Q3 2025 Cognyte Software Ltd Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by. Welcome to the cognyte third quarter, fiscal year 2025 our news conference call. At this time, our participants on the list and only mode after the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press 511 on your telephone. You will then hear an automatic message. Advising your hand is raised. Please note. That it is conference. May be recorded. I will now hand the conference over to your speaker. Host then Ron head of Investigations. Please go ahead.
Thank you, operator. Hello everyone. I'm Dean ridland cognyte head of investor relations.
Thank you for joining us today.
I'm here with a large. Jerome, 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.
Click on upcoming events.
Then the webcast link for today's conference call.
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.
These forward-looking statements are based on Management's, current expectations and are not guarantees of future performance.
As for 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 them.
Investors are cautious 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 cognitive actual results to different materially from those indicated in these forward-looking statements.
Please see our annual report on form 20f.
For the fiscal year, end of January 31st 2024 and other files we can make with the SEC.
The financial measures discussed today, include non-GAAP measures.
We?
To leave 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 cam.
For a Reconciliation of non-GAAP financial measures to gaap measures.
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 would like to turn the call over to a lot.
Thank you, Dean. Welcome everyone. To our third floor of conference calls
This was another quarter of solid execution for cognyte.
We continue to deliver on our business, plan Advanced our growth initiatives and drive in Hope of stability.
The market for our Solutions. Remember, robust and is evolving and anticipated, driving predictable and sustainable growth.
Our execution, resulted in another quarter of double digit, Revenue, growth with adjusted DBA, expanding more rapidly than Revenue.
Our rate today performance combined with solid visibility and sustained demand reinforces our confidence in the business.
As a result, we are pleased to again, raise our full year outlook.
During Q3 we grow Revenue by 12% over here to 89 million.
non-GAAP gross profit increased by 12% Euro.
We just generated approximately 7 million dollars of positive adjusted beta for the quarter representing 42% over growth, highlighting the strengths of our financial model.
And we believe our momentum remains strong fuel by significant deal weights during the quarter.
These results and deal wins validate the strength of our technology, the differentiated value. We provide to our customers and the substantial opportunities that we believe. Lie ahead.
A key pillar of our go strategy is deepening and broadening engagements with our existing customers.
We achieved this by increasing the number of groups and the number of users leveraging our Solutions and by offering additional capabilities to address emerging threats and evolving priorities.
1 of the trends that is driving expansions is enabling our customers to handle the rapidly growing volume and variety of data they need to analyze
An example is the explosion in mobile data driven by the transition to 5G, which has significantly increased the complexity and scale of their challenges.
According to a report recently issued by rex on mobile data traffic is growing at an annual rate. Exceeding 20%
The surge in data volumes and diversity underscores. The need for advanced analytics including AI Power Solutions to extract actionable and timeline insights from the expanding data landscape.
By delivering the solutions that address. This need we strengthen our customers relationships and drive sustained demand,
in Q3 we secured 4 significant orders from existing customers,
2 deals, the value that more than 20 million dollars. The other 2 were valued at over 10 million
We should press releases announcing these notable deals over the past few weeks.
These long-standing customers have consistently derived substantial value from our Solutions over the years.
We believe this demonstrates. This in dispensable role. Our Solutions play in addressing our customers, evolving challenges, delivering the quality reliability and power such customers require to operate effectively in complex environments.
We continue to expand our customer base signing 9 new customers disorder alone.
This includes 5 contracts value that over 1 million dollars each and 1 significant contrast to all 5 million dollars.
This new customers spend across different regions and segments, highlighting the broad opportunity in the market.
Additional wins in North America, underscores our study progress in establishing a foothold in this market.
A few weeks ago, we announced the following order, value that over 2 million dollars from a highly respected, and influential North American law enforcement agency.
This agency initially selected our Solutions just over a year ago to replace their incumbent providers solution.
Since then, the agency has recognized the superior, personal intelligence value of solutions delivered.
With this latest order, the customers total investment exceeds, 3 million dollars, highlighting the trusting cognyte, and in our Solutions ability to meet their critical operational needs.
We anticipate the future potential North American customers. We likely follow a similar trajectory starting with smaller, initial orders and expanding the investment of a time. As they realize, measurable improvements in efficiency and outcomes,
We continue to actively pursue opportunities in North American Federal markets.
Federal customers explore and rigorously test potential new solutions for long periods of time to validate their effectiveness before making the purchase.
As a result, the cell cycle released customers is expected to be longer than what you've experienced with state and local law enforcement agencies.
Nonetheless, we are pleased with the level of Engagement we have with this potential customers in this important market segments.
To further, strengthen our efforts in the US recently welcomed Timothy, or kalahan a retired US Marshal branch chief to help lead our initiatives aimed at expanding our presence.
Is extensive experience and deep understanding of operations will be invaluable as we build our momentum in this market.
We continuously engage with our customers around the globe to understand better and help them address their challenges.
Recently, we hosted our Global cognyte intelligence Summit in Europe. A landmark event, where we introduced our latest state of powered Innovations.
Over 310 days from about 70, countries, representing, law, enforcement, National Intelligence and national security agencies.
Explorer, today's critical security challenges in the transformative role of our technology.
The event feature the keynote by retired Admiral Mike Rogers former commander of the United States cyber command director of the NSA and chief of the Central Security Service, who shared the insights into the intersection of intelligence and Technology.
The Admiral around this is called the challenges agencies face are not getting any easier. However, adversaries must engage with the broader environment. They need to communicate, they need to move and they need to access and transfer money.
The highlighted that with the right technology, these interactions present opportunities.
And this is recognized Advantage. Lives leveraging technology to transform these interactions into actionable intelligence.
He also noted.
Agents work to generate deep knowledge about the environment and operational landscape to transforming information into actionable outcomes.
He emphasized, 2 things, excelling in addressing present challenges. While proactively positioning themselves for future success with the right tools and Technology.
These are the exact principles that we use to align our focus in product development, Advanced tools for actionable insights and future readiness.
At the summit. We also hosted 10 extension speakers including former head of agencies counterterrorism, experts and representatives from Global think tanks. Both reinforcing our position as a thought, leader and fostering discussions on the evolving threat landscape.
The key insights from the summit underscores, how the world's challenges are, becoming more complex and the lines between different types of crimes are increasingly blurred.
Criminals and terrorists are adopting. Each other's tactics creating Diversified and globalized networks that evade traditional defenses.
Bad actors exploit Advanced Technologies like encryption Communications, dark web networks and cryptocurrency to evade detection.
Increasingly the leveraging ga to obscure the operations, creating unprecedented challenges for security agencies, tasked with protecting citizens and combating crime.
This quarter, I want to highlight how our technology addresses, the critical challenges posed by organized crime.
Agencies face the task of identifying members of criminal organization and mapping their networks including leadership structures funding sources and intentions.
