Cognyte Reports Strong Second Quarter Results with Accelerating Software Growth and Expanding Profitability
Cognyte Software Ltd. (NASDAQ: CGNT) (the “Company,” “Cognyte,” “we,” “us” and “our”), a global leader in AI-powered investigative analytics solutions, today announced results for ...
Revenue grew 12% to $109.2 million; adjusted EBITDA grew 35.7% to $14.9 million; non-GAAP diluted EPS nearly doubled to $0.15; total software revenue grew 21% and recurring revenue grew 18%
The Company reiterates its FYE27 outlook and remains on track to achieve its FYE28 targets
HERZLIYA, Israel: Cognyte Software Ltd. (NASDAQ: CGNT) (the “Company,” “Cognyte,” “we,” “us” and “our”), a global leader in AI-powered investigative analytics solutions, today announced results for the three and six months ended July 31, 2026 ("Q2 FYE27").
Financial Summary for Three Months Ended July 31, 2026
- Q2 FYE27 revenue was $109.2 million, up approximately 12.0% compared with the same period last year, reflecting consistent demand for the Company’s software.
- Q2 FYE27 total software revenue, which is the combination of software and software services revenue, increased 20.9% to $100.8 million and represented more than 92% of total revenue, compared with approximately 86% in the same period last year. The increase was driven by healthy demand for our software solutions.
- Q2 FYE27 recurring revenue(1) increased by 18.4% to $56.2 million and represented 51.4% of total revenue. The growth was primarily driven by the adoption of the Company’s subscription offerings and provides enhanced visibility into future revenue streams.
- Q2 FYE27 non-GAAP operating income was $12.2 million, an increase of $4.2 million or 52.5% from $8.0 million in the same period last year, significantly outpacing revenue growth.
- Q2 FYE27 adjusted EBITDA was $14.9 million, compared to $11.0 million in the same period last year, up 35.7% and growing significantly faster than revenue.
- Q2 FYE27 diluted non-GAAP EPS nearly doubled to $0.15 per share compared with $0.08 per share in the same period last year.
- Q2 FYE27 GAAP operating income was $4.7 million, an increase of $1.9 million or 69.7% from operating income of $2.7 million in the same period last year.
- Q2 FYE27 GAAP net income attributable to Cognyte was $4.1 million, compared with $1.5 million in the same period last year.
- Q2 FYE27 diluted GAAP EPS tripled to $0.06 per share, compared with $0.02 the same period last year.
- Q2 FYE27 net cash provided by operating activities was $1.1 million, compared with net cash used in operating activities of $6.3 million in the same period last year. This improvement reflects stronger collections, improved profitability and disciplined working-capital management. The quarter also included annual incentive payments and other seasonal working-capital uses.
Financial Summary for Six Months Ended July 31, 2026
- H1 FYE27 revenue was $214.7 million, up approximately 11.2% compared to the same period last year.
- H1 FYE27 total software revenue, which is the combination of software and software services revenue, was $198.1 million, up approximately 19.8% compared to the same period last year.
- H1 FYE27 recurring revenue(1) was $108.1 million, up 14.2% compared to the same period last year.
- H1 FYE27 non-GAAP operating income was $22.9 million, an increase of $7.3 million or 47.2% from operating income of $15.6 million in the same period last year. We achieved these results despite approximately $7 million of net unfavorable foreign exchange impact on operating profitability in the first half of the year.
- H1 FYE27 adjusted EBITDA was $28.5 million, compared to $21.3 million in the same period last year, up 33.7% and growing significantly faster than revenue.
- H1 FYE27 diluted non-GAAP EPS increased to $0.19 per share compared with $0.15 per share in the same period last year.
- H1 FYE27 GAAP operating income was $9.1 million, up 85.1% from operating income of $4.9 million in the same period last year.
- H1 FYE27 GAAP net income attributable to Cognyte was $1.1 million, compared to $0.5 million in the same period last year.
- During the first half of FYE27, the Company added 40 new customers, compared with 31 in the same period last year.
Balance Sheet
- The Company ended the second quarter with $102.2 million in cash and no debt, providing significant flexibility.
