Cognyte Software Ltd (NASDAQ:CGNT) stock fell 4.15% (As on June 29, 11:12:21 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the first quarter of FY 23. Software revenue was $24.9 million, a sharp decline year-over-year due to customer deployment delays and slow pipeline conversion. Regarding software service revenue, it came in at $45.8 million, down by $4.9 million year-over-year, primarily due to federal customer reducing support and subscription spends. The non-GAAP gross margin and gross profit was 60.8% and $52.7 million, respectively. The gross profit decline of approximately $31 million year-over-year is primarily due to the decline in overall revenue. About $22 million of this decline is due to the lower software revenue. CGNT ended the quarter with $107 million of cash, cash equivalents and short-term investments. This balance reflects Q1 solid collections and includes $50 million from the existing credit facility. During Q4, the company drew down the $100 million credit facility and, during Q1, the company paid back $50 million. Overall, cash used in operation in Q1 was $8.7 million, mainly due to the loss. The balance sheet also reflects a $6.2 million accrual related to an alleged infringement of an patent claim, which was settled and paid in Q2. CGNT finished last year with a total RPO of $512 million.

CGNT in the first quarter of FY 23 has reported the adjusted loss per share of 79 cents, missing the analysts’ estimates for the adjusted loss per share of 12 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $86.44 million in the first quarter of FY 23, missing the analysts’ estimates for revenue by 22.83%.

Moreover, In Q1, the company continues to win large deals from existing customers. First is another $50 million deal from a National Security Agency to expand its existing platform. The customer is dealing with an increase in data volume, which is why they turn to the company to expand the platform. The second order is from a law enforcement agency for over $5 million of our solutions to combat drug trafficking and criminal activity. This is a follow-on order after the customer was pleased with the operational results of a previous deployment of our solutions last year. The third order is also $5 million for a national intelligence unit that purchased additional solutions to address terrorist activity along their borders.