Cognyte Software Q1 2026 Earnings Report

Cognyte Software EPS Results

• Actual EPS: $0.07
• Consensus EPS: $0.01
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: N/A

Cognyte Software Revenue Results

• Actual Revenue: $95.55 million
• Expected Revenue: $93.96 million
• Beat/Miss: Beat by +$1.59 million
• YoY Revenue Growth: N/A

Cognyte Software Announcement Details

• Quarter: Q1 2026
• Date: 6/11/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, June 11, 2025
• Conference Call Time: 8:30AM ET

Cognyte Software (NASDAQ:CGNT) provides an investigative analytics software to governments and enterprises worldwide. Its Actionable Intelligence for a Safer World, an open software designed to help governments and enterprises accelerate and enhance the effectiveness of investigations. The company offers network intelligence analytics, threat intelligence analytics, decision intelligence analytics, and operational intelligence analytics solutions. Its solutions are designed to support various use cases and support a range of users, including data analysts, investigation managers, and security operations center operators, as well as operational field teams. In addition, the company provides customer support, professional, and integration services. Its government customers include national, regional, and local government agencies. Cognyte Software Ltd. was incorporated in 2020 and is headquartered in Herzliya, Israel.

Cognyte Software Q1 2026 Earnings Call Transcript

Key Takeaways

• Q1 revenue grew ~16% year-over-year to $95.5M and adjusted EBITDA more than doubled to $10.3M, underscoring strong execution and profitability.
• Signed multi-year agreements—including a >$20M/year support deal and a >$10M/year subscription deal with national security agencies—plus five additional ~$5M deals, highlighting deep customer engagement.
• Raised full-year FY26 guidance to ~$395M revenue (+13% yoy) and ~$44M adjusted EBITDA (+50% yoy), reflecting confidence in demand and recent acquisitions.
• Acquired GroupSense for ~$4M in cash (plus up to $5M earnout), adding ~50 US customers and cyber threat intelligence capabilities to expand market presence.
• Q1 generated only $1.7M in operating cash flow and had negative $2.5M free cash flow, driven by timing of collections despite strong billings.

Presentation

[Operator]

day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognite First Quarter Fiscal Year twenty twenty six Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Dean Ridlohn, Head of Investor Relations. Please go ahead.

[Dean Ridlon, VP - Investor Relations at Cognyte Software]

Thank you, operator. Hello, everyone. I'm Dean Ridlon, Cognite's Head of Investor Relations. Thank you for joining us today. I'm here with Elad Sharon, Cognite's CEO and David Abadi, Cognite's CFO.

[Dean Ridlon, VP - Investor Relations at Cognyte Software]

Before getting started, I would like to mention that accompanying our call today is a presentation. If you'd like to view these slides in real time during the call, please visit the Investors section of our website at cognite.com. Click on Upcoming Events, then the Webcast link for today's conference call. I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward looking statements are based on management's current expectations and are not guarantees of future performance.

[Dean Ridlon, VP - Investor Relations at Cognyte Software]

Actual results could differ materially from those expressed in or implied by these forward looking statements. The forward looking statements are made as of the date of this call and except as required by law, Cognite assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Cognex's actual results to differ materially from those indicated in these forward looking statements, please see our annual report on Form 20 F for the fiscal year ended 01/31/2025, and other filings we make with the SEC. The financial measures discussed today include non GAAP measures.

[Dean Ridlon, VP - Investor Relations at Cognyte Software]

We believe investors focus on non GAAP financial measures in comparing results between periods and among our peer companies that publish similar non GAAP measures. Please see today's presentation slides, our earnings release, and the Investors section of our website at cognite.com for a reconciliation of non GAAP financial measures to GAAP measures. Non GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non GAAP financial measures that the company uses have limitations and may differ from those used by other companies. Now I would like to turn the call over to Elad.

[Elad Sharon, CEO at Cognyte Software]

Thank you, Dean. Welcome everyone to our first quarter fiscal twenty twenty six conference call. We are pleased to report a strong start to the year. Our Q1 performance reflects consistent execution against our strategy, strong customer engagement and healthy demand for our solutions. In the first quarter, we grew revenue by approximately 16% year over year to $95,500,000 Non GAAP gross profit increased by about 17% year over year.

