Increases Full-Year Outlook
Cognyte Software Ltd. (NASDAQ: CGNT) (the “Company,” “Cognyte,”
“we,” “us” and “our”), a global leader in investigative analytics
software, today announced results for the three months ended April
30, 2023 (“Q1 FYE24”).
Q1 Highlights
Three Months Ended April 30,
2023
(in thousands, except per share data)
GAAP
Non-GAAP
Revenue
$73,266
$73,378
Gross Margin
67.9%
68.4%
Diluted EPS
$(0.13)
$(0.23)
“I’m pleased to report a good start for the year, with solid Q1
results, which enables us to raise our outlook for the year on
non-GAAP revenue, gross profit, EPS and cash flow. We now expect
gross profit to grow faster than revenue, at more than ten percent
year over year on an SIS Adjusted non-GAAP basis. Looking beyond
this year, recent innovations in Artificial Intelligence present
opportunities to increase the value of our investigative analytics
solutions for our customers and expand our business over time. We
believe that our innovative technology combined with recent AI
developments, current positive industry trends, and our large
customer base position us well for long-term growth,” said Elad
Sharon, Cognyte’s chief executive officer.
“We are expecting significant gross margin improvement for the
full year primarily due to an increase in software revenue. I am
also very pleased with the strong cash flow in the first quarter
and we are now expecting positive cash flow from operations for the
full year,” said David Abadi, Cognyte’s chief financial
officer.
Updated FYE24 Outlook
Our non-GAAP outlook for the year ending January 31, 2024
(“FYE24” and “Fiscal 2024”) is as follows:
- Revenue: $303 million at the midpoint with a range of
+/- 2%, approximately 7% growth from previous year SIS Adjusted
non-GAAP revenue.
- Diluted EPS: Loss of $0.53 at the midpoint of our
revenue outlook.
Our non-GAAP outlook for FYE24, excludes the following GAAP
measures which we are able to quantify with reasonable certainty,
as described further below under "Supplemental Information About
non-GAAP Financial Measures and Operating Metrics”:
- Amortization of intangible assets of approximately $0.3
million.
Our non-GAAP outlook for FYE24 excludes the following GAAP
measures for which we are able to provide a range of probable
significance:
- Stock-based compensation is expected to be between
approximately $10.0 million and $13.0 million, assuming market
prices for our ordinary shares are generally consistent with
current levels.
For additional information about our expectations for FYE24,
please refer to the Q1 FYE24 conference call we will conduct on
June 15, 2023.
Our non-GAAP outlook does not include the potential impact of
any in-process business acquisitions that may close after the date
hereof, and, unless otherwise specified, reflects foreign currency
exchange rates approximately consistent with current rates.
We are unable, without unreasonable effort, to provide a
reconciliation for other GAAP measures which are excluded from our
non-GAAP outlook, including the impact of future business
acquisitions or acquisition expenses, future restructuring
expenses, and non-GAAP income tax adjustments due to the level of
unpredictability and uncertainty associated with these items. For
these same reasons, we are unable to assess the probable
significance of these excluded items. While historical results may
not be indicative of future results, actual amounts for the three
months ended April 30, 2023, and 2022, respectively, for the GAAP
measures excluded from our non-GAAP outlook appear in Table 4 of
this press release.
Conference Call
Information
We will conduct a conference call today at 8:30 a.m. ET to
discuss our results for the three months ended April 30, 2023. A
real-time webcast of the conference call with presentation slides
will be available in the Investor Relations section of Cognyte’s
website. Those interested in participating in the
question-and-answer session need to register here to receive the
dial-in numbers and unique PIN to access the call seamlessly. It is
recommended that you join 10 minutes prior to the event start
(although you may register and dial in at any time during the
call). An archived webcast of the conference call will also be
available in the “Investors” section of the company’s website.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of non-GAAP financial measures presented for
completed periods to the most directly comparable financial
measures prepared in accordance with GAAP, please see the tables
below as well as "Supplemental Information About Non-GAAP Financial
Measures" at the end of this press release.
About Cognyte Software Ltd.
