Cognyte Software (CGNT) 18 Jun 242025 Q1 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognyte First Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your host, Dean Ridlon, Head of Investor Relations. Please go ahead.

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

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

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

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

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

by year-over-year. focus We revenue grew than with faster profit digit increased Gross year-over-year, fiscal million, consistent on revenue, growing double generate you, up of start a our profitable gross to first profit call. Welcome, and Thank We delivered to quarter as Dean. continued results. QX approximately strong financial consistent both year-over-year. $XX our we to expansion. conference XX% everyone, our margin year XX% delivered QX and revenue

generated of sustainable delivering $XX focused along profitable in adjusted also of We million and quarter, EBITDA growth. cash remain on operations. $X positive the million We from with positive about

powerful record around countries investigative customers to globe. XXX lengthy have We the a track delivering in of than of more analytics hundreds solutions

customer and we needs their and Our customers base our growing how dialogues help view us have as global our them. solutions can about ongoing across domain experts,

interest fusing technology, be intelligence, and for other increased generate in find our customers are that unique insights data and more of nearly advanced innovate hidden to would to and including scale our value We use build capabilities on across generating at and our faster impossible cases otherwise. our leadership. continue relationships effective investigations patterns, believe solutions. variety enables artificial a detecting and These We technology wide by

We providers. and displacing North America, incumbent expand competitive deals in our presence securing continue to

marketing include sales demonstration in and proof-of-concept investment ongoing growing Our capacity. our and

technology Our high the repeat have and evident experience to shows our recognize that from previous our testament follow-on when deals place quarters business customers use is deliveries. Further value who our settings, customer real-world satisfaction solutions solutions' to in in signed value high in the returned customers and they orders.

noteworthy with of now agencies. I'll from wins existing during quarter. valuable the national we enhancing are won had deals significant intelligence follow-on some and becoming addition, and In including customers quarter, X about customers. We other other these references talk our several the orders security national during brand

obviously and its improve were capacity to were customers with outcomes. characteristics, ability repeat these more to continue and by driven million our of wins drive were significant related has While all customers or own and functionality position $X strong our business. These unique wins demonstrate who more our to and each value none in wanted

customers frequent effective and and sold national discuss gives make partner and are the prospects to and touchpoints other to solutions our innovative needs into a with more relationships. analytics we relationships key conferences our help enforcement security, national and organizations as growth. our facilities, highly speed, investigations contributor our they and where are challenges appreciate us the new innovative investigations. that high-quality us industry road of We success current to maintain which and events customers rate to insights Europe, participated valuable Cognyte view our believe meet conference we their engaged We industry strategic them improve investigative market-leading we map. position with close with helps continue future many at accuracy capabilities. Customers to We of with in customers have them Our with customers in facing, long-term timely decisions. The perform their or them optimize Recently, and and demonstrated technology our technology. intelligence, solutions our customers other to enable regularly trusted a providing law and find

such in survey intelligence financial commissioned police this agencies units, law week In recently to addition to press We we and research, ongoing of as a is issued their occasionally regarding result on around LEAs enforcement and initiatives, police, as a our of border our regular release them. with about referred was formal available survey and challenges the of as industry others. marketing as of validate summary some more we current plans this working last perform data to to stakeholders learn more the LEA and priorities website. The about analytics aim dealing the for a faced needs well assumptions by our survey future and the

Here survey. are few of key the findings a from the

for First, utilize X uncover and data. about of cases. for desperate between analyzing harder connect dots insights makes LEAs sources the it more solution than to This for data them the XX% resolving crucial

LEAs the current challenges. lack and of video. are solutions' for This analyze support their sources unstructured need to half given of include, significant text others, data is the claim a of that approximately unstructured one and LEAs of data is that issue images, many Second, the top among

analytics organizations, outdated, no enforcement volumes. limited formats XX% and effort law change often a streamline to higher and their process. findings organizations solutions keep that their surprise changes correlation them. within analytics of it also siloed the to they investigative existing the in for data analysts between for data indicated and analytics to investigation and the enforcement law optimize used Therefore, data of for number by solutions. The plans or replace are difficult the The LEAs expand, to Third, upgrade planning is need making investigators it's about and in the more solutions up with an comprehensive are solutions there organizations show existing solution

include analysis important consider very AI respondents enforcement the to of is or recognition, market law risk our investigation. The opportunity validate for of data XX% and of and is and beneficial XX% believe research law what consistent Lastly, with intelligence be either security AI customers national this most hear roadmap. enforcement from critical AI-powered our with The that to pattern capabilities law analysis image important and enforcement outcome assessment. and we future national

structured fusing and insights. customer uncover address scale data directly unstructured to around solutions hidden needs at Our analyzing and

