Cognyte Software Ltd.

Q2 revenue was $109 million, up 12% year over year. Total software revenue was $100.8 million, up 20.9%, and recurring revenue was $56.2 million, up 18.4%. Non-GAAP gross margin was 73.7%, up 154 basis points; non-GAAP gross profit was $80.5 million, up 14.4%; non-GAAP operating income was $12.2 million, up 52.5%; adjusted EBITDA was $14.9 million, up 35.7%; non-GAAP EPS was $0.15 versus $0.08 a year ago; GAAP diluted EPS was $0.06 versus $0.02. For the first half, revenue was $214.7 million, up 11.2%, total software revenue was $198.1 million, up 19.8%, recurring revenue was $108.1 million, up 14.2%, GAAP operating income was $9.1 million, up 85.1%, and non-GAAP operating income was $22.9 million, up 47.2%. Total RPO was $470.2 million, including $313.4 million of short-term RPO, and billings were $76.3 million. For FY27, management now expects revenue of approximately $448 million plus or minus 2% (around 12% growth at the midpoint), non-GAAP gross margin of approximately 73.5%, non-GAAP operating income of about $56 million, adjusted EBITDA of about $68 million, and non-GAAP EPS of $0.47 at the midpoint. Management also said Q3 revenue should be slightly higher than Q2, followed by sequential growth in Q4, and reiterated on track for the FY28 revenue target of $500 million.

Elad Sharon framed the quarter as evidence that the company’s strategy is working, with strong demand for AI-enabled, sovereign, mission-critical intelligence platforms. He emphasized that customers want tools they can trust, explain, and control, and said Cognite wins because it combines domain expertise, governance, and deployment under customer control. He also highlighted broad traction across new logos, expansions, and upgrades, including progress in U.S. federal, state and local, and international markets, while remaining confident in full-year and FY28 targets.

David Abadi focused on the improving business mix and operating leverage. He said software revenue made up more than 92% of total revenue in Q2, recurring revenue was 51.4% of revenue, and professional services fell to less than 8% from about 15% a year ago. He cited 73.7% gross margin, $102.2 million in cash, no debt, and $1.1 million of operating cash flow in Q2, while noting that FX and planned inventory investment affect cash generation. He also said the company repurchased about 1.5 million shares for $13.5 million in the first half and about $40.2 million since the buyback program began.

Analysts pressed on why revenue guidance remains modest relative to stronger bookings/RPO activity and whether the company is being conservative. Management responded that subscription adoption is improving quality and visibility but changes revenue timing, and that continued mix shift means reported growth can look lower than underlying demand. Questions also focused on the decline in total RPO and cash flow; management said the RPO decline reflects subscription cancellation rights, consumption of large multi-year support contracts, and renewal timing, while cash flow is being intentionally affected by higher inventory to support demand and manage supply-chain risk.