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    CGNT
    Earnings call· Apr 2026(Q1 FY27)

    Cognyte Software Q1 FY27 earnings call CGNT

    Jun 3, 2026 Source

    Executive summary

    Cognyte Q1 FY27 — double-digit revenue growth with accelerating subscription shift

    Cognyte is converting steady mission-critical demand into a faster-growing, higher-visibility recurring base, letting it hold total-revenue guidance while lifting the recurring-growth outlook and expanding profitability far ahead of the top line. The trade-off is near-term cash and FX drag as the perpetual-to-subscription transition and deliberate inventory build reshape collections timing. U.S. traction and platform stickiness underpin the multi-year path toward the ~$500M FY28 target.

    Highlights

    5

    • Revenue grew 10.4% YoY to $105.5M, driven by better-than-expected subscription adoption

    • Software revenue up 26.5% YoY to $47.3M; total software revenue up 18.6% ($15.3M), outpacing total revenue

    • Non-GAAP operating income up 41.5% YoY to $10.7M and adjusted EBITDA up 31.5% to $13.6M — profitability growing well ahead of revenue

    • Billings grew 31.2% YoY to $102.7M; total RPO of $528.8M with $353.4M short-term providing near-term visibility

    • Recurring revenue grew 10% YoY to $51.9M (49.2% of total); raised recurring-revenue growth outlook to >12% for FY27

    Concerns

    5

    • Negative free cash flow of $6.1M and negative operating cash flow of $4.7M in Q1, pressured by subscription mix shift, FX and a ~$3M inventory build

    • FX headwind (USD weakness vs. Israeli shekel) drove non-GAAP other expense loss of $2.2M and lifted opex to $66.2M

    • GAAP EPS of only $0.03, reflecting first-half-weighted tax accruals and FX-related other expenses

    • Rising hardware-related costs cited as a margin/cost pressure being actively offset

    • FY28 adjusted EBITDA target reduced to ~20% growth (from prior, on constant-currency basis) to reflect exchange-rate changes

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year FY27 total revenue
    ~$448M, plus or minus 3% (~5% YoY growth at midpoint)
    high materiality
    High
    Full-year FY27 recurring revenue growth
    Grow faster than total revenue; more than 12%
    high materiality
    High
    Full-year FY27 non-GAAP gross margin
    ~73.5% (improvement of 50 bps from last year)
    medium materiality
    High
    Full-year FY27 non-GAAP operating income
    ~$56M (more than 50% YoY growth)
    high materiality
    High
    Full-year FY27 adjusted EBITDA
    ~$68M (~40% YoY growth)
    high materiality
    High
    Full-year FY27 non-GAAP EPS
    $0.47 at the midpoint
    high materiality
    High
    Full-year FY27 cash flow from operations
    ~$45M
    high materiality
    Medium
    Full-year FY27 non-GAAP tax expense
    ~$15M
    low materiality
    Medium
    Quarterly revenue trajectory (FY27)
    Sequential growth each quarter through the balance of the year, in line with prior-year seasonality
    low materiality
    Medium
    FY28 total revenue target
    ~$500M
    high materiality
    Medium
    FY28 adjusted EBITDA target
    Updated to approximately 20% (margin), revised for exchange-rate changes
    high materiality
    Medium
    U.S. business — FY27 deals
    ~$20M of deals expected this year
    high materiality
    Medium
    U.S. business — FY28 deals
    ~$25M on top (next year)
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Software (perpetual licenses, appliances, some term-based subscription licenses)
    Fastest-growing revenue line; increasing recurring contribution within software drives the mix improvement.
    		$47.3M+26.5% (+$9.9M)——
    Software Services (mainly support contracts, some cloud-based subscriptions)
    Largest revenue line; combined with software, total software revenue grew 18.6% ($15.3M) YoY, well above total revenue growth.
    		$50.1M+12.1% (+$5.4M)——
    Professional Services
    Down YoY on revenue-recognition timing; management flagged quarterly fluctuations as expected. Transcript states "down $13.5 million in Q1 last year" (ASR-ambiguous — likely a decline from a higher prior-year base rather than a $13.5M absolute drop from $8.2M).
    		$8.2MDecline YoY——

    Operational metrics

    10
    Recurring revenue
    $51.9M+10% YoY
    Q1 FY27

    Transcript ASR labels this "current revenue" but context (49.2% of $105.5M, subscription-driven) makes clear it is recurring revenue.

    Non-GAAP gross margin
    72.9%+100 bps YoY
    Q1 FY27

    Gross-profit-dollar growth (12%) captured alongside the margin rate; both disclosed.