Cognyte Software Ltd. is a global leader in investigative
analytics software that empowers a variety of government and other
organizations with Actionable Intelligence for a Safer World™. Our
open interface software is designed to help customers accelerate
and improve the effectiveness of investigations and
decision-making. Hundreds of customers rely on our solutions to
accelerate and conduct investigations and derive insights, with
which they identify, neutralize, and tackle threats to national
security and address different forms of criminal and terror
activities. Learn more at www.cognyte.com.
Caution About Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995
and Section 21E of the United States Securities Exchange Act of
1934. Forward-looking statements include statements regarding
expectations, predictions, views, opportunities, plans, strategies,
beliefs, and statements of similar effect relating to Cognyte. All
statements contained in this press release that do not relate to
matters of historical fact should be considered forward-looking
statements. These forward-looking statements do not guarantee
future performance and are based on management's expectations that
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, any of which could cause
our actual results or conditions to differ materially from those
expressed in or implied by the forward-looking statements. Some of
the factors that could cause our actual results or conditions to
differ materially from current expectations include, among others:
uncertainties regarding the impact of changes in macroeconomic
and/or global conditions; risks related to the impact of inflation
and related volatility on our financial performance; risks related
to the impact of disruptions to the global supply chain; risks
related to the continuing restrictions resulting from the COVID-19
pandemic on our operations and business; risks relating to the
global regulatory constraints to which we are subject; risks
associated with political and reputational factors related to our
business or operations; risks related to claims by third parties
that our solutions infringe their terms of use or other propriety
rights; risks that our products or services, or those of
third-party suppliers, partners, or original equipment
manufacturers (“OEMs”) which we use in or with our offerings or
otherwise rely on, including third-party hosting platforms, may
contain defects, develop operational problems, or be vulnerable to
cyber-attacks; risks associated with larger orders and customer
concentration; risks associated with our ability to keep pace with
technological advances and challenges and evolving industry
standards; risks related to our relationships with and reliance on
third parties for certain components, products, or services; risks
due to aggressive competition in all of our markets; challenges
associated with selling sophisticated solutions, risks associated
with customer concentration, including risks related to significant
amounts of our business coming from government customers around the
world; risks associated with our ability or costs to retain,
recruit, and train qualified personnel in regions in which we
operate; risks relating to our ability to properly manage
investments in our business and operations; risks associated with
acquisitions, strategic investments, partnerships or alliances;
risk of security vulnerabilities or lapses, including
cyber-attacks, information technology system breaches, failures or
disruptions; risks associated with the mishandling or perceived
mishandling of sensitive, confidential or classified information;
risks associated with our failure to comply with anti-corruption,
trade compliance, anti-money-laundering and economic sanctions laws
and regulations; risks associated with our credit facilities, or
that we may experience liquidity or working capital issues and
related risks that financing sources may be unavailable to us on
reasonable terms; risks associated with changing tax laws and
regulations; risks associated with our significant international
operations; risks associated with market volatility in the price of
our shares; risks associated with complex and changing regulatory
environments relating to our operations and the markets we operate
in; risks relating to the adequacy of our existing infrastructure,
systems, processes, policies, procedures, internal controls, and
personnel for our current and future operations and reporting
needs; risks related to our limited operating history as an
independent public company; risk that the spin-off does not achieve
the benefits anticipated, does not qualify as a tax-free
transaction, or exposes us to unexpected claims or liabilities;
risks associated with different corporate governance requirements
applicable to Israeli companies; and other risks set forth and in
Section 3.D - “Risk Factors” in our latest annual report on Form
20-F for the fiscal year ended January 31, 2023, which has been
filed with the Securities and Exchange Commission (the “SEC”),
along with other documents submitted to the SEC, on April 11, 2023.
In addition, we operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible
for our management to predict all risks, nor can we assess the
impact of all factors on its business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements that we may make. In light of these risks, uncertainties
and assumptions, the forward-looking events and circumstances
discussed in this release are inherently uncertain and may not
occur, and actual results could differ materially and adversely
from those anticipated or implied in the forward-looking
statements. Accordingly, you should not rely upon forward-looking
statements as predictions of future events. Any forward-looking
statement made in this press release speaks only as of the date
hereof. Except as otherwise required by law, the Company undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changed circumstances, or any other reason.
