Cognyte Software Ltd.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognite Third Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Dean Ridlon, Head of Investor Relations. Please go ahead.

Thank you, Operator. Hello, everyone. I'm Dean Ridlon, Cognite's Head of Investor Relations. Thank you for joining us today. I'm here with Elad Sharon, Cognite CEO, and David Abadi, Cognite CFO. Before getting started, I would like to mention that accompanying our call today is a presentation. If you would like to view these slides in real time during the call, please visit the Investors section of our website at cognite.com, click on the Investors tab, click on the webcast link, and select today's conference call. I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call and, except as required by law, Cognite assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Cognite's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20F for the fiscal year ended January 31, 2023, and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods, and among our peer companies that publish similar non-GAAP measures. Please see today's presentation slides, our earnings release, and the investor section of our website at Cognite.com for a reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information. but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies. Now, I would like to turn the call over to Elad.

Thank you, Dean. Welcome, everyone, to the Headwater Conference call-out. I want to start to thank our employees, customers, partners, investors, and friends for standing with Israel and for the inspiring show of solidarity. Our hearts go out to those affected by a horrible attack in Israel and its consequences. Cognite's mission is to help make the world a safer place, and we strive to meet this commitment every single day. The company knows how to respond to challenging circumstances, and we have made the necessary adjustments to continue to effectively run the business. We remain focused on our mission, and we continue to deliver on our commitments to our customers, bringing them the highly advanced technology they need to make the world safer. Now, turning to our results. We are pleased with our continuing improvement in our performance over the last two quarters. In Q3, revenue, gross margin, operating income, and adjusted EBITDA came in ahead of our expectations. Revenue grew both year over year and sequentially, and came in at $79 million, Non-GAAP gross margin came in at 70.2%, and gross profit grew faster than revenue, and we delivered positive operating income ahead of our expectations. During the quarter, we continue to win deals with both new and existing customers who recognize the strength of our innovative technology and its ability to deliver to them high value. The visibility we currently have into our business, together with our Q3 performance, allow us to raise guidance again for the year. Now I'll start with a review of several of our significant wins. Then I'll elaborate on how AI continues to drive valuable decision intelligence to our customers. And lastly, I'll further discuss our updated outlook. Let me share a few of our recent wins that help illustrate how our advanced solutions are differentiated and why customers choose Cognite. Our investigator analytic solutions help national security, law enforcement, national intelligence, and other organizations to accelerate and perform more effective investigations. The first win is for approximately $15 million with an existing national security customer for its threat hunting mission to prevent cyber attacks on a national level. We believe we're selected because of our customers' successful experience with our previous deployment and our unique ability to fuse and enrich large amounts of data and deliver insights that are vital to identify cyber attacks on a nationwide scale. The second win is for approximately $50 million from an existing national law enforcement agency to combat criminal activities. It was a single source deal to upgrade the existing solution to address the customer's evolving needs. We believe we won because of our high value we deliver and track record of strong execution. The third win is with a new federal agency to help them de-anonymize illegal cryptocurrency transactions in real time. The deal is for approximately $3 million and is a multi-use subscription. We believe the customer chose our solution because it quickly provides unique value using our innovative AI and proprietary algorithms for pattern recognition within high volumes of data. We continue our focus on expanding in the US, and during Q3, we had two wins with new customers. Both deals were competitive, and we believe we won because of our superior technology and the high value our solutions deliver. Customer engagement remains a focus area for us. Last month, we participated in Millipol Paris, which is a leading security industry conference. During the conference, we had good customer traction and many productive conversations. We believe that our cutting-edge solutions and deep domain expertise drive our leadership position and help us to continue to win significant deals from both existing and new customers. In our recent calls, I gave a few examples of how our customers leveraging the artificial intelligence that we continue to incorporate into our solutions. I will now further elaborate on how AI helps driving valuable decision intelligence to our customers. Customers view us as a strategic trusted partner that provides innovative solutions that help them improve the speed, accuracy, and success rate of their investigations and make timely decisions by generating critical insights from enormous amounts of diversified data. We help them do this by utilizing decision intelligence capabilities. Decision intelligence involves advanced analytic and AI, including machine learning technologies, along with data fusion, data virtualization, and collaboration tools to augment and improve decision making. The goal is to empower humans to make faster and more accurate decisions. Our decision intelligence enabled solutions provide our customers a holistic, accessible view of their data and deliver actionable insights that would be virtually impossible to obtain through legacy technology or manual analysis. These capabilities provide significant value to our customers. With increasingly sophisticated capabilities of bad actors, together with the challenge of constantly evolving technology and data overload, the ability to make smarter and timely data-driven decisions have become even more critical and complicated. Traditional analytical tools tend to simply summarize trends or provide insights that are sometimes insufficient and limit the ability to take actions. When more powerful analytic solutions are deployed, these tools are often only available to a limited group of data scientists or technical experts. Our solutions address those challenges by rapidly uncovering and delivering critical insights and making those insights accessible to technical and non-technical experts, including analysts, investigators, and decision makers. It also empowers personnel to ask questions, challenge ideas, and make use of data-driven insights rather than relying on historical trends or gut instincts in making key decisions. We continue to leverage the latest AI developments from commercially available models and our own AI research lab to further enhance our solution's ability to deliver impactful results to our customers. We believe our ability to continue and embed the latest AI innovations Together with our domain expertise in investigative analytics, we further enhance the value we provide to our customers and our differentiation. Turning to our outlook for this fiscal year, given our performance during Q3 and current visibility, we are raising our revenue guidance for the year to $311 million, plus or minus 1%, representing approximately 10% growth at the midpoint on an SES-adjusted non-GAB basis. With revenue expected to grow by about 10%, we now expect gross profit to grow faster at more than 20% year-over-year on an SAS-adjusted non-GAAP basis. We now expect adjusted EBITDA for the year to be about $8 million. Looking beyond this year, we believe that the combination of positive industry trends, our innovative technology, and our large global customer base position a threat for growth and improving profitability. To summarize, our customers continue to face significant and growing challenges across many use cases, and look to us for solutions that help them accelerate investigations, make decisions faster through decision intelligence, and mitigate a wide variety of threats. Our customers view us as domain experts and a trusted partner, and frequently tell us that our solutions significantly improve the results, enabling them to effectively perform their missions and make the world safer. Our established long-term relationship with customers continue to be a significant asset for us. We are pleased with our third quarter results, and a return to profitability and are raising guidance for the current year. Looking beyond this year, we expect continuing revenue growth and further improvement in profitability. Now, let me turn the call over to David to provide more details about our Q3 results and outlook. David?