- During H1 FYE27, the company repurchased approximately 1.5 million ordinary shares for an aggregate purchase price of approximately $13.5 million under the share repurchase program approved by the board of directors in July 2025.
- Since launching its first repurchase program in November 2024, the Company has repurchased approximately $40.2 million of shares through the end of Q2 FYE27, out of the $60 million authorized across the Company’s repurchase programs.
- The Company’s capital allocation priorities remain unchanged: investing organically to support growth, evaluating strategic M&A opportunities with the potential to create returns significantly in excess of the Company’s cost of capital, and using share repurchases opportunistically when they represent a compelling use of capital.
Management Commentary
“Cognyte delivered a strong quarter, with broad global momentum and continued progress across our strategic growth pillars,” said Elad Sharon, Cognyte’s Chief Executive Officer. “The market is moving directly toward what we have built for: mission-critical intelligence in complex, high-stakes environments, powered by trusted AI and sovereign control, and grounded in deep innovation and domain expertise. Our strategy is working, our execution is strong, and the quality of our business continues to improve. We are moving forward with confidence and ambition.”
“Our second quarter results demonstrate the continued strength of our financial model,” said David Abadi, Cognyte’s Chief Financial Officer. “Total software revenue grew 21% and recurring revenue grew 18%, both significantly faster than total revenue, while profitability again expanded substantially faster than revenue. Combined with expected renewals of recurring business and commercial activity since quarter-end, we have visibility into approximately 85% of the next 12 months' revenue. This visibility, combined with our strong execution, reinforces our confidence in our full-year outlook and our FYE28 targets.”
FYE27 Outlook
The company narrowed its FYE27 revenue range around an unchanged midpoint and reaffirmed its profitability outlook for the year ending January 31, 2027 (“FYE27” and “Fiscal 2027”), as follows:
- Revenue: $448 million, with a range of +/- 2%, which represents approximately 12% year-over-year growth at the midpoint of the range.
- Adjusted EBITDA: Approximately $68 million at the midpoint of our revenue range, representing approximately 40% year-over-year growth.
- Non-GAAP Diluted EPS: $0.47 at the midpoint of our revenue range.
Additional Financial and Operational Data for the Second Quarter and Six Months Ended July 31, 2026
- Q2 FYE27 and H1 FYE27 total software revenue, which is the combination of software and software services revenue, increased by $17.5 million, and $32.8 million, up 20.9% and 19.8%, respectively, compared to the same period last year.
- Q2 FYE27 and H1 FYE27 software revenue increased by $12.6 million and $22.5 million, up 34.5% and 30.5%, respectively, compared to the same period last year.
- Q2 FYE27 and H1 FYE27 software services revenue increased by $4.8 million and $10.2 million, up 10.3% and 11.2%, respectively, compared to the same period last year.
- Q2 FYE27 and H1 FYE27 professional services and other revenue decreased by $5.7 million and $11.1 million, respectively, compared with the same period last year. Professional services represented less than 8% of total revenue during the second quarter, compared with approximately 15% in the comparable period last year, reflecting the increasing software content of the business. This mix shift supports higher-quality revenue, stronger margins and greater scalability.
- Q2 FYE27 non-GAAP gross profit and margin were $80.5 million and 73.7%, respectively, a significant increase of $10.1 million and 154 bps improvement compared to the same period last year. The increase is primarily driven by revenue mix, scale, and operational efficiencies.
- Q2 FYE27 billings(2) were $76.3 million compared to $93.0 million in the same period last year. Billings may vary between quarters based on contract timing. On a trailing twelve-month basis, billings were approximately 95% of revenue, which we believe reflects the underlying strength of the business.
For information about the non-GAAP financial measure or key metric, please see “Supplemental Information About Non-GAAP Financial Measures and Other Key Metrics” at the end of this release.
(1) Recurring Revenue – Recurring revenue is comprised primarily of revenue from support contracts as well as revenue from subscription offerings.
(2) Billings – Revenue plus the change in contract liabilities, contract assets and unbilled balances.
