Cognyte at Needham Conference: Strategic Growth and AI Focus

On Monday, 12 May 2025, Cognyte Software (NASDAQ:CGNT) presented at the 20th Annual Needham Technology, Media & Consumer 1x1 Conference. The company highlighted robust financial performance and strategic initiatives, focusing on AI and US market expansion. While revenue growth and profitability were strong, challenges include navigating geopolitical uncertainties and sophisticated adversaries.

Key Takeaways

• Cognyte reported a 12% increase in revenue, reaching $351 million in fiscal year 2025.
• Adjusted EBITDA tripled to $29 million, reflecting improved profitability.
• The company aims for a revenue CAGR of 13% over the next few years, targeting $500 million by fiscal year 2028.
• Expansion in the US market is a priority, with a focus on state, local, and federal agencies.
• Investment in AI is crucial for enhancing platform capabilities and maintaining competitive advantage.

Financial Results

• Revenue grew 12% year-over-year to $351 million.
• Non-GAAP gross profit increased by 15%.
• Adjusted EBITDA reached $29 million, more than three times the previous year.
• Cash flow from operations was $47 million.
• Fiscal year 2026 revenue guidance is $392 million, plus or minus 2%.
• Targeting a 73% gross margin and adjusted EBITDA margin over 20% by fiscal year 2028.

Operational Updates

• Operating in nearly 100 countries with hundreds of customers.
• Added almost 60 new logos last year.
• Expanding US presence, starting with state and local agencies, moving to federal.
• Emphasizing technology investment to maintain a leading position.
• Leveraging existing customer base through upgrades and new use cases.
• Strategy includes acquiring new logos through POCs, marketing events, and customer references.

Future Outlook

• Targeting a revenue CAGR of 13% over the next few years, driven by organic growth.
• Three main growth pillars: existing customers, new logos, and US market opportunities.
• Investing in AI to enhance platform capabilities and provide advanced insights.
• Significant opportunities seen in the expanding US market.

Q&A Highlights

• No significant changes in customer purchasing behavior observed.
• Demand driven by data growth, sophisticated adversaries, and tech advancements.
• Customers expanding data capacity, upgrading functionality, and implementing new use cases.
• Geopolitical uncertainty increasing security pressure, driving demand for solutions.
• GenAI presents opportunities to uncover hidden insights and simplify analysis.

Readers interested in more detailed information are encouraged to refer to the full transcript below.

Full transcript - 20th Annual Needham Technology, Media & Consumer 1x1 Conference:

Mike Cikos, Lead Analyst, Needham: Great. Thanks everyone for joining us today for Needham’s May conference. My name is Mike Cikos. I’m the lead analyst here covering Cognite. I’m pleased to say that we have with us today the CEO and CFO of Cognite, Elad and David.

Thank you to both of you guys for joining us. As part of this, I guess, webcast that we have the next forty minutes, I have prepared q and a on my side. But if anyone has any questions that they wanna log in to the management team, please feel free to send send those in, either using the chat box or you can email me at mcghost@Needhamco.com, and I’ll make sure we get to that while we have, Elad and David here. And before we go any further, just thank you again to Elad and David. Thanks for the time.

We really do appreciate it.

Elad, CEO, Cognite: Thanks, Mike. Pleasure to be here.

David, CFO, Cognite: Thank you.

Mike Cikos, Lead Analyst, Needham: Absolutely. Before we dive in, again, you guys have been in the public markets now for a handful of years, but for anyone who’s newer to the name, can we just start super high level, with a quick overview of Cognite, whether it’s the history, the value prop? Let’s start there.

Elad, CEO, Cognite: Sure. So Cognite is a software led technology vendor. We are in the investigative analytics domain. Our customers are primarily security agencies like law enforcement, national security, and national intelligence, and military intelligence agencies. We help them accelerate investigations, speed, accuracy, and success rate, and actually eliminate the unknown, and they have lots of unknown.

We do it by helping them to fuse and analyze their data, which is high volumes, high diversity of data, and convert it into critical insights quickly, and time is critical when it comes to security. And by that, actually, they can identify, investigate, and prevent terror and crime, which we all know that the price tag for not having it on time is actually human lives and financial damage. We operate in nearly hundred countries. We have hundreds of customers, and we are in this market for over three decades now.

