nyte Software .(CGNT) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $84 million, representing a 10% year-over-year increase [7][17] - Non-GAAP gross profit increased by 13% year-over-year, reaching$ 60.2 million [7][17] - Adjusted EBITDA for the quarter was $8 million, more than three times the amount generated in Q2 of the previous year [7][17] - Non-GAAP gross margin improved to 71.3%, an increase of 209 basis points year-over-year [23] Business Line Data and Key Metrics Changes - Software revenue was$ 72.3 million, an increase of $5.6 million year-over-year [22] - Recurring revenue reached$ 46.6 million, accounting for 55% of total revenue, and grew by approximately 40% year-over-year [17][22] - Non-GAAP operating income for Q2 was $4.4 million, reflecting a significant improvement from an operating loss of$ 6.5 million in the same period last year [18] Market Data and Key Metrics Changes - In North America, the company secured deals with eight new customers, replacing incumbents with Cognyte solutions [9] - Total remaining performance obligations (RPO) were $567.7 million at the end of Q2, with short-term RPO at$ 320.6 million [21] Company Strategy and Development Direction - The company aims to deepen engagements with existing customers and expand the use of its solutions [8] - A focus on AI and advanced analytics is central to the company's strategy to address evolving threats faced by law enforcement and security agencies [11][15] - The company is transitioning some offerings from perpetual licenses to subscription models to enhance recurring revenue [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in increasing the full-year revenue outlook to approximately $347 million, representing about 11% year-over-year growth [16][24] - The company highlighted the growing complexity of threats faced by customers, necessitating advanced solutions [10][12] - Management noted that the strong cash position, with almost$ 100 million in cash and no debt, supports future growth initiatives [20] Other Important Information - The company was recognized for its Luminar AI insights in a Gartner report, emphasizing its competitive edge in cyber threat intelligence [14] - The company expects to generate about $37 million of cash from operations for the year [25] Q&A Session Summary Question: Revenue composition and software service decline - The CEO clarified that the decline in software and software service revenue was due to a transition from perpetual licenses to subscription models, with recurring revenue growing significantly [27] Question: Guidance for the rest of the year - Management indicated that the guidance accounts for the growing subscription revenue and the consistent purchasing behavior of governmental agencies [28][29]