Cognyte Reports First Quarter Fiscal Year 2027 Financial Results

Reports double-digit revenue growth, and profitability growing significantly faster than revenue

Reiterates fiscal 2027 outlook

HERZLIYA, Israel--(BUSINESS WIRE)--Cognyte Software Ltd. (NASDAQ: CGNT) (the “Company,” “Cognyte,” “we,” “us” and “our”), a global leader in software-driven technology for investigative analytics, today announced results for the three months ended April 30, 2026 ("Q1 FYE27").

Financial Summary for Three Months Ended April 30, 2026

• Q1 FYE27 Revenue was $105.5 million, up approximately 10.4% compared to the same period last year, reflecting a continuing healthy demand environment.
• Q1 FYE27 GAAP operating income was $4.4 million, doubling from operating income of $2.2 million in the same period last year.
• Q1 FYE27 Non-GAAP operating income was $10.7 million, an increase of $3.1 million or 41.5% from operating income of $7.6 million in the same period last year.
• Q1 FYE27 GAAP Net loss attributable to Cognyte Software Ltd was $3.0 million, compared to $1.0 million in the same period last year primarily driven by foreign exchange losses.
• Q1 FYE27 Adjusted EBITDA was $13.6 million, compared to $10.3 million in the same period last year, up 31.5% and growing significantly faster than revenue.

Balance Sheet and Net Cash Provided by Operating Activities

• The board of directors remains committed to long-term shareholder value creation and has confidence in the Company’s growth prospects. During Q1 FYE27, the company bought approximately one million ordinary shares for an aggregate purchase price of approximately $8.2 million under the share repurchase program approved by the board of directors in July 2025.
• Since launching its first repurchase program in November 2024, the Company has repurchased approximately $35 million of shares through the end of Q1 FYE27, out of the $60 million authorized across the Company’s repurchase programs.
• During the first quarter, our cash position remained strong at $109.2 million, with no debt, reflecting disciplined working-capital management.
• During the three months ended April 30, 2026, net cash used in operating activities was $4.7 million, compared to net cash provided by operating activities of $1.7 million in the same period last year, primarily driven by accelerated adoption of subscription offerings, FX dynamics and inventory buildup to support future software demands.

Management Commentary

“The agencies we serve are under more pressure than ever to turn fragmented data into actionable intelligence – and to do it faster than the threats they are facing. That urgency is showing up in our business,” said Elad Sharon, Cognyte’s chief executive officer. “Organizations today are facing an increasingly complex threat environment – faster-moving adversaries, exploding data volumes and growing operational pressure. This is driving demand for AI-powered investigative analytics solutions that can help agencies uncover hidden insights and make faster, more informed decisions. During the quarter, we expanded relationships with existing customers, added new logos and continued building momentum in the U.S. market. Reflecting this momentum, we expect to generate approximately $20 million of business in the U.S. this year. We help the people responsible for keeping the world safe do their jobs faster, more effectively and with greater confidence in their intelligence. That mission doesn’t get less relevant – and our results this quarter reflect it.”

“Our first quarter results reflect the substantial value our differentiated solutions deliver to customers and the operational discipline with which we are managing the business,” said David Abadi, Cognyte’s chief financial officer. “As a result of better-than-expected adoption of subscription offerings, we now expect recurring revenue to grow faster than total revenue. Even with the recurring revenue momentum and foreign exchange dynamics, we are maintaining our Fiscal 27 outlook.”

FYE27 Outlook

The company maintained its outlook for the year ending January 31, 2027 (“FYE27” and “Fiscal 2027”) which is as follows:

• Revenue: $448 million, with a range of +/- 3%, which represents approximately 12% year-over-year growth at the midpoint of the range.
• Adjusted EBITDA: Approximately $68 million at the midpoint of our revenue range, representing approximately 40% year-over-year growth.
• Non-GAAP Diluted EPS: $0.47 at the midpoint of our revenue range.