Mike Cikos, Lead Analyst, Needham: Awesome. Awesome. And then I I know it’s been, probably a little bit more than a month now since we got the most recent earnings update. But, again, just given that, can we go through, key takeaways, especially since right on top of that earnings report, you guys also had the first ever analyst day as a publicly traded entity. So just reminder for folks as far as key metrics and takeaways that we got.

Elad, CEO, Cognite: Yes. So we closed fiscal twenty five strong. We delivered double digit revenue growth and a significant year over year increase in profitability. Revenue grew approximately 12% year over year to $351,000,000. Our profitability grew significantly faster than revenue.

The non GAAP gross profit increased by approximately 15% year over year. We generated adjusted EBITDA at $29,000,000, and this reflects more than three times than what we had previous fiscal year. And we had very strong cash flow from operations of $47,000,000. Our results actually highlight the significant value we delivered to our customers for many years, the strong execution, and the strength of our business model. And with this healthy demand, market reputation, customer base, and advanced technology, we believe we’re well positioned to continue and grow the company profitably.

Mike Cikos, Lead Analyst, Needham: Great. And it came with some some financial targets as well. I I just wanted to start with that. I’ll ask this one to to David and give a lot a little bit of a break. But, when I think about some of these multiyear targets, I I think one of the things you guys just reported 12% growth.

The back of the math envelopes suggests you’re doing a 13% CAGO over the next couple of years. Slight acceleration, but not much. So is is all that expected to be organic growth, or is there any acquisitions assumed to drive that that target?

David, CFO, Cognite: So when to the plan, actually, we look at our current business environment, and everything is soon our core technology. We’re a very strong guy in technology, and we have a significant installed base. So we have our customers with us for a long time, and they are continuing to lend and expand. On top of us, we are assuming that we will gain more new logos. Last year, we gained almost 60 new logos, and we are also penetrating into The US.

So we took everything together, and this is the way that we were thinking about the future. So it’s mainly our core technology and and especially our ability to execute.

Mike Cikos, Lead Analyst, Needham: And I know from a demand standpoint, a lot of people have looked at what the I guess, some of the headlines out there and some of the different data points. Now that we’re through the first couple of months of this year, where was it your, customer conversations are centered?

Elad, CEO, Cognite: Were we sorry. I couldn’t hear you, Mike.

Mike Cikos, Lead Analyst, Needham: Where are your customer conversations centered? Like, are are customers focused more on specific features or use cases? Yeah. Has has there been any change in demand or or tone of conversation just given some of the geopolitical uncertainty out there?

Elad, CEO, Cognite: Yes. So okay. So, actually, it’s all of the above. We all witnessed that the world is not getting safer. Customers have to deal with different and evolving forms of terror and crime.

The bad guys are becoming more sophisticated, better priced, well funded, well organized. And the demand drivers, are healthy, which means data is growing in diversity and volumes. The other servers are becoming more sophisticated. The technology is running very fast. So customers have to limit all of those demand drivers, which means they have to expand in order to be able to cover everything.

Either it’s data or more users, they have to update with more functionality in order to implement more analytics, more AI in order for them to be able to uncover more hidden insights after the same datasets and also simplify the work of their analysts. And they also have to make sure that they’re ahead of the bad guys in terms of technology. So the market is very dynamic, and customers have to deal with all of the above to upgrade, expand, and and even get more departments into this effort within the agency and and by far the department departments as well. And we get very positive positive feedback on the strong value we deliver to our customers, and some of them also share with us impressive success stories about saving lives, about preventing financial damage, and we are very happy to hear those those stories. We also see that customers willing to adopt more AI is there.

So more customers are buying upgrades in order to have more AI in their solutions. In terms of the geopolitical uncertainty, we all see what happens around us. I mean, over the last few years and to a greater extent, during the last few quarters, we’ve seeing increased uncertainty across the globe. If it’s the new tariff, the conflict in use Ukraine, Russia, Israel, Houthis, very recently, India and Pakistan, almost everywhere. Regardless of those, you know, geopolitical situation and unrest, security threats are there.

Crime continues, terror continues, and evolving, and our customer security agencies have to be successful in the missions. So we do expect that the demand drivers will intensify and the potential for Cognite will grow along the along the way. Security agencies must address these security threats. It’s not a matter of whether they want to or need to. It it’s a must.

