Q4 2024 Cognyte Software Ltd Earnings Call

Good day, ladies and gentlemen, thank you for standing by.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognyte fourth quarter fiscal year 2024 earnings conference call. After the speaker's remarks, we will conduct a question and answer session. To ask a question at that time, you will need to press star 1.

Welcome to the Cognex fourth quarter and fiscal year 2024 earnings conference call.

After the Speakers' remarks, we will conduct a question answer session.

To ask a question at that time, you will need to press star one one.

Operator: Please note that today's conference may be recorded. I would now like to hand the conference over to your speaker, host Dean Ridlon, Head of Investor Relations. Please go ahead.

Please note that today's conference maybe recorded.

I'd now like to hand, the conference over to your Speaker, whose gene Red lobster head of Investor Relations. Please go ahead.

Thank you operator, Hello, everyone I'm Dean Ridlon Cognex head of Investor Relations. Thank you for joining us today.

Dean M. Ridlon: Thank you, operator. Hello, everyone. I'm Dean Ridlon, Cognyte's Head of Investor Relations. Thank you for joining us today. I'm here with Elad Sharon, Cognyte CEO, and David Abadi, Cognyte CFO. Before getting started, I would like to mention that accompanying our call today is a presentation. If you'd like to view these slides in real-time during the call, please visit the investor section of our website at Cognyte.com. Click on the Investors tab, click on the webcast link, and select today's conference call.

Dean M. Ridlon: I'm here with a lot Sharon Cognex, CEO and David body cosmetics CFO.

Dean M. Ridlon: Before getting started I would like to mention that accompanying our call today is a presentation.

None: If you'd like to view these slides in real time during the call. Please visit the investors section of our website at Cognex Dot com click.

None: Click on the investors' tab click on the webcast link and select today's conference call.

Dean M. Ridlon: I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. Such forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call and, except as required by law. Cognyte assumes no obligation to update or revive it.

None: I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095 and.

None: And other provisions of the federal Securities laws.

None: These forward looking statements are based on management's current expectations and are not guarantees of future performance.

Actual results could differ materially from those expressed in or implied by these forward looking statements.

None: The forward looking statements are made as of the date of this call and except as required by law cognate assumes no obligation to update or revise them.

Dean M. Ridlon: Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Cognyte's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F for the fiscal year ended January 31st, 2023 and January 31st, 2024, which we expect to file today and other The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods and among our peer companies that publish similar non-GAAP measures. Please see today's presentation slides, our earnings release, and the investor section of our website at cognyte.com for a reconciliation of non-GAAP financial measures to GAAP measures.

None: Investors are cautioned not to place undue reliance on these forward looking statements.

None: For a more detailed discussion of how these and other risks uncertainties could cause cognex actual results to differ materially from those indicated in these forward looking statements.

None: Please see our annual report on form 20-F for the fiscal year ended January 31, 2023, and January 31 2024.

Which we expect to filed today and other filings we make with the SEC.

None: The financial measures discussed today include non-GAAP measures.

None: We believe investors focus on non-GAAP financial measures and comparing results between periods and among our peer companies that publish similar non-GAAP measures.

Please see todays presentation slides, our earnings release and the investors section of our website at Cognex Dot com.

None: A reconciliation of non-GAAP financial measures to GAAP measures.

Dean M. Ridlon: Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information, but it's included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Elad.

None: non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes.

The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies.

None: Now I'd like to turn the call over to allot.

Elad Sharon: Thank you, Dean. Welcome, everyone, to our fourth quarter conference call. The fourth quarter was a strong finish to a productive week for Cognyte. The market remained stabilized and continued to improve, as bad actors utilized new ways to conduct their business, and the need for advanced technology and actionable intelligence continued to grow. We executed well in Fiscal 24, delivering top-line growth of approximately 11%, and we entered the new year with an improving momentum that is supported by strong short- and long-term RPOs, which give us confidence in our outlook. Importantly, we have reached an inflection point where we are growing gross profit more rapidly than our revenue, and we expect Fiscal 25 to be a year of operating leverage. To be clear, we will be investing in R&D and our North America expansion efforts to accelerate future growth, but the pace of our operating expense growth is expected to be slower than our revenue ramp, leading to improved profitability.

Allot: Thank you, Dan and welcome everyone to our fourth quarter conference call.

Allot: The fourth quarter was a strong finish to a productive year for Koch Knight.

Market remain stabilized and continuing to improve as bad actors utilize new ways to conduct our business and the need for advanced technology and <unk> intelligence continues to grow.

Allot: We executed well in fiscal 'twenty for delivering top line growth of approximately 11%.

Allot: We entered the <unk> with an improving momentum that is supported by strong and short and long term appeals, which give us confidence in our outlook.

Allot: Importantly, we have reached an inflection point, where we are growing gross profit more rapidly than our revenue and we expect fiscal 'twenty five to be a year of operating leverage.

Allot: To be clear, we'll be investing in R&D and our north American expansion efforts to accelerate our growth, but the pace of our operating expense growth is expected to be slower than our revenue ramp leading to improved profitability.

For fiscal 2004, we generated non-GAAP revenue of $313 5 million and increased our SaaS adjusted non-GAAP gross profit by more than $39 million and $30 million in increased revenue.

Elad Sharon: For Fiscal 24, we generated non-GAAP revenue of $313.5 million and increased our SES-adjusted non-GAAP gross profit by more than $39 million on $30 million in increased revenue. Our improving gross profit, expense management, and growing operating leverage enabled our third consecutive quarter of positive adjusted EBITDA at $4.3 million. In fact, we delivered $9 million in positive adjusted EBITDA for the full year, along with $35 million of positive cash flow operations and $25 million of free cash flow.

Allot: Our improving gross profit expense management and growing operating leverage and then build our third consecutive quarter of positive adjusted EBITDA at $4 $3 million.

Allot: In fact, we delivered $9 million in positive adjusted EBITDA for the full year, along with $35 million of positive cash from operations and $25 million of free cash flow.

Allot: Okay.

Elad Sharon: Cognite is again generating operating income, and we expect not just to maintain our profitability but to meaningfully expand it in the next year. We believe we now have a stable platform to execute on and expect the coming year to be one of further operational improvements, as we aim to build on this strong foundation to deliver sustainable and profitable growth. During Q4, we continued to win deals with both new and existing customers, and they recognized the strength of our innovative technology and Cognyte's ability to deliver value. Looking at the full year, we signed contracts with 29 new customers, which is up 70% year-over-year.

Carbonite is again generating operating income and we expect not just to maintain our profitability, but meaningfully expand it in the next year.

Allot: We believe we now have a stable platform to execute and expect the coming year to be one of further personal improvement.

Allot: As we aim to build on this strong foundation to deliver sustainable and profitable growth.

Allot: During Q4, we continued to win deals with both new and existing customers recognized the strength of our innovative technology and cognitive ability to deliver value.

Allot: Looking at the full year, we signed contracts with 29, new customers, which is up 70% year over year.

Allot: These new customers presents a meaningful opportunity to drive growth in most cases, new customers start small and we believe that our lend and expense strategy will drive incremental revenue growth profitability and cash flow for overtime.

Elad Sharon: These new customers present a meaningful opportunity to drive growth. In most cases, new customers start small, and we believe that our land and exchange strategy will drive incremental revenue growth, profitability, and cash flow over time. As we look across our addressable market, North America represents a meaningful net-in opportunity for expansion. As previously shared, we are allocating resources to increase our presence in North America. These investments have already started to drive results, with several important wins over the past fiscal year.

Allot: As we look across our addressable markets North America represents a meaningful near term opportunity for expansion.

Allot: As previously shared we are allocating resources to increase our presence in North America.

Allot: These investments have already started to drive results with several important wins over the past fiscal year.

Elad Sharon: Our strategy to start with state and local has been successful as our new customers are pleased with the value our solutions deliver and have been providing references to potential new customers throughout the region. Regarding federal customers, we are working with an established partner to penetrate this market, and we believe that we have the right sales approach and superior technology to allow us to win. Initial progress in North America has reinforced our confidence that our strategy is sound, and we have increased our sales efforts further to leverage this momentum. We believe we will be able to win more new customers and simultaneously increase wallet share with our existing customers over time. We continue to innovate and deliver solutions that we believe demonstrate our technological leadership and generate unique value for our customers.

Allot: Our strategy to start with state and local has been successful as our new customer are pleased with the value our solutions deliver and have been providing references to potential new customers throughout the region.

Allot: Regarding federal customers, we are working with an established partner to penetrate this market and we believe that we have the right sales approach and superior technology to allow us to win.

Allot: Initial progress in North America has reinforced our confidence that our strategy is sound and we have increased our sales efforts further to leverage this momentum.

Allot: We believe we'll be able to win more new customers and simultaneously increase wallet share with our existing customers over time.

Allot: We continue to innovate and deliver solutions that we believe demonstrate our technological leadership and generate unique value for our customers.

We have a luxury track record of delivering powerful investigative analytic solutions to hundreds of customers around the globe.

Allot: Customers view us as domain experts and we have decades long relationships with many customers.

Allot: Our advanced technology, including innovative analytics, and AI allows faster and more effective investigations by fusing data at scale, creating digital twins and detecting partners relationships in other REIT and insights that would be nearly impossible to find otherwise.

Elad Sharon: We have a lengthy track record of delivering powerful investigative analytic solutions to hundreds of customers around the world. Our customers view us as domain experts, and we have decades-long relationships with many customers. Our advanced technology, including innovative analytics and AI, allows faster and more effective investigations by fusing data at scale, creating digital twins, and detecting patterns, relationships, and other hidden insights that would be nearly impossible to find otherwise.

Allot: This helps prioritize risks and maximize the productivity of investigators are decision makers, enabling faster decision, making and creating incremental value for our customers and the important patients.

Allot: Our investigative analytic solutions sort of National security law enforcement National intelligence and other organizations to enable them to perform most active investigations.

Allot: We believe customer references and field trials are very effective ways for us to win deals with both new and existing customers.

Elad Sharon: This helps prioritize risk and maximize the productivity of investigators and decision makers, enabling faster decision making and creating incremental value for our customers in important missions. Our investigative and analytic solutions are sold to national security, law enforcement, national intelligence, and other organizations to enable them to perform more effective investigations. We believe customer references and field trials are very effective ways for us to win deals with both new and existing customers. The first win I would like to highlight is for more than $20 million with an existing national security customer for its mission to combat terrorism.

Allot: The first one I would like to highlight is for more than $20 million with an existing national security customer for its mission to combat terrorism.

Allot: We recently released a new version of our solution with advanced and differentiated capabilities.

Allot: These capabilities soft challenges brought on by emerging technologies that create new need for our customers.

Allot: The customer recognizes the value, we deliver and continue to select our solutions to support the evolving needs.

Allot: We believe you want because of the demonstrated superior performance of our advanced technology.

Allot: The second win is for approximately $10 million from an existing national intelligence customer to address both the security threats.

Allot: This is an additional wins from this customer that is highly satisfied with our solution. They are using for other use cases.

Elad Sharon: We recently released a new version of our solution with advanced and differentiated capabilities. These capabilities solve challenges brought on by emerging technologies that create new needs for our customers. The customer recognizes the value we deliver and continues to select our solutions to support the evolving needs. We believe you won because of the demonstrated superior performance of our advanced technology. The second win is for approximately $10 million from an existing National Intelligence customer to address border security threats. This is an additional win from this customer that is highly satisfied with our solutions they are using for other use cases. For this use case, we were able to demonstrate the effectiveness of our solution through field trials. The third win is with a new National Intelligence customer to help them safeguard their forces. The deal is for approximately $3 million.