Additional Financial and Operational Data for the First Quarter Ended April 30, 2026

• Q1 FYE27 Total Software revenue, which is the combination of software and software services revenue, increased by $15.3 million, up 18.6%, compared to the same period last year.
• Q1 FYE27 Software revenue increased by $9.9 million, up 26.5%, compared to the same period last year. The increase was mainly driven by healthy demand for our software solutions.
• Q1 FYE27 Software services revenue increased by $5.4 million, up 12.1%, compared to the same period last year.
• Q1 FYE27 Professional services and other revenue decreased by $5.3 million, compared to the same period last year. Quarterly fluctuations in professional services revenue are expected and are primarily a result of revenue recognition timing.
• Q1 FYE27 Recurring Revenue⁽¹⁾ increased by 10.0% to $51.9 million, compared to the same period last year and was 49.2% of total revenue. The growth was driven by better-than-expected adoption of the Company’s subscription offerings.
• Q1 FYE27 Non-GAAP Gross profit and margin were $76.9 million and 72.9%, respectively, a significant increase of $8.2 million and 101 bps improvement compared to the same period last year. The increase is primarily driven by scale, operational efficiencies and the value the Company’s solutions deliver to customers.
• Q1 FYE27 Billings⁽²⁾ increased by 31.2% to $102.7 million compared to the same period last year.
• Total Backlog⁽³⁾ at the end of Q1 FYE27 was $399.8 million and short-term Backlog was $258.1 million.
• RPO⁽⁴⁾ is influenced by factors such as sales cycles, subscription deals, deployment timelines, contract length, renewal timing, and seasonality. RPO continues to reflect the increasing contribution of subscription-based arrangements within the Company’s business mix, and accounts for the proportional annual consumption of multi-year large support contracts. Current levels of RPO support the Company’s growth expectations.
• Total RPO was $528.8 million at the end of Q1 FYE27 compared to $557.2 million at the end of Q4 FYE26.
• Short-term RPO at the end of Q1 FYE27 was $363.4 million, providing solid visibility into revenue over the next 12 months.

For information about the non-GAAP financial measure or key metric, please see “Supplemental Information About Non-GAAP Financial Measures and Other Key Metrics” at the end of this release.

(1) Recurring Revenue – Recurring revenue is comprised primarily of revenue from support contracts as well as revenue from subscription offerings.
(2) Billings – Revenue plus the change in contract liabilities, contract assets and unbilled balances.
(3) Backlog represents unbilled amounts contracted under contracts deemed certain to be invoiced.
(4) RPO, or remaining performance obligations, represents contracted revenue that has not yet been recognized that will be invoiced and recognized as revenue in future periods.

Conference Call Information
We will conduct a conference call today at 8:30 a.m. ET to discuss our results for the three months ended April 30, 2026. A real-time webcast of the conference call with presentation slides will be available in the Investor Relations section of Cognyte’s website. Those interested in participating in the question-and-answer session need to register at: https://register-conf.media-server.com/register/BI46eb94a3a2964463ba6d991e82057113 to receive the dial-in numbers and unique PIN to access the call seamlessly. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call). An archived webcast of the conference call will also be available in the “Investors” section of the company’s website.

About Cognyte Software Ltd.
Cognyte is a leading software-led technology company, focused on investigative analytics solutions that help customers generate actionable intelligence from large volumes of complex data, across diverse operational domains, in order to enhance public safety and security. Our solutions are used primarily by law enforcement, national security, national and military intelligence agencies, and other organizations to address a wide range of investigative and operational challenges. Drawing on decades of investigative analytics domain expertise, our platforms and solutions enable customers to ingest, fuse and analyze structured and unstructured data from multiple sources, uncover hidden patterns and connections, and make faster, better-informed decisions. Our offerings leverage state-of-the-art Artificial Intelligence (AI), including big data analytics and advanced machine learning, as well as generative and AI-assisted capabilities that enhance user productivity and accelerate investigative workflows, together with proven investigative methodologies, to support retrospective investigations and real time, near real-time and predictive decision making. Hundreds of customers rely on our solutions to accelerate investigations, improve resolution rates and better anticipate, predict and mitigate threats with greater precision. Learn more at www.cognyte.com.

