Cognyte Software (CGNT) 10 Sep 242025 Q2 Earnings call transcript

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

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

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call. during for Events, of If at our you'd real-time cognyte.com, like today's then visit please click these view call, to Upcoming the website link webcast the conference in on slides the Investors section

also draw materially performance. on statements as Investors no are forward-looking fact call guarantees current those update them. management's from within to are would expressed of could that other of in on as The or to certain Private are undue these may of and obligation statements XXXX this expectations the I cautioned made and reliance attention results to Act provisions the the of of future like your statements. implied forward-looking Litigation based of matters this the statements. forward-looking not Cognyte place statements forward-looking federal revise are on assumes Reform these and These by date law, Securities call, securities Actual forward-looking discussed differ meaning contain to by not or required the laws. except

forward-looking and actual SEC. with For for January XX, see a please XX-F Cognyte's materially we year and other to ended results more on in statements, filings make cause detailed report discussion could differ these of those how fiscal risks these and XXXX, our the uncertainties other the Form from annual indicated

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

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given delivering strong plan, our profitability everyone, and our model. quarter Cognyte. for expanding Welcome, quarter We're have another our Dean. and delivered solid financial quarter was year-to-date healthy with you, to revenue on rapidly executing demand confidence our than and to second This business adjusted our we more leverage another the year generating Thank growth call. on full as improved We gross conference This strategy outlook. visibility increase margin of double-digit performance, EBITDA revenue. growth us

During revenue, expansion. XX% QX, up Non-GAAP our faster $XX approximately than increased year-over-year. of gross profit with focus on million, delivered year-over-year, XX% consistent we revenue growing margin

the introducing existing growth engagement and of expanding in our A and EBITDA additional more our QX our amount and we component customers of focused to broaden in strategy adjusted them solutions and growth. to use that profitable is quarter, central generated remain with the deepen positive by of sustainable offerings. year, delivering million Xx $X we generated on than also We the last

this strength deliver significant in area underscores our the value of success continued customer Our relationships. we the and

from of each realized over a North orders secured America, we These to significant believe has these enforcement QX, our came quality, X X needed reliability at tackle valued $XX providing effectively. to follow-on indispensable, our progress. from continue and value orders customers law be million. have and over Each national solutions we solutions security years. In substantial to make In power agencies our the the agency. We evolving proven challenges customers

fiscal year, a replaced customers of Cognyte us were of deals these to customers solution. superiority have half Many with who value X with technology case, first the we new the During firsthand. new won the customers each incumbent high and customers. by of referred our an In existing experienced the

are We we progress by encouraged the are making.

increasingly actors intelligence the smuggling, shed customers as our exploiting faced enforcement security they evolving agencies activities. time by technologies They crime, threats to encrypted behavior financial sophisticated on their harder continually trafficking, and threats, are such innovation law immigration. complex anonymous by challenges conceal I place. learning challenges the that and to and To and our leverage communication, before to evolving, obscure crimes illegal AI, detection, bad are ahead networks of adopting organized drug want and increasing various their evolving their payment more dark light latest across cutting-edge constant while stop activities, stay constantly methods security AI The illegal to networks agencies, evade imperative analytics. fact investigation from machine some human legitimate mimic makes take advanced to counterterrorism, this world to uncover tactics deliver face. growing stem and of track and becoming significantly and adoption operations activities, The it customers over for powered we using operations. This empower the the

We to a to our I transactions focus the international customers multiple are they human languages. deployed and broad deliver, immense for has solutions sophisticated and insights networks technology with would advanced agencies suffering making relationships of only and a trafficking, an activity the across incorporate understanding it and remains highly to would imagine you remain ensuring trafficking, best resolve identify of which worldwide, victims our law these is we like criminal tools in be hundreds financial how partnering base as can in that quarter of learning this that globally. quickly challenge human impact enforcement detect and uncover. equips from This organized many agencies and of operating ahead hidden imperative intelligence the critical of clear methodologies Our the steps effort patterns, continuously impossible actors. In to possible. to By communicating bad complex using agencies with otherwise to cases as illegal borders of give

agencies help traces, groups intents financial These detection. resolution, faster not their and and the By identities the and decision can by platform, the law only deploying conceal measures latest key and from future Proactive enable to technologies crimes. track data digital hidden enforcement intelligence assess of also tackling digital sources law is transactions trafficking driven evade reveal fast. communication of identities, in human uncover the Part actionable Cognyte traditional leverage faces insights prevent but challenges vast also amount enforcement extracting risks.

