Cognyte Software (NASDAQ:CGNT) reported fourth-quarter fiscal 2026 results that management said capped “another year of consistent execution,” highlighted by double-digit revenue growth, record non-GAAP gross margin, improved profitability, and solid cash generation. Executives also issued fiscal 2027 guidance calling for continued growth and further operating leverage, while reiterating targets for the fiscal year ending January 31, 2028.
Q4 revenue grew 12% as software and services expanded
CFO David Abadi said fourth-quarter revenue was $106.2 million, up 12.4% year over year. Software revenue rose 22.6% to $45.9 million, while software services revenue increased $3.4 million to $49.3 million. Total software revenue (software plus software services) grew 14.2% year over year.
Recurrent revenue increased 5.6% to $50 million, representing 47.1% of total revenue. Abadi noted recurrent revenue is calculated from GAAP revenue and is driven mainly by support contracts, with some term-based and SaaS subscription offerings.
Margins and profitability improved; gross margin hit a record
Cognyte’s non-GAAP gross margin in Q4 reached a record 74.7%, an expansion of 320 basis points year over year, according to Abadi. Non-GAAP gross profit increased 17.4% to $79.4 million, and he said “all the incremental year-over-year increase in revenue flows through to gross profit,” underscoring the company’s margin profile.
On the bottom line, GAAP operating income was $5.2 million, up from $697,000 in the prior-year quarter. Non-GAAP operating income reached $12.1 million, which Abadi said doubled year over year. Adjusted EBITDA rose 62.5% to $15 million. GAAP net income was $5.1 million compared with a GAAP net loss of $0.2 million a year earlier.
Full-year results and cash generation; repurchases expanded
For fiscal 2026, Cognyte reported revenue of $400 million, up 14.1% year over year. Full-year non-GAAP gross margin increased to 73% (up 200 basis points), and Abadi said the company achieved its fiscal 2028 gross margin target “two years ahead of our plan.”
Profitability improved across metrics: GAAP operating income was $13.3 million, a turnaround from a $5.1 million GAAP operating loss the prior year. Non-GAAP operating income more than doubled to $36.7 million. Adjusted EBITDA rose 65.7% to $48.2 million, and GAAP net income was $4.6 million compared with a GAAP net loss of $7.2 million last year.
Operating cash flow was $20 million in Q4 and $40.3 million for the full year. Abadi said the full-year operating cash flow came in below the company’s expectation of $45 million due to delays in collecting certain receivables late in the year, which he said were collected early in Q1. Cognyte ended fiscal 2026 with $116.9 million in cash and no debt.
On capital allocation, Abadi said the board approved an additional $20 million for the share repurchase program, bringing the total authorized for repurchases to $40 million. The company repurchased about 592,000 shares for $5.5 million in Q4 and approximately 2.3 million shares for $21.4 million for the full year. He added that since the first repurchase program began in November 2024, Cognyte has repurchased about $26.7 million of shares out of total programs authorized for $60 million.
RPO and deal activity supported visibility into FY 2027
Management emphasized contracted backlog and billings as visibility indicators. Abadi said total remaining performance obligations (RPO) were $557.2 million at the end of Q4, consisting of contract liabilities of $123.7 million and backlog of $433.4 million. Short-term RPO rose to $369.5 million, which he said provides visibility into revenue over the next twelve months. He also noted that including cancelable periods of subscription deals would have increased total RPO by about $42 million.
Fourth-quarter billings grew 15.6% year over year to $109.9 million.
CEO Elad Sharon highlighted several deals in the quarter, including an amended perpetual agreement with a long-standing national security customer in EMEA converted into a five-year subscription with a new annual value of $6 million. He said the shift was driven by the customer’s need for continuous access to new capabilities, including AI-driven functionality and faster update cycles. Sharon also cited a roughly $5 million deal with one of the largest state law enforcement agencies in the U.S., describing it as a new customer win that replaced an incumbent provider and will support “mission-critical field operations.”
In the Q&A, Sharon cited additional large transactions referenced as contributing to strong demand, including:
- A $10+ million expansion and upgrade deal with a security customer in EMEA
- A $5 million order from a “top NATO member” military organization
- A $5+ million subscription deal in APAC with a long-time customer
FY 2027 outlook: revenue growth with operating leverage; FY 2028 targets reiterated
For fiscal 2027, Abadi guided to full-year revenue of about $448 million plus or minus 3%, representing roughly 12% year-over-year growth at the midpoint. He said the mix between total software revenue and professional services revenue is expected to remain similar to last year, with Q1 revenue slightly below Q4 followed by sequential growth each quarter in line with historical seasonality.
Cognyte expects non-GAAP gross margin of approximately 73.5% for fiscal 2027, with quarterly fluctuations tied to revenue mix. Abadi said higher gross margin is expected to help partially offset foreign exchange headwinds related to the strengthening Israeli shekel versus the U.S. dollar. The company expects non-GAAP operating expenses of approximately $273 million (about 7% growth), non-GAAP operating income of about $56 million, and adjusted EBITDA of about $68 million (about 40% growth), all at the midpoint.
Abadi also guided to non-GAAP taxes of about 27% (about $15 million), non-controlling minority interest of about $5 million, and non-GAAP EPS of $0.47 at the midpoint, based on about 75 million fully diluted shares. Operating cash flow is expected to be $45 million in fiscal 2027, with capex around $11 million.
Looking further out, management reiterated fiscal 2028 targets of approximately $500 million in revenue and adjusted EBITDA margin over 20%. In the Q&A, Sharon described assumptions for the incremental $100 million of revenue growth between fiscal 2026 and fiscal 2028, saying the company expects about 50% to come from expansions and upgrades in the existing customer base, about 25% from new customers outside the U.S., and about 25% from the U.S.
Sharon also pointed to steps to expand the company’s North American presence, including strengthening leadership and adding channel partner Carahsoft to support access to federal, state, and local procurement channels.
About Cognyte Software (NASDAQ:CGNT)
Cognyte Software Ltd. is a global provider of security analytics solutions that was spun off from NICE Ltd. in early 2021. Headquartered in Israel, the company delivers specialized software and services designed to help government agencies, law enforcement organizations and critical infrastructure operators process and analyze large volumes of data for intelligence and investigative purposes.
The company’s core offerings include advanced analytics platforms that aggregate and visualize structured and unstructured data from diverse sources, such as communications metadata, open-source intelligence and sensor feeds.
