Cognyte(CGNT -12.29%) reported second-quarter fiscal 2026 results on Sept. 9, 2025, with revenue rising 15.5% year over year to $97.5 million and adjusted EBITDA increasing 33% to $11 million. Management raised full-year guidance, now projecting $397 million in revenue (up 13% year over year at midpoint) and $45 million in adjusted EBITDA, while reiterating a $500 million revenue target for the fiscal year ending Jan. 31, 2028, and signaling continued margin expansion.

The following analysis highlights execution on strategic wins, margin expansion, and the path to U.S. market growth.

Major military intelligence wins accelerate Cognyte’s momentum

Cognyte secured two $10 million deals with military intelligence customers in Asia-Pacific and EMEA, including a successful displacement of a regional incumbent in EMEA. New business wins contributed to short-term remaining performance obligations (RPO) increasing to $355 million, supporting 12-month revenue visibility amid heightened global security spending.

“In Asia-Pacific, we signed a $10 million follow-on deal with a longstanding customer. They operate in a complex border environment and use our border security solutions to stop infiltration attempts by hostile actors, clear proof of the ongoing trust they place in us and the tangible operational results we deliver. In EMEA, we won a competitive deal worth about $10 million with a new Tier 1 military intelligence organization, beating several global vendors, including the regional incumbent. They chose Cognyte Software Ltd. for our proven tactical intelligence solutions to modernize operations and address emerging threats.”
— Elad Sharon, CEO

Winning large, competitive contracts and demonstrating follow-on demand validate the company’s technology differentiation and strengthen the long-term growth narrative through increased market share in core government verticals.

Gross margin expansion demonstrates operational leverage at Cognyte

Non-GAAP gross margin improved to 72.1%, expanding 81 basis points year-over-year, while non-GAAP gross profit increased 16.8% year-over-year to $70.3 million. Annual non-GAAP gross margin guidance was raised to 72%, with a new long-term target of 73% non-GAAP gross margin for the fiscal year ending Jan. 31, 2028, driven by a software revenue mix projected to reach 87% in fiscal 2026.

“Our total software revenue for the quarter was approximately $83.3 million, representing 85.5% of total revenue. We continue to expect software revenue to be about 87% of total revenue on an annual basis.”
— David Abadi, CFO

Sustained mix shift toward higher-margin software, and disciplined cost management, improve profitability, signaling the company’s capacity to drive long-term free cash flow generation and strategic reinvestment without impairing financial flexibility.

U.S. expansion strategy advances but remains a future growth lever

Despite the U.S. accounting for a small portion of current revenue, the company highlighted recent state and local customer acquisitions, the start of a strategic LexisNexis Risk Solutions partnership, and successful proof-of-concept (POC) engagements with federal agencies in the U.S. Management reiterated that budget constraints and procurement delays in U.S. federal markets are built into guidance, but confirmed strong product-market fit and growing partner interest.

“The U.S. represents a significant opportunity for us, given that it’s a large territory with many security agencies. We continue to make investments in order to expand presence, increase market reach, expand the partner network, and invest more in marketing. Having said that, in the shorter term, the U.S. presents a small portion of our business, so we are not relying in our guidance heavily on the U.S. We do believe that the U.S. will become a more significant portion of our business over time.”
— Elad Sharon, CEO

Cognyte’s measured U.S. go-to-market investments, combined with low near-term guidance dependence, preserve upside optionality, allowing the company to capture growing demand as federal agency budget normalization occurs over the next several years.

Looking Ahead

Management projects approximately $397 million in revenue for fiscal 2026 (plus or minus 2%), $45 million in adjusted EBITDA, 72% non-GAAP gross margin, and $0.23 in annual non-GAAP EPS. Sequential quarterly revenue growth is expected in both Q3 and Q4. Strategic financial targets for the fiscal year ending Jan. 31, 2028, remain unchanged, including $500 million in revenue, a 73% gross margin target, and adjusted EBITDA margins above 20%.