We leverage to to R&D, growth. implementing and bring drive innovations advanced continue our long-term our generate AI capabilities, maintain to demand differentiation, customers, including

outlook for 'XX. Turning fiscal to our

X%, approximately growth about visibility, the plus now revenue Given representing our good year-over-year be XX% momentum and to million, at are or we $XXX minus expecting midpoint.

now of range, at leverage $XX in the increased our and financial revenue our what about we more it than double midpoint be million adjusted we expect guidance, Given the the EBITDA model, to we demonstrate the and provide we detailed summarize, more very remarks. To during financial model. will in we David consistent fiscal started generated his have performance guidance deliver leverage our 'XX. strong, in continue to

is Our visibility the and healthy. is stronger market

continue make trusted decisions well to and them partner. us established mitigate significant customers expert a and believe look of leader, domain wide faster challenges is as evolving threats. We for investigations, Our a variety that face solutions market and to Cognyte accelerate growing help and

safer. them customers the the significantly Our improve solutions missions and to the tell enabling frequently perform make world that us results, effectively our

a drive be to business. they continue repeat us relationships asset customer long-term as Our significant help for

our and continuing Cognyte and We momentum growth Given for the improvement profitability. is our increased we in year. outlook good sustainable positioned visibility, for believe

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

and Thank you, Elad, everyone. hello,

came continued, our expectations, results Our momentum financial execution. our ahead first solid of quarter has reflecting and

in was $XX.X remained strong contract we was the The QX revenue revenue. Recurring continued software support our due revenue approximately growth. generated million from some debt. cash an growth is during growth The drive cash million execute contributor in $XXX XX% of visibility was offerings. Our $XX.X from increase year-over-year. balance million, and driven increase a to revenue of quarter. We've up to million $XX with increase and balance sheet revenue mainly primarily year-end to million operations by represents of and no vast long-term and cash, and subscription of the $X.X flow majority a revenue

or total We revenue And continue $XX.X of revenue. quarter-over-quarter. to generated QX, million grow we our in recurring XX%

for drive budget profit revenue delivered to We descoping up may needs growth said, and to free recurring so faster. even margin on upgrades some customer expect able evolving their XX.X%. growth support was revenue. older That long-term quarters technology and in invest growth were between continue solution support deliver respond to to fluctuate revenue and they the in quarter due Gross to gross to can contract changes. We

XX% organization. cash $X.X and margin improved an revenue have The driven higher structure demonstrate generation profit into quarter business the services built the Our software gross million the of the for leverage our is year-over-year. cost by and $XX.X professional expansion resulting This increase largely was our we leverage million, of model. or

our in The year-over-year. value differentiation. Our recognize innovative the we help model technology customers improvement our in strong margin our generate leverage meaningful competitive our gross have us and in profitability reflects

KPIs. now recognized against major each obligations, Let we that revenue you be is performance performed of with revenue periods. to as share me in future our RPO, or expected remaining how contracted represent

is deployment RPO discussed. of just the Total QX. I reason was are period, seasonality. timing Short-term reminder, $XXX.X primarily in RPO the cycles, decrease a and and at from last months. lengths visibility revenue The factors end of quarter into end sales cycle, to to given solid $XXX.X at RPO increased impact million a of of As a contracts, our renewal the million, RPO these XX We related believe providing support growth. the QX over healthy few levels next

QX Turning year-over-year and revenue to XX.X% grew million. was revenue. $XX.X by

and by million. QX in grew revenue XX.X% software Our year-over-year was $XX.X

was solutions Our high XXX from margin in value helping our increase continued recurring QX, us of revenue of from revenue previous in it and vast year-over-year. missions. Gross similar points and basis QX, to confidence was XX.X%, testament in high the improve their to our succeed level customers majority The them generate million. was for in the period, business our critical a an $XX.X repeat to

gross grow to continues profitability. and better QX The structure was revenue improved margins profit of up combination effective gross XX% faster meaningfully drove growth, than revenue. year-over-year. cost Our profit

During the EBITDA in non-GAAP QX, our delivered million. which another $X.X of our in we financial and operating demonstrated strengths. model adjusted leverage of QX, like $X recent we in million have quarter, we was income and

on and have our continue to expansion. drive We margin been our focused improve goal executing to financials

guidance. to Turning

sharing momentum, for our dynamics, increased are outlook QX we year. the Given an and visibility,

our growth demand fiscal now outlook X%, support outlook. year or XX% the full the 'XX, be previous of midpoint plus short-term This For strong $XXX represents revenue approximately year-over-year revenue environment the at range. million and $X that our we minus $XXX.X believe RPO approximately expectations. expect We of million million, to than higher this