    Non-GAAP operating income
    $10.7M+41.5% YoY (+$3.1M)
    Q1 FY27

    Operating leverage: profitability growing far faster than 10.4% revenue growth.

    Adjusted EBITDA
    $13.6M+31.5% YoY (from $10.3M)
    Q1 FY27

    Non-GAAP; continues to expand significantly faster than revenue.

    Non-GAAP operating expenses
    $66.2MUp YoY
    Q1 FY27

    FX is the primary opex inflation driver.

    Non-GAAP other expense (FX)
    $2.2M loss
    Q1 FY27

    Contributed to the low Q1 GAAP EPS of $0.03.

    Non-GAAP tax expense
    $5.1M
    Q1 FY27

    First-half tax weighting is a key reason Q1 GAAP EPS was only $0.03.

    Share repurchase
    ~$8.2M executed (~1M ordinary shares)~$35M cumulative repurchased since Nov 2024 through end of Q1
    Q1 FY27

    Capital allocation prioritizes returns via buybacks and potential acquisitions; cash above liquidity/working-capital needs deployed to highest-return opportunities.

    Inventory build
    +~$3MQoQ increase
    Q1 FY27

    Management frames the build as strategic (support this year's demand), not a passive/unplanned accumulation; a driver of negative Q1 free cash flow.

    Net cash position
    $109.2M cash, no debt
    As of 2026-04-30

    Debt-free balance sheet cited as providing strategic flexibility for acquisitions and buybacks.

    Industry KPIs

    5
    MetricValueDetails
    Revenue growth$105.5M total revenueUSD
    Rpo current rpoTotal RPO $528.8M; current (short-term) RPO $353.4MUSD
    Bookings billings$102.7MUSD
    Pricing model mixRecurring revenue 49.2% of total ($51.9M)%
    Large deal new logo metrics3 subscription agreements >$20M combined; one expansion deal >$10M; multiple new logos in U.S. state & localUSD / deal count

    Orderbook & backlog

    2
    Total RPO (remaining performance obligations)$528.8M2026-04-30 (end of Q1 FY27)

    Reflects increasing contribution of subscription-based arrangements; fluctuations quarter-to-quarter expected

    Composed of contract liabilities of $128.9M plus backlog of $399.8M. Excludes $42M of cancelable subscription amounts (as of Jan 31, 2026) and reflects proportional annual consumption of multi-year large support contracts.

    Short-term RPO (current RPO, ≤12 months)$353.4M2026-04-30 (end of Q1 FY27)

    Analyst noted current RPO/bookings accelerated to ~16% (analyst framing, not confirmed as a company figure)

    Provides solid visibility into revenue over the next 12 months; distinct from total RPO — not to be merged.

    Product announcements

    1
    ProductTypeDetails
    Financial investigations capabilities (transnational illicit financing / digital currencies)launch

    Deals & partnerships

    4
    Undisclosed customers (3 subscription agreements)customer contract (subscription)Over $20M combined

    Three new subscription agreements valued at over $20M in aggregate, recently announced; part of the accelerating subscription-adoption trend.

    Undisclosed existing customercustomer contract (expansion)Over $10M

    A large expansion deal valued at over $10M within the existing customer base.

    Tier 1 military intelligence agencies (EMEA)customer deployment / operational use

    Used Cognyte's platform to counter terror financing with successful results; earned a National Ministry of Defense Innovation Award for operational impact. Previously announced.

    Undisclosed (minority investment)divestiture (sale of minority investment)$6.5M cash generated

    Cognyte generated $6.5M from the sale of a minority investment during Q1.

    Risks & headwinds

    6
    Foreign exchange — USD weakness vs. Israeli shekelOngoing; intensified in recent weeks

    $2.2M non-GAAP other-expense loss in Q1; primary driver of higher $66.2M opex; prompted downward revision of FY28 adjusted EBITDA target to ~20%

    Mitigation: Proactive management actions taken to offset FX; continued close monitoring; FY27 operating-income guide held despite FX

    Rising hardware-related costsOngoing

    Not quantified; cited as a cost/margin pressure and rationale for inventory build

    Mitigation: Proactive cost management; increased inventory to secure hardware ahead of demand and cost increases

    Negative near-term cash flow from subscription transitionQ1 FY27; expected to normalize with back-half-weighted collections

    Q1 operating cash flow negative $4.7M; free cash flow negative $6.1M

    Mitigation: FY OCF guide of ~$45M maintained on back-end-weighted collections (Q3/Q4 strong); active monitoring of FX and market dynamics

