Cognyte Software’s Earnings Call Highlights Growth and Optimism

Cognyte Software Ltd. ((CGNT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cognyte Software Ltd.’s recent earnings call exuded a positive sentiment, underscored by notable revenue growth and strategic customer acquisitions. The company’s acquisition of GroupSense and strong market engagement further amplified the optimistic outlook, despite some concerns regarding cash flow and deferred revenue.

Significant Revenue Growth

Cognyte reported a robust 16% year-over-year increase in revenue for the first quarter of fiscal 2026, reaching $95.5 million. This impressive growth highlights the company’s successful strategies in expanding its market presence and revenue streams.

Strong EBITDA Performance

The company achieved an adjusted EBITDA of approximately $10 million for the quarter, more than doubling the figure from the same period last year. This significant improvement in EBITDA reflects Cognyte’s operational efficiency and effective cost management.

Major Customer Wins

Cognyte secured major customer agreements, including a multi-year support agreement with a national security customer valued at over $20 million annually, and a new three-year subscription agreement worth over $10 million per year. These wins underscore the company’s ability to attract and retain high-value clients.

Acquisition of GroupSense

The acquisition of GroupSense has bolstered Cognyte’s cyber threat intelligence capabilities and expanded its U.S. customer base by approximately 50 clients. This strategic move enhances the company’s competitive edge in the cybersecurity market.

Positive Market Engagement

Cognyte received positive feedback and strong customer engagement at global events, showcasing its AI-powered solutions. This positive market reception is indicative of the company’s innovative approach and strong product offerings.

Cash Flow and Free Cash Flow Concerns

Despite the positive revenue growth, Cognyte reported cash flow from operations of $1.7 million and a negative free cash flow of $2.5 million, attributed to the timing of collections. This highlights a need for improved cash management strategies.

Deferred Revenue Decline

Deferred revenue slightly decreased to $113 million, influenced by billing timing. This decline, while minor, suggests potential challenges in revenue recognition and billing processes.

RPO Challenges

The company faces challenges with its Remaining Performance Obligations (RPO), as only the first year of a major $10 million subscription deal is included due to deal terms. This affects future revenue visibility and planning.

Forward-Looking Guidance

Cognyte provided an optimistic guidance for fiscal year 2026, projecting a 13% year-over-year growth in revenue to approximately $395 million and a 50% increase in adjusted EBITDA to about $44 million. The acquisition of GroupSense is expected to contribute $3 million in subscription-based revenue. The company maintains a strong cash position of $102.9 million with no debt and anticipates cash flow from operations of $45 million for the year.

In summary, Cognyte Software Ltd.’s earnings call reflected a generally positive sentiment, driven by significant revenue growth, strategic acquisitions, and strong customer engagement. While there are concerns over cash flow and deferred revenue, the company’s forward-looking guidance suggests continued growth and financial stability.