Cognyte Software (CGNT) Earnings Preview: Software Stock Buy or Sell Signals?

NASDAQ: CGNT | Cognyte Software Ltd. News, Ratings, and Charts

CGNT – Cognyte Software (CGNT) is scheduled to report its third-quarter results on December 13. With analysts expecting the company’s EPS and revenue to increase year-over-year, should investors buy the stock now? Let’s discuss….

Cognyte Software Ltd. (CGNT) is scheduled to report its third-quarter (ended October 31, 2023) results on December 13, 2023. The company’s EPS and revenue for the quarter are expected to increase year-over-year. In addition to optimistic analyst projections, several other factors contribute to a bullish outlook on the stock.

CGNT’s EPS and revenue for the third quarter are expected to increase 104% and 9% year-over-year to $0.01 and $77.63 million, respectively. Although the company reported a decline in revenue during the last quarter, it beat analyst estimates by 4.3%.

CGNT’s CEO, Elad Sharon, said, “I’m pleased to report solid Q2 results and that our positive momentum continues. We won deals with existing and new strategic customers who recognize the strength of our innovative technology and the value it delivers. Given the Q2 results, we are raising our outlook for the year for non-GAAP revenue, gross margin and EPS.”

“Looking beyond FYE 24, we believe that our innovative technology, combined with recent AI development and our large customer base, position us well for continued growth,” he added.

Along with reporting positive momentum in the second-quarter results, the company raised its guidance for fiscal 2024. For the year ending January 31, 2024, CGNT’s revenue is expected to be $307 million at the midpoint plus or minus 2%, representing 8.5% growth over the prior-year SIS-adjusted non-GAAP basis. With revenue expected to grow by 8.5%, the company expects its gross profit to grow faster at more than 15% year-over-year on an SIS-adjusted non-GAAP basis.

CGNT now expects positive adjusted EBITDA for the year, given its positive EBITDA in the second quarter and improved revenue and profitability outlook. The company has raised its outlook for three quarters in a row.

During the quarter, CGNT won a deal of more than $20 million with a new national security customer to combat terrorism and national threats. It won another deal for approximately $4 million from a new unit within an existing national intelligence customer to combat terrorist activities. The company locked another deal worth roughly $2.5 million to identify and prevent threats during operations.

The company is also investing in AI to help its customers improve the speed and success rate of their investigations by analyzing large amounts of structured and unstructured data, which helps generate impactful insights.

CGNT’s stock has gained 81.7% in price year-to-date and 122.4% over the past year to close the last trading session at $5.65.

Here’s what could influence CGNT’s performance in the upcoming months:

Mixed Fundamentals

CGNT’s revenue for the second quarter, which ended July 31, 2023, declined 5% year-over-year to $77.05 million. Its non-GAAP operating loss narrowed 94.7% over the prior-year quarter to $928 thousand. The company’s non-GAAP net loss attributable to CGNT widened 124.1% year-over-year to $6.39 million. Also, its non-GAAP loss per share attributable to CGNT widened 125% year-over-year.

On the other hand, CGNT’s non-GAAP gross profit rose 0.7% year-over-year to $53.33 million. Its adjusted EBITDA came in at $2.33 million, compared to an adjusted EBITDA loss of $13.14 million in the prior-year quarter.

Mixed Analyst Estimates

Analysts expect CGNT’s loss per share for fiscal 2024, and 2025 is expected to narrow 73% and 22.4% year-over-year to $0.34 and $0.26, respectively. Its revenue for fiscal 2024 is expected to decline 1.6% year-over-year to $306.94 million. On the other hand, its revenue for fiscal 2025 is expected to increase 6.1% year-over-year to $325.70 million.

Discounted Valuation

In terms of forward EV/Sales, CGNT’s 1.14x is 58.3% lower than the 2.73x industry average. Its 1.29x forward Price/Sales is 53.9% lower than the 2.81x industry average. Likewise, its 2.15x trailing-12-month Price/Book is 27.8% lower than the 2.97x industry average.