[Elad Sharon, CEO at Cognyte Software]

We generated approximately $10,000,000 of adjusted EBITDA for the quarter, more than double what we generated in Q1 last year, and cash flow from operations was approximately $1,700,000 These results underscore the strength of our business, the value of our technology and the increasing guerrilla balance of our offerings in a rapidly evolving threat environment. Let me share a few examples of our q one customer wins, high impact deals that demonstrate the strength of our technology, and the solid progress we are making in deepening our relationships with customers. We signed a multi year support agreement with longstanding national security customer, who we have had a partnership with for over two decades. This three years agreement, valued at over $20,000,000 per year, reinforces the critical role our investigative analytics solutions play in helping the agency protect national interests and secure public safety. We also signed a new three year subscription agreement, valued at over $10,000,000 per year, with another long standing national security customer.

[Elad Sharon, CEO at Cognyte Software]

By moving to a subscription model, the agency gains faster access to our latest AI powered capabilities, continuous innovation, and an expanded suite of solutions. This shift enhances their operational agility and ensures they run ahead of emerging threats in a rapidly evolving landscape. In addition, we closed five more deals valued at approximately $5,000,000 each from new and existing customers. These included new solutions and upgrades. Together, these wins reflect our ability to deliver enduring value, respond to evolving customer needs and solidify our position as a trusted partner in the intelligence and security space.

[Elad Sharon, CEO at Cognyte Software]

We continue to see strong customer engagement, as agencies turn to us to help address their most complex intelligence and investigative challenges. This was especially evident during our participation just last week at ISS Wolf Frag. This is one of the premier global events for the intelligence and security community. The event brought together senior representatives from nearly 100 countries, including law enforcement, national security, and government intelligence agencies. We showcased mission critical solutions, including sharing a preview of our new investigation co pilot, a generative AI powered capability designed to accelerate investigations and deliver faster, smarter insights.

[Elad Sharon, CEO at Cognyte Software]

The response across all solutions was extremely positive with around 80 live demonstrations and meaningful conversations with both existing and prospective customers. Meeting customers in person at events like ISS, other industry events, as well as our own intelligence summit are core parts of our go to market strategy. They allow us to validate existing and future needs, deepen relationships, and further solidify our leadership position in investigative analytics. When meeting customers and prospects, we consistently hear the same three challenges. they must analyze ever growing volumes of data from an increasingly diverse set of sources.

[Elad Sharon, CEO at Cognyte Software]

they are facing adversaries who are highly sophisticated and constantly adapting their tactics to avoid detection. And they must navigate a rapidly changing technology landscape while staying mission ready at all times. These challenges are global, urgent, and precisely the ones we were built to solve. As part of our US growth strategy, we recently acquired GroupSense, a cyber threat intelligence company that combines automated and human capabilities to deliver customer specific intelligence. This acquisition adds a highly experienced team with strong domain expertise, and a solid US customer base.

[Elad Sharon, CEO at Cognyte Software]

By integrating Group Sensors Intelligence services with our investigative analytics technology, will be able to deliver even greater value to customers, providing broader visibility, faster insights, and enhanced threat detection. We are pleased to welcome the Groups and its team to Cognite. Together, we are expanding our reach and deepening our impact in The US market, advancing our mission to empower our customers to stay ahead of rapidly evolving threats. Looking ahead, we are encouraged by the healthy demand and the continued validation of our technology through customer wins and engagements. Our strong execution, combined with a clear focus on innovation, position us well to drive long term growth and expand profitability.

[Elad Sharon, CEO at Cognyte Software]

For fiscal twenty twenty six, we are updating our guidance to primarily reflect the recent GroupSense acquisition and now extract revenue of approximately $395,000,000 plus or minus 2%, representing about 13% year over year growth at the midpoint of the range, and adjusted EBITDA of approximately $44,000,000 at the midpoint of the revenue range, representing approximately 50% year over year growth. Before I hand it over to David, I want to briefly highlight our recent Investor and Analyst Day. We shared our strategic priorities, demonstrated the technology behind our solutions, and explored the real world challenges we are helping customers solve every day. This wasn't just a regular CEO, CFO update. It was an opportunity to hear directly from our broader management team, especially the business and technology leaders, while shaping our roadmap and driving the execution across the company.