It’s a mission critical technology. And without this technology, actually, it’s very difficult for them to be successful. So to summarize, there is unrest in the world. It creates more security pressure, but even without it, crime and terror continues. The demand drivers, data technology, adversaries is very healthy, and we believe that the demand will continue to grow and our opportunity for the future is strong.

Mike Cikos, Lead Analyst, Needham: And when you guys look at the pipeline or or you talk to your sales team, again, understood that the secular demand backdrop remains consistent. Right? That I think that’s been, like, a very important highlight that management has pointed to now for some time. But specific to the pipeline or the deals with your existing customers, are you seeing any movements as far as deal cycles elongating potentially or contract sizes actually shrinking because people are nervous about budgets in in this environment?

Elad, CEO, Cognite: Not at all. Actually, we don’t see changes in customer behavior purchasing behavior. We do see, actually very, I would say, consistent behavior of customers discussing with us, engaging with us, checking what else they can have in order to make their missions more successful. We did share in the last few quarters repeat business coming from existing customers including very very larger renewals and upgrades and expansions. So we don’t see this kind of, you know, of a trend of elongated sales cycle.

It’s not what we see today. And we do see that the demand drivers are healthy, and we execute on it.

Mike Cikos, Lead Analyst, Needham: And if I if I shift to the guidance for a second Yeah. Maybe to come back to to David, but I know that you guys have spoken about the significant visibility that this business model has, which can leg into the revenue. So so when you guys formulated the initial fiscal twenty six guidance, can you help us think through what are the team’s key considerations when presenting that to shareholders and people on the outside? What what is it that you guys are looking at or the different data points you’re triangulating?

David, CFO, Cognite: So, obviously, we look multiple KPI or and the data point to give us the confidence about our guidance. We look for the for the first thing, we look at the demand environment, what we know from our customer, what we hear from our customers. And given the fact that we are three decades in the market, we have a very long relationship with the customer. The other thing is, you know, risk performance, what we are doing quarter over quarter, and we we see the the trends. Obviously, we have the CRPO that play a role and recurring revenue and contract liability, so we took everything together.

And based on that, we are building our guidance. So if you look at this year, we entered with a very good momentum, which I would say it’s a consistent momentum that take place over a long period already. We have healthy demand. We have a strong recurring business. We have a strong RPO, short term and long term, and everything create this good visibility that allow us to guide.

And, actually, we are very pleased with the revenue guidance that we should. We should the guidance for FY ’26 of $392,000,000 plus or minus 2% to present around 12% year over year growth.

Mike Cikos, Lead Analyst, Needham: Great. And when you guys went through the exercise of the analyst day and provided us a three year financial targets, I I think it’s it’s interesting, but one of the things that I received as far as a a talking point from clients is, like, why is now the right time to be putting a medium term model out there? Before we even get into some of the pieces with the the Analyst Day itself, let let’s just tackle that. So why was now the right time for Codbank to go out there with this medium?

Elad, CEO, Cognite: Yes. So we thought it’s right timing for a few reasons. The first one is that we see consistent good performance over quite a long period. This is one second. We do see healthy market market demand, which means that the discussions with our customers are good.

Their needs current and future needs out there. The reputation of Ignite in the market is very good. So this is another data point. And the third one is good visibility. David just mentioned the short and long term RPO, which is very strong.

So combining all of this together, market trends, consistent execution, as well as good visibility into the future gives us the the idea that this was the right time to share our story and to retarget in the investor day.

Mike Cikos, Lead Analyst, Needham: And I know but you just said the word execution. Right? And I’m I’ll bring it back to what we were just talking about with David, but the company has significant visibility, and now it’s giving that a a peak or or a window into that visibility to the investor base. Right? But on an execution standpoint, to deliver against those fiscal twenty seven or ’28 targets from where you guys sit, what’s the most important initiatives that the management need team needs to execute against to achieve those targets?

Elad, CEO, Cognite: Yes. So when we look at our growth potential and growth initiatives, To begin with, it starts with investing in technology that will be continue to be a leading technology that creates generates significant value to our customers. And when customers are successful with our technology, they’ll buy more. This is one. So technology is one thing.

And it’s about being able to uncover more than insights, what we call in investor day eliminate the unknown. Actually, we help our customers to uncover more hidden insights including from encrypted traffic in order for them to be able to put their hands on the bad guys and answer many important questions like who is going to do what, when, with whom, where, etcetera. So those kind of questions are critical. And given that, again, the adversaries are becoming more sophisticated, hiding, using encrypted applications, using encrypted channels for fundings, it makes the lives of the security agencies more complicated. And actually, our mission is to make sure that we keep them one step ahead of the curve.