recognized Cognyte Emerging In Future Recently, our Research. will report, Gartner Cyberthreat threats of time threat faster Another indicators highlight to impacting become respond by Intelligence this Gartner intelligence mean our Tech: and GenAI-based providing this as relates one quickly of of that Cyber for the this more assesses context. an domain, Threat Insights, Solution technology Threat surrounding AI LUMINAR predicting to The will AI-driven support trends key capabilities the XXXX Intelligence report, solutions quarter LUMINAR. was August in about

cutting-edge develop meaningful these difference them technologies continues As making significant, empowering making threats. one and capabilities, technologies summary, the to we our a even LUMINAR only has to into and our more offering. In are Cognyte advance AI solution for of LUMINAR with advanced cybersecurity, generative integrated evolving customers, reshape address this and solutions growing

we to a place mission everything safer world Our the make drives do.

Our cutting-edge and help range of faster solutions threats. investigations, accelerate enable decision-making wide mitigate a

These our solid capabilities, we to with are growth. With sustained new deepening ones. our introducing half for relationships by grow upcoming ability our advanced outlook. once profitable as year and customers our continuing first revenue our new into We to again full the are a expanding accomplishments raising strong visibility 'XX strengthening fiscal well as reach quarters, are with of deliver existing

$XXX about year-over-year million are expecting growth or midpoint. at revenue plus be to X%, minus We representing XX% now the approximately

Given fiscal Xx the increased 'XX. of to now and it our we $XX almost financial leverage million revenue in expect about range, guidance, the what adjusted at we the be we midpoint generated in our EBITDA model,

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

and Thank you, Elad, hello, everyone.

leverage solid million, year-over-year. increase our The increase driven revenue the that by $XX.X majority revenue an XX% revenue. financial model. growth of the QX an deliver our in was have We and reflect Recurring continue approximately strong in of to was results execution software strong. we revenue is

growth and revenue. drive We quarter of continue revenue grow revenue. for able gross recurring than million Non-GAAP to faster $XX.X in to gross QX, our XX.X%. profit We was we the generated were recurring margin

the for million profit was million gross $X.X quarter XX.X% growth. non-GAAP or of increase an $XX.X year-over-year Our

structure cost largely is expansion our of margin higher organization. business software services revenue demonstrates into professional the The the we have and improved This leverage driven by our built model.

technology EPS meaningfully faster recognize Our operating innovative resulting the differentiation. EBITDA revenue, million, grew our of and $X.XX. value positive ended model. competitive income non-GAAP income QX strong operating in our of $X.X gross and Non-GAAP reflects We EBITDA $X.X of margin of and strength with adjusted customers adjusted our million our the financial reflecting than in non-GAAP

Looking revenue year-over-year. grew profitability by non-GAAP XX% gross us our meaningful model year-over-year, faster in our $XXX.X year-over-year. significantly our at profit and and was our The help we XX% HX leverage results, generate million in have by improvement grew

was fiscal during operating year, versus million $XX.X operating million of versus year. about our in half of million EBITDA non-GAAP $X.X the HX was HX income an Our the of adjusted $X.X last HX previous and breakeven loss first

Our is balance sheet strong.

strong contract long-term end deferred of million known at liabilities QX. are and and as also revenue the $XXX.X short- Our were

factors, renewal including timing, payments, recognition under are Contract advanced impacted completion of revenue subscription of by liabilities support contracts contracts, and balances multiple recognized timing methodology. percentage

quarters. contract fluctuate between result, balances liabilities a may As

The almost due million Our was and from half $XXX cash of we year. $XX cash the position flow the increase to is from balance year-end over cash, in with primarily operations of our generated no million up during debt. first strong cash

now business shared and is quarters, revenue to help assets KPI few how are sharing is new defined billings in was One as past unbilled million, Billing liabilities, XX% contract plus the progressing. QX Over balances. more show quarterly year-over-year we we contract $XX.X growth. our new billings. have change representing is the KPIs

