Cognyte Software Ltd. ((CGNT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Cognyte Software Ltd.’s recent earnings call conveyed a generally positive sentiment, underscored by strong revenue and EBITDA growth. The company celebrated strategic victories in military intelligence and expansions within the U.S. market. Despite facing negative cash flow due to seasonal expenses and procurement delays in the U.S. federal market, Cognyte remains optimistic about its growth trajectory and financial objectives.
Strong Revenue Growth
Cognyte Software Ltd. reported impressive revenue growth for the second quarter, reaching $97.5 million, which marks a 15.5% increase year-over-year. Notably, software revenue surged by 35.9% compared to the previous year, highlighting the company’s successful expansion efforts.
Significant EBITDA Growth
The company achieved a substantial increase in adjusted EBITDA, reporting $11 million for the quarter. This figure represents a 33% rise from the $8.3 million recorded in the same quarter last year, showcasing Cognyte’s effective cost management and operational efficiency.
Key Military Intelligence Wins
Cognyte secured noteworthy contracts with military intelligence clients, including a $10 million follow-on deal in the Asia-Pacific region and a new $10 million agreement in the EMEA region. These wins underscore the company’s strong position in the defense sector.
Strategic Partnerships
In a strategic move to bolster its presence in the U.S. federal market, Cognyte entered into an alliance with LexisNexis Risk Solutions. This partnership aims to enhance the company’s reach and influence within this critical market segment.
Positive Market Recognition
Cognyte’s innovative capabilities were acknowledged as it was named a sample vendor in Gartner’s 2025 hype cycle for public safety and law enforcement, particularly for its AI-powered predictive analytics solutions.
Updated Financial Guidance
Cognyte provided an optimistic financial outlook for the fiscal year ending January 2026, projecting revenue of approximately $397 million and adjusted EBITDA of around $45 million. This guidance reflects a year-over-year growth of about 13% and 55%, respectively, at the midpoint of the range.
Negative Cash Flow
The company reported a negative cash flow from operating activities amounting to $6 million in the second quarter, attributed to expected seasonal expenses. Despite this, Cognyte remains confident in its long-term financial health.
Challenges in U.S. Federal Market
Cognyte is currently navigating procurement delays within U.S. federal agencies, which have impacted short-term visibility and budget timing. However, the company remains committed to overcoming these hurdles and maintaining its growth momentum.
Forward-Looking Guidance
Cognyte’s forward-looking guidance reflects a positive outlook, with anticipated revenue growth of approximately 13% year-over-year and a projected adjusted EBITDA increase of 55%. The company also expects its non-GAAP gross margins to improve to 72%. Cognyte’s strategy focuses on strengthening customer relationships, acquiring new clients, and expanding in the U.S. market, aiming for $500 million in revenue by fiscal 2028.
In summary, Cognyte Software Ltd.’s earnings call painted a picture of robust growth and strategic advancements. Despite facing some challenges, the company remains optimistic about its future, driven by strong financial performance and strategic partnerships. Investors and market observers will be keenly watching Cognyte’s progress as it continues to expand its market presence and enhance its technological offerings.