Despite the efforts to conceal activities. This group inevitably leave behind valuable digital footprints.
However as the volume and diversity of digital information, grow exponentially, extracting actual insights becomes increasingly complex.
This is where leveraging advanced technology is no longer optional. It is essential
With the right Solutions. Like ours agencies can efficiently analyze vast, amounts of structured and unstructured data and uncover hidden connections, and accelerating investigations to achieve successful outcomes.
To illustrate, a few months ago, in Central America our Solutions enabled authorities to dismantle 1 of the continent's largest structure trafficking Networks.
By providing the right insights at the right time, security, agencies. Intercepted 7 tons of cocaine off the coast.
This example demonstrates the decisive impact of solutions have in combating organized crime on a global scale.
We are making a meaningful difference for our customers, empowering them to address significant and evolving threats.
Our mission to make the world a safer Place drives, everything we do.
By combining Cutting Edge technology with proven methodologies. We enable faster decision making accelerating investigations and help mitigate a wide range of threats.
This is why customers around the globe, continue to place the trust in our solution.
In summary, we continue to grow by introducing new Advanced capabilities. Deepening our relationships with existing customers, as well as expanding our reach with new ones.
These accomplishments strengthen our ability to deliver growth.
We told it execution during the first week orders of fiscal 25 with a once again in a position to raise our fully outlook for revenue and adjust the dividend.
We now expect Revenue to be approximately 349 million plus or minus 1% representing about 11% year-over-year growth at the midpoint of the range.
Given the leverage in our financial model. We increase our adjusted DB data guidance, and we now expect it to be about 26 million dollars at the main point of the revenue range. Almost 3 times what we generated in fiscal 24.
Looking Beyond this year, our Focus remains on driving resilient growth for the long term increase of stability. Operational excellence and deepening, our Market leadership.
We believe that our strategy positions as well to capitalize on the server market conditions and create value for both. Our customers and shareholders.
Now, let me turn the call over to David to provide more details about our Q3 results and updated fiscal. 25 Outlook.
David.
thank you elad and the hello everyone, we continue to deliver results that underscore our discipline execution and strategic Focus
C Revenue.
Who by 12.5% year-over-year and was 89 million.
This quarter software Revenue was 30 million slat year over year with more subscription Revenue than we had in the same quarter last year.
Software service Revenue was 45.3 million and increase of 3.9 million over the last year.
A lot of software Revenue which include software and software Services was 75.3 million and increase of 3.7 million compared to last year, representing about 85% of total revenue.
It is not worthy that approximately 40% of total software Revenue growth came from incremental subscription Revenue at the scoring the strength of our strong recurring Revenue base,
Current Revenue remains a key strength and was 46.9 million or 53% of total revenue in Q3 compared to 42 million in the same period last year.
Current Revenue comprised, primarily of support contracts, and some subscription offering is the Cornerstone of our business. It provides strong visibility and support long-term growth.
The first and services Revenue will certain point 7 million and increase of 5.9 million over last year.
Our financial services as a percentage of Revenue in Q3 was high due to the timing of Revenue recognition.
We expect.
to share on an annual basis, will be lower and blend at about
13%.
And total revenue.
Later on this call, I will provide additional insight into our different Revenue stream.
And our FYE, 25 Revenue mix Outlook.
non-GAAP growth margin for the quarter was 70.1%.
Our total non-GAAP software growth margin improved to 80.3% versus 78.9% last year.
A year-over-year Improvement of 140 basis points.
Our land duct. Professional Services. Growth margin was 14.4% versus negative 9.7%. Last year.
Our strong growth margin, highlights the value and competitive differentiation of our Solutions as well as the benefit of an optimized cost structure.
non-GAAP operating income and adjusted debt grew faster than Revenue, reflecting the strength of our financial model.
In Q3 we generated 3.4 million of non-GAAP operating income.
and,
retrieve of 1 of the 80% versus last year and 6.6 million of suggested evida and increase of about 42% versus last year, resulting in positive non-GAAP, EPS of 2 cents,
looking at our YouTube debate results, our Revenue was 256.1 Million.
Up 11.5% year-over-year with non-GAAP gross. Profit growing 13.9%.
Outpacing Revenue growth.
After Revenue year to date was 88.4 million, and increase of 7.6% versus last year.
Dr. Services Revenue year to date was 1 135 million and increase of 10% versus last year.
About 30% of total software Revenue, growth of 18.5 million, or 9% was driven by incremental subscription Revenue. Supporting our kind Revenue growth.
Professional Services and other Revenue year to date, both 32.8 million and increase of 41.7% versus last year.
A lot of Revenue was 87% of our Revenue during the first 9 months of the year.
The inherent leverage in our business model. Drove significant year-over-year improvements in profitability. Underscoring, our ability to scale efficiently while delivering strong financial results.
Our year to date, non-amp. Operating income was 9.7 million.
And Improvement of 14.9 million compared to a non-GAAP operating loss of 5.2 million during the first 9 months of last fiscal year.
Similarly our year to date adjusted ibida was 19.9 million and increase of 15.2 million dollars compared to 4.7 million dollars in the same period of the previous year.
The strong performance this year. Combined with the leverage inherent in our business model as enabled us to strengthen our balance sheet.
Our short and long-term contract liabilities commonly referred to as deferred revenue.
Remained. Robust at 132.2 million. At the end of Q3, reflecting a significant increase versus previous periods driven by strong billing performance during the quarter.
our cash position remains strong, at 107.3 million, and increase of over, 24 million since year end, we know that
this growth in our cash balance was primarily fueled by cash from operations during the first 9 months of the year,
June. Q3 we generated 12.3 million in cash from operations and 7.6 million in free cash, flow reflecting the strength of our financial model and operational efficiency.
Over the past few quarters. We have introduced new kpi.
To provide greater transparency and demonstrate how our business is progressing.
Let me walk you through our performance against each of these key indicators.
RPO or remaining performance obligations.
Which represents contracted Revenue to be recognized in future periods?
Our influenced by factors such as cell cycle, deployment timelines.
Contract length.
Renewal timing and seasonality.
Total RPO is some of the further revenue of 132.2 million.
And backlog of 435.4 million.
At the end of Q3 total RPO was 567.6 million dollars.
Consistent with previous quarter.
Long-term RPO which also includes multi-year support. Contracts is expected to continue to fluctuate due to Renewal timing.
Just in Oppo in a given quarter, and not necessarily indicative of future Revenue, growth rates.
Throughout the RPO, at the end of Q3 increased to 325.9 million.
Providing solid visibility into Revenue over the next 12 months.
We believe this healthy RPO levels support our growth, expectations are the validating, the strength, and the resilience of our business model.
During Q3 with secured several significant deals and Achieve key buildings, Milestones, resulting in Billings of 104.7 million.
Significantly higher than our revenue for the quarter.
