Cognyte Software FY Conference Summary Company Overview - **Cognyte Software** is a leading investigative analytics software vendor primarily serving security agencies, law enforcement, national security, and military intelligence agencies. The company has been in business for three decades and operates in nearly 100 countries, helping customers convert large amounts of structured and unstructured data into actionable insights to enhance investigation outcomes and safety [4][5]. Growth Strategy - **Growth Targets**: Cognyte aims for a top line of **$500 million** and an adjusted EBITDA of **20%** by fiscal year ending January 2028. Current guidance for the year is **$400 million** in revenue, representing a **14%** growth [5][17]. - **Growth Pillars**: 1. **Repeat Business**: Expected to contribute **50%** of the incremental growth, driven by existing customers needing to keep pace with rapidly evolving technology and threats [6]. 2. **U.S. Market Penetration**: Anticipated to account for **25%** of the incremental growth, with efforts focused on state, local, and federal agencies [6][15]. 3. **New Logos**: Growth from new customers outside the U.S. [6]. Financial Performance - **Q3 Performance**: Cognyte reported over **$100 million** in revenue, achieving a **30%** top line growth. Gross profit grew by **18%**, and operating income reached **$9 million**, nearly tripling from the previous year [16][17]. - **Adjusted EBITDA Guidance**: For the year, the company raised its guidance to **$47 million**, reflecting a **60%** year-over-year growth [17]. Customer Engagement and Market Strategy - **Customer Relationships**: The company emphasizes strong relationships with a loyal customer base, which aids in understanding future needs and directing R&D efforts [21][53]. - **U.S. Market Strategy**: Cognyte is actively working to establish brand recognition in the U.S. through local teams, participation in industry conferences, and partnerships with organizations like LexisNexis [11][12]. - **Sales Cycle**: The sales cycle for government contracts typically spans several quarters, with expectations for gradual growth as budgets become available [15]. Competitive Landscape - **Market Positioning**: Cognyte is focused on displacing incumbents in the U.S. market, with many deals involving expansions of existing customer bases [42][43]. - **AI Integration**: The company views AI as a benefit rather than a risk, enhancing its ability to uncover insights and streamline operations for customers [44][46]. Long-term Vision - **Exploration of New Markets**: Beyond security, Cognyte is exploring opportunities in sectors like insurance and banking, where data analytics can provide significant value [22][23]. - **Future Growth**: The company is looking to maintain its growth trajectory by leveraging its technology and customer insights to expand into new areas [21][54]. Key Takeaways - **Strong Customer Base**: The loyal customer base is a significant asset, providing repeat business and insights into future needs [53]. - **Financial Leverage**: The company has demonstrated financial leverage, with profitability expected to grow faster than revenue [55]. - **Market Readiness**: Cognyte is preparing for increased demand in the U.S. market as budgets flow, with a focus on maintaining strong customer relationships and delivering value [14][15].

Group 1 - The article emphasizes the need for portfolio rotation from expensive large-cap growth stocks to individual small- and mid-cap stocks that have less correlation to the broader market as 2025 approaches [1] - The author, Gary Alexander, has extensive experience in covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1] Group 2 - Gary Alexander has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications, indicating his influence and recognition in the investment community [1]

Core Insights - The event marks a significant milestone, celebrating a century of history, legacy, and innovation while focusing on the future and the next five years [1] - The Capital Markets Day is hosted at the McLaren Technology Center, emphasizing the intelligent design and capabilities of the venue [2] Company and Industry Highlights - The McLaren Technology Center is fully powered by Schneider Electric, showcasing the company's commitment to intelligent energy management and automation solutions [2]

Group 1 - Cognyte Software (CGNT) is experiencing growth driven by positive mix effects and operating leverage, with software sales contributing significantly to profit [2] - The growth of Cognyte Software appears sustainable, particularly in the US market, which is still in the early stages of commercial progress [2] - The Valkyrie Trading Society is a team of analysts focused on high conviction and obscure developed market ideas, aiming for non-correlated and outsized returns in the current economic environment [2]