Table 1
COGNYTE SOFTWARE LTD.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
April 30,
(in thousands except share and per share
data)
2023
2022
Revenue:
Software
$
25,372
$
24,884
Software service
41,093
45,832
Professional service and other
6,801
15,726
Total revenue
73,266
86,442
Cost of revenue:
Software
3,337
4,918
Software service
11,072
12,143
Professional service and other
9,088
17,569
Amortization of acquired technology
—
171
Total cost of revenue
23,497
34,801
Gross profit
49,769
51,641
Operating expenses:
Research and development, net
27,747
37,979
Selling, general and administrative
28,800
43,402
Amortization of other acquired intangible
assets
90
251
Total operating expenses
56,637
81,632
Operating loss
(6,868
)
(29,991
)
Other income, net:
Interest income
369
147
Interest expense
(3
)
(449
)
Other income, net
944
1,029
Total other income, net
1,310
727
Loss before provision for income
taxes
(5,558
)
(29,264
)
Provision for income taxes
1,869
135
Net loss
(7,427
)
(29,399
)
Net income attributable to noncontrolling
interest
1,326
969
Net loss attributable to Cognyte
Software Ltd.
$
(8,753
)
$
(30,368
)
Net loss per share attributable to
Cognyte Software Ltd.:
Basic and diluted
$
(0.13
)
$
(0.45
)
Weighted-average shares
outstanding:
Basic and diluted
68,901
67,304
Table 2
COGNYTE SOFTWARE LTD.
Condensed Consolidated Balance
Sheets
April 30,
January 31,
2023
2023
(in thousands)
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
44,499
$
34,579
Restricted cash and cash equivalents and
restricted bank time deposits
4,219
4,359
Short-term investments
23,935
17,507
Accounts receivable, net of allowance for
credit losses of $1.6 million
103,641
113,201
Contract assets, net
10,819
17,476
Inventories
25,961
25,263
Prepaid expenses and other current
assets
35,288
39,339
Total current assets
248,362
251,724
Property and equipment, net
25,528
25,874
Operating lease right-of-use assets
16,574
17,559
Goodwill
126,543
126,487
Intangible assets, net
559
650
Deferred income taxes
781
823
Other assets
19,644
19,961
Total assets
$
437,991
$
443,078
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
15,357
$
20,677
Accrued expenses and other current
liabilities
80,892
78,297
Contract liabilities
101,636
94,882
Total current liabilities
197,885
193,856
Long-term contract liabilities
13,856
14,382
Deferred income taxes
3,062
3,031
Operating lease liabilities
8,898
10,368
Other liabilities
11,490
11,667
Total liabilities
235,191
233,304
Commitments and Contingencies
Stockholders' equity:
Common stock - $0 par value; Authorized
300,000,000 shares. Issued 69,011,667 and 68,842,601 at April 30,
2023 and January 31, 2023, respectively; Outstanding 69,011,284 and
68,842,601 shares at April 30, 2023 and January 31, 2023,
respectively
—
—
Additional paid-in capital
340,989
338,465
Accumulated deficit
(137,775
)
(129,022
)
Accumulated other comprehensive loss
(17,084
)
(15,314
)
Total Cognyte Software Ltd.
