Cognyte Software Ltd.

Q1 FY27 revenue was $105.5 million, up $9.9 million or 10.4% year over year. Software revenue was $47.3 million, up 26.5%; software services revenue was $50.1 million, up 12.1%; professional services revenue was $8.2 million, down from $13.5 million a year ago. Recurring revenue increased 10% to $51.9 million, or 49.2% of total revenue. Non-GAAP gross margin was 72.9%, up 100 basis points year over year, and non-GAAP gross profit was $76.9 million, up 12%. GAAP operating income was $4.4 million versus $2.2 million last year; non-GAAP operating income was $10.7 million, up 41.5%; adjusted EBITDA was $13.6 million, up 31.5%. Non-GAAP EPS was $0.03, and management reiterated full-year non-GAAP EPS of $0.47. Q1 billings grew 31.2% to $102.7 million; total RPO was $528.8 million and short-term RPO was $363.4 million. Cash and equivalents were $109.2 million with no debt. Q1 operating cash flow was negative $4.7 million and free cash flow was negative $6.1 million; full-year cash flow from operations is still expected to be about $45 million. For FY27, management reaffirmed revenue of about $448 million, plus or minus 3%, non-GAAP gross margin of approximately 73.5%, non-GAAP operating income of about $56 million, and adjusted EBITDA of about $68 million. They also said FY28 adjusted EBITDA target was updated to approximately 20% to reflect exchange rates, while still expecting to reach about $500 million of revenue in the fiscal year ending January 31, 2028.

Elad Sharon said Q1 showed solid execution, steady customer demand, and accelerating adoption of subscription offerings that are increasing recurring revenue and visibility. He emphasized that customers want integrated, AI-driven analytics embedded in mission workflows, especially as investigations become more complex and time-sensitive. His tone was constructive and confident, especially on the U.S. opportunity and the company’s ability to win new logos, expand existing accounts, and displace incumbents.

David Abadi focused on revenue mix, margin leverage, and cash timing. He highlighted Q1 revenue of $105.5 million, non-GAAP gross margin of 72.9%, adjusted EBITDA of $13.6 million, and the recurring revenue base of $51.9 million, while noting FX pressure, higher hardware costs, and subscription timing effects on OpEx and cash conversion. He said cash was $109.2 million with no debt, Q1 operating cash flow was negative $4.7 million, and full-year CFO is still expected at about $45 million, with seasonally stronger cash generation in the second half.

Analysts focused on why management held full-year revenue guidance despite stronger RPO/bookings and whether Q1 cash flow softness should change expectations. Abadi said guidance reflects deployment timing and subscription cash collection dynamics, not conservatism, and pointed to stronger recurring revenue and short-term RPO as support for the outlook. On cash flow, he cited FX, subscription mix, and inventory buildup, saying Q2 is typically negative and Q3/Q4 are stronger. In the U.S., Sharon said confidence is increasing, with stronger customer feedback, better partner leverage, and about $20 million of deals expected this year.