Cognyte Software Beats Estimates in Q2; Shares Fall 13.7%

Cognyte Software Ltd. (CGNT) has reported stronger-than-expected second-quarter fiscal 2022 results on the back of impressive margin expansion and strong momentum in the security analytics segment.

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Despite the upbeat results, shares of the global leader in security analytics software declined 13.7% to close at $24.31 on Monday.

During the second quarter, adjusted earnings of $0.17 per share beat analysts’ expectations of $0.15 per share. The earnings, however, were down 41%, compared to $0.29 per share a year ago.

Revenues jumped 10.4% year-over-year to $116 million and exceeded consensus estimates of $115.6 million. The increase in revenues reflected a surge in Software service revenues, which increased 20.6% to $53.9 million.

Moreover, adjusted gross margin grew 260 bps year-over-year to 73.5% on the back of the successful execution of the company’s software strategy. (See Cognyte Software stock charts on TipRanks)

The company said it won several seven and eight-figure orders during the quarter. It foresees continuous strength in demand for security analytics.

Cognyte Raises Outlook for Fiscal 2022

Based on strong Q2 results, the company has raised its guidance for Fiscal Year 2022. For the full year, while the company forecasts adjusted earnings to be $0.82 per share, the consensus estimate is pegged at $0.80 per share. Revenue is expected to rise 10%, compared to FY2021, to $490 million with a possible +/- 2% variation. The street expects the company to post revenue of $489.98 million.

However, for the third quarter, adjusted earnings are likely to be $0.10 per share, lower than the consensus estimate of $0.19 per share.

Further, third-quarter revenues are projected to be in the range of $112 million to $117 million against the consensus estimate of $123.93 million.

The CEO of Cognyte, Elad Sharon, said, “Following a strong start to the year, we believe we are well-positioned for a strong second half and are also pleased to be raising our annual outlook for profitability.”

Following the second-quarter results, William Blair analyst Louie DiPalma reiterated a Buy rating on the stock.

Consensus among analysts is a Strong Buy based on 3 unanimous Buys. The average Cognyte Software price target of $38 implies 60% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on CGNT, compared to the sector average of 71%.