These strong performance, reflects the impact of both ongoing business and a few larger deals. That may not occur every quarter, making this figure,
Higher than what you might typically be expected.
Billings are calculated as Revenue. Plus the change in contract, liabilities contract assets and unbuilt. Balances
this strong billing performance contributed to an increase in the third Revenue, which stood at 132.2%
Our financial foundation and revenue visibility.
Our nand. Gaap gross profit for the quarter was 62.4 million and increase of 6.7 million or 12% year-over-year.
In gaap, operating expenses were 59 million aligned with our expectations.
The combination of Revenue growth improved margins.
And effective cost structure, drove a notable increase in profitability.
Due to 3, we achieved 616 million of adjusted DBA and 3.4 million in non-GAAP operating income.
We remained focused on driving farther in financial improvements and continuing to expand our margins.
Before I turned to our improved f Way 25 Outlook, I want to provide additional insight into our revenue streams.
We generate revenue from 3 main streams.
Software Revenue.
Is primarily Perpetual licenses and appliances with some term licenses subscription.
Software Services which is largely support contracts.
And to a lesser extent cloud-based, SAS subscription offering.
A professional services and other Revenue reflecting mainly deployment, development, Hardware, selling and training.
All revenue streams can fluctuate from quarter to quarter mainly due to timing of Revenue, cognition related to customer Readiness and percentage of completion accounting.
In addition, the signing of new or renewed support of subscription contracts. May impact Revenue cognition timing
The managing value at the business by focusing on total social Revenue, which combines software and software services.
This holistic approach reflects the value, we deliver through our technology and the services that support and enhance its adoption.
This metric better reflects sales performance as its capture the full Revenue contribution from a customer.
It includes Perpetual licenses appliances.
And subscription.
As well as support contracts.
On an annual basis. We expect total software Revenue, to continue to be a growth driver.
Professional Services Revenue which we target to be in the low teams as a percentage of total revenue is crucial.
These Services help customers extract greater value from our Solutions and enable them to operationalize more quickly, ultimately driving additional opportunities with those customers.
it's important to point out that Professional Services Revenue, various quarter to quarter due to several factors including the timing and the scale of deployments
The fluctuations are natural and we look at the overall share of Professional Services revenue on an annual basis to ensure it aligns with our strategic and financial goals.
Turning to guidance.
Based on our strong you to date performance and favorable market conditions. We are raising our full year outlook for fiscal 2025.
We now expect fully Revenue to be approximately 349 million plus or minus 1% representing year-over-year growth of approximately 11% at the midpoint of the range.
Out of this Revenue Outlook we expect total software Revenue, to be about 304 million dollars representing approximately, 87% of total revenue.
A Professional Services Revenue to represent about 13% of total revenue aligned with our strategic goals.
We now expect adjusted data to be about 26 million dollars at the midpoint of the revenue range at from 9 million dollars. Last year, reflecting the inherent leverage in our business model.
We have made progress with our strategic tax planning and now expect none of tax expenses to be about 6 million dollars and improvement from our initial estimate of 10 million.
With this updated improved Outlook.
We?
Our projects are not the PPS to be positive 5 cents at the midpoint of the revenue range.
Finally, we continue to expect to generate about 37 million of cash from operations for this year.
Reflecting the strong cash, generating capability of our business.
In November our board of directors approved a share buyback, programme of up to 20 million dollars in ordinary shares over the next 18 months.
We firming our commitment to delivering value to shareholders.
Following the required 30-day, notice period at the Israeli law share repurchases. Can begin on Friday, December 13th.
To summarize.
We have demonstrated consistent execution, delivering, strong results to the first 9 months of the year.
Our ongoing commitment to Innovation and expanding our Advanced Solutions leveraging. The latest Technologies, including AI continues to enhance the value. We provide for customers.
Reflecting this progress. We have again raised revenue and profitability outlook for fiscal 25.
Looking Beyond this year.
We anticipate meaningful growth significant Improvement in profitability and strong cash flow from operations.
We believe that we are well positioned for sustainable growth.
With additional leverage in our business model, we expect revenue and growth profit to continue growing faster as an operating expenses.
We also expect to continue to generate meaningful positive free cash flow.
in closing this quarter of the result, during the positive momentum across key indicators, reflect the health of our business and the opportunities that lie ahead
Our visibility into future revenue and robust balance sheet including a solid cash position.
Ensure Financial flexibility.
This strong Foundation.
We are well positioned to see the opportunities ahead and deliver sustainable growth.
With that, I would like to end the call over to the operator, to open the lines for questions.
Operator. Thank you. Ladies and gentlemen, as a question, you will need to press star 1, 1 on your telephone, and wait, for your name to be announced.
To withdraw your question. Simply press star 1 1, again please, stand by while we compile the Q&A roster.
Now, first question coming from the lineup, Mike stickers would need him in company. Your line is now open.
Great. Thank you for taking the questions guys. Um and congrats on the quarter as well.
Wanted to the first come back to the the large customer announcement. That that came through the quarter. You you announced some 10 million and 20 million uh, agreements with some of these customers. Can you just talk about the the profile of these customers? If if if a customer is signing a 10 or 20 million dollar deal with, you guys do the features or products that they're looking at from cognyte different materially from other customers or or not necessarily
Yeah, thanks Mike. So, uh, actually the, uh,
the complexity customers are facing a similar to in the market. So, if you look at the demand drivers, uh, the demand drivers are related to, uh, the complexity of finding the bad guys, uh, which is related to, uh, them being able to better hide, its related to the, uh, data that is going in volume and diversity, and actually it's, uh, more difficult now to put your hands on them. So customers have to do 2 things. The first 1 is to, uh, to expand in terms of capacity,
To allow more users to use the solution, which means more licenses.
And also, uh, to increase capacity in terms of uh, uh, data volumes and diversity.
And and also to improve functionality, which means that if you increase data, uh, sources and you have to uncover more hidden insights, you also need to modernize the solution with more analytics including driven capabilities. And by that, uh, uncover even more than inside, some of them are predictive insight to allow. You actually not just to, uh, to investigate backward, but to find a anomalies that are going into the future and intentions, and prevent and neutralize threats.
So this is something that is relevant for many customers. Not only for those uh, obviously National Security customers, sometimes are larger than law enforcement for example. So in certain, uh, uh,
Currencies. It is more relevant.
Uh, and it depends also in the capacity of the data customers have. Uh, we don't expect it to, you know, to come every quarter. This kind of a 4 large deals, but we do expect the, the demand drivers to continue and intensify and more and more customers to upgrade either in expansion or in functionality or both. Uh, this is something that we expect also in the future.
Thanks for that a lot. And I, I just wanted to build on that last Point, uh, starting to touch on macro there but
Can you help us think it sounds like the the secular demand drivers remain intact. If not accelerating from where we stand today. But what are you hearing from customers? Uh, as far as budgets, uh, are these budgets significantly expanding from where we stand today? Are there incremental dollars, flowing into this area? From other Pockets from can you help us stick about that that budget item?
