• Q4 Revenue: $94.5 million, a 12.9% year-over-year increase.
• Full-Year Revenue: $350.6 million, approximately 12% year-over-year growth.
• Non-GAAP Gross Profit: $67.6 million for Q4, a 17% year-over-year increase.
• Adjusted EBITDA: $9.3 million for Q4, a 140% year-over-year increase.
• Cash Flow from Operations: $18.7 million for Q4 and $47 million for the full year.
• Non-GAAP Operating Income: $6 million for Q4, over 500% increase year-over-year.
• Non-GAAP Gross Margin: 71.5% for Q4, an improvement of 150 basis points year-over-year.
• Recurring Revenue: $47.3 million for Q4, representing 50% of total revenue.
• Cash Position: $113.3 million at year-end, with no debt.
• Fiscal '26 Revenue Guidance: Approximately $392 million, representing about 12% year-over-year growth.
• Fiscal '26 Adjusted EBITDA Guidance: Approximately $43 million, a 45% year-over-year growth.

• Warning! GuruFocus has detected 5 Warning Sign with CGNT.

Release Date: April 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cognyte Software Ltd (NASDAQ:CGNT) reported double-digit revenue growth of 13% year over year for Q4, reaching $94.5 million.
• The company achieved a significant year-over-year increase in profitability, with non-GAAP gross profit rising by 17%.
• Adjusted EBITDA for the quarter grew by 114% year over year, amounting to over $9 million.
• Cognyte Software Ltd (NASDAQ:CGNT) secured several significant deals, including a $10 million technology upgrade and multi-year support agreement with a law enforcement agency in EMEA.
• The company added over 60 new customers across multiple regions during the fiscal year, doubling the number from the previous year.

Negative Points

• Revenue from the Americas region declined modestly last year, despite an increase in revenue from the US.
• Total RPO (Remaining Performance Obligations) decreased by about $45 million compared to the previous year.
• The sales cycle in the US is longer than in other territories, impacting the speed of market penetration.
• Billing for Q4 was consistent with last year, indicating no growth in this metric.
• Cash flow from operations is expected to decline slightly in fiscal '26 compared to the previous year.

Q & A Highlights

Q: Can you provide insights into the demand trends in the US market, especially given the current policy uncertainties? A: Elad Sharon, CEO: The US market presents a significant opportunity for us. We've increased investments to improve market reach, starting with state and local law enforcement agencies, and are now engaging with federal agencies. Despite longer sales cycles in the US, we are seeing positive feedback and results from demonstrations. We expect growth in the US to outpace other regions, and current unrest is not expected to impact our efforts significantly.

Q: Are sales cycles extending in the US, and is there potential attrition impacting these cycles? A: Elad Sharon, CEO: Sales cycles in the US are inherently longer due to our penetration mode. While it's hard to predict the impact of current US situations, we continue to invest in sales efforts, including hiring more salespeople and increasing our demonstration capacity. We expect the US to be a growth engine for us in fiscal '26.

Q: What drove the decline in billings year-over-year, and why is cash flow from operations expected to decline next year? A: David Abadi, CFO: Q4 billings were $95 million, consistent with expectations. The previous quarter had unusually high billings due to faster billing. Cash flow from operations was strong this year due to efficiencies in working capital and cash collection. For next year, we forecast $45 million in cash flow from operations, reflecting continued strong cash generation.

Q: What are the US demand drivers, and how do they compare to international markets? A: Elad Sharon, CEO: Globally, demand is driven by organized crime, terrorism, and border control. In the US, border control is becoming more important, but law enforcement agencies also deal with organized crime and local crimes. The demand in the US is similar to international markets, with potential increases in border control-related demand.

Q: What investments are being made to accelerate sales cycles in the US market? A: Elad Sharon, CEO: We are investing heavily in the US market, hiring local sales teams with agency experience, participating in local conferences, and expanding our partner network. We are also focusing on both direct and indirect go-to-market strategies to accelerate sales cycles. These efforts are significantly higher than in other territories.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.