Allot: For this use case, we were able to demonstrate the effectiveness of our solution through field trials.

Allot: The third win is with a new national intelligence customer to help them safeguard the forces.

Allot: The deal is for approximately $3 million.

Allot: Lee we sold solutions to another agency in the country and this agency served as a reference for us affirming vote, the performance and the value of our solutions generate.

Allot: This strong reference played a significant role in our ability to sign this new deal the customer has already deployed our new solution and it is generating value for them.

Allot: Okay.

Allot: I would now like to discuss what's driving demand.

Allot: Customers recognized as a strategic trusted partner, providing innovative solutions that help them to improve the speed accuracy and success rate of the investigations and make timely decisions.

Elad Sharon: Previously, we sold solutions to another agency in the country, and this agency served as a reference for us, affirming both the performance and the value of the solutions generated. This strong reference played a significant role in our ability to sign this new deal. The customer has already deployed their new solution, and it is generating value for them. I would now like to discuss what's driving demand. Customers view Cognyte as a strategic, trusted partner, providing innovative solutions that help them to improve the speed, accuracy, and success rates of their investigations and make timely decisions. In general, customers range from organizations that are focused on relatively small geographies, like law enforcement agencies, all the way up to security and intelligence agencies that are responsible for combating threats on a national level.

Allot: In general customers range from organizations that are focused on relatively small geographies local law enforcement agencies, all the way up to security and intelligence agencies that are responsible for converting threats on the national level.

Allot: Our customers are dealing with a wide variety of challenges.

The level of sophistication with bad actors continues to increase as the leverage technology to other activities better it has become increasingly difficult to connect entities to their digital footprint.

Allot: In addition, the volume and diversity of data our customers are working with has grown dramatically.

Allot: Customer so it's a challenging situation more digital data in more places module fleet is unstructured mix investigating peer doctors more difficult.

Allot: <unk> addresses this challenge using advanced analytics, and our AI enabled solutions to analyze multiple data streams to create a holistic picture of bad actors digital footprint.

Allot: These new emerging and evolving challenges coupled with increased geopolitical unrest requires our customers to continue investing in the technology to keep them ahead of these threats.

Elad Sharon: Our customers are dealing with a wide variety of challenges. The level of sophistication of bad actors continues to increase as they leverage technology to do harder activities better. It has become increasingly difficult to connect entities to their digital footprint. In addition, the volume and diversity of data our customers are working with have grown dramatically. Our customers face a challenging situation. More digital data in more places, much of it unstructured, makes investigating bad actors more difficult.

Allot: We continue to leverage R&D to bring innovation to our customers. So that we can maintain our differentiation.

Allot: Cognize utilizes advanced AI capabilities to rapidly analyze the various desperate and growing data assets to enable our customers to make quick decisions and execute important patients.

Allot: We believe the strength of our technology together with our domain expertise and investigating analytics will continue to enhance the value we provide to our customers increase our differentiation and drive demand.

Allot: Okay.

Allot: The technologies, but afterwards, you are utilizing continue to evolve rapidly.

Elad Sharon: Cognyte addresses this challenge using advanced analytics and AI-enabled solutions to analyze multiple data streams to create a holistic picture of the bed actors' digital future. These new emerging and evolving challenges, coupled with increased geopolitical unrest, require our customers to continue investing in the technology to keep them ahead of this threat. We continue to leverage R&D to bring innovations to our customers so that we can maintain our differentiation. Cognite utilizes advanced AI capabilities to rapidly analyze the various desperate and growing data assets to enable our customers to make quick decisions and execute important missions. We believe the strength of our technology, together with our domain expertise in investigative analytics, will continue to enhance the value we provide to our customers, increase our differentiation, and drive demand. The technologies Bed-Artov is utilizing continue to evolve rapidly. For example, advancements in Gen AI and cryptocurrency have added significant complexities for our customers. GenAI has provided bad actors with the ability to create fake identities and generate harmful content on open source channels.

Allot: For example, advancements in Jennie O and crypto currency has added significant complexity for our customers.

Allot: <unk> has provided the doctors with the ability to create FERC identities and generate harmful content on open source channels.

Allot: Customers using our solutions can investigate and have really high confidence the potential identity of debate doctor and better understand the intent and risk of its actions.

Allot: Similarly, the use of crypto currency has made it easier for bad actors to transact anonymously.

Allot: Clifton requires no physical space and it can be 50 transferred across borders without currency control regulations or other barriers, making it an ideal assets really good transactions.

Allot: Our decision intelligence platform enables authorities to construct a pitch of suspects organizations companies in financial accounting volt.

Allot: Ultimately this picture allows authorities to limit the ability of organized criminal groups to fund their operations.

Allot: These examples illustrate the continually evolving landscape our customers need to address.

Allot: We expect these trends to continue to generate demand for our solutions and drive long term growth.

Allot: Turning to our outlook for FY 'twenty five.

Elad Sharon: Customers using our solutions can investigate and reveal with high confidence the potential identity of the bad actor and better understand the intent and risk of its action. Similarly, the use of cryptocurrency has made it easier for bad actors to transact anonymously. Crypto requires no physical space, and it can be swiftly transferred across borders without currency controls, regulations, or other barriers, making it an ideal asset for illegal transactions.

Allot: Demand for our solutions is solid.

Allot: Deal with a very strong short term appeal, we expect to drive operating leverage as fiscal year and at the same time, we're investing in advancing our capabilities in our go to market infrastructure with the aim of creating sustainable and profitable long term growth.

Allot: We are expecting revenue for fiscal 'twenty, five to be $340 million, plus or minus 2%, representing approximately eight 5% year over year growth at the midpoint.

Allot: We also expect gross profit to grow faster than revenue as a result of continued expansion in our gross margin, we expect gross profit to grow by more than 10% year over year.

Elad Sharon: Our Decision Intelligence Platform enables authorities to construct a picture of suspects, organizations, companies, and financial accounts involved. Ultimately, this picture allows authorities to limit the ability of organized criminal groups to fund their operations. These examples illustrate the continually evolving landscape our customers need to address. We expect these trends to continue to generate demand for our solutions and drive long-term growth.

Allot: Given the leverage in our financial model, we expect adjusted EBITDA for the year to be about $19 million more than double what we generated in fiscal 'twenty four reflecting our ongoing efforts to drive margin expansion.

Allot: David will provide more detailed guidance during his remarks.

Allot: To summarize we believe the market is helping our customers continue to face significant growing volume challenges across many use cases and look to us for solutions that help them accelerate investigations make decisions faster and mitigate the wide variety of threats.

Elad Sharon: Demand for our solutions is solid, and we entered the year with a very strong short-term order book. We expect to drive operating leverage this fiscal year, and at the same time, we are investing in advancing our capabilities and our go-to-market infrastructure with the aim of creating sustainable and profitable long-term growth. We are expecting revenue for fiscal 25 to be $340 million, plus or minus 2%, representing approximately 8.5% of real growth at the midpoint.

<unk> is well established as domain expert and a trusted partner.

Allot: Customer frequently tell us that our solutions significantly improved the results, enabling them to effectively performed emissions and make the world safer.

Allot: Our established long term customer relationships continue to be a significant asset for us.

Allot: We are pleased with our execution and financial results for the fourth quarter and full year, and we believe <unk> is well positioned for sustainable growth and continuing improvement in profitability.

Allot: Now I'll turn the call over to David I want to take a moment to thank <unk> board of director members commit Sheila and we can now gone for the significant contributions to connect leadership and a strong commitment to our mission over days.

Elad Sharon: We also expect gross profit to grow faster than revenue. As a result of continued expansion and gross margin, we expect gross profit to grow by more than 10% year over year. Given the leverage in our financial model, we expect adjusted EBITDA for the year to be about $19 million, more than double what we generated in FY24, reflecting our ongoing efforts to drive margin expansion. David will provide more detailed guidance during his remarks.

David: And I would like to welcome Sorretto gave and Roche really two accomplished executives to our board.

David: <unk> is a seasoned executive with deep financial and software industry experience in publicly traded companies.

David: <unk> brings extensive industry knowledge, including relevant experience from the Israeli defense forces.

Elad Sharon: To summarize, we believe the market is healthy, our customers continue to face significant growing and evolving challenges across many use cases, and look to us for solutions that help them accelerate investigations, make decisions faster, and mitigate a wide variety of threats. Cognyte is well-established as a domain expert and a trusted partner. Our customers frequently tell us that our solutions significantly improve results, enabling them to effectively perform their missions and make the world safer. Our established long-term customer relationships continue to be a significant asset for us. We are pleased with our execution and financial results for the fourth quarter and full year, and we believe Cognyte is well positioned for sustainable growth and continuing improvement in profitability. Before I turn the call over to David, I want to take a moment to thank Cognyte Board of Directors members Carmichaelo and Tzvika Nagan for their significant contributions to Cognyte leadership and their strong commitment to our mission over the years.

None: As head of research division specializing in the field of advanced Communications, cyber NII and head of an elite technology on it.

None: I am confident that Ron answer it relates to provide important additional strength to our board.

None: Now, let me turn the call over to David to provide more details about our results in fiscal 'twenty five outlook.

None: David.

David: Thank you <unk> and Hello, everyone, we delivered fourth quarter financial results that exceeded our expectations, reflecting stabilized market demand and solid execution.

David: With the combination of highly differentiated solutions healthy demand in the large and loyal customer base, we were able to overachieve, our expectation each quarter in fiscal 'twenty, four and we entered fiscal 'twenty five with positive momentum.

David: We ended the year with a strong balance sheet and a solid foundation for profitable growth.

David: Our cash balance increased significantly during the year, primarily due to the $34 6 million of.

David: Cash flow from operations and $25 5 million.

David: A free cash flow, we generate during FY 'twenty four.

David: At the end of the year, our cash balance was $83 3 million.

Elad Sharon: And I would like to welcome Sarit Zagif and Ron Shvili, two accomplished executives, to our board. Sarit is a seasoned executive with deep financial and software industry experience in publicly traded companies. Ron brings extensive industry knowledge, including relevant experience from the Israeli Defense Forces, while he was head of a research division specializing in the fields of advanced communications, cyber, and AI, and head of an elite technology unit. I am confident that Ron and Sarit will each provide important additional strength to our board. Now, let me turn the call over to David to provide more details about the results and Fiscal 25 Outlook. David?

David: And we had no outstanding debt.

David: During Q4, we extended our credit facility and we now have $65 million available to borrow until the end of January 2026.

David: Revenue for the full year was $313 5 million.

David: An increase of approximately 11% year over year.

David: The vast majority of the revenue growth was driven by $28 million increase in software revenue.

David: Our software revenue was 89% of total revenue close to our long term target of 90%.

David: Regarding revenue for the full year was $168 million.

David: Representing 54% of total revenue.

David: Gross margin for the year was 69, 2% up about 650 basis points year over year.

