Cognyte Analyst Leaves Estimates Unchanged Over Divestment Update

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  • Needham analyst Mike Cikos reiterated a Hold on Cognyte Software Ltd CGNT.
  • Cognyte agreed to sell its Situational Intelligence solutions to Volaris for $47.5 million, with performance-based earnout payments of up to $35.0 million over three years
  • The deal will likely close in 4Q23. Cikos leaves his estimates intact until the sale closes.
  • Adjusting for the asset sale, Cognyte's revenue in FY22 grew 9.9% to $439.5 million, implying the Situational Intelligence business declined 23.5% to $36.1 million, he noted.
  • On a year-to-date basis, Situational Intelligence has contributed 10% of revenue (or $16.8 million), indicating a stabilization of the business versus FY22 performance.
  • He added that the sale of Situational Intelligence further reduces Cognyt's Enterprise exposure (12% of revenue in FY22) to sub-5%.
  • Price Action: CGNT shares traded higher by 8.14% at $2.85 on the last check Wednesday.
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