Cognyte Software Ltd. (CGNT) DCF Valuation & Fundamental Primer
Cognyte Software Ltd. (CGNT) trades at $19.75 with a market enterprise value of $1.32B and generated $400.0M in TTM revenue and $29.9M in free cash flow (filed 2026-03-25 (period ended 2026-01-31)). Our 5-year DCF model estimates an implied intrinsic value of $5.80 per diluted share ($306.3M DCF enterprise value, Grade: A · 83/100 · High-Quality Compounder).
SEC 10-K/10-Q DCF teardown of Cognyte Software Ltd. (CGNT): $400.0M TTM revenue (-4.2% growth), 72.4% GAAP gross margin, 7.5% FCF margin, 5.3% SBC/revenue, and R&D Return Grade B (Burners, $0.40 new gross profit per $1 prior R&D).
Cognyte Software Ltd. (CGNT) earns a "Pass" rating and an institutional Quality Score of 83/100 (Grade A). On $400.0M in baseline revenue (-4.2% growth, 72.4% gross margin, 7.5% FCF margin), our 5-year DCF yields an Enterprise Value of $306.3M ($5.80/share vs. $19.75 market price). On the R&D Return Benchmark, CGNT ranks #103 of 174 (Burners · Grade B, 0.40× return).
Gross Margin & Unit Economics: Cognyte Software Ltd. operates at a 72.4% gross margin on $400.0M revenue (0.0 pts below the Software - Infrastructure median of 72.4%).
R&D Productivity (Burners · Grade B): Investing 30.6% of revenue in R&D ($122.3M) generates $0.40 of incremental gross profit per R&D dollar (Rank #103 of 174).
Rule of 40 & Cash Conversion: Combining -4.2% top-line growth with 7.5% FCF margin yields a 3.3% Rule of 40 score (vs. 38.4% cohort median) and $306.3M DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (72.4% Gross Margin · -4.2% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $400.0M | $383.4M | $367.5M |
| Cost of Revenue (COGS) | ($110.3M) | ($103.8M) | ($97.7M) |
| Gross Profit & Margin | $289.7M (72.4%) | $279.6M (72.9%) | $269.8M (73.4%) |
| Research & Development (R&D) | $108.3M | $99.6M | $91.5M |
| Sales & Marketing (S&M) | $121.1M | $111.4M | $102.3M |
| General & Administrative (G&A) | $47.1M | $43.3M | $39.8M |
| Operating EBIT | $13.3M (3.3%) | $25.2M (6.6%) | $36.2M (9.8%) |
| Adjusted EBITDA | $23.3M (5.8%) | $34.8M (9.1%) | $45.4M (12.3%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 72.4% to 77.4%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $30.3M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $390.9M.
Cognyte Software Ltd. (CGNT) 3-Scenario DCF Valuation Range
Stress-test CGNT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands CGNT's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $19.75).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $7.79 -61% | $8.14 -59% | $8.55 -57% | $9.03 -54% | $9.62 -51% |
| 9.3% | $7.21 -63% | $7.49 -62% | $7.80 -60% | $8.17 -59% | $8.61 -56% |
| 10.0% | $6.73 -66% | $6.96 -65% | $7.21 -64% | $7.50 -62% | $7.83 -60% |
| 10.8% | $6.33 -68% | $6.51 -67% | $6.72 -66% | $6.95 -65% | $7.21 -63% |
| 11.5% | $5.99 -70% | $6.14 -69% | $6.31 -68% | $6.50 -67% | $6.71 -66% |
Institutional Software Quality Scorecard (83/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Disciplined equity compensation well below software industry average
Solid gross margins with potential for operating leverage at scale
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 226% of EBIT driven by upfront annual collections
- Net cash positive: $116.9M balance sheet buffer
Key Operational & Dilution Risks
Audited R&D Intensity is 30.6% of revenue with a 0.40× incremental gross profit return per R&D dollar. Under your current Stage 1 (-4.2% CAGR / 72.4% GM) assumptions, CGNT projects to -0.10× R&D Return (Grade D · Burners).
Reverse-DCF Solver: What Growth is Priced Into CGNT?
The current share price demands 32.8% 5-year CAGR (42.9% net of SBC & dilution)—a +37.0% acceleration over historical run-rate (-4.2%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (5.3% of revenue) and annual share dilution (2.3%/yr). Accounting for both requires 42.9% 5-year revenue CAGR to justify $19.75/sh on a true per-share economic cash flow basis.