Yes, sure Mike. So, uh, maybe I'll give you a wider view on what we see in the market, so it will give you data points and also our judgment on how we see the market. So, so first of all, we see a very healthy demand from existing and new customers. Uh, if you look at a new logo here, today we added about 30 c, new customers compared to 29 in full fiscal 24. So, we do see a monologue of this year already. Uh, we see that more customers uh, our budgeting uh uh, with higher budgets. And this is reflected in the large upgrades and expansions that we see
Uh, we also discussed the, uh, intensified the demand drivers that I've just, uh, mentioned earlier. Uh, and we continuously engage with customers. And what we hear is that the challenges are growing and increasing and they are asking for budgets and we do see that the the momentum is is healthy, and we see Tailwind in terms of uh, in terms of demand.
And other data points that can help you to understand or understand if they recognize the intelligence Summit, which we discussed earlier in the call and also in the press release.
Uh, this is not an industry. General, uh, uh, event. This is an event for cognyte only and you can imagine that 300 attendees from almost 70 countries about 70 countries, uh, came to listen to what we have to say to see the the the solutions to see the uh Innovation to see the right Revenue. Uh uh new solutions that we have.
So it means that uh the demand is their customers are willing to listen and to get more insights of what new uh they're willing to put orders for expansions and upgrades and new logos are coming to us. So overall, we feel very good about the the, uh,
uh,
you know, if you, if you, if you look overall, uh, the demand drivers combined with our advanced technology and high value and what we hear from the customers that we engage frequently in general, and also, in the summit that we recently had, uh, and uh, recent large deals, all of it together. Give us a very high confidence that, uh, uh, that we have our positions for future growth.
Terrific, thank you very much, guys.
Thanks man.
Thank you and as a reminder. So as a question, please press star, 1 1 and wait for your name to be announced and our next question, coming from the line of Peter Levine with EverQuest. Now open
Great. Thank you for uh taking my question, you know elad um a lot. Sorry. Um you mentioned in your prepared remarks, you know, mobile data traffic, becoming top of Mind, meaning the need for advanced data analytics. I know there's a lot, you can't say around your product but maybe talk about like some of the R&D initiatives, you know, from your summit. Like what are your customers asking? What are you building?
I I'll I'll start with that 1.
Yeah, sure. Okay. So, uh, I mentioned the 5G, the demand driver, uh, because actually what our customers are doing, is trying to convert, uh, certain activities of the adversaries into insights. So adversaries, they have, you know, to to move, they have to, uh, to to to, to transfer money and to get money. Uh, they have to put their hands on material, they have, uh, to communicate between themselves and all of it is actually Digital Data.
So 5G in this respect actually is increasing the bandwidth of data. So customers have to deal with, um, vast amounts of data that are increasing. And I'm als mentioned that Eric, son, shared with us that uh, actually in the report that the data is growing in more than 20% uh, year over year. So this is a significant challenge for our customers because when the bandwidth is growing, it means that they have to do it more data. It means that the new applications will be launched that, uh, now the bandwidth is increasing. So new applications will come, uh, so they can, uh, you know, they can communicate in different and more varied ways. They have to hide, they can hide better and through our customer. This is a challenge. So, in order for them to be able to, to address it,
First of all they need to expand their the capacity of the solutions to get more data and second thing they have to improve the AI capabilities and analytics in order to uncover more hidden insights out of the same data sets that they have and by that being able first of all to prioritize and to predict and later on to neutralize threats before they unfold. So 5G is 1 example of how the demand drivers are evolving in the market driving demand for expansions and functionality upgrade and Analytics.
You didn't give a guide for a fiscal 26 next year, but you mentioned meaningful growth, you know, faster than operating expenses call it, you know, I think operating expense growth in in Q3 here was 7%. Can you just kind of provide some guard rails around how you're thinking, about next year? Could we see double digit growth? Are you on track to do that? Can I just walk us through how you're thinking about next year? You know, obviously factoring in the environment, but would love to know if you can give us a little bit more guidance on how you're thinking about it.
Thank you Peter. Uh so if you look at about our performance, you can see that in the last quarter, as quarter of a quarter, we were able to drive more and more profitability. If you look at the year to date with that, we grew our top line by 11 and a half percent our goal.
Only grew by 4 and a half percent. So you can see that there is a lot of Leverage. Um we we started the year with the second guidance and then we increase incremental 9 million to the Top Line. Well 7 million of out of the 9 million, went to profitability. So the leverage existing the model, looking ahead.
With.
Very well positioned for the future. We have very strong, uh, uh, crpo and total RPO which are giving us the confidence that we can go in the future and we believe that we'll be able to go
faster than revenue and gross profit in the profitability, meaning that, uh, the revenue and and the gross profit will go, uh, will go in a much faster, Pace versus Opex, um, and that will drive uh uh, strong results and better profitability also next year.
We talked a lot about us expanding to the US, go to market, you may just give us an update on how how that kind of trended in the quarter and then maybe plans for for calendar 2525. In terms of further, you know, evolving or expanding your reach or in the US. Thank you.
Yeah, sure. So uh, first of all we uh, continue to believe that North American markets designed to go opportunity for us. Obviously, there are many potential customers and it's a wealthy market. So we are focusing on expanding presence there and we execute our plan. Uh, we make progress.
I can tell you that I continue visiting existing and potential customer in the US and I get very, very good feedback on our technology.
Some of the customers became already referenced customers for some customers. We just, we got already follow on orders, which is another testimonial. That it's not just a honeymoon, you know, they don't just come to us for the first deal but they're happy with what they get. They generate lots of value compared to competition. And for that reason, they come to us and expand. And I mentioned it. Also in the earlier, in the call, uh, I can also tell you that a few weeks ago, I visited another law enforcement agency, a very significant 1 in the US
And I got very good feedback also in their second in a very significant success story using our technology. So,
Uh, given the execution so far, the recent twins, we see uh, customers feedback that I get. I do expect that North American Business will continue to grow in fiscal 2066 and Beyond it, become more significant business for cognyte.
Thank you very much.
Thank you.
And again, if you'd like to ask a question, please press star 1 1 on your touchtone phone.
Or give a moment.
And I'm showing off for the questions in the queue. At this time, I will now turn the call back over to Dean for any closing remarks.
Later. And thank you everyone for joining us. On today's call a lot David and I will be in New York in January to meet with investors and hope to see some of you then.
Uh, in the meantime, please feel free to reach out to me. Should you have any questions and we look forward to speaking with you again next quarter. Thank you all for joining us.