About Non-GAAP Financial Measures and Other Key Metrics
This press release and the accompanying tables include non-GAAP financial measures and other key metrics. For a description of these non-GAAP financial measures and other key metrics, including the reasons management uses each measure and metric, and reconciliations of non-GAAP financial measures presented for completed periods to the most directly comparable financial measures prepared in accordance with GAAP, please see the tables below as well as "Supplemental Information About Non-GAAP Financial Measures" at the end of this press release.

Our non-GAAP outlook for FYE27 excludes the following GAAP measures for which we are able to provide a range of probable significance:

• Stock-based compensation is expected to be between approximately $23.5 and $25.5 million, assuming market prices for our ordinary shares are generally consistent with current levels.
• Amortization expense of other acquired intangible assets is expected to be approximately $0.6 million.

For additional information about our expectations for FYE27, please refer to the Q1 FYE27 conference call we will conduct on June 3, 2026.

Our non-GAAP outlook, unless otherwise specified, reflects foreign currency exchange rates approximately consistent with current rates, and does not include the potential impact of any business acquisitions that may close after the date hereof.

We are unable, without unreasonable effort, to provide a reconciliation for other GAAP measures which are excluded from our non-GAAP outlook, including the impact of future business acquisitions or future acquisition expenses, future restructuring expenses, and non-GAAP income tax adjustments due to the level of unpredictability and uncertainty associated with these items. For these same reasons, we are unable to assess the probable significance of these excluded items. While historical results may not be indicative of future results, actual amounts for the three months ended April 30, 2026, and 2025, respectively, for the GAAP measures excluded from our non-GAAP outlook appear in Table 4 of this press release.

Caution About Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the United States Securities Exchange Act of 1934. Forward-looking statements include statements regarding expectations, predictions, views, opportunities, plans, strategies, beliefs, and statements of similar effect relating to Cognyte. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These forward-looking statements do not guarantee any future performance and are based solely on management's expectations that involve a number of known and unknown risks, uncertainties, assumptions and other important factors, any of which could cause our actual results or conditions to differ materially from those expressed in or implied by the forward-looking statements. Some of the factors that could cause our actual results or conditions to differ materially from current expectations include, among others: uncertainties regarding the impact of changes in macroeconomic and/or global conditions; risks related to geopolitical changes and investor visibility constraints; risks related to new tariffs and retaliatory measures that may adversely affect the economy and reduce government spending; risks related to the impact of inflation and related volatility on our financial performance; risks relating to adverse changes to the regulatory constraints to which we are subject; risks related to the impact of disruptions to the global supply chain; risks related to conditions in Israel including conflicts in the Middle East; risks resulting from health crises; risks associated with customer concentration and challenges associated with our ability to accurately forecast revenue and expenses; risks associated with political and reputational factors related to our business or operations; risks associated with our ability to keep pace with technological advances and challenges and evolving industry standards; risks relating to proprietary rights infringement claims; risks relating to defects, operational problems, or vulnerability to cyber-attacks of our products or any of the components used in our products; risks related to the strengths of our intellectual property rights protection; risks that we may be unable to establish and maintain relationships with key resellers, partners, and system integrators and risks associated with our reliance on limited number of suppliers for certain key components and hardware used in our solutions; risks due to the aggressive competition in all of our markets; risks associated with the implementation and use of artificial intelligence tools and technology, including competitive, technological, regulatory, intellectual property, data protection and cybersecurity risks; challenges associated with our long sales cycles and with the sophisticated nature of our solutions; risks associated with our ability or costs to retain, recruit and train qualified personnel; risks relating to our ability to properly manage investments in our business and operations, and execute on growth or strategic initiatives; risks associated with acquisitions, strategic investments, partnerships or alliances; risks of security vulnerabilities or lapses, including cyber-attacks, information technology system breaches, failures or disruptions; risks associated with the mishandling or perceived mishandling of sensitive, confidential or classified information; risks associated with our failure to comply with applicable laws; risks associated with our credit facilities or that we may experience liquidity or working capital issues and related risks that financing sources may be unavailable to us on reasonable terms; risks associated with changing applicable tax laws and regulations, tax rates, and the continuing availability of expected tax benefits in the countries in which we operate; risks associated with our significant international operations, including due to our Israeli operations, fluctuations in foreign exchange rates, and exposure to regions subject to political or economic instability; risks associated with complex and changing regulatory environments relating to our operations and the markets we operate in; risks relating to the adequacy of our existing infrastructure, systems, processes, policies, procedures, internal controls and personnel for our current and future operations and reporting needs; risks related to the tax treatment of our spin-off from Verint; risks related to our share repurchase programs; risks associated with different corporate governance requirements applicable to Israeli companies; risks associated with being a foreign private issuer; and other risks set forth in Section 3.D - “Risk Factors” in our latest annual report on Form 20-F for the fiscal year ended January 31, 2026, which was filed with the Securities and Exchange Commission (the "SEC") on March 25, 2026, and in our subsequent filings with the SEC. In addition, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time. It is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.

