Cognyte Software Q1 Earnings Call Highlights

• 2 Recession-Proof Intelligence Stocks to Defend Your Portfolio

Cognyte Software (NASDAQ:CGNT) reported a double-digit revenue increase for the first quarter of fiscal 2027 and reaffirmed its full-year outlook, citing continued demand for its investigative analytics platform, higher recurring revenue and progress in the U.S. market.

Chief Executive Officer Elad Sharon said the company delivered “a solid start” to the fiscal year, with revenue growth supported by customer activity and “better than expected adoption” of subscription offerings. He said agencies are increasingly seeking tools that can convert fragmented data into operational intelligence as investigations become more complex and time-sensitive.

“Across the world, agencies are under growing pressure to resolve increasingly complex investigations and turn fragmented data into intelligence and intelligence into operational action,” Sharon said.

Revenue Rises 10.4% as Software Sales Increase

Chief Financial Officer David Abadi said first-quarter revenue was $105.5 million, up $9.9 million, or 10.4%, from the prior-year period. Software revenue rose 26.5% year-over-year to $47.3 million, while software services revenue increased 12.1% to $50.1 million. Professional services revenue declined to $8.2 million from $13.5 million a year earlier, which Abadi attributed mainly to revenue recognition timing.

Total software revenue grew 18.6% year-over-year, faster than overall revenue, reflecting a larger contribution from software in Cognyte’s business mix. Recurring revenue rose 10% to $51.9 million and represented 49.2% of total revenue.

Abadi said the growth in recurring revenue was driven by stronger-than-expected subscription adoption. He noted that perpetual deployments remain important to Cognyte’s business because of customer preferences tied to workflow and security requirements, but said the company is seeing a “clear and growing shift” toward subscriptions in parts of its customer base.

Profitability Expands Despite Currency Pressure

Cognyte reported non-GAAP gross margin of 72.9%, up 100 basis points from the prior-year quarter. Non-GAAP gross profit increased 12% to $76.9 million. GAAP operating income doubled to $4.4 million from $2.2 million a year earlier, while non-GAAP operating income rose 41.5% to $10.7 million.

Adjusted EBITDA increased 31.5% year-over-year to $13.6 million. Non-GAAP earnings per share were $0.03, which Abadi said reflected first-half-weighted tax accruals and foreign exchange-related other expenses.

Management said profitability improved even as the company faced macro pressures, including foreign exchange movements and rising hardware-related costs. Abadi said much of the year-over-year increase in operating expenses was due to continued weakness in the U.S. dollar, primarily versus the Israeli shekel.

Guidance Reaffirmed, Recurring Revenue Outlook Raised

Cognyte reaffirmed its fiscal 2027 revenue outlook of about $448 million, plus or minus 3%, which Abadi said represents approximately 12% growth at the midpoint. The company also maintained its expectations for non-GAAP operating income of about $56 million, adjusted EBITDA of about $68 million and annual non-GAAP EPS of $0.47 at the midpoint of the revenue range.

While total revenue guidance was unchanged, Abadi said the company now expects recurring revenue to become a larger contributor to growth and to grow faster than total revenue. The company also continues to expect non-GAAP gross margin of approximately 73.5% for the year, up 50 basis points from the prior year.

Cognyte also said it remains on track to meet a revenue target of approximately $500 million for the fiscal year ending Jan. 31, 2028. However, Abadi said the company updated its fiscal 2028 adjusted EBITDA target to approximately 20% to reflect exchange rate changes, while remaining on track on a constant currency basis.

RPO, Cash Flow and Buybacks

At the end of the quarter, total remaining performance obligations were $528.8 million, consisting of $128.9 million in contract liabilities and $399.8 million in backlog. Short-term RPO was $363.4 million, which management said provides visibility into revenue over the next 12 months.

Cognyte ended the quarter with $109.2 million in cash and no debt. The company generated $6.5 million from the sale of a minority investment during the quarter. Cash flow from operations was negative $4.7 million, and free cash flow was negative $6.1 million.

In response to an analyst question from Taz Koujalgi of Roth Capital Partners, Abadi said the cash flow result reflected foreign exchange dynamics, the timing profile of subscription sales and an inventory build-up to support future revenue. He said inventory increased by $3 million in the quarter and that cash flow is expected to be weighted toward the second half of the year. Cognyte continues to expect cash flow from operations of about $45 million for the full year.

The company repurchased about 1 million ordinary shares during the quarter for approximately $8.2 million. Since launching its first repurchase program in November 2024, Cognyte has repurchased about $35 million of shares through the end of the first quarter, out of $60 million authorized across its repurchase programs.

U.S. Market and AI Remain Key Growth Priorities

Sharon said Cognyte is seeing strong customer engagement globally, including new logos, competitive wins, expansions and upgrades. He highlighted a new three-year subscription agreement valued at more than $20 million and a large expansion deal valued at more than $10 million.

In the U.S., Sharon said Cognyte secured several new state and local customers and advanced multiple federal opportunities through proof of concepts and live operational demonstrations. The company expects about $20 million in U.S. deals this year. In response to Koujalgi, Sharon said Cognyte’s confidence in the U.S. market is increasing, citing customer feedback, partner leverage and growing visibility.

Sharon also emphasized artificial intelligence as a driver of demand, saying customers want AI and agentic capabilities embedded in operational workflows with governance, oversight and explainability. He said AI helps agencies uncover hidden connections and improve decision-making in mission-critical environments.

During the call, Sharon also pointed to financial investigations as a growing area of innovation for Cognyte, saying the company recently introduced capabilities to help agencies track illicit financing across traditional and digital currencies. He cited prior use of Cognyte’s platform by tier 1 military intelligence agencies in EMEA to counter terror financing, which he said resulted in a National Ministry of Defense Innovation Award for operational impact.

“We help the people responsible for keeping the world safe do their job faster, more effectively, and with greater confidence in their intelligence,” Sharon said.

About Cognyte Software (NASDAQ:CGNT)

Cognyte Software Ltd. is a global provider of security analytics solutions that was spun off from NICE Ltd. in early 2021. Headquartered in Israel, the company delivers specialized software and services designed to help government agencies, law enforcement organizations and critical infrastructure operators process and analyze large volumes of data for intelligence and investigative purposes.

The company’s core offerings include advanced analytics platforms that aggregate and visualize structured and unstructured data from diverse sources, such as communications metadata, open-source intelligence and sensor feeds.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

Source MarketBeat