Cognyte Software CGNT will release results for the first quarter of fiscal 2027 on June 3.
CGNT’s earnings beat the Zacks Consensus Estimate in the last two quarters by 900% and 250%, respectively.
Let us see how CGNT is expected to fare in terms of revenues and earnings this time.
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The Zacks Consensus Estimate for the first-quarter 2027 earnings is pegged at 10 cents per share, unchanged over the past 30 days. The same for revenues is pinned at $105.3 million, indicating 10.2% jump from the year-ago actual.
Earnings Whispers for CGNT
Our proven model does not predict an earnings beat for CGNT this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
CGNT currently has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
CGNT Q1: Factors at Play
Cognyte entered the fiscal first quarter following a year of double-digit growth and improving profitability. Revenues for fiscal 2026 surged 14.1%, driven by demand from repeat customers, as well as increases in new customers. Fiscal 2026 non-GAAP gross margin expanded 200 basis points to 73%, while non-GAAP operating profit of $36.7 million more than doubled year over year. The company has already achieved its fiscal 2028 gross margin targets ahead of schedule, indicating strong execution.
However, management has explicitly guided that the fiscal first quarter revenues will come in slightly below the fiscal fourth quarter levels, followed by sequential improvement each quarter. This is mostly aligned with the seasonality of the business. Driven by revenue trends, gross margin is also expected to fluctuate between quarters.
Cognyte continues to have strong revenue visibility. Total RPO stood at $557.2 million, with a backlog of $433.4 million at the end of fiscal 2026. Total RPO is the sum of contract liabilities and backlog. As a result, the company now expects fiscal 2027 revenues to be $448 million (+/-3%) compared with $400 million in fiscal 2026.
Demand trends remain strong. Cognyte operates in a domain shaped by rising geopolitical tensions, increasing cyber and hybrid threats, sophisticated, complex data and the need for real-time intelligence, which is driving demand for its solutions.
Cognyte Software Ltd. Price and EPS Surprise
Cognyte Software Ltd. price-eps-surprise | Cognyte Software Ltd. Quote
Management remains focused on driving installed base expansion, focusing on new customers and scaling the U.S. business. On the last earnings call, management noted that the installed base forms a significant portion of revenues, highlighting customer stickiness. Strength in repeat business is likely to have stabilized performance even in seasonally softer quarters like fiscal first quarters.
Cognyte continues to see momentum in large deal activity across geographies. Recently, the company announced a roughly $5 million upgrade agreement with a “long-standing national security agency” client in the Asia-Pacific. In March, the company said it won a $20 million plus, three-year subscription contract with a “long-standing customer” in the Europe/Middle East/Africa region, underscoring both demand visibility and customer stickiness.
However, there remain challenges. The shift toward subscription-based contracts can impact near-term revenue timing differences compared with perpetual licenses. Macro uncertainty, competition, rising operating expenses and dependence on government spending cycles remain concerns. Foreign exchange, particularly the strengthening of the Israeli shekel, is another headwind, although this is expected to be partially offset by gross margin expansion.
CGNT Stock Performance vs. Peers
CGNT’s 38.4% gain stands in stark contrast to the Zacks Internet Software market’s decline of 4.9% in the past six months. The broader Computer and Technology sector and the S&P 500 are up 19.8% and 11.4%, respectively.
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Some of its peers, such as Elbit Systems ESLT, has gained 89.1%, while Palantir PLTR and Cellebrite DI Ltd CLBT are down 8.3% and 17.3%, respectively. Elbit Systems and Cellebrite are Israel-based companies like Cognyte, while Palantir is an established U.S.-based company in the intelligence software space.
CGNT’s Discounted Valuation
In terms of the price/book multiple, CGNT is trading at 3.69X, lower than the sector’s multiple of 4.74X.
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ESLT, PLTR and CLBT trade at a price/book multiple of 9.19X, 43.86X and 7.2X, respectively.
How to Approach CGNT Before Q1 Earnings Release
While a strong backlog, improving profitability and demand trends support the longer-term trajectory, near-term seasonality could limit upside.
New investors may be better off staying on the sidelines and looking for a more attractive entry point or clearer post-earnings direction.
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Elbit Systems Ltd. (ESLT): Free Stock Analysis Report
Cognyte Software Ltd. (CGNT): Free Stock Analysis Report
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Cellebrite DI Ltd. (CLBT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).