stockholders' equity
186,130
194,129
Noncontrolling interest
16,670
15,645
Total stockholders’ equity
202,800
209,774
Total liabilities and stockholders’
equity
$
437,991
$
443,078
Table 3
COGNYTE SOFTWARE LTD.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended April
30,
(in thousands)
2023
2022
Cash flows from operating
activities:
Net loss
$
(7,427
)
$
(29,399
)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization
3,343
4,362
Allowance for credit losses
(33
)
305
Stock-based compensation, excluding
cash-settled awards
1,915
5,105
Provision from deferred income taxes
44
(226
)
Non-cash losses on derivative financial
instruments, net
(308
)
(348
)
Other non-cash items, net
37
(524
)
Changes in operating assets and
liabilities:
Accounts receivable
16,081
19,710
Contract assets
(476
)
776
Inventories
(1,293
)
(4,011
)
Prepaid expenses and other assets
3,940
(4,472
)
Accounts payable and accrued expenses
(3,573
)
1,590
Contract liabilities
6,172
(2,488
)
Other liabilities
640
1,078
Other, net
(135
)
(170
)
Net cash provided by (used in)
operating activities
18,928
(8,712
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,638
)
(2,452
)
Purchases of short-term investments
(23,935
)
(14,623
)
Maturities and sales of short-term
investments
17,186
10,239
Settlements of derivative financial
instruments not designated as hedges
(245
)
48
Cash paid for capitalized software
development costs
(518
)
(580
)
Change in restricted bank time deposits,
including long-term portion
(1
)
7
Net cash used in investing
activities
(9,150
)
(7,361
)
Cash flows from financing
activities:
Repayment from credit facility - presented
as short term loan
—
(50,000
)
Net cash used in financing
activities
—
(50,000
)
Foreign currency effects on cash, cash
equivalents, restricted cash, and restricted cash equivalents
(61
)
170
Net increase (decrease) in cash, cash
equivalents, restricted cash and restricted cash
equivalents
9,717
(65,904
)
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, beginning of period
39,044
158,220
Cash, cash equivalents, restricted
cash, and restricted cash equivalents, end of period
$
48,761
$
92,316
Reconciliation of cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period:
Cash and cash equivalents
$
44,499
$
91,790
Restricted cash and cash equivalents
included in restricted cash and cash equivalents and restricted
bank time deposits
4,162
429
Restricted cash and cash equivalents
included in other assets
100
97
Total cash, cash equivalents,
restricted cash, and restricted cash equivalents
$
48,761
$
92,316
Table 4
COGNYTE SOFTWARE LTD.
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited)
Three Months Ended April
30,
(in thousands, except per share data)
2023
2022
Revenue
Total GAAP revenue
$
73,266
$
86,442
Revenue adjustments
112
244
Total non-GAAP revenue
$
73,378
$
86,686
Gross profit and gross margin
GAAP gross profit
49,769
51,641
GAAP gross margin
67.9
%
59.7
%
Revenue adjustments
112
244
Stock-based compensation expenses
313
657
Restructuring expenses, net
—
33
Other adjustments
—
171
Non-GAAP gross profit
$
50,194
$
52,746
Non-GAAP gross margin
68.4
%
60.8
%
Research and development, net
GAAP research and development,
net
27,747
37,979
As a percentage of GAAP revenue
37.9
%
43.9
%
Stock-based compensation expenses
(472
)
(1,825
)
Restructuring expenses, net
(79
)
2
Non-GAAP research and development,
net
$
27,196
$
36,156
As a percentage of non-GAAP
revenue
37.1
%
41.7
%
Selling, general and administrative
expenses
GAAP selling, general and
administrative expenses
28,800
43,402
As a percentage of GAAP revenue
39.3
%
50.2
%
Stock-based compensation expenses
(1,130
)
(2,623
)
Restructuring expenses, net
(119
)
(1,974
)
Separation expenses, net
1,024
(32
)
Other adjustments
(53
)
(116
)
Non-GAAP selling, general and
administrative expenses
$
28,522
$
38,657
As a percentage of non-GAAP
revenue
38.9
%
44.6
%
Operating loss, operating margin and
adjusted EBITDA
GAAP Operating loss
(6,868
)
(29,991
)
GAAP operating margin
(9.4
)%
(34.7
)%
Stock-based compensation expenses
1,915
5,105
Restructuring expenses, net
198
2,007
Separation expenses, net
(1,024
)
32
Other adjustments
255
780
Non-GAAP operating loss
$
(5,524
)
$
(22,067
)
Three Months Ended April
30,
(in thousands, except per share data)
2023
2022
Depreciation and amortization
3,248
3,906
Adjusted EBITDA
$
(2,276
)
$
(18,161
)
Non-GAAP operating margin
(7.5
)%
(25.5
)%
Adjusted EBITDA margin
(3.1
)%
(21.0
)%
Other income (expense)
reconciliation
GAAP other income, net
1,310
727
Change in fair value of equity
investment
—
(1,660
)
Business divestiture
160
—
Non-GAAP other income (expense),
net
$
1,470
$
(933
)
Tax provision reconciliation
GAAP provision for income taxes
1,869
135
Effective income tax rate
(33.6
)%
(0.5
)%
Non-GAAP tax adjustments
8,694
29,385
Non-GAAP provision for income taxes
(1)
$
10,563
$
29,520
Non-GAAP effective income tax
rate
(260.6
)%
(128.4
)%
Net loss attributable to Cognyte
Software Ltd. reconciliation
GAAP Net loss attributable to Cognyte
Software Ltd.