[Elad Sharon, CEO at Cognyte Software]

It offers a valuable window into the depth of leadership behind our strategy. If you haven't yet watched the one hour long replay, I strongly encourage you to do so. It's a great way to see how we are positioning Cognite for long term growth. As we look ahead, we do so with confidence, driven by healthy demand, powerful technology, and a clear sense of purpose. At Cognite, we see data differently, and we are committed to helping eliminate the unknown by empowering our customers with the solutions they need to make the world a safer place.

[Elad Sharon, CEO at Cognyte Software]

Now let me turn the call over to David to provide more details about our q one results. David?

[David Abadi, CFO at Cognyte Software]

Thank you, Elad, and hello everyone. With consistent execution, healthy demand and large, loyal customer base, we delivered strong financial results in the first quarter of fiscal twenty twenty six. Revenue for Q1 was $95,500,000 an increase of 15.5% year over year. Software revenue was $37,400,000 an increase of $5,900,000 or 19% year over year. Software service revenue was $44,700,000 roughly even with last year.

[David Abadi, CFO at Cognyte Software]

Our total software revenue for the quarter was approximately $82,000,000 representing about 86% of total revenue. We continue to expect software revenue to be about 87% of total revenue on an annual basis. Professional service revenue in Q1 was $13,500,000 an increase of $6,600,000 over last year. Professional services revenue is expected to fluctuate between quarters due to revenue recognition timing. We continue to expect professional services revenue to be about 13% of total revenue on an annual basis.

[David Abadi, CFO at Cognyte Software]

Recurring revenue for Q1 was $47,200,000 representing 49% of total revenue. Recurring revenue, primarily from support contract and subsubscription offering, improved our visibility both near and long term. Non GAAP gross margin for the quarter was 71.9%, expanding by 80 basis points year over year. Gross margin may fluctuate between quarters based on our revenue mix. Gross profit in the first quarter outpaced revenue growth and was $68,700,000 an increase of about 17% year over year.

[David Abadi, CFO at Cognyte Software]

We believe the steady improvement we have made in gross profit is the result of the significant value customers derive from our innovative solutions, our competitive differentiation and our improved cost structure. The combination of revenue growth and our business model continue to deliver meaningful year over year improvement in profitability, showing our ability to continue to drive operational leverage. Once again, non GAAP operating income and adjusted EBITDA both grew significantly faster than revenue. In Q1, we generated 7,600,000 of non GAAP operating income, over four times higher than the $1,800,000 we generated in Q1 last year. Adjusted EBITDA for the quarter was $10,300,000 more than double the $5,000,000 we generated last Q1, resulting in 2026 non GAAP EPS of $07 Turning to our balance sheet.

[David Abadi, CFO at Cognyte Software]

Our short and long term contract liabilities, commonly referred to as deferred revenue, remained robust at about $113,000,000 at the end of Q1, down modestly versus last year's balance due to the timing of billing. During Q1, we generated $1,700,000 in cash flow from operations and had negative free cash flow of $2,500,000 Q1 cash generation was relatively modest, primarily due to the timing of collection, as we had strong collection in Q4 last year. For the full year, we continue to expect cash flow from operations to be about $45,000,000 We continue to execute our share repurchase program, buying about 952,000 ordinary shares for an aggregate purchase price of approximately $9,000,000 As a reminder, last November our Board of Directors approved a share repurchase program of up to $20,000,000 in ordinary shares over eighteen months. Since we began the repurchase program in December, we repurchased shares valued at approximately $14,200,000 through 04/30/2025. Our cash position remains strong at $102,900,000 with no debt.

[David Abadi, CFO at Cognyte Software]

Let me share with you some additional context on the Group Sense acquisition. Transaction closed on 05/20/2025, for approximately $4,000,000 in cash. In addition, there is an earnout of up to $5,000,000 contingent on GroupSense's ability to meet defined post closing performance targets. GroupSense offering is sold on a subscription basis and adds approximately 50 customers to Cognite. Let me walk you through our execution against some of our key performance indicators.

[David Abadi, CFO at Cognyte Software]

RPO, or remaining performance obligations, represents contracted revenue to be recognized in future periods, influenced by factors such as sales cycles, deployment timelines, contract lengths, renewal timing, and seasonality. RPO fluctuations are not necessarily indicative of future revenue growth rate. Total RPO is a sum of deferred revenue of 112,900,000 and backlog of $484,900,000 At the end of Q1, total RPO was $597,800,000 up $52,000,000 versus the end of fiscal twenty twenty five. As Elad mentioned, during the quarter we signed a three year, over $10,000,000 annual subscription agreement. Delivery of this agreement is scheduled to begin in early calendar twenty twenty six.