Table 1
COGNYTE SOFTWARE LTD.
Condensed Consolidated Statements of Operations
(Unaudited)
	Three Months Ended April 30,
(in thousands except share data)	2026			2025
Revenue:
Software	$	47,273		$	37,371
Software service		50,071			44,677
Professional service and other		8,150			13,500
Total revenue		105,494			95,548
Cost of revenue:
Software		8,671			5,991
Software service		11,701			10,456
Professional service and other		8,850			10,955
Total cost of revenue		29,222			27,402
Gross profit		76,272			68,146
Operating expenses:
Research and development, net		31,585			29,098
Selling, general and administrative		40,130			36,895
Amortization of other acquired intangible assets		151			—
Total operating expenses		71,866			65,993
Operating income		4,406			2,153
Other (expenses) income, net:
Interest income		576			658
Interest expense		(48	)		(53	)
Other (expenses) income, net		(2,357	)		1,521
Total other (expenses) income, net		(1,829	)		2,126
Income before provision for income taxes		2,577			4,279
Provision for income taxes		4,578			4,137
Net (loss) income		(2,001	)		142
Net income attributable to noncontrolling interest		1,038			1,123
Net loss attributable to Cognyte Software Ltd.	$	(3,039	)	$	(981	)
Net loss per share attributable to Cognyte Software Ltd.:
Basic and diluted	$	(0.04	)	$	(0.01	)
Weighted-average shares outstanding:
Basic and diluted		73,063			72,225

Table 2
COGNYTE SOFTWARE LTD.
Condensed Consolidated Balance Sheets
	April 30,			January, 31
	2026			2026
(in thousands)	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	109,185		$	116,878
Accounts receivable, net of allowance for credit losses of $1.2 million and $1 million as of April 30, 2026 and January 31, 2026, respectively		135,156			122,548
Contract assets		4,054			3,284
Inventories		19,307			16,414
Prepaid expenses and other current assets		40,526			39,145
Total current assets		308,228			298,269
Property and equipment, net		28,965			29,128
Operating lease right-of-use assets		40,151			40,376
Goodwill		126,736			126,605
Intangible assets, net		4,229			4,380
Deferred income taxes		6,112			6,068
Other assets		9,287			16,240
Total assets	$	523,708		$	521,066
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	22,959		$	26,915
Accrued expenses and other current liabilities		105,774			94,590
Contract liabilities		105,261			102,538
Total current liabilities		233,994			224,043
Long-term contract liabilities		23,687			21,211
Deferred income taxes		1,053			1,037
Operating lease liabilities		36,317			36,542
Other liabilities		9,642			9,370
Total liabilities		304,693			292,203
Commitments and Contingencies
Stockholders' equity:
Common stock - $0 par value; Authorized 300,000,000 shares. Issued 77,531,421 and 75,917,304 at April 30, 2026 and January 31, 2026, respectively; Outstanding 73,705,907 and 73,078,376 shares at April 30, 2026 and January 31, 2026, respectively		—			—
Additional paid-in capital		401,083			395,374
Treasury stock, at cost 3,825,514 and 2,838,928 shares at April 30, 2026 and January 31, 2026, respectively		(34,953	)		(26,712	)
Accumulated deficit		(160,320	)		(157,281	)
Accumulated other comprehensive loss		(10,090	)		(4,837	)
Total Cognyte Software Ltd. stockholders' equity		195,720			206,544
Noncontrolling interest		23,295			22,319
Total stockholders’ equity		219,015			228,863
Total liabilities and stockholders’ equity	$	523,708		$	521,066

