nyte Software .(CGNT) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q1 revenue of $83 million, representing a 13$58.8 million, up 17% year-over-year, with a gross margin of 71.1%, an increase of 270 basis points year-over-year [27][43] - Adjusted EBITDA for Q1 was $5 million, with an increased full-year adjusted EBITDA guidance of approximately$22 million, more than double the previous year's figure [21][57] Business Line Data and Key Metrics Changes - Recurring revenue for Q1 was $45.8 million, accounting for 55$42 million in the same quarter last year [24][33] - Software revenue grew by 13.9% year-over-year, contributing significantly to overall revenue growth [52] Market Data and Key Metrics Changes - Total Remaining Performance Obligations (RPO) at the end of Q1 was $566.3 million, with short-term RPO increasing to$312.4 million, indicating strong visibility into future revenue [26] - Approximately 75% of law enforcement agencies (LEAs) indicated plans to expand, upgrade, or replace their existing data analytics solutions, highlighting a significant market opportunity [19][20] Company Strategy and Development Direction - The company aims to deliver sustainable and profitable growth by focusing on advanced technology, including AI, to enhance investigative analytics solutions [15][30] - The strategy includes expanding presence in North America and investing in sales and marketing to capture competitive deals [44][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the healthy demand environment and the company's ability to grow, citing strong customer engagement and evolving needs [72][74] - The company expects fiscal '25 revenue to be approximately $344 million, reflecting a 10$107 million in cash and no debt, indicating financial stability [23] - The company is adapting its non-GAAP tax expense methodology to improve correlation between non-GAAP pre-tax income and non-GAAP income [29] Q&A Session Summary Question: Can you provide more details on the sources of recurring revenue? - Recurring revenue primarily comes from support contracts, which are regularly renewed, with Q1 recurring revenue increasing from $42 million to$45.8 million year-over-year [33] Question: What factors contributed to the sequential decline in RPO? - The decline in RPO was attributed to renewal timing, sales cycle, and seasonality, but both short and total RPO levels remain strong [80] Question: How is the company monetizing AI innovations? - AI serves as an incremental demand generator, enhancing efficiency and uncovering hidden insights for customers, thus increasing the value of the company's solutions [67][85]