David Abadi: Thank you, Elad, and hello everyone. We delivered a fourth quarter financial result that exceeded our expectations, reflecting stabilized market demand and solid execution. With a combination of highly co-differentiated solutions, healthy demand, and a large and loyal customer base, we were able to overachieve our expectations each quarter in Fiscal 24 and re-enter Fiscal 25 with positive momentum. We ended the year with a strong balance sheet and a solid foundation for profitable growth. Our cash balance increased significantly during the year, primarily due to the $34.6 million of cash flow from operations and $25.5 million of free cash flow we generated during FY24. At the end of the year, our cash balance was $83.3 million, and we had no outstanding debt.

David: And full year gross profit grew twice as fast as revenue and was $217 million, an increase of 22% year over year.

David: The main driver for our gross profit improvement or the value our customers see in our innovative technology, our competitive differentiation and improved cost structure.

David: As Alan mentioned, we continued to win significant deals from both existing and new customers, reflecting the demand for and the value of our cutting edge investigative analytics solutions.

David: During fiscal 'twenty four we want 29, new customers, an increase of 12, new customers compared to last year.

David: Let me now share with you how we perform against each of our major kpis.

David: Our short term appeal continues to be strong.

David: Is that a healthy demand for our solution and deals we have won.

David: We ended the year with a short term IPO of $302 5 million.

David Abadi: During Q4, we extended our credit facility, and we now have $65 million available to borrow until the end of January 2026. Revenue for the full year was $313.5 million, an increase of approximately 11% year over year. The vast majority of the revenue growth was driven by a $28 million increase in software revenue. Our software revenue was 89% of total revenue, close to our long-term target of 90%. The recurring revenue for the full year was $168 million, representing 54% of total revenue.

David: Total IPO at the end of Q4 was $591 9 million.

David: As a reminder, our apio.

David: Remaining performance obligations represent contracted revenue that is expected to be recognized as revenue in future periods.

David: Q4 revenue.

David: Grew by 17, 6% year over year and was $83 7 million.

David: Our software revenue in Q4 grew by 14, 9% year over year and was $73 8 million.

David: We were also able to improve our gross margin significantly.

David Abadi: Gross margin for the year was 69.2%, up about 650 basis points year-over-year, and full-year gross profit grew twice as fast as revenue and was $217 million, an increase of 22% year-over-year. The main drivers for our gross profit improvement are the value our customers see in our innovative technology, our competitive differentiation, and improved cost-tractability. As Elad mentioned, we continue to win significant deals from both existing and new customers, reflecting the demand for and the value of our cutting-edge investigative analytics solutions. During FISCA 24, we want to win 29 new customers, an increase of 12 new customers compared to last year.

David: Q4, gross margin was 69% an improvement of more than 420 basis points year over year.

David: Our gross profit continue to grow meaningfully faster than revenue.

David: Q4, gross profit was up 25% year over year.

David: We have been focused on executing our goals to improve our financial model further and drive margin expansion.

David: The combination of revenue growth better margins and effective cost structure drove improved profitability.

David: During Q4, we delivered $4 3 million.

David: Adjusted EBITDA, bringing full year, adjusted EBITDA to $9 million.

David: Okay.

David: We have delivered positive adjusted EBITDA for each of the last three quarters and we expect to continue delivering positive adjusted EBITDA going forward.

David: All the metrics.

David: Cash so far are in SCS adjusted non-GAAP basis.

David Abadi: Let me now share with you how we perform against each of our major KPIs. Our short-term RPO continues to be strong, a result of healthy demand for our solution and deals we have won. We ended the year with a short-term RPO of $302.5 million. Total RPO at the end of Q4 was $591.9 million.

David: For fiscal 'twenty five we expect full year revenue of approximately 340 million.

David: Plus or minus 2%.

David: This presents approximately 18, 5% year over year growth at the midpoint of the revenue range.

David: We believe that our strong short term appeal of $302 5 million.

David: And the positive demand environment support this outlook.

David Abadi: As a reminder, RPO, or Remaining Performance Obligations, represent contracted revenue that is expected to be recognized as revenue in future periods. Q4 revenue grew by 17.6% year-over-year and was $83.7 million. Our software revenue in Q4 grew by 14.9% year-over-year and was $73.8 million. We were also able to improve our growth margin significantly. Q4 growth margin was 69%, an improvement of more than 420 basis points year over year. Our Gospofit continues to grow meaningfully faster than revenue. In Q4, Gross Profit was up 25% year-over-year.

We also believe that the seasonality of our revenue will be similar to previous years.

David: We expect Q1 revenue to be slightly below the Q4 level, we are reporting today and to increase sequentially each quarter throughout the year.

David: We believe that our outlook of topline growth and continuing improvement in our gross margin will drive more than 10% year over year gross profit growth.

David: We expect the non-GAAP gross margin to improve year over year and to be about 75% an improvement of 130 basis points year over year.

David: Gross margin may fluctuate between quarters based on our revenue mix.

David: For the full year, we expect our non-GAAP operating expenses to grow meaningfully slower than revenue and be approximately $233 million an increase of about 5%.

David Abadi: We have been focused on executing our goals to improve our financial model further and drive margin expansion. The combination of revenue growth, better margins, and an effective cost structure drove improved profitability. During Q4, we delivered $4.3 million of adjusted EBITDA, bringing full-year adjusted EBITDA to $9 million. We have delivered positive adjusted EBITDA for each of the last three quarters, and we expect to continue delivering positive adjusted EBITDA going forward. All the metrics I have discussed so far are in SAS-adjusted NANDGAP-based.

David: Our quarterly Opex may fluctuate slightly throughout the year.

David: Because of the leverage we have in our model, we expect adjusted EBITDA to be about $19 million more than doubled compared to last year.

David: We expect our cash taxes to be about $10 million and noncontrolling minority interest to be about $5 million.

David: As a result, we expect annual EPS loss to come in at 13.

David: The midpoint of the revenue range.

David: For share count, we assume about 72 million weighted average fully diluted shares in FY 'twenty five.

David Abadi: For Fisca 25, we expect full-year revenue of approximately $340 million, plus or minus 2%. This represents approximately 8.5% year-over-year growth at the midpoint of the revenue range. We believe that our strong short-term R&D of $302.5 million and the positive demand environment support this outcome. We also believe that the seasonality of our revenue will be similar to previous years.

David: Turning to cash flow in a typical year cash from operation is similar to adjusted EBITDA.

David: This year.

David: To generate about $34 million of cash from operation significantly higher than the expected adjusted EBITDA.

David: We have recently extended our lease agreement in our headquarter facility in Israel for an additional 10 years.

David: We decided to renovate and changing to a more open work environment and reduce the amount of space we occupy.

David: The renovation is expected to drive incremental capex investment of about $6 million.

David Abadi: We expect Q1 revenue to be slightly below the Q4 level we are reporting today and to increase sequentially each quarter throughout the year. We believe that our outlook for top-line growth and continuing improvement in our growth margin will drive more than 10% year-over-year gross profit growth. We expect the land-gap gross margin to improve year-over-year and to be about 70.5%, an improvement of 130 basis points year-over-year. However, gross margin may fluctuate between the quarters based on our revenue mix. For the full year, we expect our non-GAAP operating expenses to grow meaningfully slower than revenue and be approximately $233 million, an increase of about 5%.

David: And will result in future Opex savings.

David: We also expect additional proceeds of about $5 million from the divestiture of SaaS related to price adjustment.

David: For the full year, we expect a total capex net of SaaS expected proceeds of approximately $12 million.

David: To summarize.

We executed well during FY 'twenty, four and produce strong results.

David: The market has stabilized and new and existing customers recognized our advanced solutions and the value they generate for them.

David: We continue to add capabilities and increase the value of our solution delivered to our customers buy.

David: By leveraging the latest technologies, including AI.

David Abadi: Our quarterly OPEX may fluctuate slightly throughout the year. Because of the leverage we have in our model, we expect adjusted EBITDA to be about $19 million, more than doubled compared to last year. We expect our cash taxes to be about $10 million and non-controlling minority interest to be about $5 million. As a result, we expect annual EPS losses to come in at $0.13 at the midpoint of the revenue range.

David: As a result, we expect FY 'twenty five to be a year of continued growth significant profitability improvement and strong cash flow from operations.

We believe we are well positioned for sustainable growth and there is leverage in our model. So we can generate additional improvement in profitability and cash flow in future years.

None: With that I would like to end the call over to the operator to open the line for questions.

David Abadi: For the share count, we assume about 72 million weighted average fully diluted shares in FY25. Turning to cash flow, in a typical year, cash from operations is similar to adjusted EBITDA. This year, we plan to generate about $34 million of cash from operations, significantly higher than the expected adjusted dB depth. We have recently extended our lease agreement on our headquarter facility in Israel for an additional 10 years. We decided to renovate and change it to a more open work environment and reduce the amount of space we occupy.

None: Operator.

None: Thank you if you'd like to ask a question. Please press star one one.

Question has been answered and you'd like to remove yourself from the queue. Please press star one again.

None: First question comes from Mike <unk> with Needham Your line is open.

Mike: Great. Thank you guys. Thanks for taking my questions here.

Mike: I think the first question I wanted to ask you about was with respect to.

Mike: This past quarter.

Mike: Noteworthy year actually I know the companies that you ended 29, new customers, which is up 70% year over year, which is a great statistic.

David Abadi: The renovation is expected to drive an incremental CapEx investment of about $6 million and will result in future OPEX savings. We also expect additional proceeds of about $5 million from the divestiture of SAS related to the price adjustment. For the full year, we expect a total CAPEX, net of expected proceeds from SAS, of approximately $12 million.

Mike: Just trying to see are these new customers when they ran or they actually landing larger where it has the initial land remains relatively unchanged, you'll probably look at customers coming to cognate this year versus the customers who landed with cognate last year.

None: Yes, Hi, Mike.

Mike: So yeah, it's a good number of new customers for the year.

None: Maybe I'll give you some more color with a variety of customer types, it's coming from different areas alone Forcemeat National security and intelligence.

David Abadi: We executed well during FY24 and produced strong results. The market has stabilized, and new and existing customers recognize our advanced solutions and the value they generate for them. We continue to add capabilities and increase the value of our solutions delivered to our customers by leveraging the latest technologies, including AI. As a result, we expect FY25 to be a year of continued growth, significant profitability improvement, and strong cash flow from operations. We believe we are well positioned for sustainable growth and have leverage in our model so we can generate additional improvement in profitability and cash flow in future years. With that, I would like to end the call and ask the operator to open the line for questions. Operator. Thank you. If you'd like to ask a question, please press star 1. If your question has been answered and you would like to remove yourself from the queue, please press star 11 again.

None: Also geographic wise, it's spread globally. So it's a good indication that demand across the world is.

None: Is healthy usually new customers start small and this is the case also now we had one large deal.

None: Last year with a new customer with more than $20 million, but the other deals most of them are small and actually grow over time.

None: And this is actually the land and expand strategy that we're following.

None: New customers.

None: Starting small with either a few use cases and relatively limited capacity and when they see the value. There go industrial expansions upgrades more functionality and the wallet share is it usually growing over the years and this is the case also here.

None: That's great to hear and if I could just build on that comment around the land and expand I know that you guys have the.

Operator: Our first question comes from Mike Cikos with Needham. Your line is open. Great, thank you guys. Thanks for taking the questions here. I think the first question I wanted to ask you about was with respect to this past quarter, or the year actually. I know the company said that you landed 29 new customers, which is up 70% year over year, which is a great statistic. Just trying to see if these new customers, when they land, are they actually landing larger, or has the initial land remained relatively unchanged if I look at customers coming to Cognyte this year versus the customers who landed with Cognyte last year. Yeah, hi Mike.