Table 3
COGNYTE SOFTWARE LTD.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended April 30,
(in thousands)	2026			2025
Cash flows from operating activities:
Net (loss) income	$	(2,001	)	$	142
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		3,030			2,787
Allowance for credit losses		265			45
Stock-based compensation		5,709			5,172
Provision from deferred income taxes		52			56
Non-cash gains on derivative financial instruments, net		(636	)		(339	)
Other non-cash items, net		(306	)		300
Changes in operating assets and liabilities:
Accounts receivable		(11,255	)		257
Contract assets		(2,157	)		(3,031	)
Inventories		(2,962	)		887
Prepaid expenses and other assets		(6,920	)		986
Accounts payable and accrued expenses		6,283			10,454
Contract liabilities		5,028			(16,881	)
Other liabilities		592			103
Other, net		583			772
Net cash (used in) provided by operating activities		(4,695	)		1,710
Cash flows from investing activities:
Purchases of property and equipment		(1,430	)		(3,948	)
Sale of noncontrolling minority investment		6,546			—
Settlements of derivative financial instruments not designated as hedges		231			29
Cash paid for capitalized software development costs		—			(222	)
Change in restricted bank time deposits, including long-term portion		—			97
Net cash provided by (used in) investing activities		5,347			(4,044	)
Cash flows from financing activities:
Purchases of treasury stock		(8,241	)		(8,951	)
Repayment of principal portion of finance lease liability		(92	)		(66	)
Net cash used in financing activities		(8,333	)		(9,017	)
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents		(12	)		1,284
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents		(7,693	)		(10,067	)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period		116,878			112,904
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	109,185		$	102,837
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents at end of period:
Cash and cash equivalents	$	109,185		$	102,642
Restricted cash and cash equivalents included in restricted cash and cash equivalents and restricted bank time deposits		—			195
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	109,185		$	102,837

Table 4
COGNYTE SOFTWARE LTD.
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
	Three Months Ended April 30,
(in thousands, except per share data)	2026			2025
Operating income, operating margin and adjusted EBITDA
GAAP Operating income	$	4,406		$	2,153
GAAP operating margin		4.2	%		2.3	%
Stock-based compensation expenses		5,709			5,172
Restructuring expenses, net		412			—
Other Non-GAAP adjustments		158			226
Non-GAAP operating income	$	10,685		$	7,551
Depreciation and amortization		2,887			2,765
Adjusted EBITDA	$	13,572		$	10,316
Non-GAAP operating margin		10.1	%		7.9	%
Adjusted EBITDA margin		12.9	%		10.8	%
Net income (loss) attributable to Cognyte Software Ltd. reconciliation
GAAP Net loss attributable to Cognyte Software Ltd.	$	(3,039	)	$	(981	)
Stock-based compensation expenses		5,709			5,172
Non-GAAP tax adjustments		(494	)		613
Restructuring expenses, net		412			—
Change in fair value of noncontrolling minority investments, net		(329	)		—
Other Non-GAAP adjustments		158			226
Total adjustments		5,456			6,011
Non-GAAP Net income attributable to Cognyte Software Ltd.	$	2,417		$	5,030
Table comparing GAAP and Non-GAAP diluted net loss (income) per share attributable to Cognyte Software Ltd.
GAAP diluted net loss per share attributable to Cognyte Software Ltd.	$	(0.04	)	$	(0.01	)
Non-GAAP diluted net income per share attributable to Cognyte Software Ltd.	$	0.03		$	0.07
GAAP weighted-average shares used in computing diluted net loss per share attributable to Cognyte Software Ltd.		73,063			72,225
Non-GAAP diluted weighted-average shares used in computing net income per share attributable to Cognyte Software Ltd.		74,737			75,493
Stock-based compensation
Cost of revenue	$	641		$	556
Research and development, net		476			366
Selling, general, and administrative		4,592			4,250
Total stock-based compensation expense	$	5,709		$	5,172
Restructuring expenses, net
Cost of revenue	$	5		$	—
Research and development, net		266			—
Selling, general, and administrative		141			—
Total restructuring adjustments	$	412		$	—
Other Non-GAAP adjustments
Selling, general, and administrative	$	7		$	226
Amortization of other acquired intangible assets		151			—
Other income, net		—			—
Total other Non-GAAP adjustments	$	158		$	226
Footnotes
(1) The actual cash tax paid, net of refunds, was $1.3 million and $0.7 million for the three months ended April 30, 2026 and 2025, respectively.

