Cognyte Software (CGNT) 13 Dec 232024 Q3 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognyte Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions]. Please note that today's conference may be recorded. the of to Investor hand Dean speaker now Head Ridlon, Relations. will conference your over host, I Please go ahead.

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

accompanying getting Before that I is today like would call started, a mention to our presentation.

reliance Investors to forward-looking securities would expressed forward-looking this expectations these section fact guarantees also statements tab. provisions like statements are not laws. federal management's the differ call, statements. The on from the the to performance. could current These draw by Click are cautioned these and the contain Investors of Act or may Litigation certain If this to your link within website on today's other results attention during made implied on by on or materially and, the of and future you'd statements are of forward-looking based of please them. discussed Securities date meaning conference call Click and real-time as of the like these the the webcast Private call. I of matters on slides in to forward-looking Actual the in those that update call Cognyte statements. of cognyte.com. Reform to our view at Investors assumes except law, as undue no are place forward-looking obligation revise select required visit XXXX not

believes these XXXX, our year for on materially cause fiscal from ended XX-F of forward-looking and in could risks, to these among other believe earnings the our information slides, business financial January measures. with differ at make is informational considered how those actual and for the used non-GAAP is because performance should focus companies. for For of detailed the indicated release on see as results Form Cognyte's XX, non-GAAP have not of website peer financial non-GAAP annual management We cognyte.com it similar comparative non-GAAP GAAP please statements, discussion to information, provides and financial reconciliation GAAP section a more to report today's uncertainties from, isolation those measures investors filings useful but discussed differ may presentation companies superior and our financial other measures see measures. limitations measures. Please company between of publish meaningful the purposes. investors the in SEC. The other about periods substitute a included our that comparing and and our a that include The financial in for and Investors or Non-GAAP financial to uses measures non-GAAP today financial results be by from information we measures

to like Elad. over the would I call turn to Now

Thank you, conference of investors friends to Dean. to with I want show our Welcome, inspiring for start call. quarter our to customers, thank Israel partners, and third for everyone, the and solidarity. standing employees,

a safer need horrible out our the necessary its world the to to effectively to by mission is they to this highly focused world how place to continue hearts and make help remain and our commitment strive and respond the on business. We we every adjustments commitments Our challenging to the we attack to circumstances, customers, to advanced our on safer. continue The them make Cognyte's meet technology made we've run and deliver consequences. single mission, company a in bringing those to go to day. affected knows the Israel

to our turning Now results.

in revenue, gross than margin, ahead delivered XX.X% at adjusted in sequentially income both came ahead operating with gross Revenue grew two Non-GAAP pleased and EBITDA are and at margin expectations. in million. QX, faster came our positive continuing expectations. of our in we and and gross our last and operating $XX year-over-year profit our came improvement In of quarters. grew performance We over the income revenue,

win the visibility to innovative high to into ability with guidance we During and allow quarter, we for customers, to recognize both strength technology The the them our deals performance year. continue its currently value. business, us with to new deliver existing have QX again our of together our and raise the

significant discuss outlook. intelligence several Now I'll review elaborate of to valuable lastly, decision to our start on further how I'll a customers. with drive our our of updated wins. continues AI And Then I'll

Cognyte. share illustrate our me recent our are of why few advanced a how choose wins help Let that and customers solutions differentiated

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the technology of provide our provide constantly tools group that Intelligence data or evolving decisions limited powerful available complicated. are take Traditional a customers. only deployed. sometimes impossible a of legacy analysis. These holistic data-driven smarter that sophisticated become make data the more With our to Decision capabilities limit a bad to and virtually significant obtain timely ability critical their when enabled These deliver customers Our of to insufficient view insights to with even value challenge accessible manual technology of provide tend through solutions and that insights actions, often to solutions technical actors], capabilities would together more or increasingly and experts. are overload, [ actionable analytical summarize to ability scientists be simply or trends and are analytics tools data the and

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models latest solutions' deliver ability believe we enhance customers. expertise will to our differentiation. commercially our ability leverage customers our research enhance and to and results with development to continue lab analytics continue domain together value our further impactful investigative further our the We to We to latest our innovations for own AI AI AI to the available and provide the embed our in