    First-half-weighted tax and FX suppressing GAAP EPSFirst half FY27

    Q1 GAAP EPS of $0.03; Q1 non-GAAP tax $5.1M of ~$15M annual

    Mitigation: Full-year non-GAAP EPS guide of $0.47 reaffirmed; tax phasing understood

    Professional services revenue volatilityQuarter-to-quarter

    Q1 professional services $8.2M, down YoY on rev-rec timing

    Mitigation: Management characterizes fluctuations as expected; targets rising software/recurring mix (~87%/13%)

    Implied software-revenue deceleration through the yearFY27 balance of year

    Q1 software grew 26.5%; full-year software growth expected to moderate as recurring share rises (>12% recurring growth)

    Mitigation: Framed as healthy mix shift toward recurring revenue, not demand weakness; total revenue guide held

    Q&A highlights

    5

    With current RPO/bookings accelerating to ~16%, why maintain full-year guidance — conservatism or something seen?

    Not conservatism; guidance reflects deployment cycle and timing considerations layered onto RPO. Management is pleased to hold total revenue guidance while recurring revenue grows faster than expected, having already delivered 10% YoY recurring-revenue growth in Q1.

    “it's not about conservatism or not. As part of looking at RPO, we are looking at deployment cycle and timing. And based on that, we define the guidance.”

    asked by Imtiaz Koujalgi · answered by David Abadi

    2 min read5 chapters

    Detailed Narrative

    01

    Revenue mix shifts decisively toward software and recurring

    Q1 FY27 revenue rose 10.4% YoY to $105.5M. Software revenue (perpetual licenses, appliances, some term subscriptions) jumped 26.5% to $47.3M and software services (support plus cloud subscriptions) grew 12.1% to $50.1M, so total software revenue climbed 18.6% ($15.3M) — far outpacing total revenue. Professional services fell to $8.2M on revenue-recognition timing. Recurring revenue grew 10% to $51.9M, reaching 49.2% of total. Management expects to hold the ~87%/13% software-to-professional-services split for the full year even as software growth moderates from the Q1 pace.

    02

    Profitability leverage running well ahead of revenue

    Non-GAAP gross margin expanded 100 bps YoY to 72.9% and non-GAAP gross profit rose 12% to $76.9M. Non-GAAP operating income grew 41.5% to $10.7M and adjusted EBITDA grew 31.5% to $13.6M, versus 10.4% revenue growth — demonstrating operating leverage. GAAP operating income doubled to $4.4M from $2.2M. Non-GAAP opex was $66.2M, with the YoY increase driven mainly by USD weakness versus the Israeli shekel. GAAP EPS was $0.03, held down by first-half-weighted tax accruals ($5.1M non-GAAP tax in Q1) and a $2.2M non-GAAP FX-related other-expense loss.

    03

    Subscription transition reshapes cash, billings and RPO timing

    The growing shift to subscription is strengthening recurring revenue and visibility while introducing timing dynamics across RPO, billings and cash. Billings grew 31.2% to $102.7M. Total RPO ended at $528.8M (contract liabilities of $128.9M plus backlog of $399.8M), with short-term RPO of $353.4M covering the next 12 months. RPO excludes $42M of cancelable subscription amounts as of January 31, 2026 and reflects proportional annual consumption of multi-year support contracts. Q1 operating cash flow was negative $4.7M and free cash flow negative $6.1M, driven by subscription adoption, FX and a deliberate inventory build (inventory up ~$3M) to support future demand.

    04

    U.S. market becomes a quantified growth pillar

    Management expressed rising confidence in the U.S., quantifying ~$20M of deals (~21 deals) expected in FY27 and ~$25M on top in FY28. In state and local, Cognyte secured multiple new logos; in federal, it advanced opportunities through proofs of concept and live operational demonstrations with strong feedback, developed both directly and via partnerships. Management sees potential for overachievement but guides to what is currently visible, framing the U.S. as the largest and most sophisticated security market globally.

    05

    Platform stickiness and cross-domain expansion

    Cognyte positions its unified intelligence platform as displacing incumbents and in-house-built systems as agencies extend from single use cases across domains, integrate new data sources, and adopt embedded AI/agentic capabilities with governance and explainability. Management highlighted new financial-investigations capabilities addressing transnational illicit financing and digital currencies, noting Tier 1 military intelligence agencies in EMEA used the platform to counter terror financing and earned a National Ministry of Defense Innovation Award. Demand drivers cited: faster/more complex threats, expanding data volumes, and agency investment in integrated intelligence.

    AI-generated summary of the company’s earnings call. Not investment advice.