Question · Q3 2026
Charlie Zhou asked about the primary drivers behind Cognyte's impressive margin outperformance in the quarter, specifically regarding gross margin and operating margin, noting that the 73% gross margin target for FY28 was already achieved. He sought insight into the future gross margin expansion trajectory and updated color on the Adjusted EBITDA margin, including whether the 800 basis points expansion towards the greater than 20% target for FY28 should be considered linear.
Answer
David Abadi (CFO, Cognyte) expressed satisfaction with the 73% gross margin, noting quarterly fluctuations but a positive trend. He attributed the improvement to customers' willingness to pay premium prices for advanced analytics solutions, Cognyte's focus on value over pricing competition, and R&D investments. He also mentioned efficiencies in COGS, partly due to applying AI capabilities internally. For Adjusted EBITDA, he highlighted the $47 million guidance for the year (60% year-over-year growth) as evidence of operational leverage and commitment to profitable growth. He stated that the expansion towards the FY28 Adjusted EBITDA margin target would be a gradual improvement over time, without providing a linear breakdown for future years.
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