Turning to our year. outlook for this fiscal

expect by grow an for on we visibility, more adjusted on be EBITDA about grow expect at now basis. SIS faster revenue raising revenue Given are to our our minus current and or adjusted we basis. growth representing for to adjusted the now the at non-GAAP year about gross QX profit $XXX non-GAAP to approximately We XX% million. X%, than during With an SIS XX%, performance year guidance year-over-year XX% expected million, $X to plus year-over-year midpoint

technology significant intelligence Looking threats. decision trends, a solutions and and combination beyond our To face and and of challenges variety believe customer across mitigate accelerate faster year, improving customers we us growth summarize, positive innovative for our global through the help many large growing to for position continue look base industry this that cases profitability. that to make use us investigations, and well decisions wide of them our

as the frequently results the effectively and perform them partner world trusted that enabling missions and tell a our us safer. and domain experts make improved Our solutions their customers significantly view to us

asset with established be a relationship Our significant longterm customers to continue for us.

for and our current return our profitability with the our results We guidance year. are pleased to third raising quarter and

beyond year, continuing growth this and Looking we revenue further profitability. improvement expect in

to me provide details outlook. QX more David? about let David our call Now the turn and to over results

everyone. Thank you, hello, and Elad,

conciliation is and mentioned, of Dean Investors financial as between measures Our discussion non-GAAP section non-GAAP available, our GAAP earnings The today will in and measures. in financial the our include our website. release

Situation include excluding a Intelligence detail a financial with the divested that our historical Our website tab results, solutions. dashboard also

came of very expectations. over gross few with and income the ahead are QX, last our in In pleased We adjusted continuing performance in quarters. margin, EBITDA revenue, improvement operating the our

faster was primarily software solutions. last XX.X% QX million, at from $XX.X customers, was up the the continue XX.X%, million sequentially both XXX revenue. gross cutting-edge than from in increase and from existing last in X.X% and QX analytics from year-over-year, and up QX profit year, and QX million margin grew our revenue to demand $X.X QX We deals significant year-over-year. basis for win coming year. Gross investigative grew revenue and points sequentially up $XX.X new reflecting both to due

XX.X%. software We of margin are gross our with pleased

and for competitive value continuously our customers. reflects create differentiation margin gross our ability Our to

Our million previous the QX $XX.X to were similar level quarter. in non-GAAP operating expense

the was and first was XX.X% EBITDA $XX year-over-year growth. Our year-over-year of growth, adjusted our revenue million, revenue X months the X.X% and $X.X grew software QX representing non-GAAP million. In operating million income representing million year, $XX our overall $X.X grew by by

our for basis result XX% year-over-year revenue to SIS All high approximately metrics gross increased discussed margin adjusted the points gross value we a non-GAAP year-to-date deliver XX.X% software increased as profit our non-GAAP on Our customers. XXX non-GAAP are our and of the just basis. I and

are We trend we our pleased with improvement execution performance. of continuing and see our financial in

gross expansion revenue and growth, to margin structure income. operating Our and cost drive with margin improved coupled

During year, first million months of of our the ahead EBITDA X we generated the $X.X of adjusted expectation.

cash. to Turning

operations positive positive and first a results X strong driven with of cash from cash flow improved was our year months flow the operation For financial million. cash $XX.X the The from by of collection.

the about sheet, debt. with In ended and $XX no million terms we balance of of cash quarter

for the for view, Our outlook RPO was solid with combined us consecutive In strong. Total at quarter. results RPO our allow to to million. backlog, fourth $XXX.X long was end year continuing short-term $XXX.X healthy million, the and and be of short-term our the QX increase continued our current this RPO

$XXX minus SIS of fiscal at XX% plus X%, the raising year-over-year midpoint now the reflecting growth For we to non-GAAP revenue million, our an approximately outlook adjusted range. basis XXXX, on revenue are or

more XXX on of points outlook you about gross our increasing improvement We're outlook. non-GAAP an adjusted an of color year-over-year with XXX expectation share basis versus me let and our non-GAAP SIS basis. margin improvement full points our XX%, year Now to previous basis

non-GAAP the million we of continue our expense, $XXX For expect operating full approximately total expenses year. for to

the increase of have expect outlook. the Given million of revenue at versus our of range adjusted strong million the year $X about EBITDA for previous performance to in our we now QX, expectation an positive QX full $X for and our about midpoint