We will be also the of historical believe patterns. similar to that seasonality revenue

and non-GAAP and significantly to increased model, in more expenses that level non-GAAP million approximately the effective adjusted Because We quarter $X impacted common will of between expect basis range million This GAAP outlook the expect the the tax throughout we about we be million non-GAAP $XX at $X our non-GAAP reporting by year. In the results. we EPS adapted and quarters, sequentially to recent rate leverage and last year. a QX to revenue have each income provided call, QX be correlation slightly non-GAAP our compared EBITDA which tax results. revenue quarterly our it during applied our now above guidance on In from the of to last it the midpoint the methodology earning fluctuated period, expected we uses methodology the increase a income. between our QX, pre-tax increase

expect continue to be expect payment expenses in to including and $XX to note, tax million annual $XX our about We to cash also release press be tax million. Full is about comparative period, the issued today. provided non-GAAP the impact disclosure

increased midpoint we come EPS of revenue the non-GAAP annual outlook, in our expect of at result the loss now a $X.XX to range. As at

of we million now and cash are a operations. To improved and to outlook, our executing in summarize, consistently for we about have and this we from generate forecast strong As well result collection $XX producing results. year expect been our increasing of QX strong

add new growth, latest capabilities continued we Operator? believe to additional the including increased fiscal call our our growth value to in well by generate and like to profitability years. With We profitability for customers current sustainable operations. a so revenue can year the open line over questions. in future and to we for strong the flow for 'XX hand would in significant to leverage and with operator cash year from and and of deliver improvement positioned to our are profitability AI. We flow I cash advanced the expect that, continued improvement have outlook model the technologies, be leveraging existing increase solutions We the and

to [Operator going Instructions] Needham. from with the come And Mike Cikos our question line is first of

appreciate as far give prepared sense think Great XX% us David, think, was to the think about help I year maybe you might execution. And is we maybe an the Can of we which And the as ago Really bit quarter so investors. Can revenues? revenue revenue you recurring quarter just or recurring the apples-to-apples to here I for come that total a some know the I compare total as a have sources for today. of far been I as XX% was that a XX% then better have a for more you wanted help it contribution. remarks. of back have it how ago of something revenue comparison? a us about to new talking to the statistic, who just

of growth. Yes. contract vast Thank renew an which And main from say, revenue revenue would regular this contributor you, coming on is even important that this I Mike. the majority And our generate for are contracts, pillars our Recurring revenue subscription. majority, support support of basis. the and some customers a offering is the

the about on to look you increasing from million correctly and actually, this shared numbers, dashboard were last the we quarter. -- in that year it $XX from If we the QX million numbers presented $XX.X

will think existing trend the the in have that you and we good business And of So customers. it It's term, provided another us long repeat visibility secretion it's web to quarter-over-quarter indication continue from and ] the [ growth. grow.

just pieces here. Got it. I other wanted highlight to And X

RPO if and I is that's guess So the gives strong remains the the question probably have year first, up leaves the more we full that the reading you the organization, cRPO And I'm for around confidence here, decline I think guidance. I to right? the taking saw. that's sequential be the tea what --

in tied remind more that shift metric? is RPO, RPO can seasonality Is seasonality to based we contract increasingly decline, first, first, on are shorter-term the that play seeing the business? So towards come about -- when And that so customers way for the on any RPO with piece think you second sequential into durations? us and then is you then it second maybe

this is Yes. Mike, Elad.

So and may the is is manner. quarter-to-quarter, and timing, similar X strong. reasons. was a QX, as and of healthy market behavior those renewal we and the up business very customers and the the on RPO, solid, believe X short to RPO And impact seasonality. sales conditions to yet total And challenges, healthy, hear related proxy evolving it healthy was of in renewal the is you've sales from factors. both are RPO can to primarily David backlog very cycle, of and RPOs, It fluctuated a are -- what seen in addition, that reflect cycle RPO continue the out market from mentioned maybe mainly the may cycles, the deployment related factors down. In given and for grow past And the overall in seasonality. are and but the very the And due fluctuate lengths RPO RPO we we going in call, of the contracts, timing demand

to next Evercore from our the of with is question And come Levine line ISI. Peter going

on a earlier you in compete Elad, in it that today the the replacing? an the give in North America your in? America, different the cycle, it Maybe to than other would investments us different. comment understanding you kind of America. you understand of in Just Is process script made around and/or be sales buying replacements markets go are you're in help North North just is any market? What making is any investments us who

Peter. sure, Yes,

to side, this of And America. marketing. POCs primarily the So North capacity The investments [ which in in lot sales presence extend force the we year to and see continue ] incremental interest invest sell in products. means related our we are most for there the a to

competitive to win continue deals. We

able, value. that We good we are high were already very of operationally incumbents. are And all, Customers get feedback. placing solutions to generating use first our

got we follow-on also, for good already customers some Second, And became very a reference us. orders.