None: In your slide deck, those three customers that you are citing to our existing customers who decided to renew.

None: Increased their spend with cognate.

None: I just think it might be helpful.

None: But let's say for that National security customer who signed.

None: Over $20 million deal is there any way you could provide some additional color as far as what the deal size was before that we're seeing for the $10 million National intelligence deal that you guys signed like are these customers expanding at a rate of 3% a year is at 5% a year just trying to get a sense of.

None: How quickly they are expanding their usage of cognex overtime when they when they come to renew with you.

None: Yes so.

Elad Sharon: So yeah, it's a good number of new customers for the year, maybe I'll give you some more color, there are a variety of customer types, they're coming from different areas, law enforcement, national security, national intelligence. Also, geographically, they're spread globally, so it's a good indication that demand across the world is healthy. Usually, new customers start small, and this is the case also now. We had one large deal last year with a new customer of more than $20 million, but the other deals, most of them are small and actually grow over time, and this is actually the lend and expand strategy that we are following, acquiring new customers, starting small with either a few use cases and relatively limited capacity, and when they see the value, they go with us with expansions, upgrades, That's great to hear, and if I could just build on that comment around, land and expand.

None: Maybe I'll give you some more color about each one of them and then I'll answer the quantification side because qualification side, it's quite difficult because it's a very good lot between one customer to the other with one one day to the other but the first customer.

None: Actually faced new technology that came in their territory and created.

None: More data that they need to address which they didn't have the capabilities before and.

None: Given that we have the solution. This customer is with us for many years actually more than two decades, and they came to us and.

Actually upgraded our capabilities with the new solution.

None: And this happened a lot over the years with this customer.

None: The second one is relate.

None: Related to a use case.

None: A border control solution for an existing customer that we had before.

None: Actually we sold already to discussed on their full border control also but actually they have large borders.

None: And different <unk>.

None: And different challenges in different areas of the border and they actually expanded with capability that they didn't have before.

Elad Sharon: I know that you guys have the, in your slide deck, those three customers that you're citing, two are existing customers who decided to renew or increase their spend with Cognyte. I just think it might be helpful, but let's say for that national security customer who signed over a $20 million deal, is there any way you could provide some additional color as far as what the deal size was before that? We're saying for the $10 million national intelligence deal that you guys signed, like are these customers expanding at a rate of... 3% a year, is it 5% a year? Just trying to get a sense of how quickly they're expanding their usage of Cognite over time when they come to renew it.

None: For a different border challenge.

And the last one is actually.

None: Sort of referenced a physician customer that worked with US was very happy and actually it was a very strong reference for us to another organization in the same country.

None: About the quantification, it's very difficult to quantify because you know.

None: So it might be that customers that very large law like the other one that I mentioned earlier at $20 million plus new customer.

None: That Ken.

None: Fit into the capacity and functionality for few years and not upgrading or it could be smaller deals that can come and go quickly. So it really varies between one year to the other with one customer to the other.

Elad Sharon: Yes, so maybe I'll give you some more color about each one of them and then I'll answer the quantification side because quantification is quite difficult because it varies a lot between one customer to the other, with one wanting to do it for the other, but the first customer actually faced new technology that came into their territory and created more data that they needed to address, but they didn't have the capabilities before. And given that we have this solution and this customer has been with us for many years, actually more than two decades, they came to us, and they actually upgraded their capabilities with the new solution. And this happened a lot over the years with this customer.

None: So statistics is not something that would be helpful. Here.

None: And also.

None: I believe that given that we have hundreds of customers in many countries and that we are able to actually engage with customers frequently and understand their current and future needs. It helped us a lot to be prepared.

None: The technology they need in order to upgrade and address the new challenges, which happened in one of the examples I gave earlier. So solar then expand its very important for us.

None: Great. Thank you for that and then just one final question, if I could but I'm just trying to get a better understanding I know that you guys gave some great color around <unk> exiting fiscal 'twenty four.

Elad Sharon: The second one is related to a use case; it's a border control solution for an existing customer that we had before. Actually, we sold it to this customer for border control also, but they actually have large borders and different concerns and different challenges in different areas of the border, and they actually expanded with the capability that they didn't have before for a different border challenge. And the last one is actually a result of a reference from an existing customer that worked with us, was very happy, and actually was a very strong reference for us to another organization in the same country. About the quantification, it's very difficult to quantify because, you know, it might be that customers start very large, like the other one that I mentioned earlier, $20 million plus new customer, that can fit into the capacity and functionality for a few years without upgrading So it really varies between one deal to the next, between one customer to the next, and so statistics are not something that would be helpful here.

None: If I look at the fiscal 'twenty five revenue guidance that we have this outlook.

None: It looks like there's a decent amount of incremental revenue you guys are looking to add in this coming year.

None: The comparison of the <unk> growth and I, just wanted to get a better understanding of what's driving the confidence in driving that incremental dollar.

None: Cognate above and beyond the <unk> balance that we have today.

Actually the coverage of the <unk> the short term appeal for the re similar to last year. So it's not far from what it was before in terms of the coverage.

None: This gives us high confidence that.

None: We can deliver on.

None: On the outlook and also we have the confidence given that we have the mix of the deals and the appeal that we are going to see improved profitability. So the confidence level in our outlook is high.

None: Well, if I could if I could just push back on that for one second but if we go back a year ago.

None: You guys Cognex had a <unk> balance of $281 million and then guided the full year to $300 million in revenue, so you're talking about $20 million increase and I look at where we are today.

Elad Sharon: And also, I believe that given that we have hundreds of customers in many countries and that we are able to actually engage with customers frequently and understand their current and future needs, it helps us a lot to be prepared with the technology they need in order to upgrade and address their new challenges, which happened in one of the examples I gave earlier. So, let them explain it; it's very important for us. Great, thank you for that. And then just one final question, if I could, but I'm just trying to get a better understanding.

None: $303 million or so in <unk> and then the guide of 340.

None: So the incremental dollars above and beyond the <unk> balance has gone up from $20 million to almost $40 million. If I look at the guidance that we have today and I'm just trying to get a better understanding of again that doubling of the incremental dollars above this European balance does that makes sense I just want to make sure I'm clear on that.

None: Yeah. So.

None: If you look at the previous.

None: Current IPO of the $2 80 versus the initial guidance of the trend that we were like in that period in a different environment from our perspective.

Elad Sharon: I know that you guys gave some great color around. CRPO exiting fiscal 24. If I look at the fiscal 25 revenue guidance that we have, this outlook, it looks like there's a decent amount of incremental revenue you guys are looking to add in this coming year, in comparison to the CRPO growth. And I just wanted to get a better understanding of what's driving the conflict, driving that incremental dollar to Cognyte above and beyond the CRPO balance that we, Actually the coverage of the RPO, the short-term RPO for the year is similar to last year, so it's not far from what it was before in terms of the coverage, and this gives us high confidence that we can deliver on the outlook and also we have the confidence given that we have the mix of the deals in the RPO that we are going to see improved profitability.

None: During this year, we saw significant demand and we sold the <unk> is growing quarter over quarter.

None: First increase our confidence and second allow us to increase the guidance over the year.

None: When you look at next year, we are starting there.

None: The year with $302 $5 million of short term IPO and guiding 240, which is from a coverage perspective. It's the same percentage that you can see a very similar percentage versus the $2 80 in the 300 <unk> that we actually.

None: The main difference that we have if you compare this year versus last year is that over the last few quarter.

None: <unk> work closely with our customers and we know that that our short term IPO is very strong and allow us.

Elad Sharon: So the confidence level in our outlook is high. Well, if I could, if I could just push back on that for one second, but if we go back a year ago, you guys had a CRPO balance of $281 million and then guided the full year to $300 million in revenue. So you're talking about a $20 million increase, and I look at where we are. $303 million or so in CRPO, and then a guide of 340. So the incremental dollars above and beyond the CRPO balance have gone up from $20 million to almost $40 million if I look at the guidance that we have today. And I'm just trying to get a better understanding of, again, that doubling of the incremental dollars above the CRPO balance. Does that make sense?

None: To predict in that.

None: In the good way, where we're going to land and actually we are very pleased and the rest from the last few quarters that we were able.

None: But also too over achieved quarter over quarter.

None: Is that other stereo vision.

None: It does it does I really do appreciate the incremental color from both U N a lot.

None: Thank you very much.

None: I'll turn it over to other analysts on the line. Thank you. Thank you.

Mike: It's Mike.

Mike: Thank you. Our next question comes from shallower Yao with TD Securities. Your line is open.

Shaul Eyal: Thank you hi, good afternoon, guys. Congrats on the ongoing consistent outperformance my question is around AI.

Shaul Eyal: AI, NII, which hasnt been the topic does your in recent quarters.

Shaul Eyal: A lot in your prepared remarks, you did mention latest AI developer myself the driver for the market and the company can.

David Abadi: I just want to make sure I'm... Yeah, so if you look at the previous current RPO of 280 versus the initial guidance of 300, we were, in that period, in a different environment from our perspective. During this year, we saw significant demand, and we saw that the RPO was growing quarter over quarter, which first increased our confidence and second, allowed us to increase the guidance over the year. When you look at next year, we are starting the year with $302.5 million of RPO, short-term RPO, and guiding $340, which is, from a coverage perspective, it's the same percentage that you will see a very similar percentage versus the $280 and the $313 that we actually guided. The main difference that we have, if you compare this year versus last year, is that in the last few quarters, we have worked And we know that our short-term RPO is very strong and allows us to predict in a good way where we're going to land. And actually, we are very pleased from the last few quarters that we were also able to overachieve quarter over quarter. Is that your first time? No, it doesn't.

Shaul Eyal: Can you maybe double click on this point, maybe provide us with.

Shaul Eyal: Some insights and how should we be thinking about kunai impacting coconut near and long term. Thank you.

None: Sure Hi, Sean.

None: So.

None: It's becoming more important for customers over time and actually it's a race and maybe it's important that we understand that.

It's a race between our customers who are trying to make the world safer than the bad guys are trying to hide better. So if you look on the bad guys.

None: They're using gen AI and advanced technology.

None: To hide their identities.

Given example earlier in the call about Gen AI and using fake entities in crypto currency that actually the use.

None: And in order to Anonymize.

None: Who they are and actually this mix.

None: Our customer's challenge is much more complicated and difficult to address.

None: As if you want to put your hands on the bad guys are investigate them you need first to know who they are.

None: And this is one challenge that is growing over time on the other hand.

None: Our customers they have more data.

None: Coming in structured and unstructured form.

None: Different sources and in order for them to be able to actually unhide uncover hidden insights.

David Abadi: It does. I really do appreciate the incremental color from both you and Elad, so thank you very much. I'll turn it over to other analysts on the line. Thank you. Thank you. Thank you, Michael.

None: They need.

None: More capabilities in the analytics and AI areas in order for them to be able in high probability to identify who is actually the identity behind something that happens.

Operator: Our next question comes from Shaul Eyal with TD Securities. Your line is: Thank you. Hi, good afternoon, guys. Congratulations on the ongoing consistent outperformance. My question is around AI, Gen AI, which has been the topic du jour in recent quarters. Elad, in your prepared remarks, you did mention recent AI developments as a driver for the market and the company. Can you maybe double-click on this point, maybe provide us with some insights, and how should we be thinking about Gen AI impacting Cognyte's near and long term? and Shu Haishou.