Conference Call Information
We will conduct a conference call today at 8:30 a.m. ET to discuss our results for the three months ended July 31, 2026. A real-time webcast of the conference call with presentation slides will be available in the Investor Relations section of Cognyte’s website. Those interested in participating in the question-and-answer session need to register at: https://register-conf.media-server.com/register/BI3b38c70743424364b7cd51bda5573f0f to receive the dial-in numbers and unique PIN to access the call seamlessly. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call). An archived webcast of the conference call will also be available in the “Investors” section of the company’s website.
About Cognyte Software Ltd.
Cognyte is a global leader in AI-powered investigative analytics solutions that empower customers with Actionable Intelligence for a Safer World®. Cognyte’s solutions enable law enforcement, national security and military intelligence agencies, as well as other organizations, to navigate an increasingly complex threat landscape. With offerings that leverage advanced technologies, including artificial intelligence (AI) and analytics, Cognyte helps customers make sense of growing volumes of fragmented multi-source data to help identify, assess and mitigate risks across dynamic environments, supporting informed, mission-critical investigations and operations. Hundreds of customers worldwide rely on Cognyte’s intelligence platform to uncover insights and reveal what matters, enabling confident decision-making in high-stakes environments. Learn more at www.cognyte.com.
About Non-GAAP Financial Measures and Other Key Metrics
This press release and the accompanying tables include non-GAAP financial measures and other key metrics. For a description of these non-GAAP financial measures and other key metrics, including the reasons management uses each measure and metric, and reconciliations of non-GAAP financial measures presented for completed periods to the most directly comparable financial measures prepared in accordance with GAAP, please see the tables below as well as "Supplemental Information About Non-GAAP Financial Measures" at the end of this press release.
Our non-GAAP outlook for FYE27 excludes the following GAAP measures for which we are able to provide a range of probable significance:
- Stock-based compensation is expected to be between approximately $23.5 and $25.5 million, assuming market prices for our ordinary shares are generally consistent with current levels.
- Amortization expense of other acquired intangible assets is expected to be approximately $0.6 million.
For additional information about our expectations for FYE27, please refer to the Q2 FYE27 conference call we will conduct on September 9, 2026.
Our non-GAAP outlook, unless otherwise specified, reflects foreign currency exchange rates approximately consistent with current rates, and does not include the potential impact of any business acquisitions that may close after the date hereof.
We are unable, without unreasonable effort, to provide a reconciliation for other GAAP measures which are excluded from our non-GAAP outlook, including the impact of future business acquisitions or future acquisition expenses, future restructuring expenses, and non-GAAP income tax adjustments due to the level of unpredictability and uncertainty associated with these items. For these same reasons, we are unable to assess the probable significance of these excluded items. While historical results may not be indicative of future results, actual amounts for the three and six months ended July 31, 2026, and 2025, respectively, for the GAAP measures excluded from our non-GAAP outlook appear in Table 4 of this press release.
Caution About Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the United States Securities Exchange Act of 1934. Forward-looking statements include statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Cognyte. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These forward-looking statements do not guarantee any future performance and are based solely on management's expectations that involve a number of known and unknown risks, uncertainties, assumptions and other important factors, any of which could cause our actual results or conditions to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual results or conditions to differ materially from current expectations include, among others: uncertainties regarding the impact of changes in macroeconomic and/or global conditions; risks related to geopolitical changes and investor visibility constraints; risks related to new tariffs and retaliatory measures that may adversely affect the economy and reduce government spending; risks related to the impact of inflation and related volatility on our financial performance; risks relating to adverse changes to the regulatory constraints to which we are subject; risks related to the impact of disruptions to the global supply chain; risks related to conditions in Israel including conflicts in the