We optimizing continue cash tax on to payments. work our

for As we're million work, a additional expecting million improvement last of non-GAAP year, $X tax quarter. the $X result our an of outlook record to versus a ex-provision this about of

that non-GAAP a base, the record believe are previous an customer In leader EPS positions with of strong loyal midpoint annual versus market world. together non-GAAP they the terms QX trend loss of fluctuation a be our well innovative in positive result we expecting we for combination expenses. track versus at improvement and now expected EPS, believe $X.XX gain analytics to the and revenue around lengthy loss backlog of profitability. To our and in customers and in summarize, growth with We we range, EPS are QX a our as tax of is non-GAAP outlook. of LC investigative improved our industry global a a our technology and the have us $X.XX

solution drive demand. needs capabilities base artificial opportunity customer innovations our new value to technologies, us add of these from intelligence. customers of large the leveraging solution in the continue and lower and the We generate help of by profitable and the growth. combination technology, existing cutting-edge performance latest innovations well The the position to increase our including our emerging for believe and address our customers and We improve

our including profitability. year, We improving annual are with visibility the quarter raising guidance our and very pleased every we and made this progress

another Looking for during like provide FY revenue call. open growth year forward to questions. year, I expect earnings expansion over plan we guidance our of call the 'XX With would the Operator? line for and to to margin hand to to the next operator that, QX and

And with Cikos Mike Needham. question we the have Instructions]. coming [Operator line of from a

the the together strung solid a for in this at point. quarters cutback couple of on to Congrats been have Good that story. here execution see

seeing So are And significant of you help out customers. quarter what revenues. the discussing sales want deals deals increased movement there hats know us new new talk going would customers market? are that actually guys I have guys like you the or the customers, I I'm from X good start the through a or is of respect with is number new line any I'm Can both in for is be helpful. you of visibility Are that existing were deals. are during demonstrating and where it and that. and budgets? to obviously increasing? to won -- there both velocity, sales about Or in budget these their significant velocity with sorry, off number deals that think potentially the on from on you And did into this being won cycles sales -- sight and confidence -- could you If those a existing

Mike. you, Thank Yes.

means, analytics, to bad using customers, better organized, more in custom need result, to our have conclude on their and also more Customers more sophisticated. solutions are for and driving race and that increase deal technology. to the of with X from reason, of in accuracy demand is more a sets. them terms technology the are more customers. are And all, first gave in for more them. more examples the had customers. About So hiding. drivers the call, diversity order of to speed, advance of this AI with so solid, the they deal also example, because for for in the diversified And existing investigations. Customers rate to up and existing of -- success this for to data uncover a the data insights becoming The data to their is add not order out at and time they existing volumes It's complexity I situation. and continue insights need more mission more and functionality critical buy actors static you and which funded, the that existing scale successfully customers, earlier have deals significant They're and is growing mentioned strong the more themselves investigative quickly. And -- need we data analytics investigations is as a complicated well uncovering

use national It's level. to server for add case them related a to added threat on of another hunting. One

an and is more And one capacity and capabilities generate other related of the third upgrade to one functionality is insights. having to more The cryptocurrency.

means You can apply fusing at cases. to hidden data different which scale use analyzing them all strong see with of And many analytics and the technology, uncover insights.

very technology. traction The that see opportunity. we about ones growth good and new and need the customers many this we with feel is So customers, good existing

and went update building as progress in cited in out the value new on technology as there deals X And on far the the us competitive hear conversation those line know States Can as top your and more right? across to around wins it. ideally while we're And How were market? guys you an out customer that remarks, you those specifically, prepared well? you Got proposition. trending good on are in the getting give United the pipeline line? I and U.S. customers these of we finish wins

Yes, sure.

So first that Market make -- It's U.S. existing like our obviously opportunity to the us. process. repeat an It's -- time. presents penetration to expand not had adjustments. in some the a We to think a of all, we U.S. some adjust takes for from product customers. keep We process about it decision is market, business

on work out we brand push mainly, awareness. to And have We have to incumbents.