Ladies and gentlemen, that doesn't got a conference for today. Thank you for your participation and you may now disconnect
Good day, ladies and gentlemen, thank you for standing by, welcome to the cognyte third quarter, fiscal year 2025 our news conference call at this time, more participants on lesson. Only mode after the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automatic message. Advising your hand is raised. Please note. That it is conference. May be recorded. I will now hand the conference over to your speaker. Host Dan, Ron, head of Investigations. Please go ahead.
Thank you, operator. Hello everyone. I'm Dean ridland cognyte head of investor relations.
Thank you for joining us today.
I'm here with a large. Jerome cognyte, CEO, and David aati, 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.
Click on upcoming events.
Then the webcast link for today's conference call.
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.
These forward-looking statements are based on Management's, current expectations and are not guarantees of future performance.
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 them.
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 cognitive actual results to differ materially from those indicated in these forward-looking statements.
Please see our annual report on form 20f.
For the fiscal year. Ended January, 31st, 2024 and other filings we make with the SEC.
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 cam for a Reconciliation of non-GAAP financial measures to gaap measures.
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 would like to turn the call over to a lot.
Thank you, Dean. Welcome everyone. To our third floor of conference calls
This was another quarter of solid execution for cognyte.
We continue to deliver on our business, plan Advanced our growth initiatives and drive in group of stability.
The market for our Solutions. Remember, robust and is evolving because anticipated driving predictable and sustainable growth.
Our execution, resulted in another quarter of double digit, Revenue, growth with adjusted DBA, expanding more rapidly than Revenue.
Our rate today performance combined with solid visibility and sustained demand reinforces our confidence in the business.
As a result, we are pleased to again, raise our full year outlook.
During Q3 we grow Revenue by 12% over here to 89 million.
non-GAAP gross profit increased by 12% Euro.
We generated approximately 7 million dollars of positive adjusted debt for the quarter representing 42%. Year-over-year growth highlighting the strengths of our financial model.
And we believe our momentum remains strong fueled by significant deal wins during the quarter.
These results and deal wins validate the strength of our technology, the differentiated value. We provide to our customers and the substantial opportunities that we believe. Lie ahead.
A key pillar of our go strategy is deepening and broadening engagements with our existing customers.
We achieved this by increasing the number of groups and the number of users leveraging our Solutions and by offering additional capabilities to address emerging threats and evolving priorities.
1 of the trends that is driving expansions is enabling our customers to handle the rapidly growing volume and variety of data they need to analyze
An example is the explosion in mobile data driven by the transition to 5G, which has significantly increased the complexity and scale of their challenges.
According to a report recently issued by rex on mobile data traffic is growing at an annual rate. Exceeding 20%
The surgeon data volumes and diversity underscores, the need for advanced analytics including AI Power Solutions, to extract actionable And Timely Insight from the expanding data landscape.
By delivering the solutions that address. This need we strengthen our customers relationships and drive sustained demand,
in Q3 we secured 4 significant orders from existing customers,
To Deals the value that more than 20 million dollars. The other 2 were valued at over 10 million
we should press releases announcing these notable deals over the past few weeks.
These long-standing customers have consistently derived substantial value from our Solutions over the years.
We believe this demonstrates, this indispensable role, our Solutions play in addressing our customers, evolving challenges, delivering the quality reliability and power such customers require to operate effectively in complex environments.
We continue to expand our customer base signing 9 new customers disorder alone.
This includes 5, contracts valued at over 1 million dollars each and 1 significant contract worth 5 million dollars.
This new customers, spend a lot of different regions and segments, highlighting the broad opportunity in the market.
Additional wins in North America. Underscores our steady progress in establishing a foothold in this market.
A few weeks ago, we announced the following order, value that over 2 million dollars from a highly respected, and influential North American law enforcement agency.
This agency initially selected our Solutions just over a week ago to replace their incumbent provider solution.
since then the agency has recognized the superior, personal intelligence value, our Solutions delivered
With this latest order, the customer's total investment exceeds, 3 million dollars, highlighting the trusting cognyte, and in our Solutions ability to meet their critical operational needs.
We anticipate the future potential of North American customers. We likely follow a similar trajectory starting with smaller, initial orders and expanding the investment of the time. As they realize, measurable improvements in efficiency and outcomes,
We continue to actively pursue opportunities in North American Federal markets.
Federal customers explore and rigorously test potential new solutions for long periods of time to validate their effectiveness before making the purchase.
As a result, the cell cycle released customers is expected to be longer than what you've experienced with state and local law enforcement agencies.
Nonetheless, we are pleased with the level of Engagement we have with this potential customers in this important market segments.
To further strengthen our efforts in the US. Recently welcomed emotive or Kahan a retired US Marshal brand Chief to help lead our initiatives aimed at expanding our presence.
Is extensive experience and deep understanding of operations will be invaluable as we build our momentum in this market.
We continuously engage with our customers around the globe to understand better and help them address their challenges.
Recently, we hosted our Global cognyte intelligence Summit in Europe. A landmark event, where we introduced our latest day of powered Innovations.
Over 300 and days from about 70 countries, representing law enforcement, National Intelligence and national security agencies.
Explorer, today's critical security challenges in their transformative role of our technology.
The event feature the keynote by retired Admiral Mike Rogers former commander of the United States cyber command director of the NSA and chief of the Central Security Service who share the insights into the intersection of intelligence and Technology.
The Admiral around the school that challenges agencies face. Are not getting any easier. However, adversaries must engage with the broader environment. They need to communicate, they need to move and they need to access and transfer money.
The highlighted that with the right technology, these interactions present the opportunities.
And this is recognized Advantage. Lives leveraging technology to transform these interactions into actionable intelligence.
He also noted.
Agents work to generate deep knowledge about the environment and operational landscape to transforming information into actionable outcomes.
He emphasized, 2 things, excelling in addressing present challenges. While proactively positioning themselves for future success with the right tools and Technology.
These are the exact principles that we use to align our focus in product development, Advanced tools for actionable insights and future readiness.
At the summit. We also hosted 10 extension speakers including former head of agencies counterterrorism experts and representatives from Global think tanks. Both reinforcing our position as a top leader and fostering discussions on the evolving threat landscape.
The key insights from the summit underscores, how the world's challenges are, becoming more complex and the lines between different types of crimes are increasingly blurred.
Criminals and terrorists adopting, each other's tactics, creating Diversified and globalized networks that evade traditional defenses.
Bad actors exploit Advanced Technologies like encryption Communications, dark web networks and cryptocurrency to evade detection.
Increasingly the leveraging AI to obscure the operations, creating unprecedented challenges for security agencies, tasked with protecting, citizens and competing crime.
This quarter, I want to highlight how our technology addresses, the critical challenges posed by organized crime.
Agencies face the task of identifying members of criminal organization and mapping their networks including leadership structures funding sources and intentions.
Despite the efforts to conceal activities. This group inevitably leave behind valuable digital footprints.