America. are new the customers, we got deals were in X This from Two QX, them North follow-on orders. others new quarter, of actually,

and making progress. continue overall, So good we

little the yes, a we state and In go to local different. bit of federal. are it's X market, terms different markets, focusing on North America, and In

For force. the own and local, state our directly with we approach sales

an partner. we federal. federal with state far The started and side, local. approach so for deals go-to-market For established Later we initiated the the and we the on, first was we won with

it federal, a the it takes -- For longer. we take expect to bit little

In a follow-on terms every acquire quarters. quarters cycle we and a when market X cycle, we after to a other may newcomer X to that to into X we territories, and far in follow-on It we incumbents, given have each compared to about orders. have sales almost sales and customer are came of take to longer this replace new so have X orders deal

customer, So we new much follow-on and journey, come we make progress. acquire a when It's actually, faster. the orders continue a to

question upsell? kind then new And if X-part us you if AI, Is rates? -- your tool? out you the analytics with second, it -- retention net that? us you could know I share with rates you it's terms And Is a investigative monetizing And how of the is, pricing look with, us don't that with retention side, in maybe help you're of like? a can on AI share then what are more retention how second, AI? it walk could through an it innovations net us is coming Just you're understand

We contracts. retention, in more -- net solutions primarily relevant subscription support in SaaS companies. for it's a is sell about So model and license perpetual KPI our this

that. of terms demand There is our few AI, an are reasons factor for a In for AI incremental customers.

and more well. it's bad one by and AI the are create fake is complicated identities, is to They actors find difficult them. used first hiding, better The as they that

So in our this challenges customers have respect. increasing

are make benefits, helps investigations of areas dimensions And more AI successful. and X or our there where our AI it accelerating customers' a is terms for contributor customers. In

way. Actually, customers simple experts utilize technical a high-quality is a in to one don't rely user first in more answers. and get and The to faster efficient the natural have scientists. and They question every ask system data GenAI language much can on helps GenAI.

So area with here stronger the help the benefit is second analytics is can and efficiency a AI engine. quality. And where

uncover insights much hidden it to AI insights the more or hidden have actually customers. can relations, makes value of uncover customers if increase hidden faster example, and actually the and For

along I it the and is an be way. continue expect demand generator, and to incremental AI that So way

from Shaul Cowen. [Operator Instructions] line question of our with the And TD next comes Eyal

we're execution seasonally focused, results. a on ahead results translating reporting those and that to Congrats more improved healthy seen cybersecurity of of results. that And quarter. we related the the slightly and seems of seeing coming have little really your federal Elad, I'm September improved are under strong bit coverage, federal the vertical spending as majority companies government if

seeing what understand just help thus driving spending what So And an maybe federal across-the-board how you're far? has us the to that is it be seems been healthy market?

Yes. Thanks, Shaul.

of is demand an customers start that say their our get few About evolving engagement into high, first So them. and with there very on basis. are the will needs I and all, ongoing we our insights a of drivers,

their become is one our bad more networks, the hiding, customers using ideas also investigations difficult identities, their and that and and The and technology, guys are more fake plans. for as relationships creating first complex hiding better hiding

put becomes one. hand before on more to to and this them neutralize a This they unfold. So difficult threats is

very effective, for more with volumes data deal in be and to Second, customers they have diversity. order to

they and them And order related Technology more And is more into dramatically. And both And and actually, analyze is of data. have and requires, So continues more the convert quickly. first fusion grows strong to insights work this to second in disruption. analysis AI ways. disruptions technology and it for driver all, this capabilities next the more capabilities. to

you have might if don't have you winning, it, one If technology it, is you you're example lose. AI. disruption, And

efficiency AI also with machine-learning helps GenAI earlier, with As mentioned engines. sophisticated and with I

drivers. the And So actually -- Copilot. AI-driven our example in capability, copilot those about customers. One in GenAI capability in -- in demonstrated ISS, exactly that discussed earlier is, we many had we I in engagements reflected demand those drivers the those also call. Europe had conference with customers We talking demand our

that -- having our for we it also customers, hear that are it LEA engaging from We and customers results. mentioned as and also call. And national intelligence we earlier survey them the security the we other many from also in heard it have many, I we only enforcement, hear years. customers it not in low

the and grow for to is going that we same overall, need feel So the is drivers healthy, demand time. are the technology over market solid, continue and

make course, U.S. we the And to good pace to feel to extend and us. territories, presence to We investments, opportunity continue certain ahead keep including maintain in the of growth about and leadership of

I'd the showing over to questions. to conference remarks. hand And further further back Dean no for And like Ridlon any I'm

Thank call. you, Thank Michelle, and joining any to much. please on have thank feel to us look you very today's for reach you, Should me, forward we speaking with you everyone, and to questions, out quarter. you again next

This concludes today's participating. for conference you call. Thank

You now disconnect. may