None: So.

None: It's a race between those two.

And it's important to remind everyone that area has been part of our solutions for quite a long time.

None: We view it as an integral part of our present and future product.

None: And it's important to note.

None: Yeah.

None: When we implement AI into our solution, we implemented into the process and the workflow of our customers. So it's part of the overrun investigation process, it's not a stand alone solution, but it's part of that.

Elad Sharon: So AI is becoming more important for customers over time. And actually, it's a race. And maybe it's important that we understand that. It's a race between our customers, who are trying to make the world safer, and the bad guys who are trying to hide better. So if you look at the bad guys, they're using Gen AI and advanced technology to hide their identities. I gave an example earlier in the call about Gen AI and using fake entities and cryptocurrency that they actually use in order to anonymize who they are, and actually this makes our customers' challenges much more complicated and difficult to address. As if you want to put your hands on the bad guys or investigate them, you need first to know who they are.

None: The workflow of our customers using which is highly important.

None: And also some of our customers or most of our customers our government customers and they have unique environment, so with <unk> into the environment.

None: And so we gave them actually a holistic benefit of using our AI technology.

None: So when you leverage AI to continually generate incremental value for our customers.

None: And for this purpose, we have a dedicated research team that we established long ago.

None: And that's all they're focused on to give more value out of the existing data sets that customers have in order to be able to unhide insights in much quicker and accurate manner and you view it as one of the demand drivers for the short end for the long term, it's something that is evolving over time.

Elad Sharon: And this is one challenge that is growing over time. On the other hand, our customers have more data coming in, structured and unstructured, from different sources. And in order for them to be able to actually uncover hidden insights, they need more capabilities in the analytics and AI areas in order for them to be able, with high probability, to identify who is actually the identity behind something that happened. So it's a race between those two.

None: Thank you for that I appreciate it.

None: Thanks, Ron.

None: As a reminder, if you'd like to ask a question. Please press star one one.

None: Our next question comes from Peter Levine with Evercore. Your line is open.

Peter Marc Levine: Great. Thanks, guys for taking my question, maybe just one follow up to that question.

Elad Sharon: And it's important to remind everyone that AI has been part of our solutions for quite a long time. We view it as an integral part of our present and future products. And it's important to note that, actually, when we implement AI into our solution, we implement it into the process and the workflow for our customers. So it's part of the overall investigation process.

Peter Marc Levine: The privacy of your customers with government. We work with are there any restrictions in terms of maybe the data.

Peter Marc Levine: The data pools that you can pull from just curious how you guys navigate that.

Peter Marc Levine: Secrecy familiar customers.

Peter Marc Levine: Yes.

Peter Marc Levine: I want to remind you that we do not provide managed services to our customers.

Elad Sharon: It's not a standalone solution, but it's part of the workflow our customers are using, which is highly important. And also, some of our customers, or most of our customers, are government customers, and they have a unique environment. So we feed the AI into the environment.

Peter Marc Levine: And the data customers have is their own data, it's not data that we deliver to them so given that our government customers and the.

Peter Marc Levine: Our regulated customers in their countries.

Peter Marc Levine: It's their responsibility to put their hands on the data that they are allowed to.

Elad Sharon: So we give them actually a holistic benefit of using our AI technology. And we will leverage AI to continually generate incremental value for our customers. And for this purpose, we have a dedicated AI research team that we established long ago. And that's all they focus on, to give more value out of the existing data sets that customers have, in order to be able to uncover insights in a much quicker and accurate manner. And we view it as one of the demand drivers for the short and for the long term. It's something that is evolving over time. Thank you for that; I appreciate it. Thanks, Shaul. As a reminder, if you'd like to ask a question, please press star 1.

Peter Marc Levine: And do the investigation process themselves without our interference.

Peter Marc Levine: Interference. So we are not exposed to customers data.

Okay.

Peter Marc Levine: And then if you think about revenue.

Yes can you hear me.

None: Yes, yes. Please.

None: Yeah, and then maybe.

None: If you think about the guidance maybe help us what's baked in there obviously 17 net new customers in fiscal 'twenty five.

None: What are the assumptions for toward the fiscal 25, I'm, sorry, 17 for fiscal 'twenty four and then if you think about fiscal 'twenty five what are your assumptions, meaning is it more of an upsell motion.

Operator: Our next question comes from Peter Levine with Evercore. Your line is open. Great, thanks guys for taking my question. Maybe just one follow-up to that AI question, you know, given the privacy of your customers, the governments you work with, are there any restrictions in terms of data?

None: Do you still need to.

None: Are you assuming that youre going to be hitting call. It net new customer growth north of 17 versus what you saw in two.

None: <unk> 24, so just give us an idea of kind of the assumptions behind the guide and what that entails.

None: Yes sure.

None: Secondly, you asked about this in the direction of the guidance. So if you look at the guidance. The guidance is built primarily on the existing appeal.

Elad Sharon: the data pools that you can pull from. Just curious how you guys navigate that given the secrecy of some of your customers. So I want to remind you that we do not provide managed services to our customers, and the data customers have is their own data. It's not data that we deliver to them.

None: So we are not relying much on new customers for the for the guidance, but if you look at existing and new customers, we do have <unk>.

None: Investments in order to accelerate our growth.

None: Growth overtime, including acquiring new customers. One example is the U S market.

Elad Sharon: So given that they are government customers and that they are regulated customers in their country, it's their responsibility to put their hands on the data that they are allowed to and do the investigation process themselves without our interference, so we are not exposed to customer data. And if you think about the guys...

None: Thus we are focusing on.

None: Actually most of the customers that will occur there will be new customers.

As I mentioned earlier in the call that we focus on state and local first and just started recently with the federal So we do expect new customers to lend for us and also.

Elad Sharon: Yes, can you hear me? Yes, please. Yeah, and then maybe, you know, if you think about the guidance, let me help us with what's baked in there. Obviously, 17 net new customers in fiscal 25, you know, what are the assumptions for fiscal 25? I'm sorry, 17 in fiscal 24.

None: As I mentioned earlier.

None: About the land and expense strategy and we expect those customers to stay with us for quite a long time and continue and buy from US again, and again and actually I can tell you that.

Elad Sharon: And then you think about fiscal 25, what are your assumptions? Meaning, is it more of an upsell motion? You know, do you still need to – are you assuming that you're going to be hitting, call it, net new customer growth north of 17 versus what you saw in 24? So, just give us an idea of the assumptions behind the guide and what that entails. Yes, so you asked about this in the direction of the guidance. So, if you look at the guidance, the guidance is built primarily on the existing RPO. So we are not relying much on new customers for the guidance. But if you look at existing new customers, we do have investment in order to accelerate growth over time, including acquiring new customers.

None: I was in the U S. In January this year medium customers.

None: And I can tell you that we already have follow on order from customer after the media again and actually one customer that already put the second deal with us.

None: No.

None: It's important for us to continue and win new customers.

None: We are focused on that.

None: Maryland.

None: And if you think about the expansion into the U S.

None: Is that directed that through partners help us understand the investments that youre, making today to expand further be Ross. Thank you.

Ross: Sure so.

Ross: We started with a certain locale, we started the direct and actually we have a sales team local sales team with everything he needs including.

Elad Sharon: One example is the US market that we are focusing on. Actually, most of the customers that we acquire there will be new customers. I mentioned earlier in the call that we focus on state and local first and started recently with the federal government. So we do expect new customers to lend money to us and also, as I mentioned earlier about the lend and expense strategy, we expect those customers to stay with us for quite a long time and continue to buy from us again and again. Actually, I can tell you that I was in the U.S. in January this year meeting customers.

Ross: Demand POC capabilities in marketing efforts and participate in relevant conferences.

Ross: And the investment given that it's a penetration mode. The investment and sales efforts in the U S is disproportional to the current business level.

Ross: As a federal we are using established partner, who has the relevant clearance and market access and knowhow and relationships with relevant federal customers.

Elad Sharon: And I can tell you that we already have a follow-on order from a customer after the meeting, and actually, one customer that has already placed a second deal with us. So it's important for us to continue and renew customers, and we are focused on that, primarily in the US. And if you think about the expansion into the US, is that correct?

Ross: So state and local is primarily the rest in federal is primarily by.

Ross: And established partners that we have.

Ross: Yeah.

None: Great. Thank you for the color.

None: Sure. Thanks Peter.

None: Thank you. Our next question is a follow up from Mike <unk> with Needham <unk> Company. Your line is open.

Mike: And not not a follow up question here more of a comment.

Elad Sharon: Is that through partners? Help us understand the investments that you're making today to expand further in the U.S. Thank you. Sure, so we started with the standard local.

Mike: Just to make sure everyone was clear.

Mike: From what I heard in management that you guys a lot and David just sanity check the numbers I have on my side, because I know Peter had referenced 17 incremental new customers just for perspective than the numbers I have and I know, we're all digesting that through upon you added 29, new customers in fiscal 'twenty four.

Elad Sharon: We started directly, and actually, we have a sales team, a local sales team, with everything you need, including demo and POC capabilities, marketing efforts, and participation in relevant conferences. And the investment, given that it's a penetration mode, the investment in sales efforts in the US is disproportional to the current business level. As a federal government agency, we are using an established partner who has the relevant clearance and market access and know-how and relationships with relevant federal customers. So state and local is primarily direct, and federal is primarily through an established partner that we have. Great, thank you for the call. Shaul, thanks, Peter.

Mike: Which is up from 12 in fiscal 'twenty three.

Mike: So there is a 70% year on year increase from 12 to 29 for fiscal 'twenty three to fiscal 'twenty four is that correct.

Mike: It is from 17 to 29, so 12 seven unit went on pyramid.

Mike: From 17% to $29 12, small which is up 70%.

None: Got it thank you for clarifying I appreciate that.

Sure Noah.

None: Thank you there are no further questions at this time I'll turn the call back over to Dean Ridlon for any closing remarks.

Operator: Thank you. Our next question is a follow-up from Michael. Company. Hey, not really a follow-up question here, more of a comment, just to make sure everyone was clear, at least based on what I heard.

Dean M. Ridlon: Thank you Michelle and thank you everyone for joining us on today's call. We will be attending several conferences in may and hope to speak with some of you. Then should you have any questions in the meantime, please feel free to reach out to me and we look forward to speaking with you again next quarter. Thank you.

Operator: Management, if you guys have a lot of David just sanity check the numbers I have on my side because I know Peter for reference. Incremental new customers just for perspective and the numbers I have and I know we're all digesting this. You rated 29 new customers in fiscal 24, which is up from 12, in fiscal 20. So there's a 70% year-on-year increase from 12 to 29, from fiscal 23 to. Is that correct? It is from 17 to 29, so there are 12 new accumulations. I got it.

None: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

None: Yeah.

None: [music].

Okay.

None: Yes.

None: Yes.

David Abadi: Thank you for clarifying. I appreciate that. Sure, I'm all in. Thank you.

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None: Hum.

Dean M. Ridlon: There are no further questions at this time. I'd like to turn the call back over to Dean Ridlon for any closed questions. Thank you, Michelle, and thank you everyone for joining us on today's call. We will be attending several conferences in May and hope to speak with some of you then. Should you have any questions in the meantime, please feel free to reach out to me, and we look forward to speaking with you again next quarter. Thank you. Thank you for your participation. This does conclude the program, and you may now disconnect.