Cognyte Software Ltd. (CGNT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $400.0M | $400.0M | $383.4M | $367.5M | $352.3M | $337.7M | $323.6M |
| Gross Profit | $289.7M | $289.7M | $277.7M | $266.2M | $255.1M | $244.5M | $234.4M |
| Operating Income (EBIT) | $13.3M | $13.2M | $12.7M | $12.2M | $11.7M | $11.2M | $10.7M |
| Stock-Based Compensation (SBC) | $21.2M | $21.2M | $20.4M | $19.5M | $18.7M | $17.9M | $17.2M |
| Unlevered Free Cash Flow (FCF) | $29.9M | $29.9M | $28.7M | $27.5M | $26.4M | $25.3M | $24.2M |
| SBC-Adjusted True Cash Flow | $8.7M | $8.7M | $8.3M | $8.0M | $7.6M | $7.3M | $7.0M |
Software - Infrastructure Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 6.8 + 0.05 × (Rule of 40) · R² = 12%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Cognyte Software Ltd. | CGNT | $1.44B | $400.0M | 72.4% | 7.5% | 3.3% | 5.3% | 3.3× |
| Block, Inc. | XYZ | $41.67B | $25.04B | 46.4% | 15.5% | 23.7% | 4.8% | 1.6× |
| CoreWeave, Inc. | CRWV | $35.80B | $1.92B | 74.2% | -80.0% | 0.0% | 1.6% | 23.5× |
| VeriSign, Inc. | VRSN | $22.52B | $1.56B | 87.7% | 56.1% | 61.5% | 3.9% | 15.5× |
| CORPAY, INC. | CPAY | $22.17B | $3.97B | 78.1% | 44.4% | 52.1% | 2.9% | 7.2× |
| NetApp, Inc. | NTAP | $21.02B | $7.39B | 70.6% | 22.3% | 24.6% | 5.4% | 3.0× |
| Joint Stock Co Kaspi.kz | KSPI | $11,481.85B | $2,520.93B | 62.3% | 19.3% | 59.8% | — | 4.4× |
| Peer Cohort Median Benchmark (N=6) | 72.4% | 20.8% | 38.4% | 3.9% | 5.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.3× | $1.32B | $1.44B | $19.75 | 0.0% |
| -20% Multiple Compression | 2.6× | $1.06B | $1.18B | $16.12 | -20.0% |
| -35% Multiple Compression | 2.1× | $860.0M | $976.9M | $13.40 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $2.00B | $2.12B | $29.04 | +51.2% |
Frequently Asked Questions: Cognyte Software Ltd. (CGNT) Valuation
What is Cognyte Software Ltd. (CGNT)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Cognyte Software Ltd. (CGNT) has a Base Case implied value of $5.80 per share (with a Bear Case of $4.61 and a Bull Case of $6.88), compared to its current price of $19.75. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Cognyte Software Ltd. (CGNT)'s Rule of 40 score and Free Cash Flow margin?
Cognyte Software Ltd. achieves a Rule of 40 score of 3.3%, combining a -4.2% revenue growth run-rate with a 7.5% TTM free cash flow margin on $400.0M in trailing twelve-month revenue. In the Software - Infrastructure peer cohort, the median Rule of 40 benchmark is 38.4%.
What revenue growth rate is priced into CGNT stock according to Reverse-DCF analysis?
At $19.75 per share (Enterprise Value of $1.32B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 32.8%, compared to Cognyte Software Ltd.'s historical CAGR of -4.2%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
What is Cognyte Software Ltd. (CGNT)'s R&D Return Score and innovation productivity?
On the Golden Door Software R&D Return Benchmark, Cognyte Software Ltd. (CGNT) is ranked #103 out of 174 scored software peers, earning a Grade B in the "Burners" quadrant. Cognyte Software Ltd. invests 30.6% of FY revenue into R&D ($122.3M) and generated $0.40 of incremental gross profit per prior-year R&D dollar.
How does Cognyte Software Ltd. compare to Software - Infrastructure peers?
Cognyte Software Ltd. (CGNT) earns an institutional Software Quality Score of 83/100 (Grade A — High-Quality Compounder). Across its Software - Infrastructure peer group (XYZ, CRWV, VRSN, CPAY, NTAP), the cohort trades at a median EV/TTM Revenue multiple of 5.8× and a median gross margin of 72.4%.
How does Stock-Based Compensation (SBC) impact Cognyte Software Ltd. (CGNT)'s valuation?
Cognyte Software Ltd. recorded $21.2M in TTM stock-based compensation (5.3% of revenue). When treating SBC as a cash-equivalent compensation expense, Cognyte Software Ltd.'s SBC-adjusted free cash flow yield is 0.6%, scoring 21/25 on our Shareholder Dilution Friction pillar.