So this is one. Second is related to existing customers. We operate in nearly hundred countries. We have hundreds of customers. It’s important for us to be able to deliver upgrade path for each and every customer, which means upgrades, expansions, more use cases, and sometimes to sell to more departments within a security agency.

So the repeat business and being able to leverage on our customer base is another pillar. The third pillar is acquiring new logos. Actually, our strategy go to market strategy is gonna expand. We know that when you acquire new customers, sometimes they start small. Usually, they start small, and over time, they buy more and more and expand the number with us.

So it’s important for us to focus also on acquiring new customers. This is another pillar. And the last one is The US market. We have decided that we want to expand presence in The US market. We do it gradually.

We started with state and local. We continue with federal, and this is another growth pillar for us. So it’s about technology, leverage on existing customers, acquiring new ones, and expand presence in The US. Those are the main, I would say, growth pillars.

Mike Cikos, Lead Analyst, Needham: Great. And for David too, I know, again, there were some pretty impressive margin targets put out there as well. So I’m I’m trying to get a better understanding or at least tease out for the audience as well. Can you walk us through the dynamic about how you balance that, I guess, low teens revenue CAGR outlook, that growth versus the profitability and the expanded margins that you guys are looking to drive that?

David, CFO, Cognite: So over the years, our focus remains on driving revenue growth and margin expansion. Actually, if you look at the quarter over quarter, we’re able to improve our profitability significantly. Last year, we we have almost tripled our adjusted EBITDA while we were growing 12%. And this is the way that we are operate our organization. So when we’re making our investment, we are consistently sync with this approach, and this is how we decide where to invest in to drive growth with the with leverage.

So and we expect that this will continue to drive the the growth and the acceleration. We target revenue of half a billion dollar by FY ’20 ’8 and with adjusted EBITDA of over 20%. And the major profitability will come from better gross margins where we’re aiming to have a 73% gross margin and leverage related to our OpEx.

Mike Cikos, Lead Analyst, Needham: And I I think one of the things that was impressive when we were running the numbers on our side is that to achieve that fiscal twenty eight target, it’s it’s more than 50¢ for every revenue dollar is dropping to adjusted EBITDA. Yeah. I think it’s low fifties as far as incremental margin. And I wanted to get a sense. It would seem that there is a significant amount of fixed cost that you guys are just driving leverage against.

And so if we think about even beyond $500,000,000 is the revenue, in fiscal twenty eight, would it would you then need to start tacking on a significant amount of OpEx costs or no? There there’s still even more margin to to drive in this business over the longer term?

David, CFO, Cognite: So, obviously, you know, over FY twenty eight, we will see where we are. But in in general, the the business is very healthy, meaning that we have a very strong, I would say, technology. And we over the years, you can see that the level of r and d investment is relatively high, and we continue to plan to invest more. But there is leverage. And the leverage is because we are able to drive with our technology to more customers and by acquiring new logos and expansion within existing customers and penetrating into new regions like The US, that allow us to to be more with a better leverage.

And this is the reason to see also in, you know, in the last few quarters and also when we are guiding for this year and for the future that we are able to leverage on that. It’s mainly coming from, again, from, gross margin, and the other pillar is the r and d r and d level to revenue, which is, will create for us some leverage.

Mike Cikos, Lead Analyst, Needham: And or I should’ve asked this earlier. With your existing customers, can you give us a sense what’s the average contract length?

David, CFO, Cognite: So, you know, most of the customers are our customer behavior is is perpetual license. So meaning they’re buying the perpetual, and then they place a support contract. Usually, they buy a support contract between one year to up to three years. But the I would say the nice thing about our business is the reoccurring business. When I’m saying reoccurring business, it’s the idea that when customers start with us, usually, they need expansion, and it could be expansion related to data capacity.

It could be more functionality. It could be more use cases. So it’s a journey. You start with the customer, and over time, they’re adding more and more business. Again, the license is, in most cases, is perpetuals, and the support, in most cases, is renewed, so it give us more business over time.

Mike Cikos, Lead Analyst, Needham: And when you look at the support contracts as an example, like, I’m trying to get a sense that that I have to imagine is like a a tell or or that helps you underwrite what next year looks like, just given that renewal base that you have coming due. Is there reason to think that fiscal twenty six or fiscal twenty seven or ’28, like are any of those years a larger renewal year, or each of these years of about on average with the others?

