This article first appeared on GuruFocus .
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Revenue:$105.5 million, up 10.4% year-over-year.
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Software Revenue:$47.3 million, an increase of 26.5% year-over-year.
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Software Services Revenue:$50.1 million, up 12.1% year-over-year.
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Total Software Revenue:Grew by 18.6% year-over-year.
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Professional Services Revenue:$8.2 million, down from $13.5 million last year.
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Recurring Revenue:Increased by 10% to $51.9 million, representing 49.2% of total revenue.
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Non-GAAP Gross Margin:72.9%, an expansion of 100 basis points year-over-year.
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Non-GAAP Operating Income:$10.7 million, an increase of 41.5% year-over-year.
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Adjusted EBITDA:$13.6 million, up 31.5% from last year.
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Cash and Cash Equivalents:$109.2 million with no debt.
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Negative Cash Flow from Operations:$4.7 million.
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Negative Free Cash Flow:$6.1 million.
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Share Repurchases:Approximately 1 million shares for $8.2 million.
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Full Year Revenue Guidance:Approximately $448 million, plus or minus 3%.
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Non-GAAP EPS Guidance:Expected to be $0.47.
Release Date: June 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Cognyte Software Ltd ( NASDAQ:CGNT ) reported double-digit year-over-year revenue growth, driven by strong customer activity and better-than-expected adoption of its subscription offerings.
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The company achieved significant profitability improvements, with non-GAAP operating income increasing by 41.5% year-over-year.
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Recurring revenue increased by 10% to $51.9 million, supported by the growing momentum of subscription offerings.
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Cognyte Software Ltd ( NASDAQ:CGNT ) secured new subscription agreements valued at over $20 million and a large expansion deal valued at over $10 million.
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The company is making encouraging progress in the US market, expecting to generate $20 million in deals this year, with strong customer feedback and increased visibility.
Negative Points
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Cognyte Software Ltd ( NASDAQ:CGNT ) experienced negative cash flow from operations of $4.7 million in Q1, primarily due to FX dynamics, subscription adoption, and inventory buildup.
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Professional services revenue decreased by $13.5 million compared to Q1 last year, reflecting expected quarterly fluctuations.
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The company faces challenges from foreign exchange movements, particularly the weakness of the US dollar against the Israeli shekel, impacting operating expenses.
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Despite strong performance, the company maintained its full-year guidance, indicating potential conservatism or uncertainties in deployment cycles and timing.
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Cognyte Software Ltd ( NASDAQ:CGNT ) reported a non-GAAP other expense loss of $2.2 million due to FX dynamics, affecting overall profitability.
Q & A Highlights
Q: Given the strong performance in the quarter and acceleration in current bookings, why is Cognyte maintaining its full-year guidance? Is it due to conservatism? A: The decision to maintain the guidance is not about conservatism. It considers deployment cycles and timing. Despite maintaining the guidance, we are pleased to increase recurring revenue, reflecting strong subscription adoption and a 10% year-over-year growth in recurring revenue.
Q: Cash flow came in lighter than expected. What factors contributed to this, and how does Cognyte plan to meet its full-year cash flow guidance? A: The lighter cash flow was influenced by FX dynamics, increased subscription sales, and inventory buildup to support future demand. Despite these factors, we expect to achieve the $45 million full-year cash flow target, with stronger cash flow anticipated in the second half of the year.
Q: Is Cognyte still on track to achieve its US revenue targets, given the $20 million expected from US deals this year? A: Yes, confidence in the US market is increasing. The US is a strategic market, and our technology resonates well with customers. We expect $20 million in deals this year and $25 million next year, with potential for overachievement.
Q: With the strong software and recurring revenue growth, is the expected 87%-13% split between software and professional services still accurate? A: While software revenue is growing fast, we maintain the 87%-13% split expectation. The recurring revenue growth is driving this, with recurring revenue expected to grow more than 12% this year, indicating a healthy business transition.
Q: What has driven the continued strength in subscription adoption, and is this expected to continue? A: Customers benefit from faster tech refresh and maintaining high solution value with subscriptions. The dynamic threat environment and faster technology changes are driving this shift. We are pleased with the recurring revenue growth and maintaining overall top-line growth, indicating market health and strong execution.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
