year. Investors could keep a close eye on the stock over the coming days.
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