So competitive able we wins. that incumbents. is year. I were our but able, from a or it improve are ahead for in hope QX, QX guidance had into replacing in to Mike. business the value we'll reason the over asked deals guidance this you give see see the do we and we the both -- reason, we what having we It We previous About And answers, it be we this budget. for able were for that of because the also able X general expectations -- saw -- different We the countries in process, visibility increase technology won believe both deals raise our we in in products. and and that to actually, more market, visibility QX, that was more states. In be see to as interest in delivers. we gradually already to grow customers and first of before, for think was our deliver were of U.S. and both, And time. all, for high win I better

gross one question the for full and did. So gross plus my on just QX, before from colleagues, reason a but maybe in I in margins there that margin there actually creeping did. turn Is keep in year-over-year see that's talking any did margin know good in gross another I margin for XX.X% decline? either to should from at up a maybe that guys here guidance you sense, mind QX backlog? coming It why more seasonal the year is reason right? XX% why would where basis, And what wanted declining point I your you gross see It to sequentially? to the over get growth why something to we more anything versus it nature? by be Any you're would XX% Or

David. is Mike, may margin in you general, can as general, it's reflect overall, gross trend Yes. very see, In margin quarter-over-quarter. between can -- the positive. But gross fluctuate

the services. see the can the You quarters, that in last is professional margin software over our -- and in growing gross overall the few in also

see dynamics. the software, say, fluctuation you for behind you see margin. In limited dynamics place. margin more better The can the revenue quarter, gross that that gross the are be, the there take may So would right can any I given

for the But in of is the that time. now we to and opportunity time. we that for to the we Given margin over the it technology this are scheduling continue year. current we margin like gross XX% solution improve advantage backlog over and QX, an right given the strength get bring see always the gross the the table, full focusing direction on with that trend believe We our can

our next And with from Levine coming ISI. the Evercore of question Peter line [Operator Instructions].

your confidence help business? seeing in visibility us about back home. of kind And the maybe can appreciate to terms question anything your year. today quarter, the that an fiscal to god -- the that of think the about just Grace But color think when around and next the how inflection but commentary guide you you in the when reacceleration for some in into first then line, you understand help maybe back the have top do 'XX you at us families

we Just maybe that out us models. our as think frame about for help --

Yes, Peter.

a customer global So base. we strong have

have We differentiated technology.

with We traction a needs. do lot We have of see customers. their

pleased are last the had We quarters. with execution the few in that we

insights believe drivers, and more time. visibility and more good a we in more growth is the also that to are line hidden QX FY actually and backlog we guidance prevent as call for before, guidance more going demand into expansion that for reason drivers The stronger for We the specifics can gave. reason, demand these before bad 'XX We and our difficult and for it's continue which that and up next with fact time. volumes reflected believe see in to the the continue unfold have mentioned uncover see the top is forward. they solutions, numbers we over those becoming call. have -- becoming and that the we it that that give their of also and margin complicated. We earnings should performance over is data expansion About margin that growing And in year, actors and are QX growing we'll in more it's that customers the I sophisticated, next and becoming scale

with months in more any us changes business, you gross terms And you in seen X the quarter, that the about excited share of the get metrics you've in color of maybe can Perfect. retention into net that then metrics terms any fiscal year, retention, share us outlook. for with your

it's Peter, David.

the backlog to plan of see positive execute able deliver to higher would say, are was continuing us not we the there KPI to perspective, levels. goes that ahead I and indicator we wrong So do On our Actually, no something expectations. opposite. -- Overall, We the of there the our any to were that, from show was bring direction. a top that trend.

are trend. on at that KPI looking seeing a the overall, we're So positive if day-to-day, the you we look

renewals like and We and customer stuff do a that. the are a positive across see not retention But in sharing strong execution. general, trend we

time. I'll Dean to turn at remarks. I for see And any [Operator Ridlon it no this further questions closing back Instructions].

and you, everyone, on operator, joining you, us call. today's for Thank thank

U.S. some any then. should to you the meantime, next visit Thank to planning we to speaking to free you are early for with feel the next again month and all me. hope quarter. to look And please you out of In questions, We see reach attending. you forward have

and participation. Ladies you your for Thank today. the gentlemen, for conference that concludes

disconnect. may now You