Middle East; risks resulting from health crises; risks associated with customer concentration and challenges associated with our ability to accurately forecast revenue and expenses; risks associated with political and reputational factors related to our business or operations; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; risks relating to proprietary rights infringement claims; risks relating to defects, operational problems, or vulnerability to cyber-attacks of our products or any of the components used in our products; risks related to the strengths of our intellectual property rights protection; risks that we may be unable to establish and maintain relationships with key resellers, partners, and system integrators and risks associated with our reliance on limited number of suppliers for certain key components and hardware used in our solutions; risks due to the aggressive competition in all of our markets; risks associated with the implementation and use of artificial intelligence tools and technology, including competitive, technological, regulatory, intellectual property, data protection and cybersecurity risks; challenges associated with our long sales cycles and with the sophisticated nature of our solutions; risks associated with our ability or costs to retain, recruit and train qualified personnel; risks relating to our ability to properly manage investments in our business and operations, and execute on growth or strategic initiatives; risks associated with acquisitions, strategic investments, partnerships or alliances; risks of security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures or disruptions; risks associated with the mishandling or perceived mishandling of sensitive, confidential or classified information; risks associated with our failure to comply with applicable laws; risks associated with our credit facilities or that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms; risks associated with changing applicable tax laws and regulations, tax rates, and the continuing availability of expected tax benefits in the countries in which we operate; risks associated with our significant international operations, including due to our Israeli operations, fluctuations in foreign exchange rates, and exposure to regions subject to political or economic instability; risks associated with complex and changing regulatory environments relating to our operations and the markets we operate in; risks relating to the adequacy of our existing infrastructure, systems, processes, policies, procedures, internal controls and personnel for our current and future operations and reporting needs; risks related to the tax treatment of our spin-off from Verint; risks related to our share repurchase programs; risks associated with different corporate governance requirements applicable to Israeli companies; risks associated with being a foreign private issuer; and other risks set forth in Section 3.D - “Risk Factors” in our latest annual report on Form 20-F for the fiscal year ended January 31, 2026, which was filed with the Securities and Exchange Commission (the "SEC") on March 25, 2026, and in our subsequent filings with the SEC. In addition, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time. It is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.
Table 1 COGNYTE SOFTWARE LTD. Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
|
| Six Months Ended July 31, |
| Three Months Ended July 31, | ||||||||||||
(in thousands except share data) |
|
| 2026 |
|
|
| 2025 |
|
|
| 2026 |
|
|
| 2025 |
|
Revenue: |
|
|
|
|
|
|
|
| ||||||||
Software |
| $ | 96,504 |
|
| $ | 73,970 |
|
| $ | 49,231 |
|
| $ | 36,599 |
|
Software service |
|
| 101,634 |
|
|
| 91,417 |
|
|
| 51,563 |
|
|
| 46,740 |
|
Professional service and other |
|
| 16,593 |
|
|
| 27,674 |
|
|
| 8,443 |
|
|
| 14,174 |
|
Total revenue |
|
| 214,731 |
|
|
| 193,061 |
|
|
| 109,237 |
|
|
| 97,513 |
|
Cost of revenue: |
|
|
|
|
|
|
|
| ||||||||
Software |
|
| 16,111 |
|
|
| 9,571 |
|
|
| 7,440 |
|
|
| 3,580 |
|
Software service |
|
| 23,765 |
|
|
| 21,430 |
|
|
| 12,064 |
|
|
| 10,974 |
|
Professional service and other |
|
| 18,948 |
|
|
| 24,153 |
|
|
| 10,098 |
|
|
| 13,198 |
|
Total cost of revenue |
|
| 58,824 |
|
|
| 55,154 |
|
|
| 29,602 |
|
|
| 27,752 |
|
Gross profit |
|
| 155,907 |
|
|
| 137,907 |
|
|
| 79,635 |
|
|
| 69,761 |
|
Operating expenses: |
|
|
|
|
|
|
|
| ||||||||
Research and development, net |
|
| 63,558 |
|
|
| 58,305 |
|
|
| 31,973 |
|
|
| 29,207 |
|
Selling, general and administrative |
|
| 82,982 |
|
|
| 74,627 |
|
|
| 42,852 |
|
|
| 37,732 |
|
Amortization of other acquired intangible assets |
|
| 302 |
|
|
| 77 |
|
|
| 151 |
|
|
| 77 |
|
Total operating expenses |
|
| 146,842 |
|
|
| 133,009 |
|
|
| 74,976 |
|
|
| 67,016 |
|
Operating income |
|
| 9,065 |
|
|
| 4,898 |
|
|
| 4,659 |
|
|
| 2,745 |
|
Other (expenses) income, net: |
|
|
|
|
|
|
|
| ||||||||
Interest income |
|
| 981 |
|
|
| 1,156 |
|
|
| 405 |
|
|
| 498 |
|
Interest expense |
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