Imtiaz Koujalgi

Imtiaz Koujalgi inquired about the drivers of Cognyte's growth, distinguishing between increased purchases from existing customers (due to data growth or new products) and new customer acquisition, and later asked about the company's 'secret sauce' for displacing incumbents.

Answer

Elad Sharon, CEO, stated that main growth typically comes from existing customers expanding data capacity, diversity, and use cases, while new customers start small and grow over time. He attributed incumbent displacement to Cognyte's superior technology, significant R&D investment, and advanced AI capabilities, proven through successful POCs. David Abadi, CFO, explained that strong Q2 billings were influenced by contract milestones and new orders, with no specific callouts beyond overall strong trends. He also noted that recurring revenue, primarily from support, is expected to see some improvement next year due to new subscription deals.

Imtiaz Koujalgi asked for clarification on the drivers of Cognyte's growth, specifically the split between existing customers buying more products, data growth, and new product adoption. He also questioned what enables Cognyte to displace incumbents in EMEA and the U.S., and whether new logo acquisitions are primarily greenfield or competitive displacements. Additionally, Koujalgi inquired about the strong Q2 billings, the consistency of the 48% recurring revenue mix, and the U.S.'s assumed contribution to the long-term $500 million revenue target.

Answer

CEO Elad Sharon outlined three growth pillars: existing customer base, new logo acquisition, and U.S. market acceleration, noting that most growth comes from existing customers expanding data capacity, functionality, and use cases. He attributed incumbent displacement to Cognyte's superior technology, R&D investment in AI, GenAI, analytics, and automation, which enables customers to stay ahead of adversaries, often proven through successful POCs. New logo acquisition is a mix of new territories, new departments, and new agencies. Regarding billings, Sharon stated that strong Q2 billings were influenced by contract milestones and new orders, reflecting overall healthy trends. He explained that recurring revenue, primarily from support and subscriptions, is expected to improve in the long term, with some subscription deals becoming active next year. Sharon confirmed that U.S. growth is factored into the $500 million long-term target, citing strong product-market fit and partner interest.

Imtiaz Koujalgi from ROTH Capital asked for clarification on the drivers of Cognyte's growth, specifically the split between existing customers (data growth vs. new products) and new logo acquisition. He also questioned what specific functionalities or "secret sauce" enable Cognyte to displace incumbents in EMEA and the U.S., whether new logo acquisitions are primarily greenfield or competitive displacements, the reasons behind the strong Q2 billings jump, the expected trend for the 48% recurring revenue mix, and the U.S. market's assumed contribution to the long-term $500 million revenue target.

Answer

CEO Elad Sharon stated that growth primarily comes from existing customers expanding their use cases, data capacity, and functionality, as new customers typically start small. He attributed incumbent displacement to continuous R&D investment in AI, analytics, and GenAI, which enhances mission success and is proven through successful POCs. New logo acquisition is a mix of new territories, departments, and agencies. CFO David Abadi noted that strong Q2 billings were influenced by contract milestones and new orders, with no specific call-out beyond overall strong performance. He expects recurring revenue to show some improvement in the long term, especially next year, driven by subscription deals. Elad Sharon confirmed the U.S. is expected to grow over time to contribute to the $500 million target, citing strong product-market fit and partner interest.