$
(8,753
)
$
(30,368
)
Revenue adjustments
112
244
Stock-based compensation expenses
1,915
5,105
Restructuring expenses, net
198
2,007
Separation expenses, net
(1,024
)
32
Other adjustments
303
536
Change in fair value of equity
investment
—
(1,660
)
Non-GAAP tax adjustments
(8,694
)
(29,385
)
Total adjustments
(7,190
)
(23,121
)
Non-GAAP net loss attributable to
Cognyte Software Ltd.
$
(15,943
)
$
(53,489
)
Table comparing GAAP diluted net loss
per share attributable to Cognyte Software Ltd. and Non-GAAP
diluted net loss per share attributable to Cognyte Software
Ltd.
GAAP diluted net loss per share
attributable to Cognyte Software Ltd.
$
(0.13
)
$
(0.45
)
Non-GAAP diluted net loss per share
attributable to Cognyte Software Ltd.
$
(0.23
)
$
(0.79
)
GAAP weighted-average shares used in
computing diluted net loss per share attributable to Cognyte
Software Ltd.
68,901
67,304
Additional weighted-average shares
applicable to non-GAAP diluted net income per share attributable to
Cognyte Software Ltd.
—
—
Non-GAAP diluted weighted-average
shares used in computing net loss per share attributable to Cognyte
Software Ltd.
68,901
67,304
Table of reconciliation from GAAP net
loss attributable to Cognyte Software Ltd. to adjusted
EBITDA
GAAP Net loss attributable to Cognyte
Software Ltd.
$
(8,753
)
$
(30,368
)
As a percentage of GAAP revenue
(11.9
)%
(35.1
)%
Net income attributable to noncontrolling
interest
1,326
969
GAAP provision for income taxes
1,869
135
GAAP other income, net
(1,310
)
(727
)
Depreciation and amortization
3,248
3,906
Revenue adjustments
112
244
Three Months Ended April
30,
(in thousands, except per share data)
2023
2022
Stock-based compensation expenses
1,915
5,105
Restructuring expenses, net
198
2,007
Separation expenses, net
(1,024
)
32
Other adjustments
143
536
Adjusted EBITDA
$
(2,276
)
$
(18,161
)
As a percentage of non-GAAP
revenue
(3.1
)%
(21.0
)%
Table 5
COGNYTE SOFTWARE LTD.
Reconciliation of Non-GAAP to
SIS Adjusted Non-GAAP Measures
(Unaudited)
Three Months Ended April
30,
(in thousands)
2023
2022
Revenue
Total non-GAAP revenue
$
73,378
$
86,686
SIS revenue adjustments
—
(9,176
)
Total SIS Adjusted non-GAAP
revenue
$
73,378
$
77,510
Gross profit and gross margin
Non-GAAP gross profit
50,194
52,746
Non-GAAP gross margin
68.4
%
60.8
%
SIS adjustments
—
(6,035
)
SIS Adjusted non-GAAP gross
profit
$
50,194
$
46,711
SIS Adjusted non-GAAP gross
margin
68.4
%
60.3
%
Research and development, net
Non-GAAP research and development,
net
27,196
36,156
As a percentage of non-GAAP
revenue
37.1
%
41.7
%
SIS adjustments
—
(3,024
)
SIS Adjusted non-GAAP research and
development, net
$
27,196
$
33,132
As a percentage of SIS Adjusted
non-GAAP revenue
37.1
%
42.7
%
Selling, general and administrative
expenses
Non-GAAP selling, general and
administrative expenses
28,522
38,657
As a percentage of non-GAAP
revenue
38.9
%
44.6
%
SIS adjustments
—
(2,688
)
SIS Adjusted non-GAAP selling, general
and administrative expenses
$
28,522
$
35,969
As a percentage of SIS Adjusted
non-GAAP revenue
38.9
%
46.4
%
Operating loss and operating
margin
Non-GAAP operating loss
(5,524
)
(22,067
)
Non-GAAP operating margin
(7.5
)%
(25.5
)%
SIS adjustments
—
(323
)
SIS Adjusted non-GAAP operating
loss
$
(5,524
)
$
(22,390
)
SIS Adjusted non-GAAP operating
margin
(7.5
)%
(28.9
)%
Table 6
COGNYTE SOFTWARE LTD.