Financial Data and Key Metrics Changes - Revenue for Q3 was $100.7 million, up 13.2% year-over-year, driven by ongoing demand for software solutions [26] - Non-GAAP gross margin for the quarter was 73.1%, expanding by 297 basis points year-over-year [29] - Non-GAAP operating income was $9 million, nearly tripling from $3.4 million in Q3 last year [31] - Adjusted EBITDA for Q3 was $11.9 million, 81.4% higher than the $6.6 million generated in the same quarter last year [32] - Non-GAAP net income for the quarter was about $2 million, resulting in non-GAAP EPS of $0.03 [34] Business Line Data and Key Metrics Changes - Software revenue was $41.9 million, an increase of 39.6% year-over-year [26] - Software services revenue was $46.9 million, up $1.6 million from last year [27] - Total software revenue for the quarter was approximately $88.7 million, a year-over-year increase of 17.9% [27] - Professional services revenue in Q3 was $12 million, a decrease of $1.7 million over last year [27] Market Data and Key Metrics Changes - The U.S. market continues to present significant opportunities, with ongoing investments in partnerships and field activities [13] - Total remaining performance obligations (RPO) at the end of Q3 was $576.6 million, compared to $567.6 million at the same period last year [40] - Short-term RPO at the end of Q3 increased to $358.9 million, providing solid visibility into revenue over the next 12 months [41] Company Strategy and Development Direction - The company is raising its full-year guidance, now expecting revenue of approximately $400 million, representing year-over-year growth of approximately 14% [24] - The focus remains on expanding market reach in the U.S. and enhancing partnerships, such as with LexisNexis [13][64] - The company aims to deliver sustained value for customers, partners, employees, and shareholders [25] Management's Comments on Operating Environment and Future Outlook - Management noted healthy demand for AI-powered investigative and decision intelligence solutions, with strong customer trust and repeat business [9][11] - The company is well-positioned for future growth, with a commitment to innovation and operational efficiency [25][44] - Management expressed confidence in the ability to generate sustained profitable growth, driven by a strong customer base and operational leverage [46] Other Important Information - The company had strong cash flow from operations of $25 million and free cash flow of $23.2 million during Q3 [38] - The cash position increased to $106.6 million with no debt, reflecting disciplined working capital management [38] Q&A Session Summary Question: Breakdown of large deal announcements and their impact on RPO and revenue - Management clarified that the software license part is included in RPO, and the sales cycle for large deals typically takes several quarters [48][50] Question: Conversations in the U.S. Federal market post-government shutdown - Management noted that demand drivers in the U.S. are similar to other regions, and engagement with federal agencies has resumed following the shutdown [59][61] Question: Competitive landscape in the U.S. market - Management identified L3Harris and Octasic as competitors in the U.S. market, noting that challenges are similar to those faced globally [70] Question: Duration of contracts and trends in RPO - Management confirmed strong RPO levels and indicated that CRPO has grown year-over-year, providing confidence in future growth [71][72] Question: Professional services revenue fluctuations - Management explained that professional services revenue is aligned with the target of 13% of total revenue, with fluctuations due to revenue recognition criteria [73][78] Question: Drivers of margin outperformance - Management attributed margin improvements to customer willingness to pay premium prices and efficiencies in cost structure [88][90]