David, CFO, Cognite: So in general, these variety, I would say, the large range of renewal deal size. It’s mainly depend on the customer installed base and the terms because not all the customers will require a contract for three years. This case is that they will buy for one year, the other one for three years. It’s really depend on the specific customers and specific country purchasing behavior. And this is something that I think it was March when we issued a press release about a very large deal that we have a support renewal.

It was a three years deal with the annual support renewal of more than $20,000,000. So a very large one that took place this year. So it really depend on the year what is up to upcoming to renewal. And everything even when we shared our guidance for this year and we look on the on the three models, we took everything together in our plan and expecting to these numbers.

Mike Cikos, Lead Analyst, Needham: Okay. And I know you had spoken to data capacity use cases. A lot had mentioned, some of the new capabilities coming in from AI as an example. So can you talk about and and this probably goes back to my earlier question as far as where customer conversations are centered. When when I was asking about the customer conversations, initially, it was more around macro geopolitical uncertainty.

If we change the question slightly, but when customers are coming to you today for new use cases, are there more dominant use cases that are coming up today that are driving that expansion motion with your existing customers?

Elad, CEO, Cognite: Yes. So it is different in changing between one territory to the other. There are certain territories that are more concerned about border control and border security, illegal immigration. So this is primarily, you know, military intelligence and those that are responsible for borders in certain territories, which is becoming an issue in in in some some countries. In all countries globally, law enforcement is doing things similarly, which means everybody is fighting drug trafficking, human trafficking, organized crime activities.

So this is more common. So if I look at law enforcement agencies, it’s all kinds of crime all over. This is quite similar. If I’m talking about national security and military, it is a little bit different use case between one country to the other. Certain countries are more concerned about external threats that are coming from neighboring countries.

Others are more concerned about internal terror activities. So this is, you know, this is about the the the security pressure in each and every country. Generally speaking, what we do see is that the the I would say the borders are blurring. If, you know, there was a clear you could clearly distinguish between, I would say, terror activities and crime activities before, today, is not the case. And, actually, I urge and encourage everybody on the line to to to view the the IR day replay that we have in our website.

It’s only one hour. It will give you lots of color about the market, about the challenges of our customers, about the technology, and also about this one that the the the the borders are blurring, which means today funding of terror and crime is sometimes the same. Actually, you know, they have to use specific ways to to do funding without being exposed. So they they now utilize similar, you know, similar ways to to find themselves, to organize themselves, and we do see this quite globally. And this is another trend that we see today that crime and terror are no longer totally separate.

They are becoming more involved one with each other. So this is another area where customers need our help. And and we do take into consideration also future concerns that customers may have based on what they tell us. All of them are concerned, about terror that is growing. Actually, each and every country, on the globe, I think, is concerned about internal terror to ourselves.

But but if you look at the specific use cases, so in generally speaking, prime activities, criminal activities all over is quite similar. Border external, threats are different. You can assume that, what happens in in between India and Pakistan now is more border related. What happens now with the Trump administration is some of it is border related, but still the state and local, law enforcement agencies have to deal with the day to day crime. So that’s how what we see in the market today.

Mike Cikos, Lead Analyst, Needham: And and just the last thing on the analyst day here, again, back to David. For the 13% ish revenue CAGR to to drive it 500,000,000 in fiscal twenty eight, Can you help us think about what the basic building blocks are? And what I mean by that, understood that 85 or 90% plus of your growth each year comes from existing customers. But if I take that, again, the 13% revenue CAGR, is it two to three points a year from new logos? Like, maybe four ish percent is coming from price increases, like and then the rest is data capacity and AI upgrades and use cases?

Like, how do you what do you look at to drive at that 13%?

David, CFO, Cognite: So we’ve seen when we look at the future, we see three main pillars. The first one is the existing customers, like many games existing existing installed base and the customer that we have. And these with them, few options to grow. One of them is data capacity. Given what happened with data, you see more and more data.

The data is growing. That give drive more demand. Functionality, we are innovating on a daily basis. So innovation is playing a significant role. Customer need more functionality that create additional expansion.

Actually, when we are sharing data about expansion, expansion could be even $5,000,000, 10 million dollar. This is a significant expansion. It could be related to data capacity. It could be functionality. And a lot of cases, it’s a combination.