Calculation of Change in
Revenue on a Constant Currency Basis
(Unaudited)
(in thousands)
GAAP Revenue
Non-GAAP Revenue
Revenue for the three months ended April
30, 2022
$
86,442
$
86,686
Revenue for the three months ended April
30, 2023
$
73,266
$
73,378
Revenue for the three months April 30,
2023 at constant currency (2)
$
73,500
$
73,500
Reported period-over-period revenue
change
(15.2
)%
(15.4
)%
% impact from change in foreign currency
exchange rates
0.1
%
0.1
%
Constant currency period-over-period
revenue change
(15.2
)%
(15.3
)%
For more information see "Supplemental Information About
Constant Currency" at the end of this press release.
Footnotes
(1) The actual cash tax paid, net of refunds, was $1.0 million
and $3.0 million for the three months ended April 30, 2023 and
2022, respectively.
(2) Revenue for the three months ended April 30, 2023, at
constant currency is calculated by translating current-period GAAP
or non-GAAP foreign currency revenue (as applicable) into U.S.
dollars using average foreign currency exchange rates for the three
months April 30, 2022, rather than actual current-period foreign
currency exchange rates.
Cognyte Software Ltd. and Subsidiaries
Supplemental Information About Non-GAAP Financial
Measures
The press release includes reconciliations of certain financial
measures not prepared in accordance with GAAP, consisting of
non-GAAP revenue, non-GAAP gross profit and gross margins, non-GAAP
research and development expenses, net, non-GAAP selling, general
and administrative expenses, non-GAAP operating loss and operating
margins, non-GAAP other income (expense), net, non-GAAP provision
for income taxes and non-GAAP effective income tax rate, non-GAAP
net loss attributable to Cognyte, adjusted EBITDA and adjusted
EBITDA margin, non-GAAP diluted net loss per share attributable to
Cognyte and non-GAAP diluted weighted-average shares used in
computing such measure. The tables above include a reconciliation
of each non-GAAP financial measure for completed periods presented
in this press release to the most directly comparable GAAP
financial measure.
We believe these non-GAAP financial measures, used in
conjunction with the corresponding GAAP measures, provide investors
with useful supplemental information about the financial
performance of our business by:
- facilitating the comparison of our financial results and
business trends between periods, by excluding certain items that
either can vary significantly in amount and frequency, are based
upon subjective assumptions, or in certain cases are unplanned for
or difficult to forecast,
- facilitating the comparison of our financial results and
business trends with other software companies who publish similar
non-GAAP measures, and
- allowing investors to see and understand key supplementary
metrics used by our management to run our business, including for
budgeting and forecasting, resource allocation, and compensation
matters.
We also make these non-GAAP financial measures available because
our management believes they provide meaningful information about
the financial performance of our business and are useful to
investors for informational and comparative purposes.
Non-GAAP financial measures should not be considered in
isolation as substitutes for, or superior to, comparable GAAP
financial measures. The non-GAAP financial measures we present have
limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP, and these non-GAAP financial measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP financial measures. These non-GAAP
financial measures do not represent discretionary cash available to
us to invest in the growth of our business, and we may in the
future incur expenses similar to or in addition to the adjustments
made in these non-GAAP financial measures. Other companies may
calculate similar non-GAAP financial measures differently than we
do, limiting their usefulness as comparative measures.