None: Hum.

None: Okay.

None: [music].

None:

None: Hum.

None: [music].

None: Yeah.

None: [music].

Operator: Everyone, have a great day. Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Cognyte fourth quarter of fiscal year 2024 earnings conference call. After the speaker's remarks, we will conduct a question and answer session. To ask a question at that time, you will need to press star 1.

None: Okay.

None: Yes.

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None: [music].

None: Okay.

None: Yes.

None: Sure.

Dean M. Ridlon: Please note that today's conference may be recorded. I would now like to hand the conference over to your speaker, host Dean Ridlon, Head of Investor Relations. Please go ahead.

Yes.

None: Okay.

None: [music].

Dean M. Ridlon: Thank you, operator. Hello, everyone. I'm Dean Ridlon, Cognyte's Head of Investor Relations. Thank you for joining us today. I'm here with Elad Sharon, Cognyte CEO, and David Abadi, Cognyte CFO. Before getting started, I would like to mention that accompanying our call today is a presentation. If you'd like to view these slides in real time during the call, please visit the investor section of our website at cognyte.com. Click on the Investors tab, click on the webcast link, and select today's conference call.

None: Okay.

None: Yes.

None: Thank you.

Yes.

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Thanks.

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Okay.

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Dean M. Ridlon: I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. Such forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call and, except as required by law. Cognyte assumes no obligation to update or revise.

None: Okay.

None: Okay.

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None: [music].

None: Good day, ladies and gentlemen, thank you for standing by welcome to the Cognex fourth quarter fiscal year 2024 earnings Conference call.

None: After the Speakers' remarks, we will conduct a question and answer session to ask a question at that time, you will need to press star one one.

None: Please note that today's conference maybe recorded.

None: I would now like to hand, the conference over to your speaker of Jean <unk> <unk> head of Investor Relations. Please go ahead.

None: Thank you operator, Hello, everyone I'm Dean Ridlon Cognize head of Investor Relations. Thank you for joining us today.

Dean M. Ridlon: Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Cognyte's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F for the fiscal year ended January 31st, 2023 and January 31st, 2024, which we expect to file today and other The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods and among our peer companies that publish similar non-GAAP measures. Please see today's presentation slides, our earnings release, and the investor section of our website at cognyte.com for a reconciliation of non-GAAP financial measures to GAAP measures.

Dean M. Ridlon: I'm here with a lot Jerome cognate CEO and David body Cognize CFO.

Dean M. Ridlon: Before getting started I would like to mention that accompanying our call today is a presentation.

None: If you'd like to view these slides in real time during the call. Please visit the investors section of our website at cognate dot com click.

None: Click on the investors' tab click on the webcast link and select today's conference call.

None: I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, and other provisions of the federal Securities laws.

These forward looking statements are based on management's current expectations and are not guarantees of future performance.

Actual results could differ materially from those expressed in or implied by these forward looking statements.

None: The forward looking statements are made as of the date of this call and except as required by law coordinate assumes no obligation to update or revise them.

Dean M. Ridlon: Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Elad.

None: Investors are cautioned not to place undue reliance on these forward looking statements.

None: For a more detailed discussion of how these and other risks uncertainties could cause cognex actual results differ materially from those indicated in these forward looking statements.

None: Please see our annual report on form 20-F for the fiscal year ended January 31, 2023, and January 31 2024.

None: Which we expect to filed today and other filings we make with the SEC.

None: The financial measures discussed today include non-GAAP measures.

None: We believe investors focus on non-GAAP financial measures and comparing results between periods and among our peer companies that publish similar non-GAAP measures.

Elad Sharon: Thank you, Dean. Welcome, everyone, to our fourth quarter conference call. The fourth quarter was a strong finish to a productive week for Cognyte. The market remains stabilized and continues to improve, as bad actors utilize new ways to conduct their business, and the need for advanced technology and actionable intelligence continues to grow. We executed well in Fiscal 24, delivering top-line growth of approximately 11%, and we entered the new year with improving momentum that is supported by strong short- and long-term RPOs, which give us confidence in our outlook. Importantly, we have reached an inflection point where we are growing gross profit more rapidly than revenue, and we expect Fiscal 25 to be a year of operating leverage. To be clear, we will be investing in R&D and our North America expansion efforts to accelerate richer growth, but the pace of our operating expense growth is expected to be slower than our revenue ramp, leading to improved profitability.

None: Please see todays presentation slides, our earnings release and the investors section of our website at <unk> Dot com for a reconciliation of non-GAAP financial measures to GAAP measures.

None: non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes.

None: The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies.

None: Now I'd like to turn the call over to allot.

Allot: Thank you, Dan and welcome everyone to our fourth quarter conference call.

Allot: The fourth quarter was a strong finish to our productivity for Coke night.

Allot: <unk> remain stabilized and continuing to improve as Bud doctors utilize new ways to conduct our business and the need for advanced technology and <unk> intelligence continues to grow we executed well in fiscal 'twenty, four delivering topline growth of approximately 11% and we.

Allot: We entered the new year with an improving momentum that is supported by strong and short and long term <unk>, which give us confidence in our outlook.

Elad Sharon: For Fiscal 24, we generated non-GAAP revenue of $313.5 million and increased our SES-adjusted non-GAAP gross profit by more than $39 million on $30 million in increased revenue. Our improving gross profit, expense management, and growing operating leverage enabled our third consecutive quarter of positive adjusted EBITDA at $4.3 million. In fact, we delivered $9 million in positive adjusted EBITDA for the full year, along with $35 million of positive cash flow operations and $25 million of free cash flow.

Allot: Huntley, we have reached an inflection point, where we are growing gross profit more rapidly than our revenue and we expect fiscal 'twenty five to be ahead of operating leverage.

To be clear, we will be investing in R&D and our north American expansion efforts to accelerate our growth, but the pace of our operating expense growth is expected to be slower than our revenue ramp leading to improved profitability.

For fiscal 2004, we generated non-GAAP revenue of $313 5 million and increased our SaaS adjusted non-GAAP gross profit by more than $39 million on $30 million in increased revenue.

Elad Sharon: Cognyte is again generating operating income, and we expect not just to maintain our profitability but to meaningfully expand it in the next year. We believe we now have a stable platform to execute on and expect the coming year to be one of further operational improvements, as we aim to build on this strong foundation to deliver sustainable and profitable growth. During Q4, we continued to win deals with both new and existing customers who recognized the strength of our innovative technology and Cognyte's ability to deliver value. Looking at the full year, we signed contracts with 29 new customers, which is up 70% year-over-year.

Allot: Our improving gross profit expense management and growing operating leverage enabled our third consecutive quarter of positive adjusted EBITDA at $4 $3 million.

In fact, we delivered $9 million in positive adjusted EBITDA for the full year, along with $35 million of positive cash from operations and $25 million of free cash flow.

Allot: Okay.

Allot: Cognitive again generating operating income and we expect not just to maintain our profitability, but meaningfully expanding it into next year.

Allot: We believe we now have a stable platform to execute and expect the company to be one of further operational improvement.

Elad Sharon: These new customers present a meaningful opportunity to drive growth. In most cases, new customers start small, and we believe that our land and expense strategy will drive incremental revenue growth, profitability, and cash flow over time. As we look across our addressable market, North America represents a meaningful netting opportunity for expansion. As previously shared, we are allocating resources to increase our presence in North America. These investments have already started to drive results, with several important wins over the past fiscal year.

Allot: As we aim to build on this strong foundation to deliver sustainable and profitable growth.

Allot: During Q4, we continued to win deals with both new and existing customers recognized the strength of our innovative technology and cognitive ability to deliver value.

Allot: Looking at the full year, we signed contracts with 29, new customers, which is up 70% year over year.

Allot: These new customers presents a meaningful opportunity to drive growth in most cases, new customers start small and we believe that our land and expand strategy will drive incremental revenue growth profitability and cash flow for overtime.

Allot: As we look across our addressable markets North America represents a meaningful opportunity for expansion.

Elad Sharon: Our strategy to start with state and local has been successful as our new customers are pleased with the value our solutions deliver and have been providing references to potential new customers throughout the region. Regarding federal customers, we are working with an established partner to penetrate this market, and we believe that we have the right sales approach and superior technology to allow us to win. Initial progress in North America has reinforced our confidence that our strategy is sound, and we have increased our self-efforts further to leverage this momentum. We believe we will be able to win more new customers and simultaneously increase wallet share with our existing customers over time. We continue to innovate and deliver solutions that we believe demonstrate our technological leadership and generate unique value for our customers.

Allot: As previously shared we are allocating resources to increase our presence in North America.

Allot: These investments have already started to drive results with several important wins over the past fiscal year.

Allot: Our strategy to start with state and local has been successful as our new customer are pleased with the value our solutions deliver and have been providing referenced as to potential new customers throughout the region.

Allot: Regarding federal customers, we are working with an established partner to penetrate this market and we believe that we have the right sales approach and superior technology to allow us to win.

Allot: Initial progress in North America has reinforced our confidence that our strategy is sound and we have increased our sales efforts further to leverage this momentum.

Allot: We believe we'll be able to win more new customers and simultaneously increase wallet share with our existing customers over time.

Allot: We continue to innovate and deliver solutions that we believe demonstrate our technological leadership and generate unique value for our customers.

Allot: We have a lessor you took record of delivering powerful investigative analytic solutions to hundreds of customers around the globe.

Elad Sharon: We have a lengthy track record of delivering powerful investigative analytics solutions to hundreds of customers around the world. Our customers view us as domain experts, and we have decades-long relationships with many customers. Our advanced technology, including innovative analytics and AI, allows faster and more effective investigations by fusing data at scale, creating digital twins, and detecting patterns, relationships, and other hidden insights that would be nearly impossible to find otherwise.

Allot: Customers view us as domain experts and we have decades long relationships with many customers.

Allot: Our advanced technology, including innovative analytics, and AI allows faster and more effective investigations by fusing data at scale, creating digital twins and detecting partners relationships in other REIT and insights that will be nearly impossible to find otherwise.

Elad Sharon: This helps prioritize risk and maximize the productivity of investigators and decision makers, enabling faster decision making and creating incremental value for our customers in important missions. Our investigative and analytic solutions are sold to national security, law enforcement, national intelligence, and other organizations to enable them to perform more effective investigations. We believe customer references and field trials are very effective ways for us to win deals with both new and existing customers. The first win I would like to highlight is for more than $20 million with an existing national security customer for its mission to combat terrorism.

Allot: This helps prioritize risks and maximize the productivity of investigators are decision makers, enabling faster decision, making and creating incremental value for our customers in their important missions.

Allot: Our investigating analytic solutions are sort of national security law enforcement National intelligence and other organizations to enable them to perform all 50 investigations.

Allot: We believe customer references and field trials are very effective ways for us to win deals with both new and existing customers.

Allot: The first one I would like to highlight is for more than $20 million with an existing national security customer for its mission to combat terrorism.

Elad Sharon: We recently released a new version of our solution with advanced and differentiated capabilities. These capabilities solve challenges brought on by emerging technologies that create new needs for our customers. The customer recognizes the value we deliver and continues to select our solutions to support the evolving needs. We believe you won because of the demonstrated superior performance of our advanced technology. The second wing is for approximately 10 million dollars from an existing national intelligence customer to address border security threats. This is an additional win from this customer that is highly satisfied with our solutions they are using for other use cases. For this use case, we were able to demonstrate the effectiveness of our solution through field trials. The third win is with a new National Intelligence customer to help them safeguard their forces. The deal is for approximately $3 million.

