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CGNT's recurring revenues rose 10% to $51.9M, making up nearly half of total revenues.
Cognyte's subscription shift boosts visibility, with billings up 31.2% and RPO at $528.8M.
CGNT faces near-term strain, including negative cash flow and revenue timing challenges.
Cognyte Software Ltd.’s (CGNT - Free Report) first quarter of fiscal 2027 results highlight a shift in its business model, with recurring revenues gaining significant traction. Recurring revenues were up 10% to $51.9 million, accounting for nearly 49.2% of total revenues. Recurring revenues at Cognyte are primarily driven by support contracts, as well as sub-time-based and SaaS subscription offerings.
Software revenues of $47.3 million rose 26.5% year over year, while software services revenues of $50.1 million were up 12.1%. Subscription momentum is expected to improve revenue visibility over time.
While billings rose a healthy 31.2% year over year and remaining performance obligations (“RPO”) reached $528.8 million, indicating improved revenue visibility.
Cognyte Software Ltd. Price, Consensus and EPS Surprise
However, the timing mismatch remains a concern. The company reported a negative operating cash flow of $4.7 million in the quarter. The performance was affected by the transition to a subscription model, forex dynamics and inventory levels.
Challenges associated with the shift to a subscription model are that revenues are recognized over time rather than upfront. The transition may lead to temporary pressure on revenue growth and increased volatility in key financial metrics.
Looking ahead, Cognyte reaffirmed its full-year outlook, expecting recurring revenues to grow faster than total revenues. Revenues are expected to be $448 million (+/-3%) compared with $400 million in fiscal 2026.
Overall, Cognyte’s recurring revenue shift strengthens its long-term growth prospects, but near-term financial strain could remain a meaningful overhang.
Taking a Look at Competitors’ Business Models
Cellebrite (CLBT - Free Report) offers digital investigative solutions (software and services) for legally sanctioned investigations for the public and private sectors. The company recently reported its first-quarter 2026 results.
Cellebrite is demonstrating strong top-line expansion, driven by its subscription-heavy model. First-quarter annual recurring revenues (“ARR”) grew 21% year over year to $493 million, with sequential ARR growth of $12 million. Subscription revenues increased 23% year over year to $117.9, signaling improved revenue visibility. Overall revenues were up 19% to $128.3 million. Recurring revenue dollar-based net retention rate was 115%. At the same time, it maintained a trailing 12-month free cash flow margin of 32%.
Palantir’s (PLTR - Free Report) first-quarter revenues surged 85% year over year to $1.633 billion, buoyed by strong momentum in the U.S. business. Revenues from U.S. business were up 104% to $1.28 billion. PLTR closed 47 deals of at least $10 million, 72 deals of at least $5 million and 206 deals of at least $1 million in the last reported quarter. Adjusted free cash flow came in at $925 million for the quarter.
For 2026, PLTR raised its revenue guidance and now expects the metric to be between $7.65 billion and $7.662 billion. Palantir’s software platforms – Gotham, Foundry, Apollo and AIP – offer the infrastructure that customers need to integrate data and operations and run their software on any environment.
CGNT Price Performance, Valuation & Estimates
Shares of Cognyte have lost 8.5% in the past month against the Internet-Software industry’s growth of 0.4%.
Image Source: Zacks Investment Research
Regarding the price/book ratio, CGNT is trading at 2.96, lower than the sector’s multiple of 4.36.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CGNT’s earnings for fiscal 2027 has been significantly revised downward over the past 60 days.
Image Source: Zacks Investment Research
CGNT currently carries a Zacks Rank #5 (Strong Sell).
View the Zacks #1 Rank List
Image: Bigstock
Cognyte's Recurring Revenue Shift: Short-Term Strain Ahead?
Key Takeaways
Cognyte Software Ltd.’s (CGNT - Free Report) first quarter of fiscal 2027 results highlight a shift in its business model, with recurring revenues gaining significant traction.
Recurring revenues were up 10% to $51.9 million, accounting for nearly 49.2% of total revenues. Recurring revenues at Cognyte are primarily driven by support contracts, as well as sub-time-based and SaaS subscription offerings.
Software revenues of $47.3 million rose 26.5% year over year, while software services revenues of $50.1 million were up 12.1%. Subscription momentum is expected to improve revenue visibility over time.
While billings rose a healthy 31.2% year over year and remaining performance obligations (“RPO”) reached $528.8 million, indicating improved revenue visibility.
Cognyte Software Ltd. Price, Consensus and EPS Surprise
Cognyte Software Ltd. price-consensus-eps-surprise-chart | Cognyte Software Ltd. Quote
However, the timing mismatch remains a concern. The company reported a negative operating cash flow of $4.7 million in the quarter. The performance was affected by the transition to a subscription model, forex dynamics and inventory levels.
Challenges associated with the shift to a subscription model are that revenues are recognized over time rather than upfront. The transition may lead to temporary pressure on revenue growth and increased volatility in key financial metrics.
Looking ahead, Cognyte reaffirmed its full-year outlook, expecting recurring revenues to grow faster than total revenues. Revenues are expected to be $448 million (+/-3%) compared with $400 million in fiscal 2026.
Overall, Cognyte’s recurring revenue shift strengthens its long-term growth prospects, but near-term financial strain could remain a meaningful overhang.
Taking a Look at Competitors’ Business Models
Cellebrite (CLBT - Free Report) offers digital investigative solutions (software and services) for legally sanctioned investigations for the public and private sectors. The company recently reported its first-quarter 2026 results.
Cellebrite is demonstrating strong top-line expansion, driven by its subscription-heavy model. First-quarter annual recurring revenues (“ARR”) grew 21% year over year to $493 million, with sequential ARR growth of $12 million. Subscription revenues increased 23% year over year to $117.9, signaling improved revenue visibility. Overall revenues were up 19% to $128.3 million. Recurring revenue dollar-based net retention rate was 115%. At the same time, it maintained a trailing 12-month free cash flow margin of 32%.
Palantir’s (PLTR - Free Report) first-quarter revenues surged 85% year over year to $1.633 billion, buoyed by strong momentum in the U.S. business. Revenues from U.S. business were up 104% to $1.28 billion. PLTR closed 47 deals of at least $10 million, 72 deals of at least $5 million and 206 deals of at least $1 million in the last reported quarter. Adjusted free cash flow came in at $925 million for the quarter.
For 2026, PLTR raised its revenue guidance and now expects the metric to be between $7.65 billion and $7.662 billion. Palantir’s software platforms – Gotham, Foundry, Apollo and AIP – offer the infrastructure that customers need to integrate data and operations and run their software on any environment.
CGNT Price Performance, Valuation & Estimates
Shares of Cognyte have lost 8.5% in the past month against the Internet-Software industry’s growth of 0.4%.
Image Source: Zacks Investment Research
Regarding the price/book ratio, CGNT is trading at 2.96, lower than the sector’s multiple of 4.36.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CGNT’s earnings for fiscal 2027 has been significantly revised downward over the past 60 days.
Image Source: Zacks Investment Research
CGNT currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.