Mixed Profitability

In terms of the trailing-12-month gross profit margin, CGNT’s 65.34% is 34.3% higher than the 48.67% industry average. Likewise, its 12.56% trailing-12-month levered FCF margin is 52.4% higher than the industry average of 8.24%. Furthermore, the stock’s 2.41% trailing-12-month Capex/Sales is 3.1% higher than the industry average of 2.33%.

On the other hand, CGNT’s trailing-12-month net income margin is negative 24.78% compared to the 2.35% industry average. Likewise, its trailing-12-month Return on Common Equity is negative 34.48% compared to the 1.11% industry average. Furthermore, the stock’s negative 16.62% trailing-12-month EBITDA margin compares to the industry average of 9.25%.

POWR Ratings Show Promise

CGNT has an overall B rating, equating to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. CGNT has a B grade for Value, consistent with its discounted valuation.

CGNT is ranked #28 out of 132 stocks in the Software – Application industry. Click here to access CGNT’s Growth, Momentum, Stability, Sentiment, and Quality ratings.

Bottom Line

CGNT’s stock is trading above its 50-day and 200-day moving averages of $4.63 and $4.62, respectively, indicating an uptrend. Several initiatives were taken last year by the company, including adjusting the cost structure, improving its capital structure, and focusing its investments on high-potential opportunities in R&D and sales, which helped the company deliver positive adjusted EBITDA two quarters earlier than projected.

It also had a positive free cash flow during the second quarter. The company won several new deals during the third quarter, strengthening revenue visibility. Moreover, adding artificial intelligence to its solutions positions it well to maintain its leadership in investigative analytics.

Given its discounted valuation, sizable global customer base, and the use of emerging technologies like AI, it could be wise to buy the stock now.

How Does Cognyte Software Ltd. (CGNT) Stack Up Against Its Peers?

While CGNT has an overall grade of B, equating to a Buy rating, you may also check out these other A (Strong Buy) or B (Buy)-rated stocks within the Software – Application industry: eGain Corporation (EGAN), Commvault Systems, Inc. (CVLT), and Nutanix, Inc. (NTNX). To explore more Software – Application stocks, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >


CGNT shares were unchanged in premarket trading Monday. Year-to-date, CGNT has gained 81.67%, versus a 21.59% rise in the benchmark S&P 500 index during the same period.


About the Author: Dipanjan Banchur


Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CGNTGet RatingGet RatingGet Rating
EGANGet RatingGet RatingGet Rating
CVLTGet RatingGet RatingGet Rating
NTNXGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Is This REALLY a Bull Market?

The S&P 500 (SPY) keeps making record highs...but does that mean that market conditions are truly bullish? 44 year investment veteran shines a light on how hollow recent gains are as they are only accruing to a handful of stocks with most investors searching high and low for stock market gains. Read on for more...

Unveiling Adobe (ADBE) Q2 Earnings: What Lies Ahead for Investors?

Software giant Adobe Inc. (ADBE) has released its second-quarter earnings, revealing double-digit growth in both revenue and profits. Yet, concerns arise around the complexities of navigating growth in the face of advancing AI technologies. Let’s analyze ADBE’s recent performance and assess key fundamentals to uncover what lies ahead for investors…

3 AI Stocks to Invest in for the Next Technological Revolution

The AI market is experiencing a significant growth trajectory, driven by widespread application across various industries. Hence, it could be wise to invest in top AI stocks, Alphabet (GOOGL), Meta Platforms (META), and Alibaba Group Holding (BABA) for the next technological revolution. Read more...

Analyzing Broadcom’s (AVGO) Q2 Earnings: Worth Investing?

Driven by a surge in demand for its AI products, Broadcom (AVGO) reported robust earnings in its latest quarterly results, exceeding expectations on both top and bottom lines. However, is the stock’s recent announcement of a 10-for-1 stock split worth investing in? Keep reading to find out…

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

Read More Stories

More Cognyte Software Ltd. (CGNT) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CGNT News