We recently released a new version of our solution with advanced and differentiated capabilities.

Allot: These capabilities soft challenges brought on by emerging technologies that create new need for our customers.

Allot: The customer recognizes the value, we deliver and continue to select our solutions to support the evolving needs.

Allot: We believe you want because of the demonstrated superior performance of our advanced technology.

Allot: The second win is for approximately $10 million from an existing national intelligence customer to address both the security threats.

Allot: This is an additional wins from this customer that is highly satisfied with our solution. They are using for other use cases.

For this use case, we were able to demonstrate the effectiveness of our solution through field trials.

Allot: The third win is with a new national intelligence customer to help them safeguard the forces.

Allot: The deal is for approximately $3 million.

Elad Sharon: Previously, we sold solutions to another agency in the country, and this agency served as a reference for us, affirming both the performance and the value of the solutions generated. This strong reference played a significant role in our ability to sign this new deal. The customer has already deployed their new solution, and it is generating value for them. I would now like to discuss what's driving demand. Customers view Cognyte as a strategic, trusted partner, providing innovative solutions that help them to improve the speed, accuracy, and success rates of their investigations and make timely decisions. In general, customers range from organizations that are focused on relatively small geographies, like law enforcement agencies, all the way up to security and intelligence agencies that are responsible for combating threats on a national level. Our customers are dealing with a wide variety of challenges. The level of sophistication of bad actors continues to increase as they leverage technology to do harder activities better. It has become increasingly difficult to connect entities to their digital footprints.

Allot: Previously we sold solutions to another agency in the country and this agency served as a reference for us affirming vote, the performance and the value of our solutions generate.

Allot: This strong reference played a significant role in our ability to sign these new deal the customer who has already deployed our new solution and it is generating value for them.

Allot: Yeah.

Allot: I would now like to discuss what's driving demand.

Allot: Customers recognize as a strategic trusted partner, providing innovative solutions that help them to improve the speed accuracy and success rate of the investigations and make timely decisions.

Allot: In general customers range from organizations that are focused on relatively small geographies local law enforcement agencies, although we offer security and intelligence agencies that are responsible for converting threats on the national level.

Allot: Our customers are dealing with a wide variety of challenges the level of sophistication with bad actors continues to increase as the leverage technology to other activities better it has become increasingly difficult to connect entities to their digital footprint.

Allot: In addition, the volume and diversity of data our customers are working with has grown dramatically.

Elad Sharon: In addition, the volume and diversity of data our customers are working with has grown dramatically. Our customers face a challenging situation; more digital data in more places, much of it unstructured, making investigating bad actors more difficult. Cognyte addresses this challenge using advanced analytics and AI-enabled solutions to analyze multiple data streams to create a holistic picture of bad actors' digital footprint.

Allot: Our customers faced a challenging situation more digital data in more places module fleet is unstructured mix investigating by doctors more difficult.

Allot: <unk> addresses this challenge using advanced analytics and AI.

Allot: <unk> enabled solutions to analyze multiple data streams to create a holistic picture of bad actors digital footprint.

Elad Sharon: These new emerging and evolving challenges, coupled with increased geopolitical unrest, require our customers to continue investing in technology to keep them ahead of this threat. We continue to leverage R&D to bring innovations to our customers so that we can maintain our differentiation. Cognyte utilizes advanced AI capabilities to rapidly analyze the various desperate and growing data assets to enable our customers to make quick decisions and execute important missions. We believe the strength of our technology, together with our domain expertise in investigative analytics, will continue to enhance the value we provide to our customers, increase our differentiation, and drive demand. The technologies Bed-Avtos is utilizing continue to evolve rapidly. For example, advancements in Gen AI and cryptocurrency have added significant complexities for our customers. GenAI has provided bad actors with the ability to create fake identities and generate harmful content on open source channels.

Allot: These new emerging and evolving challenges coupled with increased geopolitical unrest requires our customers to continue investing in the technology to keep them ahead of these threats.

We continue to leverage R&D to bring innovation to our customers. So that we can maintain our differentiation.

Allot: <unk> utilizes advanced AI capabilities to rapidly analyze the various desperate and growing data assets to enable our customers to make quick decisions and executing important patient.

Allot: We believe the strength of our technology together with our domain expertise and investigating analytics will continue to enhance the value we provide to our customers increase our differentiation and drive demand.

Allot: The technologies, but afterwards, you are utilizing continue to evolve rapidly for.

Allot: For example, advancements in Jennie O and crypto currency has added significant complexity for our customers.

Allot: <unk> has provided by doctors with the ability to create fake identities and generate harmful content on open source channels.

Elad Sharon: Customers using our solutions can investigate and review with high confidence the potential identity of the bad actor and better understand the intent and risk of its action. Similarly, the use of cryptocurrency has made it easier for bad actors to transact anonymously. Crypto requires no physical space, and it can be swiftly transferred across borders without currency controls, regulations, or other barriers, making it an ideal asset for illegal transactions.

Allot: Customers using our solutions can investigate on a really high confidence the potential identity of debate doctor and better understand the intent and risk of its actions.

Allot: Similarly, the use of physical currency has made it easier for bad actors to transact anonymously.

Allot: Clifton requires no physical space and it can be 50 transferred across borders without currency control regulations or other barriers, making it an ideal asset related transactions.

Elad Sharon: Our Decision Intelligence Platform enables authorities to construct a picture of suspects, organizations, companies, and financial accounts involved in the operation. Ultimately, this picture allows authorities to limit the ability of organized criminal groups to fund their operations. These examples illustrate the continually evolving landscape that our customers need to address. We expect these trends to continue to generate demand for our solutions and drive long-term growth. Turning to our Outlook for FY25, demand for our solutions is solid, and we entered the year with a very strong short-term RPO. We expect to drive operating leverage this fiscal year, and at the same time, we are investing in advancing our capabilities and our go-to-market infrastructure with the aim of creating sustainable and profitable long-term growth. We are expecting revenue for fiscal 25 to be $340 million, plus or minus 2%, representing approximately 8.5% of your growth at the midpoint.

Allot: Our decision intelligence platform enables authorities to construct the pitch of suspects organizations companies in financial accounting volt.

Allot: Ultimately this picture allows authorities to limit the ability of organized criminal groups to fund their operations.

Allot: These examples illustrate the continually evolving landscape our customers need to address we expect these trends to continue to generate demand for our solutions and drive long term growth.

Allot: Turning to our outlook for FY 'twenty five.

Allot: Demand for our solutions is solid ground to deal with a very strong short term appeal, we expect to drive operating leverage as fiscal year and at the same time, we're investing in advancing our capabilities in our go to market infrastructure with the aim of creating sustainable and profitable long term growth.

Allot: We are expecting revenue for fiscal 'twenty five to be $340 million plus.

Allot: Plus or minus 2%, representing approximately eight 5% year over year growth at the midpoint.

Allot: We also expect gross profit to grow faster than revenue as a result of continued expansion in our gross margin, we expect gross profit to grow by more than 10% year over year.

Elad Sharon: We also expect gross profit to grow faster than revenue. As a result of continued expansion and gross margin, we expect gross profit to grow by more than 10% year-over-year. Given the leverage in our financial model, we expect adjusted EBITDA for the year to be about $19 million, more than double what we generated in fiscal 2024, reflecting our ongoing efforts to drive margin expansion. David will provide more detailed guidance during his remarks.

Allot: Given the leverage in our financial model, we expect adjusted EBITDA for the year to be about $19 million more than double what we generated in fiscal 'twenty four reflecting our ongoing efforts to drive margin expansion.

Allot: David will provide more detailed guidance during his remarks.

Elad Sharon: To summarize, we believe the market is healthy. Our customers continue to face significant, growing, and evolving challenges across many use cases and look to us for solutions that help them accelerate investigations, make decisions faster, and mitigate a wide variety of threats. Cognyte is well-established as a domain expert and a trusted partner.

Allot: To summarize we believe the market is helping our customers continue to face significant growing volume challenges across many use cases and look to us for solutions that help them accelerate investigations make decisions faster and mitigate the wide variety of threats.

Allot: <unk> is well established as domain expert and a trusted partner.

Elad Sharon: Our customers frequently tell us that our solutions significantly improve results, enabling them to effectively perform their missions and make the world safer. Our established long-term customer relationships continue to be a significant asset for us. We are pleased with our execution and financial results for the fourth quarter and full year, and we believe Cognyte is well positioned for sustainable growth and continuing improvement in profitability. Before I turn the call over to David, I want to take a moment to thank Cognyte Board of Directors members Carmichaelo and Tzvika Nagan for their significant contributions to Cognyte leadership and their strong commitment to our mission over the years.

Allot: Customer frequently tell us that our solutions significantly improved the results, enabling them to effectively performed emissions and make the world safer.

Allot: Our established long term customer relationships continue to be a significant asset for us.

Allot: We are pleased with our execution and financial results for the fourth quarter and full year, and we believe <unk> is well positioned for sustainable growth and continuing improvement in profitability.

None: Before I turn the call over to David I want to take a moment to thank <unk> board of director members commit Sheila and we can now gone for the significant contributions to coconut leadership and a strong commitment to our mission over days.

Elad Sharon: And I would like to welcome Sarit Agiv and Ron Shvili, two accomplished executives, to our board. Sarit is a seasoned executive with deep financial and software industry experience in publicly traded companies. Ron brings extensive industry knowledge, including relevant experience from the Israeli Defense Forces, while he was head of a research division specializing in the fields of advanced communications, cyber, and AI, and head of an elite technology unit. I am confident that Ron and Sarit will each provide important additional strength to our board. Now, let me turn the call over to David to provide more details about the results and Fiscal 25 Outlook. David?

David Abadi: And I would like to welcome Sorretto gave and Roche really two accomplished executives to our board.

David: <unk> is a seasoned executive with deep financial and software industry experience in publicly traded companies.

Ron brings extensive industry knowledge, including relevant experience from the Israeli defense forces. While he was head of research division specializing in the field of advanced Communications cyber NII and head of an elite technology on it.

None: I am confident that Ron answer it relates to provide important additional strength to our board.

None: Now, let me turn the call over to David to provide more details about our results in fiscal 'twenty five outlook Dave.

David Abadi: Thank you, Elad, and hello everyone. We delivered a fourth quarter financial result that exceeded our expectations, reflecting stabilized market demand and solid execution. With a combination of highly co-differentiated solutions, healthy demand, and a large and loyal customer base, we were able to overachieve our expectations each quarter in Fiscal 24 and re-enter Fiscal 25 with positive momentum. We ended the year with a strong balance sheet and a solid foundation for profitable growth. Our cash balance increased significantly during the year, primarily due to the $34.6 million of cash flow from operations and $25.5 million of free cash flow we generated during FY24. At the end of the year, our cash balance was $83.3 million, and we had no outstanding debt.

None: David.

David: Thank you <unk> and Hello, everyone, we delivered fourth quarter financial results that exceeded our expectations, reflecting stabilized market demand and solid execution.