Usually, when they’re doing the this type of expansion, this is what happened. And the third element within the existing customers is the additional use cases. So you can see that within the organization, they need more use cases to deal with, And then I was speaking about the the the the the the the the changes in the market that you see more the boundaries are changing, and this is they need more use cases within the same organization. So that’s what we see in the existing customer. I didn’t quantify it because we need all of the three of them in different I would say, the weights will allow us to get into the f four a f four a 28 target of half a billion dollar.

The second pillar is new logos. With new logos, last year, we ended with more than 60 new logos. Usually, the case is that new customers start with smaller deals and increase over time. We shared, you know, a few successful stories that customer may start with few hundred thousand of dollars, and then in two years’ time can do already $2,000,000. So the the journey is is, I would say, is is very important.

And given the fact that once you start to work with the customer, can demonstrate the value, work with them, and and build, I would say, a road map with the customer where they want to be in the future so they can plan around it and build their budget towards that. And the third element is The US opportunity, which is a significant opportunity. US represent a large market with a lot of opportunity for us, and we are in a penetration mode there. So all three all these three pillars will play a role in different ways, but, obviously, we have enough room to to to get into this target of FY ’28 of half a billion dollar.

Mike Cikos, Lead Analyst, Needham: And on the go to market point too, I know, like, you just said the the new logos, and that is something that I think investors are aware of how management has been more transparent or aggressive. I I don’t know how to phrase it right now, but you you guys have been pointing us to, the volume and and growing number of new logos that are coming to Conda, which has been great. I’d love to get a better perspective of the new logo acquisition initiatives that you guys have. What do you have in place to ensure that new logos continue to come to the Conda platform?

Elad, CEO, Cognite: Yeah. So when it comes to new logos, usually, we have to either replace incumbent, that is a a commercial vendor, competitor of us, or to replace someone on the solution. So the way we do it is usually we encourage customers to go for a POC proof of concept. When we go to a proof of concept, it’s easier for us to present a superiority for our technology and the significant value we can deliver compared to others. So is to encourage customers to go for POC.

Second one is we look at the opportunity, the current opportunity, but also the future opportunity. So if we believe that customer could become significant customers for the longer term, obviously, we’ll invest more in order to acquire these customers. So we’ll invest in most of the marketing activities, more POCs, more demos, etcetera. We also have marketing events, hours and the industry marketing events, but also our specific marketing events. The last one was back in November when we invite customers from many countries.

Last year, it was 70 countries that participated in this event. Some of them are new potential customers, others are existing customers. And actually, we attract them with the technology that we have, show them the value, present to them how we can solve many different use cases with technology that is building blocks that they can update and and, you know, and evolve over time. Then it’s not necessarily that they need to go now for a huge install installation, but they can do it gradually in a way that is easier for them to absorb. We make adjustments and prioritizations to go to market.

It depends on the opportunity and where the, you know, the security pressure is and where the budgets are. And I believe that the combination of the advanced solutions that we have, customer references, we have also customer references that help us. Our global presence, including people, close to customers, that are, you know, sitting in in in the customers’ countries, and the the the reputation for the last three decades, all of them are helping us to acquire more and more new customers.

Mike Cikos, Lead Analyst, Needham: Great. And on The US market is a large, new territory that Cognite’s addressing. Right? And so, again, for historical context, why is it Cognite has not been in The US market as before now? And then secondly, where are we in building out that US motion for the company?

Elad, CEO, Cognite: Yes. So we are part of Verint. As part of Verint, focus of the security business was rest of the world and less in The US market. And for that reason, we were unknown, I would say, almost unknown as a security vendor in The US. And we’ve decided after the spin off, we’ve decided to change it and to create brand awareness, brand recognition, and to start acquiring new customers, start with state and local operational units, and then move to the federal agencies, operational units, the law enforcement, federal agencies, operational units, and do it gradually, step by step, do it right without any mistakes in between.

So why now? I explained why now because now we are stand alone. We can take our own decisions, and we believe that The US market presents lots of opportunity for us. Obviously, there are many security agencies out there in all levels, state and local and federal. Second, decided to start with state and local because it’s easier to penetrate.