However as the volume and diversity of digital information, grow exponentially, extracting actual insights becomes increasingly complex.
This is where leveraging advanced technology is no longer optional. It is essential
With the right Solutions. Like ours agencies can efficiently analyze vast, amounts of structured and unstructured data, uncover hidden connections, and accelerate investigations to achieve successful outcomes.
To illustrate, a few months ago, in Central America our Solutions enabled authorities to dismantle 1 of the continent's largest structure trafficking Networks.
By providing the right insights at the right time, security, agencies. Intercepted 7 tons of cocaine off the coast.
This example demonstrates the decisive impact, our Solutions have in combating organized crime on a global scale.
We are making a meaningful difference for our customers, empowering them to address significant and evolving threats.
Our mission to make the world a safer Place drives, everything we do.
By combining cardio and Technology with proven methodologies, we enable faster decision making accelerating investigations and help mitigate a wide range of threats.
This is why customers around the globe, continue to place the trust in our solution.
In summary, we continue to grow by introducing new Advanced capabilities. Deepening the relationships with existing customers, as well as expanding our reach with new ones.
These accomplishments strengthen our ability to deliver growth.
We solid the execution during the first 3 quarters of fiscal 25. With once again in a position to raise our fully route, look for revenue and adjust the debt.
We now expect Revenue to be approximately 349 million plus or minus 1% representing about 11% year-over-year growth at the midpoint of the range.
Given the leverage in our financial model. We increased our adjusted DB Doug guidance, and we now expect it to be about 26 million dollars at the mean, Port of the revenue range. Almost 3 times what we generated in fiscal 24.
Looking Beyond this year, our Focus remains on driving resilient growth for the long term. Increased profitability of rational excellence and deepening, our Market leadership.
We believe that our strategy positions as well to capitalize on the server Market condition and create value for both. Our customers and shareholders.
Now, let me turn the call over to David to provide more details about our Q3 results and updated fiscal. 25 Outlook.
David.
Thank you elad and the hello everyone, we continue to deliver results. That underscore our discipline, the execution and strategic Focus.
C Revenue.
Who by 12.5% year-over-year and was 89 million.
This quarter software Revenue was 30 million slat year over year with more subscription Revenue than we had in the same quarter last year.
Software service Revenue was 45.3 million and increase of 3.9 million over the last year.
A lot of software Revenue which include software and software Services was 75.3 million and increase of 3.7 million compared to last year, representing about 85% of total revenue.
It is not worthy that approximately 40% of total software Revenue growth came from incremental subscription Revenue at the scoring the strength of our strong recurring Revenue base,
Current Revenue remains a key strength and was 46.9 million or 53% of total revenue in Q3 compared to 42 million in the same period last year.
Caring Revenue comprised primarily of support contracts, and some subscription offering is the Cornerstone of our business. It provides strong visibility and support long-term growth.
The first and services Revenue will certain point 7 million and increase of 5.9 million over last year.
Professional Services as a percentage of Revenue in Q3 was high due to the timing of Revenue recognition.
Share on an annual basis will be lower and blend.
About.
13%.
Later on this call, I will provide additional insight into our different Revenue stream.
And our FYE, 25 Revenue mix Outlook.
non-GAAP, gross margin for the quarter was 70.1%.
Our total non-GAAP software, gross, margin improved to 80.3% versus 78.9% last year.
A year-over-year Improvement of 1140 basis points.
Our land deck.
Professional Services. Growth margin was 14.4% versus negative 9.7%. Last year.
Our strong gross margin highlights the value and competitive differentiation of our Solutions as well as the benefit of an optimized cost structure.
non-GAAP, operating income and adjusted move faster than Revenue, reflecting the strength of our financial model.
In Q3 we generated 3.4 million of non-GAAP operating income.
and,
3 of 1 of the 80% versus last year and 6.6 million dollars of adjusted debt and increase of about 42% versus last year, resulting in positive non-GAAP, EPS of 2 cents.
Looking at our YouTube debate results, our Revenue was 256.1 Million.
Up 11.5% year-over-year with non-GAAP gross. Profit growing 13.9%.
Outpacing Revenue growth.
After Revenue year to date was 88.4 million, and increase of 7.6% versus last year.
Dr. Services Revenue year to date was 1 135 million and increase of 10% versus last year.
About 30% of total software Revenue, growth of 18.5 million, or 9% was driven by incremental subscription Revenue. Supporting our kind Revenue growth.
Professional Services and other Revenue year to date with 32.8 million and increase of 31.7% versus last year.
A lot of Revenue was 87% of our Revenue during the first 9 months of the year.
The inherent leverage in our business model. Drove significant, your rear improvements in profitability, underscoring, our ability to scale efficiently while delivering strong financial results.
Our year-to-date non-GAAP operating income was 9.7 million.
An improvement of 14.9 million compared to a non-GAAP operating loss of 5.2 million during the first 9 months of last fiscal year.
Similarly our year to date adjusted ibida was 19.9 million and increase of 15.2 million compared to 4.7 million dollars in the same period of the previous year.
The strong performance this year. Combined with the leverage inherent in our business model as enabled us to strengthen our balance sheet.
Our short and long-term contract liabilities commonly referred to as deferred revenue.
Remained. Robust at 132.2 million. At the end of Q3, reflecting a significant increase versus previous periods driven by strong billing performance during the quarter.
Our cash position remains strong at 107.3 million, and increase of over 24 million since year end with no debt.
this growth in our cash balance was primarily fueled by cash flow from operations during the first 9 months of the year
June, Q3 we generated 12.3 million dollars in cash from operations and 7.6 million in free cash, flow reflecting the strength of our financial model and operational efficiency.
Over the past few quarters. We have introduced new kpis.
To provide greater transparency and demonstrate how our business is progressing.
Let me walk you through our performance against each of these key indicators.
RPO or remaining performance obligations.
Which represents a contracted Revenue to be recognized in future periods?
Our influenced by factors such as cell cycle, deployment timelines.
Contract length.
Renewal timing and seasonality.
Total RPO is some of the further revenue of 132.2 million.
And backlog of 435.4 million.
At the end of Q3 total RPO was 567.6 million dollars.
Consistent with previous quarter.
Long-term RPO which also includes multi-year support. Contracts is expected to continue to fluctuate due to Renewal timing.
Changes in RPO, in a given quarter are not necessarily indicative of future Revenue. Growth rates.
Throughout the RPO, at the end of Q3 increased to 325.9 million.
Providing solid visibility into Revenue over the next 12 months.
We believe this healthy, RPO level support, our growth, expectations are the validating, the strength, and the resilience of our business model.
during Q3 with secured several significant deals and achieved key buildings, Milestones, resulting in Billings of 1, 104.7 million
significantly higher than our revenue for the quarter.
These strong performance, reflects the impact of both ongoing business and a few larger deals. That may not occur every quarter, making this figure,
Higher than what might typically be expected.