Our non-GAAP financial measures are calculated by making the
following adjustments to our GAAP financial measures:
Revenue adjustments. We exclude from our non-GAAP revenue the
impact of fair value adjustments required under GAAP relating to
software and software service revenue and professional service and
other revenue acquired in a business acquisition, which would have
otherwise been recognized on a stand-alone basis. We believe that
it is useful for investors to understand the total amount of
revenue that we and the acquired company would have recognized on a
stand-alone basis under GAAP, absent the accounting adjustment
associated with the business acquisition. We believe that our
non-GAAP revenue measure helps management and investors understand
our revenue trends and serves as a useful measure of ongoing
business performance.
Amortization of acquired technology and other acquired
intangible assets. When we acquire an entity, we are required under
GAAP to record the fair values of the intangible assets of the
acquired entity and amortize those assets over their useful lives.
We exclude the amortization of acquired intangible assets,
including acquired technology, from our non-GAAP financial measures
because they are inconsistent in amount and frequency and are
significantly impacted by the timing and size of acquisitions. We
also exclude these amounts to provide easier comparability of pre
and post-acquisition operating results.
Stock-based compensation expenses. We exclude stock-based
compensation expenses related to restricted stock awards, stock
bonus programs, bonus share programs, and other stock-based awards
from our non-GAAP financial measures. We evaluate our performance
both with and without these measures because stock-based
compensation is typically a non-cash expense and can vary
significantly over time based on the timing, size and nature of
awards granted, and is influenced in part by certain factors which
are generally beyond our control, such as the volatility of the
price of our ordinary shares. In addition, measurement of
stock-based compensation is subject to varying valuation
methodologies and subjective assumptions, and therefore we believe
that excluding stock-based compensation from our non-GAAP financial
measures allows for meaningful comparisons of our current operating
results to our historical operating results and to other companies
in our industry.
Acquisition expenses (benefit), net. In connection with
acquisition activity (including with respect to acquisitions that
are not consummated), we incur expenses, including legal,
accounting, and other professional fees, integration costs, changes
in the fair value of contingent consideration obligations, and
other costs. Integration costs may consist of information
technology expenses as systems are integrated across the combined
entity, consulting expenses, marketing expenses, and professional
fees, as well as non-cash charges to write-off or impair the value
of redundant assets. We exclude these expenses from our non-GAAP
financial measures because they are unpredictable, can vary based
on the size and complexity of each transaction, and are unrelated
to our continuing operations or to the continuing operations of the
acquired businesses.
Restructuring expenses. We exclude restructuring expenses from
our non-GAAP financial measures, which include employee termination
costs, facility exit costs, certain professional fees, asset
impairment charges, and other costs directly associated with
resource realignments incurred in reaction to changing strategies
or business conditions. All of these costs can vary significantly
in amount and frequency based on the nature of the actions as well
as the changing needs of our business and we believe that excluding
them provides easier comparability of pre- and post-restructuring
operating results.
Separation expenses. On December 4, 2019, Verint announced its
intention to separate into two independent publicly traded
companies: Cognyte Software Ltd., which consists of Verint’s Cyber
Intelligence Solutions business, and Verint Systems Inc., which
consists of its Customer Engagement Business. We incurred
significant expenses to separate the aforesaid businesses,
including third-party advisory, accounting, legal, consulting, and
other similar services related to the separation as well as costs
associated with accelerated depreciation and amortization of assets
which became obsolete following the separation from Verint,
including those related to human resources, brand management, real
estate, and information technology to the extent not capitalized.
These costs are incremental to our normal operating expenses and
incurred solely as a result of the separation transaction.
Accordingly, we are excluding these separation expenses from our
non-GAAP financial measures in order to evaluate our performance on
a comparable basis.
Business Divestiture gains/losses. In certain cases, we may
divest a portion of our business, which may result in a gain or
loss on divestiture. These gains or losses may result from the sale
of a business unit or the termination of a product line or service.
We exclude these gains or losses from our non-GAAP financial
measures in order to provide a more meaningful comparisons of our
ongoing business performance between periods and to other companies
in our industry. On December 1, 2022, as part of our ongoing
strategic plan to simplify and focus the Company on fewer agendas,
we sold our Situational Intelligence Solutions (SIS) business.
Provision for legal claim. We exclude from our non-GAAP
financial measures accrual made for the settlement of certain legal
claims related to our business acquisitions.
