Cognyte Software Ltd. Q2 FY2026 earnings call

• Q2 revenue grew 15.5% year-over-year to $97.5 million. Non-GAAP gross margin was 72.1%, and adjusted EBITDA was $11 million, up 33% year-over-year. • Secured two significant wins in military intelligence: a $10M follow-on deal in Asia-Pacific and a ~$10M deal in EMEA with a new Tier 1 military intelligence organization. • Highlighted operational intelligence suite of solutions, built on signal processing, insight mining, and investigative analytics, enabling real-time mission operations. • Partnered with LexisNexis Risk Solutions to expand presence in the U.S. federal market. • Participating in key events like ATIA, MILIPOL Paris, etc., to showcase capabilities.

In Q2, revenue was $97.5 million, an increase of 15.5% year-over-year. Software revenue was $83.3 million, representing 85.5% of total revenue. Software revenue included $36.6 million from software (perpetual licenses, appliances, term-based subscriptions) and $46.7 million from software services (support contracts, cloud-based SaaS). Professional services revenue was $14.2 million, an increase of $2 million year-over-year, representing 13% of total revenue annually. Recurring revenue for Q2 was $47.4 million, accounting for 48.7% of total revenue.

• Full-year revenue expected ~$397 million (+/-2%), representing ~13% year-over-year growth. • Adjusted EBITDA expected ~$45 million, ~55% year-over-year growth. • Annual non-GAAP gross margin expected 72%, up 100 basis points from last fiscal year. • Q3 revenue expected slightly higher than Q2, Q4 expected to grow sequentially. • Non-GAAP EPS expected $0.23 at midpoint of revenue range.

• Atypical U.S. agency procurement delays limiting NAITM visibility into budget timing, though considered temporary disruptions.

Q: Matthew Kalitri asked about updated assumptions around the U.S. federal environment, group contribution, and large deal signed.

A: Elad Sharon mentioned U.S. is a significant opportunity but not heavily relied on in short term, LexisNexis partnership is a tailwind, and GroupSense integration is on track.

Q: Matthew Kalitri asked about U.S. budget status.

A: Elad Sharon said there are budget headwinds but POCs and demos are successful, and strategy to expand in U.S. is ongoing.

Q: Matthew Kalitri asked about software and professional services mix.

A: Elad Sharon said no real seasonality in professional services, but visibility supports 87% software and 13% professional services mix.

Q: Joshua Husk asked about growth from existing vs new customers, displacement of incumbents.

A: Elad Sharon said mostly existing customers drive growth, displacement is due to better technology and successful POCs/demos.

Q: Joshua Husk asked about billing strength and recurring revenue.

A: David Abadi said billing is impacted by multiple factors, recurring revenue has support and subscription elements, expected to trend up long term.

Q: Charlie Zhou asked about deal pipeline and public sector trends.

A: Elad Sharon said demand environment is healthy due to growing security pressure and need for advanced solutions.