Cognyte Software Ltd. (NASDAQ: CGNT) reported fiscal second-quarter profitability outpacing revenue growth by more than fourfold, as its software business accelerated and costs came under control.
Non-GAAP operating income rose 52.5% to $12.2 million for the quarter ended September 30, compared with $8 billion in the prior-year period. That pace of growth — roughly 4.4 times faster than the 12% rise in total revenue — underscored improving margins even as the company broadened its customer base.
Revenue totaled $109.2 million, growing 12% year over year and slightly exceeding the $108.51 million consensus estimate, according to InvestingPro data. Non-GAAP earnings per share came in at $0.15, surpassing analyst projections of $0.11 by 36%.
Software revenue, Cognyte's core segment, climbed 20.9% to $100.8 million, up from $83.3 million a year earlier. Software now accounts for 92.3% of total revenue, a meaningful step up from 86% in the prior-year quarter. Recurring revenue grew 18.4% to $56.2 million, representing 51.4% of total revenue. Professional services revenue declined to $8.4 million from $14.2 million.
Non-GAAP gross margin expanded 154 basis points to 73.7%, and adjusted EBITDA rose 35.7% to $14.9 million from $11.0 million. GAAP operating income doubled to $4.7 million, and GAAP net income rose to $5.1 million from $2.7 million.
Cognyte added 40 new customers in the first half of fiscal 2027, up from 31 in the same period last year. The company expects to sign approximately $20 million in U.S. deals across federal, state and local government accounts during the full fiscal year.
On the balance sheet, Cognyte held $102.2 million in cash with zero debt. Operating cash flow turned positive at $1.1 million for the quarter, a sharp improvement from negative $6.3 million a year earlier.
The company maintained its full-year fiscal 2027 revenue midpoint at $448 million, narrowing the guidance range to plus or minus 2%. It reaffirmed a non-GAAP EPS target of $0.47 and projected non-GAAP gross margin of 73.5% — a 50-basis-point improvement. Full-year non-GAAP operating income is expected to reach $56 million, with adjusted EBITDA targeting $68 million, both implying growth exceeding 40%.
Looking ahead to fiscal 2028, Cognyte guided to revenue of approximately $500 million and an adjusted EBITDA margin of roughly 20%, up from about 15% implied by the current year outlook.
Shares rose 3.89% in premarket trading following the earnings release. The stock was last trading around $8.02, down from a 52-week high of $12.31 and well below analyst price targets as high as $14.