Cognyte Software Ltd. and Subsidiaries
Supplemental Information About Non-GAAP Financial Measures and Other Key Metrics

Non-GAAP Financial Measures
The press release includes reconciliations of certain financial measures not prepared in accordance with GAAP, consisting of non-GAAP operating income and operating margins, non-GAAP net income attributable to Cognyte, adjusted EBITDA and adjusted EBITDA margin, non-GAAP diluted net income per share attributable to Cognyte and non-GAAP diluted weighted-average shares used in computing such measure. The tables above include a reconciliation of each non-GAAP financial measure for completed periods presented in this press release to the most directly comparable GAAP financial measure.

We believe these non-GAAP financial measures, used in conjunction with the corresponding GAAP measures, provide investors with useful supplemental information about the financial performance of our business by:

• Facilitating the comparison of our financial results and business trends between periods, by excluding certain items that either can vary significantly in amount and frequency, are based upon subjective assumptions, or in certain cases are unplanned for or difficult to forecast,
• Facilitating the comparison of our financial results and business trends with other software companies who publish similar non-GAAP measures, and
• Allowing investors to see and understand key supplementary metrics used by our management to run our business, including for budgeting and forecasting, resource allocation, and compensation matters.

We also make these non-GAAP financial measures available because our management believes they provide meaningful information about the financial performance of our business and are useful to investors for informational and comparative purposes.

Non-GAAP financial measures should not be considered in isolation as substitutes for, or superior to, comparable GAAP financial measures. The non-GAAP financial measures we present have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and these non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. These non-GAAP financial measures do not represent discretionary cash available to us to invest in the growth of our business, and we may in the future incur expenses similar to or in addition to the adjustments made in these non-GAAP financial measures. Other companies may calculate similar non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

Our non-GAAP financial measures are calculated by making the following adjustments to our GAAP financial measures:

Stock-based compensation expenses. We exclude stock-based compensation expenses related to restricted stock awards, stock bonus programs, bonus share programs, and other stock-based awards from our non-GAAP financial measures. We evaluate our performance both with and without these measures because stock-based compensation is typically a non-cash expense and can vary significantly over time based on the timing, size and nature of awards granted, and is influenced in part by certain factors which are generally beyond our control, such as the volatility of the price of our ordinary shares. In addition, measurement of stock-based compensation is subject to varying valuation methodologies and subjective assumptions, and therefore we believe that excluding stock-based compensation from our non-GAAP financial measures allows for meaningful comparisons of our current operating results to our historical operating results and to other companies in our industry.

Restructuring expenses. We exclude restructuring expenses from our non-GAAP financial measures, which include employee termination costs, facility exit costs, certain professional fees, asset impairment charges, and other costs directly associated with resource realignments incurred in reaction to changing strategies or business conditions. All of these costs can vary significantly in amount and frequency based on the nature of the actions as well as the changing needs of our business and we believe that excluding them provides easier comparability of pre- and post-restructuring operating results.

Other adjustments. We exclude from our non-GAAP financial measures fair value adjustments related to revenue acquired in a business acquisition, amortization of acquired technology and other acquired intangible assets, acquisition expenses (benefit), separation expenses, business divestiture gain/losses, provision for legal claim, rent expense for redundant facilities, gains/losses on change in fair value of noncontrolling minority investment, gains or losses on sales of property and certain professional fees unrelated to our ongoing operations.

