Good day ladies and gentlemen. Thank you for standing by. Welcome to the Cognyte second quarter fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, we will conduct a question and answer session. Instructions will be given at that time. Please note that today’s conference may be recorded. I would now like to hand the conference over to your host, Dean Ridlon, Head of Investor Relations. Please go ahead.

Thank you Operator. Hello everyone, I’m Dean Ridlon, Cognyte’s Head of Investor Relations. Thank you for joining us today. I’m here with Elad Sharon, Cognyte’s CEO, and David Abadi, Cognyte’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 Investors section of our website at cognyte.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 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, Cognyte 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 other uncertainties could cause Cognyte’s actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F for the fiscal year ended January 31, 2024 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 Investors section of our website at cognyte.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 meaningful information about the financial performance of our business and is useful for 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’d like to turn the call over to Elad.

Thank you Dean. Welcome everyone to our second quarter conference call. This was another strong quarter for Cognyte. We are delivering on our business plan, executing the growth strategy, and generating improved profitability as we leverage our financial model. We delivered another quarter of double-digit revenue growth with gross margin and adjusted EBITDA expanding more rapidly than revenue. This year-to-date performance, solid visibility and healthy demand have given us the confidence to increase our full-year outlook. During Q2, we delivered revenue of $84 million, up approximately 10% year-over-year. Non-GAAP gross profit increased 13% year-over-year, growing faster than revenue, consistent with our focus on margin expansion. We also generated $8 million of positive adjusted EBITDA in the quarter, more than three times the amount that we generated in Q2 last year, and we remain focused on delivering sustainable and profitable growth. A central component of our growth strategy is to deepen and broaden our engagements with existing customers by expanding the use of our solutions and introducing them to additional offerings. Our continued success in this area underscores the significant value we deliver and the strength of our customer relationships. In Q2, we secured three substantial follow-on orders, each valued at over $10 million. These orders came from two international security agencies and a law enforcement agency. Each of these customers has realized significant value from our solutions over the years. We believe our solutions have proven to be indispensable, providing our customers the quality, reliability and power needed to tackle evolving challenges effectively. In North America, we continued to make progress. During the first half of the fiscal year, we won deals with eight new customers. In each case, the customer replaced an incumbent with a Cognyte solution. Many of these new customers were referred to us by existing customers…

Thank you Elad, and hello everyone. We continue to deliver strong results that reflect our solid execution and the leverage we have in our financial model. Q2 revenue was $84.4 million, an increase of approximately 10% year-over-year. The majority of the revenue growth was driven by an increase in software revenue. Recurring revenue is strong. We continue to grow our recurring revenue, and in Q2 we generated $46.6 million of recurring revenue. We were able to drive gross profit growth faster than revenue. Non-GAAP gross margin for the quarter was 71.3%. Our non-GAAP gross profit for the quarter was $60.2 million, an increase of $6.9 million or 12.9% year-over-year growth. The margin expansion demonstrates the leverage we have built into our business model. This is largely driven by higher software revenue and the improved cost structure of our professional services organization. Our strong gross margin reflects the value our customers recognize in our innovative technology and our competitive differentiation. Non-GAAP operating income and adjusted EBITDA grew meaningfully faster than revenue, reflecting the strength of our financial model. We ended Q2 with non-GAAP operating income of $4.4 million and adjusted EBITDA of $8.3 million, resulting in positive non-GAAP EPS of $0.05. Looking at our H1 results, our revenue was $167.1 million and grew by 11% year-over-year, and our non-GAAP gross profit grew significantly faster by 15% year-over-year. The leverage we have in our model helps us generate meaningful improvement in profitability year-over-year. Our H1 non-GAAP operating income was $6.3 million versus an operating loss of $6.5 million during the first half of last fiscal year, and our H1 adjusted EBITDA was $13.3 million versus about breakeven in H1 of the previous year. Our balance sheet is strong. Our short and long term contract liabilities, also known as deferred revenue, are strong…

Thank you. [Operator instructions] Our first question comes from Mike Cikos with Needham. Your line is open.

Hey guys, thanks for taking the questions here. Just wanted to cycle back to the revenue composition when we’re looking at it today. I saw the software and software service declined 5% sequentially, which I think was the first time that we’ve seen this revenue stream decrease since 3Q of fiscal ’23, so just trying to get a sense of the software and software service revenue to understand what caused that decline, or was that in line with how you guys had expected?

Yes, hi Mike. The vast majority of our offering is offered in perpetual license. As you remember, we do offer certain elements of our portfolio in a subscription model, and recurring revenue this quarter grew sequentially and year-over-year. In Q2, the recurring revenue came in at $46.6 million versus $41.2 million in Q2 last year, representing about a 40% increase related to incremental subscription revenue, so if you look at it, the overall software revenue increased year-over-year by $5.5 million, so actually it’s a conversion of perpetual license to some offerings that are subscription.

Got it. If I think about the guidance that we have here for the rest of the year now, can you help us better think through, I guess, this flip you’re expecting between software and software service versus the professional services, just again because that professional services was so strong in this past quarter.

Yes Mike, it’s David. In general, our guidance baked in the subscription revenue that we’re seeing that is growing. You can see the trend on overall recurring revenue that is growing and is becoming more than 55% of the total revenue, which is good - it gives us visibility, and you can see that between the growth in the recurring revenue, the portion of the subscription is higher. Now, if you will think about governmental agencies, their purchasing behavior has remained the same - their preference is to still buy in our domain on a capex model, which means in other words perpetual. We do encourage the customer to do this transition and we are very pleased that we were able to do it this year, but from a forecast perspective, our 11% is taking into consideration everything, and we believe that in the long term, there will be more impact related to subscriptions.

Got it, thank you very much. I’ll leave it there and turn it over to my colleagues.

Thank you. As a reminder, if you’d like to ask a question, please press star-one-one. I’m showing no further questions at this time. I’d like to turn the call back over to Dean for any closing remarks.

Thank you Michelle, and thank you everyone for joining us on today’s call. Elad, David and I will be traveling to Chicago, Milwaukee and Minneapolis in early October to meet with investors, and hope to see some of you then. In the meantime, please feel free to reach out to me should you have any questions, and we look forward to speaking with you again next quarter.

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone have a great day.