By Katherine Hamilton

Cognyte Software shares fell after the company said its growth strategy in the U.S. is being slowed by budget cuts.

The stock slid 12% to $8.34 on Tuesday. Shares are down 3% this year.

The Israeli company, which helps governments analyze data, said its growth opportunity in the U.S. has been dampened slightly by budget cuts to federal agencies.

"We know that there are certain headwinds that we have to take into account in the U.S.," Chief Executive Elad Sharon said.

Cognyte is looking to build a larger customer base in the U.S., and in May acquired the cybersecurity company GroupSense as a way to help grow its U.S. presence. But Sharon said federal agencies are still resolving budget issues since cuts were made earlier this year. For now, Cognyte is staying away from relying heavily on the market or baking a lot of revenue into its guidance from U.S. customers, he said.

In the second quarter, the company swung to a profit of $1.5 million, or 2 cents a share, up from a loss of $1.9 million, or 3 cents a share, the year before. The two analysts that cover the company had been guiding for a profit of 3 cents a share, according to FactSet.

Revenue rose 15.5% to $97.5 million.

Cognyte raised its revenue outlook for the full year by $2 million to $397 million at the midpoint and lifted its adjusted earnings per share guidance by 1 cent to 23 cents.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

September 09, 2025 14:17 ET (18:17 GMT)

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