Thank you, Alan. I'm pleased to report a strong second quarter with sequential revenue growth coming in better than expected. Cash from operations was also strong in Q2, and for the first six months, increased nearly 40% year-over-year.
Looking ahead, our view of the year has improved and we believe the Q2 cloud momentum will continue in the second half of the year with sequential non-GAAP revenue growth in both Q3 and Q4. Also, I'm pleased to report that we expect to make an initial confidential submission to the SEC later this month and are on track to complete the separation shortly after fiscal year end.
Turning to Customer Engagement. In Q2, we experienced significant cloud momentum, driven by demand for our analytics, workforce productivity and compliance solutions in the cloud. We delivered strong performance across cloud revenue and booking metrics, as follows. Cloud revenue, excluding ForeSee, increased 28% year-over-year, on a non-GAAP basis.
New SaaS ACV bookings increased 65% year-over-year and also accelerated sequentially. In Q2, 80% of our non-GAAP software revenue came from recurring sources, compared to 74% in the same quarter in the prior year.
As previously discussed, we believe our transition to the cloud will be substantially complete, when 85% of our software revenue comes from recurring sources.
We are pleased with our progress and are targeting completion of our cloud transition within two years, which Doug will discuss in more detail, later.
Finally, I'm pleased to report, that despite the COVID impact on our on-premises deals, new perpetual license equivalent bookings, increased 3% year-over-year in Q2, driven by cloud. Based on what we see now, we believe on-premises deals will come back gradually, in the remainder of the year. Combined with sustained cloud momentum, we expect new perpetual license equivalent bookings, to improve in the second half of the year. And grow mid-to-high single digits.
During Q2, we continue to win new cloud customers and displace competitors, due to our strong differentiation in artificial intelligence and automation, and our communication infrastructure neutrality. We won many seven-figure cloud deals across the financial services, government, technology and healthcare industries. And here are a few examples. A $7 million cloud order for a new global technology customer that made Verint its cloud platform of choice, replacing several foreign solutions providers. We won this large deal, because of our best-of-breed cloud platform that can scale to support their growing contact center and back-office operations. A $3 million cloud order from a long-standing Verint's banking customer that is adopting a cloud platform, to benefit from faster innovation and lower total cost of ownership. And a $2 million cloud order from a leading food delivery company, to support their rapid growth. This customer chose Verint's, due to our differentiated workforce management functionality and our open cloud platform, that makes it easy to integrate and scale.
In addition to these large cloud orders, I'm pleased to report that in Q2, we received an initial multimillion-dollar order for the social security administration, following the appeal process we discussed in prior quarters.
We are now delivering on this initial order, and we expect Verint to receive additional orders for the social security administration, as the project advances over time. I would like to take a few minutes to provide a COVID update, and discuss the trends we are currently seeing in the customer engagement market. In Q2, we saw certain customers moving forward with on-premises deployment that were previously slowed down due to COVID. In the second half of the year, we expect on-premises deals to continue to pick up gradually. We believe that certain trends that were already underway, prior to COVID, will accelerate as a result of the pandemic.
The first one is cloud adoption. In that regard, looking at our pipeline, we see a noticeable shift towards cloud since the beginning of the year.
The second trend is the adoption of AI and automation to drive efficiencies and to deliver superior customer experience. Since our last call, we launched several new AI-based applications, including real-time agent assist. This new AI-based tool provides the workforce with real-time guidance during calls to help improve their productivity and show compliance and drive better customer experience. This new real-time capability is of particular importance during COVID, where employees working from home need tools to guide them through the changing environment.
The third trend is the increasing role of partners in our industry.
Our partner agnostic strategy, an open cloud platform, make Verint a unique strategic partner.
We are investing in expanding our strong partner network across technology vendors, resellers and system integrators, and believe this strategy will deliver incremental cloud growth over time. Overall, we believe we are uniquely positioned to address these trends with the cloud platform, AI and automation, fast innovation and an expanding partner network. In summary, we are on track with our cloud strategy and expect to complete a cloud transition within two years.
As part of our strategy, we will continue to expand our partner program to drive incremental growth.
We expect sequential increase in non-GAAP revenue in Q3 and Q4, as our cloud momentum continues and on-premises deals gradually return.
We also expect New Perpetual License Equivalent Bookings to improve and grow in the second half, mid- to high-single-digits year-over-year.
Turning to our Cyber business, our analytical security software generates actionable intelligence for many governments and enterprise customers around the world. In Q2, we received multiple large orders, including two orders for approximately $15 million each, one order for approximately $10 million and four orders for approximately $4 million each. Customers come to Verint for our mission critical security software to help prevent terror, crime and cyber threats and to accelerate investigations. In Q2, we continue to experience demand for analytical security software, and we are working closely with our customers around the world to navigate the current environment and minimize the impact of travel restrictions. Behind these large orders is a broad portfolio of analytical and security software.
Our investigative analytics empower national security agencies around the world to apply data science to find the needles in the haystacks, accelerating complex investigations.
Our operational intelligence analytics empower these agencies with near real-time actionable insights, a critical factor for field operations to achieve successful missions. And our threat intelligence analytics empower government and enterprise security customers with actionable intelligence to detect, respond and mitigate physical and cybersecurity threats.
We continue to win large deals every quarter due to our innovation in big data fusion, AI and analytics engines, data visualization and data governance. And we continue to invest in an open platform to drive down professional services and to allow customers and third parties to manage and enhance the solution on their own.
Over the last few years, we've transitioned from a system integrator model, in which we performed integration professional services to a software model in which we sell open software solutions. We believe our software model is resonating well with customers because they benefit from faster software refresh cycles will quickly address security threats. It also provides Verint a competitive advantage. In Q2, our software model continued to drive gross margin expansion of approximately 500 bps year-over-year. I'm pleased to report a 71% non-GAAP gross margin on an estimated fully allocated basis, consistent with the trend of ongoing margin expansion over the last few years. In summary, we continue to see demand for our solutions as threats are becoming more complex, and government and enterprise organizations continue to seek new analytical security software.
Looking forward, we expect the gradual lifting of travel restrictions to drive sequential non-GAAP revenue growth in Q3 and in Q4. And overall, we believe our cyber business is a category leader and well-positioned to be to be a successful independent software company.
We continue to make good progress, creating two strong independent public companies, and I would like to share some key milestones.
We expect to make our initial confidential submission to the SEC later this month.
During the Q3 conference call, we will provide additional details on the separation. In January, we plan to conduct a virtual roadshow for analysts and investors. And finally, as we discussed, we expect to complete the separation shortly after fiscal year-end.
Now, let me turn the call over to Doug to discuss our financial results in more detail. Doug?