nyte Software .(US:CGNT)2025-09-09 13:30Financial Data and Key Metrics Changes - Revenue for Q2 2026 grew approximately 16% year-over-year to about $98 million, with non-GAAP gross profit increasing by about 17% year-over-year [5][18] - Adjusted EBITDA for the quarter was approximately $11 million, reflecting a growth of about 33% compared to Q2 last year [5][21] - Cash flow from operating activities was negative $6 million, primarily due to expected seasonal expenses [5][23] - Non-GAAP gross margin for the quarter was 72.1%, expanding by 81 basis points year-over-year [19][26] Business Line Data and Key Metrics Changes - Software revenue was $36.6 million, an increase of 35.9% year-over-year, while software services revenue was $46.7 million, up $1.4 million from last year [18] - Total software revenue for the quarter was approximately $83.3 million, representing 85.5% of total revenue [18] - Professional services revenue in Q2 was $14.2 million, an increase of $2 million over last year [19] - Recurring revenue for Q2 was $47.4 million, representing 48.7% of total revenue [19] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) at the end of Q2 was $574.5 million, up from $567.7 million at the same period last year [24] - Short-term RPO at the end of Q2 increased to $355 million, providing solid visibility into revenue over the next 12 months [24] Company Strategy and Development Direction - The company aims for $500 million in revenue by the fiscal year ending January 31, 2028, with gross margins of about 73% and adjusted EBITDA margins above 20% [15] - The U.S. remains a key growth strategy, with ongoing efforts to expand presence and strategic partnerships, including an alliance with LexisNexis Risk Solutions [12][15] - The company is focused on deepening relationships with existing customers, winning new customers, and expanding its footprint in the U.S. market [15][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is marked by heightened security challenges, creating an urgent demand for advanced intelligence solutions [8][10] - The company expressed confidence in achieving its updated guidance for the fiscal year ending January 31, 2026, expecting revenue of approximately $397 million, representing about 13% year-over-year growth [16][25] - Management highlighted the importance of innovation and customer feedback in driving long-term growth and profitability [11][15] Other Important Information - The class action lawsuit was fully dismissed with no additional appeals possible [27] - The company completed a share repurchase program, repurchasing about 2.1 million ordinary shares for a total of $20 million [23] Q&A Session Summary Question: Can you help us think through your updated assumptions around the U.S. federal environment? - Management indicated that while the U.S. presents a significant opportunity, it currently represents a small portion of the business, and they are not heavily relying on it for short-term guidance [30][31] Question: How are conversations compared to expectations regarding U.S. budgets? - Management acknowledged budget headwinds but noted successful acquisitions of new state and local customers and strong POCs [33][35] Question: How much of the growth came from existing customers versus data growth? - The majority of growth is driven by existing customers, with new customers starting small and growing over time [41][42] Question: What is driving the displacement of incumbents? - The company attributes displacement to advanced technology, R&D investments, and the ability to provide superior analytics and insights [44][46] Question: How is the overall deal pipeline turning versus six to twelve months ago? - Management reported a healthy demand environment, with increasing pressure on customers to modernize solutions and deal with more data [60][66]