Cognyte Software Ltd. (NASDAQ: CGNT) shares plummeted 6.61% in pre-market trading on Tuesday, despite reporting better-than-expected second-quarter results and raising its full-year outlook. The sharp decline suggests investors may be focusing on other aspects of the report or have concerns about the company's future prospects.

For the second quarter of fiscal year 2026, Cognyte reported revenue of $97.51 million, surpassing analyst estimates of $96.32 million. The company's adjusted earnings per share came in at $0.08, also beating the expected $0.03. Additionally, Cognyte raised its outlook for the fiscal year ending January 31, 2026, now projecting revenue of $397 million at the midpoint, representing approximately 13% growth from the previous year.

Despite these positive headlines, the significant pre-market drop indicates that investors may be reacting to other factors in the report. Possible concerns could include the company's cash flow situation, with net cash used in operating activities increasing to $6.3 million compared to $5.7 million in the same period last year. Additionally, while Cognyte reported strong revenue growth and improved profitability, the market's reaction suggests that expectations may have been even higher or that there are underlying concerns about the sustainability of this growth in the face of global economic uncertainties.