[David Abadi, CFO at Cognyte Software]

Currently, only the year of the deal is included in our total RPO. Total RPO, which also includes multi year support contracts, is expected to continue to fluctuate due to renewal timing. Short term RPO at the end of Q1 increased to $346,900,000 which we believe provides solid visibility into revenue over the next twelve months. These healthy RPO levels reinforce our growth expectations and validate the strength and resilience of our business model. Q1 billings were $78,300,000 consistent with last year.

[David Abadi, CFO at Cognyte Software]

Q1 non GAAP operating expenses were $61,200,000 in line with our expectations. We remain focused on driving continued financial improvement and sustained margin expansion. Today, we are updating our guidance for FY 'twenty six, mainly to reflect the GroupSense acquisition. For fiscal twenty six, we are expecting full year revenue of approximately $395,000,000 plus or minus 2%. This represents approximately 13% year over year growth at the midpoint of the revenue range.

[David Abadi, CFO at Cognyte Software]

We expect total software revenue to be about $344,000,000 representing approximately 87% of total revenue, and professional service revenue to represent about 13% of total revenue, aligned with our strategic goals. We believe that our strong short term RPO of $346,900,000 and a favorable demand environment support this outlook. We expect Q2 revenue to be slightly higher than the Q1 levels we are reporting today, with sequential growth each quarter throughout the year. We continue to expect annual non GAAP gross margin to be 71.5%, reflecting an improvement of 50 basis points over last fiscal year. Gross margin may fluctuate between quarters based on our revenue mix.

[David Abadi, CFO at Cognyte Software]

As a result of the improved gross margin, we expect annual gross profit to increase at a faster rate than revenue growth. For the full year, we expect our non GAAP operating expenses to grow meaningfully slower than revenue, reaching approximately $252,000,000 an increase of about 8%. Operating expense seasonality should remain in line with prior years, with slight fluctuations throughout the year. We expect annual adjusted EBITDA to be about $44,000,000 representing 50% year over year growth. As a result of the execution of our share repurchase program, we reduced our expected weighted average fully diluted shares for the year to be approximately 75,000,000.

[David Abadi, CFO at Cognyte Software]

We now expect annual non GAAP EPS to come in at $0.19 at the midpoint of the revenue range. Turning to cash flow, we continue to expect to generate $45,000,000 of cash flow from operations in fiscal twenty twenty six. To summarize, we delivered a strong start to fiscal twenty twenty six, continuing to execute against our strategic priorities. The combination of healthy demand, revenue visibility and the robust balance sheet give us financial flexibility to invest in growth while also improving profitability. We are encouraged by ongoing customer wins and positive feedback across our portfolio, reinforcing our leadership position.

[David Abadi, CFO at Cognyte Software]

With this strong foundation, we believe we are well positioned to capitalize on the opportunities ahead and continue to deliver profitable growth this year and beyond, while providing our customers with tools to make the world a safer place. With that, I would like to hand the call over to the operator to open the line for questions. Operator?

[Operator]

Thank you.

[Operator]

We have a question coming from the line of Mike Sikos from Needham. Your line is now open.

[Mike Cikos, Senior Analyst at Needham & Company]

Great. Thanks for taking the questions here, guys, and congrats on the solid start to the year. I just wanted to come back to the guidance for a and we'll work, I guess, revenue But just to make sure I'm clear, Q1, obviously, you guys outperformed the sell side projection. But how did the quarter itself play out versus plan? Was there anything to call out? It sounded like you guys struck a positive tone on macro and the demand, but can you just speak to those points specifically?

[Elad Sharon, CEO at Cognyte Software]

Hi, Mike. So in Q1, the top line came a little bit ahead of expectations, but this can happen between quarters. We still expect the sequential growth quarter over quarter along the year. As of the demand and market environment, we do see similar momentum as we shared before. We do see very good traction with customers.

[Elad Sharon, CEO at Cognyte Software]

It's evident also in conferences we are participating, including the recent one. The demand drivers remains very healthy. The data is growing volume in diversity. The adversaries are more sophisticated, better hide, and the technology is running fast. So, we do see the momentum continues, and we continue to expect to continue and grow along the quarter over quarter, and improve profitability for the year.