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

next providing contracts, renewal $XXX.X primarily QX the visibility are and XX end of into healthy we was deferred are a profitability, of break down our balances QX. a and Total and to providing sales RPO solid level reminder, disclosure given As In months. $XXX.X revenue growth. over million, additional believe timing at seasonality. the RPO between this lengths impact we RPO We revenue period: cycle, the our of at increased million backlog. RPO cycle, Short-term few RPO deployment end in support factors and a of

revenue deferred backlog of $XXX.X sum a million. is million $XXX.X million and $XXX.X of of RPO total Our of

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

was revenue software of increase Our is million. $XX.X $X.X Recurring million, revenue an strong.

repeat and in the high we This QX to revenue our previous our vast long-term revenue. revenue. subscription of continue them is to total critical And offerings. their or significant We the revenue visibility a from helping to recurring value represents and from The our mainly contract of confidence QX, business, some is level generated XX% million periods. for similar solution a support customers $XX.X in testament and us generate succeed to contributor in missions. Recurring grow was and revenue growth majority our

margin increase of basis points improve, in and was QX XX.X%, an Non-GAAP year-over-year. to XXX gross continued

gross than faster revenue profit profitability. Our drove combination profit meaningfully margins gross cost grow revenue. was and structure non-GAAP effective up better the In of XX.X% improved significantly to growth, QX, year-over-year, continued

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

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

Turning to guidance.

demand increased we an $XXX the QX minus outlook. range. market the that we RPO growth of for fiscal We In year. support strong million of the million, 'XX, the outlook outlook plus and at revenue be now midpoint our revenue expect visibility, to conditions, believe Given represents momentum year our This are approximately year-over-year approximately environment full or $XXX.X XX% this sharing X%. and short-term

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

compared above the a We ending expect model, leverage have to to year in at million now the the QX. last we of our be of Because the with we expect to be million the slightly range and adjusted EBITDA QX midpoint $XX level QX about $X strong revenue revenue year.

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

year. $XX million to continue for operations We from generate of about expect cash to this

year the started have with consistently we a well summarize, strong producing have results. To we executing HX, and been strong and

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

Cikos Needham. Mike Instructions] first comes [Operator question with Our from

declined it today. decrease the service saw X% which to first time cycle fiscal of the XQ wanted since we've software was seen think back software this when revenue revenue that sequentially at Just comp I looking stream 'XX. and I the position we're to

get So the to understand that had line caused decline? just and with you software revenue a guys software trying expected? of Or in sense to what how that service was

Yes, Mike.

perpetual the is license. of offered vast So our majority offering in

a offer and remember, versus QX, certain about last portfolio came related at and sequentially revenue. recurring our this quarter QX million revenue and we do our to in million $XX.X you model grew of In representing revenue subscription increase subscription As year-over-year. elements recurring year, incremental a XX% $XX.X the in

million. here the So revenue if it, by software you at increased look overall $X.X over

subscription. sum it's license actually, to is of perpetual that So offerings conversion a

And quarter. it. service the the the software here and now, guess, about think services? year better past the can you're again strong for of professional Just you expecting services through, was that think if professional help Got guidance so the I have it. this we us versus between because split Got software that rest I

Yes, Mike. It's David.

is seeing in the that we're baked subscription our general, growing. in guidance So revenue that

total on You recurring good, higher. that visibility. more see than see XX% could it is portion could is trend the the of it's subscription the growth revenue in becoming us that the the is gives of the you recurring overall growing and which revenue between And revenue,

do governmental still will a same. other to buy do perpetual. remain on model, We transition, encourage you if Their think which our is preference our means, that related pleased a we their customer behavior from this agencies, able the words, CapEx subscription. Now about to And and in in is cushions that do purchasing domain to the this XX% and it be But taking there is we long are in to believe everything. very were we year. will forecast perspective, term, the impact more

there it. leave colleagues. over Got my I'll it and it to turn

I'm the at questions Dean like for to back Instructions] further turn to this showing remarks. time. over closing no call [Operator I'd any

you again and early we have look David forward see and Michelle, me will investors you, should speaking Milwaukee reach to you to on to you, thank with feel and next traveling questions. hope you to then. any quarter. I be with free call. some everyone, joining Elad, Minneapolis to for Chicago, the of please and in meantime, Thank us out to today's In meet And October

now Thank you participation. program, for have you great Everyone, This the your and disconnect. day. conclude does a may