Billings are calculated as Revenue. Plus the change in contract, liabilities contract assets and unbuilt. Balances
This strong billing performance contributed to an increase in deferred revenue, which stood at 132.27%.
Our financial foundation and revenue visibility.
Our non-GAAP gross profit, for the quarter was 62.4 million and increase of 6.7 million of 12% year-over-year.
In gaap, operating expenses were 59 million aligned with our expectations.
The combination of Revenue growth improved margins.
And effective cost structure, drove a notable increase in profitability.
Due to 3, we achieved 616 million of adjusted VA and 3.4 million in non-GAAP operating income.
We remained focused on driving farther and financial improvements and continuing to expand our margins.
Before I turned to our improved f Way 25 Outlook, I want to provide additional insight into our Revenue stream.
We generate revenue from 3 main streams.
Software Revenue.
Is primarily Perpetual licenses and appliances with some term licenses subscription.
Software Services which is largely support contracts.
To a lesser extent cloud-based. SAS subscription offering.
And Professional Services and other Revenue reflecting mainly deployment development, Hardware, selling and training.
All revenue streams and fluctuate, from quarter to quarter, mainly due to timing of Revenue, cognition related to customer Readiness and percentage of completion accounting.
In addition, the signing of new or renewed support of subscription contracts. May impact Revenue cognition timing
We manage and evaluate the business by focusing on total software Revenue.
Which combines?
Software and software services.
This holistic approach.
Reflects the value, we deliver through our technology and the services that support and enhance its adoption.
This metric better reflects sales performance as its capture the full Revenue contribution from a customer.
It includes Perpetual licenses appliances.
And subscription.
As well as support contracts.
On an annual basis. We expect total software Revenue, to continue to be a growth driver.
Professional Services Revenue which we target to be in the low teams as a percentage of total revenue is crucial.
These Services help customers extract greater value from our Solutions and enable them to operationalize more quickly, ultimately driving additional opportunities with those customers.
it's important to point out that Professional Services Revenue, various quarter to quarter due to several factors including the timing and the scale of deployments
This fluctuations are natural and we look at the overall share of Professional Services revenue on an annual basis to ensure it aligns with our strategic and financial goals.
Learning to guidance.
Based on our strong you to date performance and favorable market conditions. We are raising our full year outlook for fiscal 2025.
We now expect full year Revenue to be approximately 349 million plus or minus 1% representing year-over-year growth of approximately 11% at the midpoint of the range.
Out of this Revenue Outlook we expect total software Revenue, to be about 304 million dollars representing approximately, 87% of total revenue.
And Professional Services Revenue to represent about 13% of total revenue aligned with our strategic goals.
We now expect adjustability to be about 26 million dollars at the midpoint of the revenue range.
From 9 million dollars. Last year, reflecting the inherent leverage in our business model.
We have made progress with our strategic tax planning and now expect none of that tax expenses to be about 6 million dollars and improvement from our initial estimate of 10 million dollars.
With this updated improved Outlook.
We now project, analyzed the PPS to be positive 5 cents at the midpoint of the revenue range.
Finally, we continue to expect to generate about 37 million dollars of cash from operations, for this year, reflecting the strong car generating capability of our business.
In November our board of directors approved a share buyback, programme of up to 20 million dollars in ordinary shares over the next 18 months.
Refering our commitment, to delivering value to shareholders.
Following the required 30-day, notice period at the Israeli law share repurchases, can begin on Friday, December 1 3.
summarized,
We have demonstrated consistent execution delivering strong result to the first 9 months of the year.
Our ongoing commitment to Innovation and expanding our Advanced Solutions leveraging. The latest Technologies, including AI continues to enhance the value. We provide for customers.
Selecting this progress?
We have again raised revenue and profitability outlook for fiscal 25.
Looking Beyond this year.
We anticipate meaningful growth significant Improvement in profitability and strong cash flow from operations.
We believe that we are well positioned for sustainable growth.
With additional leverage in our business model, we expect revenue and gross profit to continue growing faster as an operating expenses.
We also expect to continue to generate meaningful positive free cash flow.
in closing this quarter, the result during a positive momentum across key indicators, reflect the health of our business and the opportunities that lie ahead
our visibility into future revenue and robust balance sheet including a solid cash position.
Ensure Financial flexibility.
With this strong Foundation.
We are well, positioned to seize opportunities, add and deliver sustainable growth.
With that, I would like to end the call over to the operator, to open the lines for questions.
Operator. Thank you. Ladies and gentlemen, as a question, you will need to press star 1, 1 on your telephone, and wait, for your name to be announced.
To withdraw your question. Simply press star 1 1, again please, stand by while we compile the Q&A roster.
Now, first question coming from the lineup, Mike stickers would need him in company. Your line is now open.
Great. Thank you for taking the questions guys. Um and congrats on the quarter as well.
What to the first come back to the the large customer announcements that that came through the quarter, you you announced some 10 million and 20 million dollar uh, agreements with some of these customers. Can you just talk about the the profile of these customers? If if if the customer is signing a 10 or 20 million dollar deal with, you guys do the features or products that they're looking at from cognyte different materially from other customers or or not necessarily
Yeah, thanks Mike. So, uh, actually the, uh,
the complexity customers are facing a similar to in the market. So, if you look at the demand drivers, uh, the demand drivers are related to, uh, the complexity of finding the bad guys, uh, which is related to, uh, them being able to better hide, its related to the, uh,
Data that is going in volume and diversity and actually it's more difficult now to put your hands on them. So customers have to do 2 things.
To expand in terms of capacity.
To allow more users to use the solution, which means more licenses. And also, uh, to increase capacity in terms of uh, uh, data volumes and diversity.
And, and the, and also to improve functionality, which means that if you increase data, uh, sources and you have to uncover more hidden Insight, you also need to modernize the solution with more analytics including driven capabilities, and by that uncover even more than the inside, some of them are predictive insight to allow. You actually not just to uh, to investigate backward, but to uh, find anomalies that are going into the future and intentions and prevent and neutralize threats.
So this is something that is relevant for many customers. Not only for those uh, obviously National Security customers, sometimes are larger than law enforcement for example. So in certain uh uh, segments, it is more relevant, uh, and it depends also in the capacity of the data customers have. Uh, we don't expect it to, you know, to come every quarter, this kind of a for large deals. But we do expect the the demand drivers to continue and intensify and more and more customers to upgrade either in expansion or in functionality or both. Uh, this is something that we expect also in the future.
Thanks for that a lot and I I just wanted to build on that last Point. Uh, sorry to touch on macro there but
Can you help us think it sounds like the the secular demand drivers remain intact. If not accelerating from where we stand today. But what are you hearing from customers? Uh, as far as budgets, uh, are these budgets?
