Is Cognyte Software a buy right now?

Roth Capital Partners analyst Taz Koujalgi says Cognyte Software’s (Cognyte Software Stock Quote, Chart, News, Analysts, Financials NASDAQ:CGNT) first-quarter results showed accelerating software revenue and stronger current remaining performance obligation bookings, a leading indicator of revenue growth.

In a June 4 update, Koujalgi maintained his “Buy” rating and $14.00 target on Cognyte.

Cognyte reported first-quarter fiscal 2027 revenue of $105.5-million, up 10% year-over-year and slightly ahead of Street estimates of $105.0-million. Adjusted EBITDA was $13.6-million, or a 13% margin, also ahead of the Street at $13.2-million.

Software licence revenue, including perpetual and term licences, rose 26.5% year-over-year to about $47.0-million, accelerating from 23% growth in the previous quarter. Software services revenue, which includes support and SaaS revenue, rose 12% to $50.1-million.

Koujalgi noted total software revenue had its strongest growth in two years, rising 19% year-over-year to $97.3-million, compared with an average of about 14% over the previous four quarters.

Total remaining performance obligation was $557.2-million, down 11.5% year-over-year, while current RPO was $363.4-million, up 5%. RPO bookings fell 48% to about $77-million, but current RPO bookings accelerated 16% to $99-million.

Operating cash flow was negative $4.7-million, which Koujalgi attributed to increased subscription adoption, foreign exchange pressure and inventory build. He said subscription offerings have a different cash collection profile than perpetual licences, with less cash collected upfront, while a weaker U.S. dollar and higher hardware costs also weighed on cash flow.

Despite that pressure, Cognyte reiterated its fiscal 2027 operating cash flow guidance of about $45-million, though it expects the result to be back-end loaded. The company also reiterated its fiscal 2027 revenue guidance of $448-million at the midpoint and Adjusted EBITDA guidance of about $68-million.

Koujalgi said Cognyte’s recurring revenue mix, which includes SaaS, term licences and maintenance revenue, increased to 49.2% from about 47% over the previous two quarters. Recurring revenue grew about 10% year-over-year, and the company expects the mix to keep rising through the year.

“CGNT continues to see healthy traction in the U.S. market at both the Federal and local/State levels and said it secured several new logos,” Koujalgi said. “The company has further expanded its partner ecosystem in the U.S. in addition to Carhasoft and LexisNexis.”

Cognyte expects to sign about $20-million in U.S. deals in fiscal 2027. Koujalgi said the company remains on track to generate about $25-million of U.S. revenue across fiscal 2027 and fiscal 2028 combined.

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