[Mike Cikos, Senior Analyst at Needham & Company]

Got it. And for the I know you guys have cited some of these recent contract signings. Right? I think we have more than $40,000,000 in TCV you guys have announced in press releases. So just a question, we're seeing the volume of contract value that's being signed, again, dollars 40,000,000, call it about $20,000,000 is reflected in financials today based on some of these investments which were not captured in today's numbers.

[Mike Cikos, Senior Analyst at Needham & Company]

Why isn't that necessarily impacting fiscal twenty six to a greater extent? Is it the timing of some of these renewals or expansions? Maybe they're a little bit further out. Can you provide us an update on that front?

[Elad Sharon, CEO at Cognyte Software]

Yes, sure. So we mentioned actually two large deals. One is related to a renewal of very large contracts. We expected this to come in, so it was already baked in our guidance. And the one is a larger subscription deal of over $10,000,000 per deal, and the deployment is planned to take place in Q1 next year, fiscal twenty twenty seven. And that's the reason it's not relevant in terms of top line for this year.

[Mike Cikos, Senior Analyst at Needham & Company]

I see. Thank you for that. And on that $10,000,000 plus deal, if I heard correctly in, David's prepared remarks, that's a a three year deal? And Yeah. That's that's the other p yeah.

[Mike Cikos, Senior Analyst at Needham & Company]

Go ahead. So I was just going to say, it's a three year deal, but only the year of the deal is currently included in total RPO. Can you just help us think about like why isn't the remaining duration of that contract reflected in the RPL?

[David Abadi, CFO at Cognyte Software]

Yes, Mike. It's it's correct. It's a three year deal with annual value of $10,000,000. The deal from an RPL perspective, only the year is included. It's related to the terms and conditions within the deal, which only the year is qualified for RPO definition.

[Mike Cikos, Senior Analyst at Needham & Company]

I see. Okay. Thank you for that. And the the final question I had for your topic is GroupSense with the acquisition here. I know that you're saying the updated guidance today primarily attributable to the GroupSense acquisition.

[Mike Cikos, Senior Analyst at Needham & Company]

Can you help us think about what is the revenue impact when we think about the $3,000,000 raise here for full year? What is the associated OpEx increase by taking on the employee base from Group Sense?

[David Abadi, CFO at Cognyte Software]

So, in general, it's a small transaction. It's a breakeven business. We added the $3,000,000 to the top line. The model that they are selling is a subscription model. So it's a recurring revenue of $3,000,000 that were added to the top line, and this is something that we also to the guidelines.

[David Abadi, CFO at Cognyte Software]

From an OpEx perspective, we have additional $2,000,000 because of some other saving that come from a different area. So in general, it's a breakeven. We believe that over time, due to synergies and other elements, we can create profitability, and it will allow us to grow in The US.

[Mike Cikos, Senior Analyst at Needham & Company]

Great. And that that US piece loud and clear on the increased exposure there. I know you're talking about the call it 50 ish customers being brought over as a result of GroupSense. Are all 50 of those customers in The US, or is it just the the vast majority? Is there any customer overlap with Cognite's traditional customer base?

[Elad Sharon, CEO at Cognyte Software]

All customers are in The US, and the solution, actually, the group sends provide to those customers is in the domain of Cyber Express Intelligence. We do believe that for some of the customers, and this was also the main rationale for the deal, we can leverage our technology, and being able to deliver to them Cognite's technology in addition to what GroupSense delivers to them today, and by that, expand presence continue to expand our presence in The U. S. This is one more element in our strategy to increase presence in The U. S.

[Mike Cikos, Senior Analyst at Needham & Company]

Terrific. Thank you. I'll turn it over to my colleagues. Thank you, guys.

[Elad Sharon, CEO at Cognyte Software]

Thanks, Mike.

[David Abadi, CFO at Cognyte Software]

Thank you.

[Operator]

Thank you. Thank you. And I'm showing no further questions in the queue at this time. I'll turn the call back to Dean for any closing remarks.

[Dean Ridlon, VP - Investor Relations at Cognyte Software]

Thank you, Olivia, and thank you, everyone, for joining us on today's call. Please feel free to reach out to me should you have any questions, and we look forward to speaking with you again next quarter. Have a good day.

[Operator]

This concludes this conference call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Dean Ridlon, VP - Investor Relations
• Elad Sharon, CEO
• David Abadi, CFO

Analysts

• Mike Cikos, Senior Analyst at Needham & Company