Significantly expanding from where we stand today or is there incremental dollars flowing into this area from other Pockets? Can can you help us think about that that budget item?
Yes, sure Mike. So, uh, maybe I'll give you a wider view on what we see in the market, so it will give you data points and also our judgment on how we see the market. So, so first of all, we see a very healthy demand from existing and new customers. Uh, if you look at a new logo here, today we added about 30 car, new customers compared to 29 in full fiscal 24. So, we do see a monologue of this year already. Uh, we see that more customers uh, our budgeting uh uh with higher budgets. And this is reflected in the large upgrades and expansions that we see
uh,
We also discussed the, uh, intensify the demand drivers that I have just, uh, mentioned earlier. Uh, and we continuously engage with customers and what we have.
Growing and increasing.
and they are asking for budgets and we do see that the the momentum is is healthy, and we see Tailwind in terms of uh, in terms of demand,
Another data point that can help you understand or understand, if they recognize the intelligence Summit, which we discussed earlier in the call and also in the press release.
Uh, this is not an industry. General, uh, uh, event. This is an event for cognyte only and you can imagine that 300 attendees from almost 70 countries about 70 countries, uh, came to listen to what we have to say to see the the the solutions to see the uh Innovation to see the it even you know uh uh uh new solutions that we have.
So it means that uh the demand is their customers are willing to listen and to get more insights of what's new. Uh, they're willing to put orders for expansions and upgrades and new logos are coming to us. So overall, we feel very good about the the, uh Market.
and, you know, if you if you if you look overall
The demand drivers combined with our advanced technology and high value. And what we hear from the customers that we engage frequently in general, and also, in the summit that we recently had, uh, and uh, recent large deals, all of it together. Give us a very high confidence that, uh, uh, that we have our positions for future growth.
Terrific, thank you very much, guys.
Thanks Mike.
Thank you. And as a reminder, to ask a question. Please press star, 1 1 and wait for your name to be announced.
in our next question, coming from the line of Peter Levine with EverQuest and is now open
Great, thank you for uh, taking my question, you know?
You mentioned in your prepared remarks, you know, mobile data traffic, becoming top of Mind, meaning the need for advanced data analytics. I know there's a lot you can't say around your products but maybe talk about like some of the R&D initiatives, you know, from your summit. Like, what are your customers asking? What are you building?
and I'll, I'll I'll
Yeah sure. So uh, I mentioned the 5G, the demand driver uh because actually what our customers are doing is trying to convert uh, certain activities of the adversaries into insights.
So adversaries, they have, you know, to to move they have to, uh, to to to, to transfer money and to get money. Uh, they have to put their hands on material, they have, uh, to communicate between themselves and all of it is actually Digital Data. Uh,
So 5G in this respect actually is increasing the bandwidth of data. So customers have to deal with um uh vast amounts of data that are increasing. And I'm Al mentioned that Eric son shared with us that uh, actually in the report that, uh, the data is growing in more than 20%, uh, over here. So this is a significant challenge for our customers because when the bandwidth is growing, it means that we have to do it more data. It means that the new applications will
That, uh, now the bandwidth is increasing. So new applications will come, uh, so they can, you know, they can communicate in different and more varied ways. They have to hide, they can hide better and throughout
so, in order for
them to be able to, to
first of all, they need to expand their the capacity of the solutions to get more data and second thing they have to improve the uh, AI capabilities and
in order to uncover more hidden insights out of the same data sets that they have and by that being able first of all, to prioritize and to predict and later on to neutralize, uh, threats before they unfold,
So 5G is 1 example of how the demand drivers are evolving in the market driving demand for expansions and functionality at the upgrade and Analytics.
David, you mentioned, you didn't give a guide for fiscal 26 next year, but you mentioned meaningful growth, you know, faster than operating expenses call it. I think operating expense growth in in Q3 here was 7%. Can you just kind of provide some Garden rails around how you're thinking about next year? Could could we see double digit growth? Are you on track to do that? Kind of just walk us through how you're thinking about next year. You know, obviously factoring in the environment, but would love to know if you can give us a little bit more guidance on how you're thinking about experience.
Thank you Peter. Uh, so if you look at about our performance, you can see that in the last quarter, as quarter of a quarter, we were able to drive more and more profitability. If you look at the year to date with that, we grew our top line by, uh, 11 and a half percent. Our goals profit, Google by 14%, uh, on the 9 months basis and the Opex only grew by 4 and a half percent. So you can see that there is a lot of Leverage. Um, we we started the year with the setting guidance and then we increase incremental, 9 million dollar to the Top Line. Well, 7 million of out of the 9 million, went to positive profitability. So the leverage existing in the model
Looking ahead.
We are very well positioned for the future. We have very strong, uh, uh, crpo and total RPO which are giving us the confidence that we can go in the future and we believe that we'll be able to go
faster than revenue and gross profit in the possibility meaning that uh the revenue and and the gospel that we go uh will go in the much faster Pace versus Opex um and that will drive uh uh strong result in better profitability. Also next year.
I'm sorry if I can squeeze 1 last time. You know, last quarter, you talked a lot about us, expanding to the US, go to market. You may just give us an update on how how that kind of trended in the quarter and then maybe plans for for calendar. 25. In terms of further, you know evolving or expanding your reach here in the US. Thank you.
Yeah, sure. So uh, first of all, we uh, continue to believe that South American markets designed to go opportunity for us. Obviously, there are many potential customers and it's a wealthy market. So, we are focusing on expanding presence there and we execute our plan. Uh, we make progress.
Uh, I can tell you that I continue.
and I,
A very, very good feedback on our technology. Uh, some of the customers became already referenced customers for some customers. We just, we got already follow on orders, which is another testimonial that
It's not just a honeymoon, you know, they don't just come to us for the first deal, but they're happy with it. Was they get? They generate lots of value uh, compared to competition. And for that reason, they come to us and expand and they mentioned it. Also in the group, uh, earlier in the call. Uh, I can also tell you that a few weeks ago, I visited another law enforcement agency, a very significant 1 in the US
And I got very good feedback also in their, in a very significant success story using our technology. So,
Uh given the execution so far, the recent wins, we see uh customers feedback that I get I do expect that North American Business.
Will continue to grow in fiscal 2016 and Beyond is become more significant business recognition.
Thank you very much.
Thank you.
And again, if you'd like to ask a question,
For 11 on your touchdown phone.
Or give a moment.
I'm showing off for the questions in the queue. At this time, I will not turn the call back over to the in for any closing remarks.
Uh, thank you, operator. And thank you everyone for joining us on today's call a lot David and I will be in New York in January to meet with investors and hope to see some of you then.
Uh, in the meantime, please feel free to reach out to me. Should you have any questions and we look forward to speaking with you again next quarter. Thank you all for joining us.
Ladies and gentlemen, that doesn't call conference for today. Thank you for your participation and you may now disconnect