Financial Data and Key Metrics Changes - Revenue for Q3 2026 was $100.7 million, representing a year-over-year increase of 13.2% [15] - Non-GAAP operating income nearly tripled year-over-year to $9 million from $3.4 million [17] - Adjusted EBITDA for Q3 was $11.9 million, an increase of 81.4% compared to $6.6 million in Q3 last year [17] - Non-GAAP net income for the quarter was approximately $2 million, resulting in a non-GAAP EPS of $0.03 [18] - GAAP net loss for Q3 was $3.4 million, compared to a loss of $2.6 million in Q3 last year [18] - Total revenue for the first three quarters of the year was $293.8 million, up 14.7% year-over-year [19] Business Line Data and Key Metrics Changes - Software revenue was $41.9 million, an increase of 39.6% year-over-year [15] - Software services revenue was $46.9 million, up $1.6 million from last year [15] - Total software revenue for the quarter was approximately $88.7 million, a year-over-year increase of 17.9% [15] - Professional services revenue in Q3 was $12 million, a decrease of $1.7 million over last year [15] Market Data and Key Metrics Changes - Recurring revenue reached $47.5 million, representing 47.1% of total revenue [16] - Total remaining performance obligations (RPO) at the end of Q3 was $576.6 million, compared to $567.6 million at the same period last year [21] - Short-term RPO increased to $358.9 million, providing solid visibility into revenue over the next 12 months [22] Company Strategy and Development Direction - The company is raising its full-year guidance, now expecting revenue of approximately $400 million, representing year-over-year growth of approximately 14% [13] - The focus remains on expanding the U.S. market and strengthening partnerships, such as with LexisNexis Risk Solutions [8] - The company aims to deliver sustained value for customers, partners, employees, and shareholders [14] Management's Comments on Operating Environment and Future Outlook - Management noted healthy demand for AI-powered investigative and decision intelligence solutions, with strong momentum in military intelligence and law enforcement sectors [5] - The company is well-positioned for future growth, with a commitment to innovation and operational efficiency [14] - Management expressed confidence in the ability to generate sustained profitable growth, supported by a strong customer base and operational leverage [24] Other Important Information - Non-GAAP gross margin for the quarter was 73.1%, expanding by 297 basis points year-over-year [16] - Cash flow from operations for Q3 was $25 million, with free cash flow of $23.2 million [20] - The company has no debt and a cash position of $106.6 million, reflecting disciplined working capital management [20] Q&A Session Summary Question: Breakdown of large deal announcements impacting RPO and revenue - Management clarified that the software license part is included in RPO, and the conversion to revenue depends on the size and complexity of the deal [26][28] Question: Overall conversations in the U.S. Federal market post-government shutdown - Management indicated that demand drivers are similar to other regions, and discussions with federal customers resumed after the shutdown [37][39] Question: Competitive landscape in the U.S. market - Management noted that while challenges are similar, the competitive landscape includes companies like L3Harris and Octasic [46] Question: Duration of contracts and trends in RPO - Management confirmed strong RPO levels and indicated that CRPO has grown year-over-year, providing confidence in future growth [47] Question: Professional services revenue fluctuations - Management explained that professional services are expected to be around 13% of total revenue, with fluctuations related to revenue recognition criteria [48][51] Question: Drivers of margin outperformance - Management attributed margin improvements to customer willingness to pay premium prices and efficiencies in cost structure [60]

December 9, 2025 © 2025 Cognyte Ltd. All Rights Reserved. Proprietary & Confidential Disclaimers Forward Looking Statements This presentation contains "forward-looking statements," including statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Cognyte Software Ltd. These forward-looking statements are not guarantees of future performance and they are based on management's expectations that involve a number of known and ...

Core Insights - Cognyte Software Ltd. has secured a ~$5 million contract with a Tier-1 military intelligence agency in EMEA, indicating strong performance in the small-cap tech sector over the past three years [1][2] - The contract involves deploying Cognyte's tactical SIGINT solution to enhance situational awareness and reconnaissance, reflecting a growing demand for agile and scalable tactical intelligence solutions [1][2] Company Overview - Cognyte is an Israel-based investigative analytics software company that provides services to law enforcement, national security, and military intelligence agencies [3] - The company's platforms integrate and analyze data at scale, offering solutions in Decision, Network, Operational, and Threat Intelligence, with a focus on AI-powered analytics to expedite investigations and produce actionable insights [3] Market Position and Strategy - The recent contract win is viewed as a demonstration of the strength and operational adaptability of Cognyte's tactical SIGINT offerings, according to the Chief Revenue Officer [2] - The CFO highlighted the deal as a foundation for cross-selling and expanding into additional AI-powered capabilities as customer needs evolve, showcasing momentum with national and military intelligence clients [2]

Core Insights - Cognyte has secured a new contract with a Tier-1 military intelligence organization in the EMEA region, valued at approximately $5 million [1] Company Summary - The contract represents a significant opportunity for Cognyte, enhancing its position in the military intelligence sector [1] - The deal underscores the company's capability to engage with high-profile clients in the defense industry [1]

Core Insights - Cognyte Software Ltd. has secured a follow-on contract valued at over US$5 million from a long-standing military intelligence customer in the Asia-Pacific region, indicating strong customer loyalty and successful execution of its "land-and-expand" strategy [2][3]. Group 1: Company Overview - Cognyte Software Ltd. is an Israel-based company that specializes in software-driven investigative analytics solutions for national security, law enforcement, and military clients [4]. - The company's platforms utilize artificial intelligence, big-data analytics, and machine learning to assist agencies in generating actionable intelligence, accelerating investigations, and anticipating emerging threats [4]. Group 2: Recent Developments - The new contract enhances the customer's mission-readiness and operational efficiency, improving decision-making speed and intelligence capabilities across complex terrains [3]. - The deal reflects the effectiveness of Cognyte's technology in high-stakes defense and intelligence markets, with repeat business identified as a core growth driver for the company [3].