Cognyte Software Ltd.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cognite First Quarter Fiscal Year 2027 Earnings Conference Call. At this time, all participants are in 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please note that today's conference may be recorded. I will now hand the conference call over to your speaker host, Dean Ridlawn, Head of Investor Relations. Please go ahead.

Thank you, Operator. Hello, everyone. I'm Dean Ridlawn, Cognite's Head of Investor Relations. Thank you for joining us today. I'm here with Elad Sharon, Cognite's CEO, and David Abadi, Cognite's CFO. Before getting started, I would like to mention that accompanying our call today is a presentation. If you'd like to view these slides in real time during the call, please visit the investor section of our website at cognite.com. Click on Upcoming Events, then the webcast link for 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 31st, 2026, 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 it's 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. Hello, everyone, and thank you for joining us today. We delivered a solid start to fiscal 27, reflecting steady execution across the business and sustained demand for Cognite's investigative analytic solutions. Revenue grew double-digit year-over-year, supported by strong customer activity and better-than-expected adoption of our subscription offering, momentum that is driving the growth of recurring revenue. Growth margin remains strong. Profitability improved significantly, going faster than revenue and reflecting the leverage in our model. This successful outcome also reflected our proactive management of macro pressures, notably foreign exchange movements and rising hardware-related costs, which we'll continue to monitor closely and work to offset. Across the world, agencies are undergoing pressure to resolve increasingly complex investigations, and to fragment the data into intelligence, and intelligence into operational action. Before turning to our customer activity, a few words on the trend shaping demand. First, the intelligence environment is growing more complex. Threats are moving faster, data volumes are expanding rapidly, information is increasingly fragmented across domains, and adversaries are becoming more interconnected and sophisticated. As a result, agencies must generate actual intelligence faster and operate more effectively in highly dynamic environments. Second, agencies across law enforcement, national security, defense, and other public safety organizations are advancing and expanding their intelligence and investigative capabilities and investing in advanced technologies to meet evolving mission requirements. This includes growing investments in integrated intelligence capabilities for use cases such as border security, operational intelligence, multi-domain investigations, financial crime, and cyber-related threats. Third, AI is reshaping how intelligence work gets done, transforming both the threat and the opportunity. As investigative environments become more data intensive and time sensitive, customers are looking for AI and agenda capabilities embedded directly within operational workflows with a governance, oversight, explainability, and accountability required for mission-critical environments rather than standalone AI tools. It helps agencies not only work faster, but also uncover hidden connections, surface insights that would otherwise be missed, and improve decision-making. These are not abstract trends. They show up directly in how our customers describe their challenges to us. in our customer conversations, in competitive evaluations, and in expansion conversations. Agencies that came to us a few years ago for a single use case are now asking how to extend across domains, integrate additional data sources, and enable broader investigative and operational workflows through our unified intelligence platform. This pull from the install base is one of the clearest signals of platform stickiness we see. These trends align closely with Cognite's strengths and are increasingly visible in customer demand across our business. Day in and day out, customers depend on our cutting-edge AI-driven analytics to solve problems that matter most to their missions. During Q1, we executed against the key pillars of our growth strategy. What drives both new and existing customer wins is straightforward. We collapse work that used to take weeks of manual correlation into one cohesive environment, fusing data co-sources, surfacing connections, and delivering actionable intelligence. When agencies evaluate us against alternatives, the combination of value, speed, and integration is what wins the deal. And importantly, once deployed, the platform becomes deeply embedded in how their missions operate. As a result, we are displacing incumbents including in-house build systems, as agencies recognize that fragmented and modular intensive workflows cannot keep pace with the scale, speed, and complexity of modern investigations. With that background, the Q1 results show real traction. We saw strong customer engagement globally, new logos, competitive deals, expansions, and upgrades. We extended within our customer base including a new three-year subscription agreement valued at over $20 million, which we recently announced, as well as a large expansion deal valued at over $10 million. New logo activity remains robust across geographies, and we are encouraged by the pace and quality of customers we are bringing on. In the US, we made good progress. In state and local, we secured a number of new logos, In federal, we advanced multiple opportunities through proof of concepts and live operational demonstrations with excellent feedback. The pipeline is maturing, including opportunities that we developed directly and through our partnerships. This year, we expect to generate $20 million in deals and believe there is a significant long-term opportunity in the largest and most sophisticated security market in the world. We evolve our solutions in line with where our customers' missions are heading and have over time shared some examples from our portfolio with you. Today, I want to highlight financial investigations, another growing domain we are bringing significant innovation. We recently introduced new capabilities in this area, addressing rising demand around transnational illicit financing and a broader evolution of financial crime. The help agencies follow the money across traditional and digital currencies, expose the hidden networks behind sanctions, evasion, and terror financing, the networks that bad actors work hard to conceal. And this innovation is already delivering in the field. As we previously announced, T1 military intelligence agencies in EMEA used our platform to counter terror financing with successful results and even earned a National Ministry of Defense Innovation Award for the operational impact. This reflects how we operate across every domain. We listen closely to our customers, monitor the evolving threat landscape to our domain specialists, identify where missions are heading, and deliver integrated solutions that address emerging operational needs, the same engines behind border intelligence, financial investigations, and what comes next.