David: With the combination of highly differentiated solutions healthy demand in the large and loyal customer base, we were able to overachieve, our expectation each quarter in fiscal 'twenty, four and we entered fiscal 'twenty five with positive momentum.

David: We ended the year with a strong balance sheet and a solid foundation for profitable growth.

David: Our cash balance increased significantly during the year, primarily due to the $34 6 million.

David: Cash flow from operations and $25 5 million of free cash flow, we generate during FY 'twenty four.

David: At the end of the year, our cash balance was $83 3 million.

David: And we had no outstanding debt.

David Abadi: During Q4, we extended our credit facility, and we now have $65 million available to borrow until the end of January 2026. Revenue for the full year was $313.5 million, an increase of approximately 11% year over year. The vast majority of the revenue growth was driven by a $28 million increase in software revenue. Our software revenue was 89% of total revenue, close to our long-term target of 90%. Current revenue for the full year was $168 million, representing 54% of total revenue.

David: During Q4, we extended our credit facility and we now have $65 million available to borrow until the end of January 2026.

David: Revenue for the full year was $313 5 million.

David: An increase of approximately 11% year over year.

David: The vast majority of the revenue growth was driven by $28 million increase in software revenue.

David: Our software revenue was 89% of total revenue close to our long term target of 90%.

David: Regarding revenue for the full year was $168 million.

David: Representing 54% of total revenue.

David Abadi: Gross margin for the year was 69.2%, up about 650 basis points year-over-year, and full-year gross profit grew twice as fast as revenue and was $217 million, an increase of 22% year-over-year. The main drivers for our gross profit improvement are the value our customers see in our innovative technology, our competitive differentiation, and improved cost structure. As Elad mentioned, we continue to win significant deals from both existing and new customers, reflecting the demand for and the value of our cutting-edge investigative analytics solutions. During FISCA 24, we want to win 29 new customers, an increase of 12 new customers compared to last year.

David: Yeah.

David: Gross margin for the year was 69, 2% up about 650 basis points year over year.

David: And full year gross profit grew twice as fast as revenue and was $217 million, an increase of 22% year over year.

The main drive therefore, our gross profit improvement or the value our customers see in our innovative technology, our competitive differentiation and improved cost structure.

David: As Alan mentioned, we continued to win significant deals from both existing and new customers, reflecting the demand for and the value of our cutting edge investigative analytics solutions.

David: During fiscal 'twenty four we want 29, new customers, an increase of 12, new customers compared to last year.

David Abadi: Let me now share with you how we perform against each of our major KPIs. Our short-term RPO continues to be strong, a result of heavy demand for our solution and deals we have won. We ended the year with a short-term RPO of $302.5 million. Total RPO at the end of Q4 was $591.9 million. As a reminder, RPO, or Remaining Performance Obligations, represent contracted revenue that is expected to be recognized as revenue in future periods. Q4 revenue grew by 17.6% year-over-year and was $83.7 million. Our software revenue in Q4 grew by 14.9% year-over-year and was $73.8 million. We were also able to prove the significance of our growth margin.

Let me now share with you how we perform against each of our major kpis.

David: Our short term appeal continues to be strong.

David: Is that a healthy demand for our solution and deals we have won.

David: We ended the year with a short term IPO of $302 5 million.

David: Total IPO at the end of Q4 was $591 9 million.

David: As a reminder, our apio or remaining performance obligations represent contracted revenue that is expected to be recognized as revenue in future periods.

David: Q4 revenue grew by 17, 6% year over year and was $83 7 million.

David: Our software revenue in Q4 grew by 14, 9% year over year and was $73 8 million.

David: We were also able to improve our gross margin significantly.

David Abadi: Q4 growth margin was 69%, an improvement of more than 420 basis points year over year. Our Ghost Profit continues to grow meaningfully faster than revenue. In Q4, Gross Profit was up 25% year-over-year.

David: Q4, gross margin was 69% an improvement of more than 420 basis points year over year.

David: Our gross profit continue to grow meaningfully faster than revenue and.

David: In Q4 gross profit was up 25% year over year.

David Abadi: We have been focused on executing our goals to improve our financial model further and drive margin expansion. The combination of revenue growth, better margins, and an effective cost structure drove improved profitability. During Q4, we delivered $4.3 million of adjusted EBITDA, bringing full-year adjusted EBITDA to $9 million. We have delivered positive adjusted EBITDA for each of the last three quarters, and we expect to continue delivering positive adjusted EBITDA going forward. All the metrics I have discussed so far are SAS-adjusted, NAND-gap based.

David: We have been focused on executing our goals to improve our financial model further and drive margin expansion.

David: The combination of revenue growth better margins and effective cost structure drove improved profitability.

David: During Q4, we delivered $4 3 million of adjusted EBITDA, bringing full year adjusted EBITDA to $9 million.

David: Okay.

We have delivered positive adjusted EBITDA for each of the last three quarters and we expect to continue delivering positive adjusted EBITDA going forward.

David: All the metrics I've discussed so far are in SCS adjusted non-GAAP basis.

David Abadi: For Fisca 25, we expect full-year revenue of approximately $340 million, plus or minus 2%. This represents approximately 8.5% year-over-year growth at the midpoint of the revenue range. We believe that our strong short-term R&D of $302.5 million and the positive demand environment support this outcome. We also believe that the seasonality of our revenue will be similar to previous years.

David: Okay.

David: For fiscal 'twenty, five we expect full year revenue of approximately $340 million.

David: Plus or minus 2%.

David: This represents approximately 85% year over year growth at the midpoint of the revenue range.

David: We believe that our strong short term IPO of $302 5 million.

David: And the positive demand environment support this outlook.

David: We also believe that the seasonality of our revenue will be similar to previous years we.

David Abadi: We expect Q1 revenue to be slightly below the Q4 level we are reporting today and to increase sequentially each quarter throughout the year. We believe that our outlook for top-line growth and continuing improvement in our growth margin will drive more than 10% year-over-year gross profit growth. We expect the non-GAP growth margin to improve year over year and to be about 70.5%, an improvement of 130 basis points year over year. Gross margin may fluctuate between the quarters based on our revenue. For the full year, we expect our non-GAAP operating expenses to grow meaningfully slower than revenue and be approximately $233 million, an increase of about 5%. Our quarterly OPEX may fluctuate slightly throughout the year. Because of the leverage we have in our model, we expect Adjusted EBITDA to be about $19 million, more than doubled compared to last year. We expect our cash taxes to be about $10 million, and non-controlling minority interest to be about $5 million. As a result, we expect annual EPS losses to come in at $0.13 at the midpoint of the revenue range.

Q1 revenue to be slightly below the Q4 level, we are reporting today and to increase sequentially each quarter throughout the year.

David: Sure.

David: We believe that our outlook of topline growth and continuing improvement in our gross margin will drive more than 10% year over year gross profit growth.

David: We expect the non-GAAP gross margin to improve year over year and to be about 75% an improvement of 130 basis points year over year.

David: Gross margin may fluctuate between quarters based on our revenue mix.

David: For the full year, we expect our non-GAAP operating expenses to grow meaningfully slower than revenue and be approximately $233 million.

David: An increase of about 5%.

Our quarterly Opex may fluctuate slightly throughout the year.

David: Because of the leverage we have in our model, we expect adjusted EBITDA to be about $19 million more than doubled compared to last year.

David: We expect our cash taxes to be about $10 million.

David: And noncontrolling minority interest to be about $5 million.

David: As a result, we expect annual EPS loss to come in at 13.

David: The midpoint of the revenue range.

David Abadi: For the share count, we assume about 72 million weighted average fully diluted shares in FY25. Turning to cash flow, in a typical year, cash from operations is similar to adjusted EBITDA. This year, we plan to generate about $34 million of cash from operations, significantly higher than the expected adjusted dB depth. We have recently extended our lease agreement on our headquarter facility in Israel for an additional 10 years. We decided to renovate and change it to a more open work environment and reduce the amount of space we occupy.

David: For share count, we assume about 72 million weighted average fully diluted shares in FY 'twenty five.

Turning to cash flow in a typical year cash from operation is similar to adjusted EBITDA.

David: This year.

David: To generate about $34 million of cash from operation significantly higher than the expected adjusted EBITDA.

David: We have recently extended our lease agreement in our headquarter facility in Israel for an additional 10 years.

We decided to renovate and changing to a more open work environment and reduce the amount of space we occupied.

David Abadi: The renovation is expected to drive an incremental CapEx investment of about $6 million and will result in future OPEX savings. We also expect additional proceeds of about $5 million from the divestiture of SAS related to price adjustments. For the full year, we expect a total CAPEX, net of expected proceeds from SAS, of approximately $12 million.

The renovation is expected to drive an incremental capex investment of about $6 million.

David: And will result in future Opex savings.

David: We also expect additional proceeds of about $5 million.

David: From the divestiture of SaaS related to price adjustment.

David: For the full year, we expect a total capex net of SaaS expected proceeds of approximately $12 million.

David Abadi: To summarize, we executed well during FY24 and produced strong results. The market is stabilizing, and new and existing customers recognize our advanced solutions and the values we generate for them. We continue to add capabilities and increase the value of our solutions delivered to our customers by leveraging the latest technologies, including AI. As a result, we expect FY25 to be a year of continued growth, significant profitability improvement, and strong cash flow from operations. We believe we are well positioned for sustainable growth, and there's leverage in our model, so we can generate additional improvement in profitability and cash flow in future years. With that, I would like to end the call and open the line for questions. Operator.

David: To summarize.

David: We executed well during FY 'twenty, four and produce strong results.

David: The market has stabilized and new and existing customers recognized our advanced solutions and the value they generate for them.

David: We continue to add capabilities and increase the value our solutions deliver to our customers.

David: Leveraging the latest technologies, including AI.

David: As a result, we expect FY 'twenty five to be a year of continued growth significant profitability improvement and strong cash flow from operations.

David: We believe we are well positioned for sustainable growth and they are leveraging our model. So we can generate additional improvement in profitability and cash flow in future years.

With that I would like to end the call over to the operator to open the line for questions.

David: Operator.

Operator: Thank you. If you'd like to ask a question, please press star 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. Our first question comes from Mike Cikos with Needham. Your line is open. Great, thank you guys. Thanks for taking the questions here.

None: Thank you.

None: You'd like to ask a question. Please press star one one.

None: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Our first question comes from Mike <unk> with Needham Your line is open.

Mike: Great. Thank you guys. Thanks for taking my questions here.

Operator: I think the first question I wanted to ask you about this past quarter, or the year actually. I know the company said that you landed 29 new customers, which is up 70% year over year, which is a great statistic. Just trying to see if these new customers, when they land, are they actually landing larger? Or has the initial land remained relatively unchanged if I look at customers coming to Cognyte this year versus those who landed with Cognyte last year. Yeah, hi Mike. So yeah, it's a good number of new customers for the year. Maybe I'll give you some more color; there are a variety of customers.

Mike: I think the first question I wanted to ask you about was with respect to this.

Mike: This past quarter, where the year actually I know the company said that you ended 2009, new customers, which is up 70% year over year, which is a great statistic.

Mike: Just trying to see are these new customers when they ran or they actually landing larger where it has the initial land.

Mike: Remained relatively unchanged, you'll probably look at customers coming to cognate this year versus the customers who landed with cognate last year.

None: Yes, Hi, Mike.

Mike: So yeah, it's a good number of new customers for the year.

None: I'll give you some more color with a variety.