Non-GAAP income tax adjustments. We exclude our GAAP provision (benefit) for income taxes from our non-GAAP measures of net income attributable to Cognyte Software Ltd., and instead include a non-GAAP provision for income taxes. Cognyte uses a full-year non-GAAP tax rate to compute the non-GAAP tax provision. This full-year non-GAAP tax rate is based on Cognyte’s annual GAAP income, adjusted to exclude non-GAAP items, as well as the effects of significant non-recurring and period-specific tax items which vary in size and frequency. This annual non-GAAP tax rate is based on an evaluation of our historical and projected profit before tax, taking into account the impact of non-GAAP adjustments, tax law changes, as well as other factors such as our current tax structure, existing tax positions and expected recurring tax incentives. Our GAAP effective income tax rate can vary significantly from year to year as a result of tax law changes, settlements with tax authorities, changes in the geographic mix of earnings including acquisition activity, changes in the projected realizability of deferred tax assets, and other unusual or period-specific events, all of which can vary in size and frequency. We believe that our non-GAAP effective income tax rate removes much of this variability and facilitates meaningful comparisons of operating results across periods. We evaluate our non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time. Our non-GAAP income tax rate can differ materially from our GAAP effective income tax rate.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure defined as net income (loss) attributable to non-controlling interest before interest expense, interest income, income taxes, depreciation expense, amortization expense, revenue adjustments, restructuring expenses, acquisition expenses, and other expenses excluded from our non-GAAP financial measures as described above. We believe that adjusted EBITDA is also commonly used by investors to evaluate operating performance between companies because it helps reduce variability caused by differences in capital structures, income taxes, stock-based compensation accounting policies, and depreciation and amortization policies.

Other Key Metrics
Recurring revenue. Cognyte calculates recurring revenue for a period by combining revenue from initial and renewal support, subscription software licenses, and cloud-based SaaS in certain transactions. Recurring revenue is the portion of our revenue that we believe is likely to be renewed in the future. The recurrence of these revenue streams in future periods depends on a number of factors including contractual periods and customers' renewal decisions. Cognyte believes that recurring revenue provides investors more visibility into our recurring business in the upcoming years and helpful measurement of Cognyte’s potential revenue. Cognyte does not consider recurring revenue to be a non-GAAP financial measure because it is calculated using GAAP revenue.

Billings. Cognyte calculates billings for a period by adding changes in contract liabilities, contract assets and unbilled balances in that period to revenue. Cognyte believes that billings help investors better understand sales activity and ongoing business for a particular period, which is not necessarily reflected in revenue. Billings fluctuate from quarter to quarter. Cognyte does not consider billings to be a non-GAAP financial measure because it is calculated using exclusively revenue, contract liabilities, contract assets and unbilled balances, all of which are financial measures calculated in accordance with GAAP.

Total Backlog and Short-Term Backlog. Backlog is defined as unbilled amounts contracted under contracts deemed certain to be invoiced and recognized as revenue in future periods. Short-term backlog represents backlog that Cognyte expects to be recognized as revenue within the subsequent 12 months. Cognyte monitors backlog to provide visibility into our future revenue. Cognyte does not consider backlog to be a non-GAAP financial measure because it is calculated using exclusively unbilled contracted amounts.

Total Remaining Performance Obligations (RPO) and Short-Term RPO. RPO consist of backlog plus contract liabilities. RPO represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. The majority of our arrangements are for periods of up to three years, with a significant portion being one year or less. The timing and amount of revenue recognition for our RPO is influenced by several factors, including timing of support renewals, revenue recognition for certain solutions that can extend over longer periods of time, delivery under which, for various reasons, may be delayed, modified, or canceled. Therefore, the amount of remaining obligations may not be a meaningful indicator of future results. In some cases, we may decide to cancel outstanding orders and reduce the RPO when there have been extended delays by customers in paying the agreed upon down payments or due to other reasons. Short-term RPO represents RPO that Cognyte expects to be recognized as revenue within the subsequent 12 months. Cognyte monitors RPO to provide visibility into our future revenue. Cognyte does not consider RPO to be a non-GAAP financial measure because it is calculated in accordance with GAAP, specifically under ASC Topic 606.