nyte Software .(US:CGNT)2022-06-28 18:48Financial Data and Key Metrics Changes - Q1 non-GAAP revenue was $87 million, reflecting a significant decline year-over-year [10][28] - Non-GAAP gross margin was 60.8%, with gross profit declining approximately $31 million year-over-year [30] - Non-GAAP operating loss was $22.1 million, with adjusted EBITDA loss of $18.2 million [30][31] - Cash balance at the end of the quarter was $107 million, reflecting solid collections and a $50 million repayment from the credit facility [32] Business Line Data and Key Metrics Changes - Software revenue was $24.9 million, a sharp decline year-over-year due to customer deployment delays and slow pipeline conversion [28][29] - Software services revenue was $45.8 million, down by $4.9 million year-over-year primarily due to federal customers reducing support and subscription spending [29] Market Data and Key Metrics Changes - Total RPO (remaining performance obligations) was slightly above $512 million at the end of Q1, indicating a sequential increase despite year-over-year revenue decline [15][24] - The company faced supply chain challenges that impacted the ability to deliver on quarterly expectations, leading to delays in revenue recognition [16][17] Company Strategy and Development Direction - The company is focused on improving execution and cost structure to navigate current challenges and emerge stronger [9][24] - A new Chief Revenue Officer (CRO) has been hired to enhance internal execution and accelerate pipeline conversion [19][47] - The company aims to maintain its market leadership in investigative analytics and strengthen customer relationships [26][45] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in Q1 results but believes the challenges are temporary and are taking steps to address them [9][24] - There is a low visibility period with a broad range of potential outcomes, and guidance cannot be provided at this time [37][24] - Management noted that the pipeline remains healthy, but conversion rates are low due to supply chain issues and macroeconomic factors [38][46] Other Important Information - The company has reduced its headcount by approximately 5% to lower costs [25][48] - Inventory levels have been increased to provide flexibility in addressing market demands [33] Q&A Session Summary Question: Changes in pipeline conversion or supply chain constraints - Management indicated that the situation remains volatile with low visibility and a healthy pipeline but lower conversion rates [37][38] Question: Composition of RPO - Management stated that typically two-thirds of RPO is expected to be recognized within the next 12 months [40] Question: Inventory levels - Management confirmed that current inventory levels are sufficient, with plans for redesign processes to be completed in Q3 [41] Question: Competitive landscape - Management noted no significant changes in competition and emphasized strong customer relationships and technology [45][46] Question: Cost reduction areas - Cost reductions were made across the board, including R&D, totaling about 5% [48] Question: Reasons for government customers delaying orders - Management speculated that delays are related to supply chain issues and macroeconomic factors, rather than COVID-19 [54] Question: Revenue from perpetual vs. term-based licenses - Management confirmed that over 75% of revenue comes from perpetual licenses [56] Question: Maintenance revenue decline - Management indicated that customers reducing support and subscriptions is not uncommon and may be reallocating budgets [59]