Other adjustments. We exclude from our non-GAAP financial
measures rent expense for redundant facilities, gains on change in
fair value of equity investment, gains or losses on sales of
property and certain professional fees unrelated to our ongoing
operations.
Non-GAAP income tax adjustments. We exclude our GAAP provision
(benefit) for income taxes from our non-GAAP measures of net income
attributable to Cognyte Software Ltd., and instead include a
non-GAAP provision for income taxes, determined by applying a
non-GAAP effective income tax rate to our income before provision
for income taxes, as adjusted for the non-GAAP items described
above. The non-GAAP effective income tax rate is generally based
upon the income taxes we expect to pay in the reporting year. Our
GAAP effective income tax rate can vary significantly from year to
year as a result of tax law changes, settlements with tax
authorities, changes in the geographic mix of earnings including
acquisition activity, changes in the projected realizability of
deferred tax assets, and other unusual or period-specific events,
all of which can vary in size and frequency. We believe that our
non-GAAP effective income tax rate removes much of this variability
and facilitates meaningful comparisons of operating results across
periods. We evaluate our non-GAAP effective income tax rate on an
ongoing basis, and it can change from time to time. Our non-GAAP
income tax rate can differ materially from our GAAP effective
income tax rate.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure defined as net income
(loss) attributable to non-controlling interest before interest
expense, interest income, income taxes, depreciation expense,
amortization expense, revenue adjustments, restructuring expenses,
acquisition expenses, and other expenses excluded from our non-GAAP
financial measures as described above. We believe that adjusted
EBITDA is also commonly used by investors to evaluate operating
performance between companies because it helps reduce variability
caused by differences in capital structures, income taxes,
stock-based compensation accounting policies, and depreciation and
amortization policies. Adjusted EBITDA is also used by credit
rating agencies, lenders, and other parties to evaluate our
creditworthiness.
SIS Adjusted Non-GAAP
SIS Adjusted Non-GAAP is a non-GAAP financial measure used by
Cognyte that excludes SIS non-GAAP direct business contribution
(which was divested on December 1, 2022) on financial measures such
as non-GAAP revenue, non-GAAP gross profit, and gross margins,
non-GAAP research and development expenses, net, non-GAAP selling,
general and administrative expenses, non-GAAP operating (loss)
income and operating margins.
We believe these SIS Adjusted non-GAAP financial measures, used
in conjunction with the corresponding GAAP and non-GAAP measures,
provide investors with useful supplemental information about the
financial performance of our business.
Supplemental Information About Constant Currency
Because we operate on a global basis and transact business in
many currencies, fluctuations in foreign currency exchange rates
can affect our consolidated U.S. dollar operating results. To
facilitate the assessment of our performance excluding the effect
of foreign currency exchange rate fluctuations, we calculate our
GAAP and non-GAAP revenue, cost of revenue, and operating expenses
on both an as-reported basis and a constant currency basis,
allowing for comparison of results between periods as if foreign
currency exchange rates had remained constant. We perform our
constant currency calculations by translating current-period
foreign currency results into U.S. dollars using prior-period
average foreign currency exchange rates or hedge rates, as
applicable, rather than current period exchange rates. We believe
that constant currency measures, which exclude the impact of
changes in foreign currency exchange rates, facilitate the
assessment of underlying business trends.
Unless otherwise indicated, our financial outlook for each of
revenue, operating margin, and diluted earnings per share, which is
provided on a non-GAAP basis, reflects foreign currency exchange
rates approximately consistent with rates in effect when the
outlook is provided.
We also incur foreign exchange gains and losses resulting from
the revaluation and settlement of monetary assets and liabilities
that are denominated in currencies other than the entity’s
functional currency. Our financial outlook for diluted earnings per
share includes net foreign exchange gains or losses incurred to
date, if any, but does not include potential future gains or
losses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230615673276/en/
Investor Relations Dean
Ridlon Cognyte Software Ltd. IR@cognyte.com
Cognyte Software (NASDAQ:CGNT)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Cognyte Software (NASDAQ:CGNT)
Gráfica de Acción Histórica
De May 2023 a May 2024