We are pleased with the acquisition of new customers and also follow on orders that we already seen in the in the state and local market. Now we’re engaging with federal agencies, and we have partners with us in order to to do that. And we also sit in front of the potential federal customers. We know that it will be a longer sales cycle. We know that investment level in POCs, demos, and engagement will be higher than what we experienced in the state and local, but we go we go with the re open eyes, and we are very determined to to make this happen.

Actually, we had already few POCs with federal agencies with very good and successful results, and we’ll work hard in order to to have the federal market law enforcement in the law enforcement agency side with us. So we are very happy with the progress we’ve made so far, and we intend to continue and invest more and more in The US over time in order to grow it and and have more and more customers with us.

Mike Cikos, Lead Analyst, Needham: And we probably have time for maybe just a a couple of more questions here. But just rounding out the the understanding on go to market. For The US market specifically, could you talk about where we are or or the strategy first, again, for some of the newer people here, but are we going direct versus indirect? If we are going indirect, where are we in establishing some of those reseller partner relationships?

Elad, CEO, Cognite: Yeah. So go to market strategy globally and in general always was to increase the market reach as much as we can, either to hire more sales and marketing people and or, you know, acquire more partners or increase the partner networks expand the partner network. We do both actually globally. That’s our strategy for for many years. We do the same exactly the same in The US.

We started with state and local direct. The reason we started direct is we wanted to have high touch with customers because we are a newcomer. We wanted to make sure that we fully understand the market needs, that we are very close to customers, that we get feedback and respond to it immediately. And instead of local, we already started to have also partners there. With the federal, we’ve decided that in day one, we will start with partners because we need a market reach that we didn’t have.

We have a few partners already that are working with us with federal agencies, but the federal agencies knows that it’s Cognite technology and Cognite employees, including myself, are meeting those and discussing with federal agencies as well. So it’s about accelerating market market reach as much as possible, and we combine both direct and indirect.

Mike Cikos, Lead Analyst, Needham: And then the last question I have for you guys is more from the yeah. I guess it’s go to market and tech wrapped in a one. Right? But on the go to market, with the expansion into North America, how does the competitive landscape change? And then the tech question that goes into that is, does GenAI or or AI technologies more generally benefit you guys versus some of your competitors?

Or are they doing enough to invest in their solutions, or are you guys actually seeing win rates improve for your side?

Elad, CEO, Cognite: Yes. So in terms of competitive landscape, we are global. We we address many different use cases in many different territories, so the competitive landscape is quite fragmented for us. Penetrating The US didn’t have any material change in our competitive set. In The US, as I mentioned before, we are focusing on operational units in law enforcement agencies, And usually, the competitors we see there is Elteri Harris, Jacobs, this kind of competitors.

In terms of GenAI, it presents huge opportunity for us and for our customers. And the reason is that investigation is a process. It involves many data sources, new leads that are coming in during the process of the investigation, governance requirements, holistic intelligence picture that need to be uncovered. And GenAI can help in two ways. The first one is to uncover more hidden insights including out of encrypted data in order to understand and be able to answer questions like who is going to do what, where we whom, why, where where are the funding coming from, etcetera.

Another way to look at gen to GenAI is actually simplify the process of the analyst and make the lives much easier to just to access the the technology in a very simple and human manner and get very sophisticated answers without being required, you know, to to understand the technology, the datasets, etcetera. So in two ways, this is a a very strong capability for our customers. I can tell you that having a standalone AI capability doesn’t really help our customers. They need to implement it and integrate it into the investigation process, the governance, etcetera. So what we are doing quite successfully is two things.

First, we do use AI capabilities, strong AI capabilities that are available in the market, but we also develop and we have a new CTO with us and we have AI team with us for for for a few years already, And we develop purpose driven AI capabilities, machine learning engines in order to solve specific needs that are relevant for investigation, security, etcetera. And the combination of those two that are integrated into the platform that the customers have today with all the data management and governance management and and and and the feeds that they get from many data sources actually presents a very strong value for our customers and, opportunity for us to continue and grow and upgrade the customer base and, maintain leadership.

Mike Cikos, Lead Analyst, Needham: Terrific. That’s great. And it’s a great way to wrap it up here, but I know we’re out of time here. Thank you a lot, David, and to the audience for joining. Any follow ups, please feel free to reach out.

We’d love to make sure that we miss the intro here. But thank you, guys. Take care.

Elad, CEO, Cognite: Thank you, Mike. Take care. Bye bye.

Mike Cikos, Lead Analyst, Needham: Bye bye.

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