Cognyte Software Sends Letter to Shareholders Highlighting the Company’s Operational Performance and Recent Business Improvements
Cognyte Software (NASDAQ: CGNT) has issued a letter to shareholders ahead of its 2024 Annual Meeting, urging them to vote for the re-election of Chairman Earl Shanks and CEO Elad Sharon, while rejecting Value Base Fund's nominee. The letter highlights:
1. Improved financial performance: Three consecutive quarters of year-over-year Revenue and Adjusted EBITDA growth, expanding Gross Margins, and strong RPOs.
2. Stock appreciation: Over 50% since Shanks' appointment as Chairman, outperforming market benchmarks.
3. Enhanced governance: Establishment of a Strategy Committee, appointment of new independent directors, and improved disclosures.
4. Shareholder engagement: Proactive outreach to top institutional shareholders, representing about 60% of outstanding shares.
The Board emphasizes the importance of retaining leadership with global market understanding and software industry expertise to drive Cognyte's continued growth and expansion.
Cognyte Software (NASDAQ: CGNT) ha inviato una lettera agli azionisti in vista della sua Assemblea Annuale 2024, esortandoli a votare per la rielezione del Presidente Earl Shanks e dell'Amministratore Delegato Elad Sharon, mentre si oppongono al candidato del Value Base Fund. La lettera evidenzia:
1. Performance finanziaria migliorata: Tre trimestri consecutivi di crescita anno su anno del fatturato e dell'EBITDA rettificato, espansione dei margini lordi e forti RPO.
2. Aumento del valore delle azioni: Oltre il 50% dall'appuntamento di Shanks come Presidente, superando i parametri di riferimento di mercato.
3. Governance migliorata: Costituzione di un Comitato Strategico, nomina di nuovi amministratori indipendenti e miglioramenti nelle comunicazioni.
4. Coinvolgimento degli azionisti: Attività proattive nei confronti dei principali azionisti istituzionali, che rappresentano circa il 60% delle azioni in circolazione.
Il Consiglio sottolinea l'importanza di mantenere una leadership con una comprensione del mercato globale e un'esperienza nel settore software per guidare la continua crescita e espansione di Cognyte.
Cognyte Software (NASDAQ: CGNT) ha emitido una carta a los accionistas antes de su Junta Anual 2024, instándolos a votar por la reelección del Presidente Earl Shanks y del CEO Elad Sharon, al tiempo que rechazan al candidato del Value Base Fund. La carta destaca:
1. Mejora en el rendimiento financiero: Tres trimestres consecutivos de crecimiento interanual en ingresos y EBITDA ajustado, expansión de márgenes brutos y fuertes RPO.
2. Apreciación de acciones: Más del 50% desde el nombramiento de Shanks como Presidente, superando los índices de referencia del mercado.
3. Mejor gobernanza: Establecimiento de un Comité Estratégico, nombramiento de nuevos directores independientes y mejoras en las divulgaciones.
4. Compromiso con los accionistas: Contacto proactivo con los principales accionistas institucionales, que representan aproximadamente el 60% de las acciones en circulación.
La Junta enfatiza la importancia de mantener un liderazgo con comprensión del mercado global y experiencia en la industria del software para impulsar el crecimiento y expansión continuos de Cognyte.
Cognyte Software (NASDAQ: CGNT)는 2024년 정기 주주총회를 앞두고 주주들에게 의장을 재선출할 것과 CEO Elad Sharon의 재선출을 지지해 줄 것을 촉구하는 서신을 발송하였으며, Value Base Fund의 후보자는 반대할 것을 요청했습니다. 이 서신은 다음을 강조합니다:
1. 개선된 재정 성과: 3분기 연속 매출과 조정 EBITDA의 연간 성장, 총 이익률 확대, 강력한 RPO.
2. 주가 상승: Shanks가 의장으로 임명된 이후 50% 이상 상승하여 시장 기준치를 초과했습니다.
3. 강화된 거버넌스: 전략위원회 설립, 새로운 독립 이사 임명, 개선된 공시.
4. 주주 참여: 전체 주식의 약 60%를 차지하는 주요 기관 투자자와의 적극적인 소통.
이사회는 글로벌 시장 이해 및 소프트웨어 산업 전문성을 갖춘 리더십 유지의 중요성을 강조하며 Cognyte의 지속적인 성장과 확장을 이끌 것을 권장합니다.
Cognyte Software (NASDAQ: CGNT) a envoyé une lettre aux actionnaires avant sa Réunion Annuelle 2024, les encourageant à voter pour la réélection du Président Earl Shanks et du PDG Elad Sharon, tout en rejetant le candidat du Value Base Fund. La lettre met en avant :
1. Amélioration de la performance financière : Trois trimestres consécutifs de croissance d'une année sur l'autre du chiffre d'affaires et de l'EBITDA ajusté, expansion des marges brutes et RPO solides.
2. Appréciation des actions : Plus de 50 % depuis la nomination de Shanks en tant que Président, surpassant les indices de référence du marché.
3. Gouvernance renforcée : Création d'un Comité Stratégique, nomination de nouveaux administrateurs indépendants et amélioration des divulgations.
4. Engagement des actionnaires : Contact proactif avec les principaux actionnaires institutionnels, représentant environ 60 % des actions en circulation.
Le Conseil souligne l'importance de maintenir une direction ayant une compréhension du marché mondial et une expertise dans l'industrie du logiciel pour soutenir la croissance et l'expansion continues de Cognyte.
Cognyte Software (NASDAQ: CGNT) hat einen Brief an die Aktionäre vor der Jahreshauptversammlung 2024 versendet, in dem sie aufgefordert werden, für die Wiederwahl von Chairman Earl Shanks und CEO Elad Sharon zu stimmen, während der Kandidat des Value Base Fund abgelehnt werden soll. Im Brief wird Folgendes hervorgehoben:
1. Verbesserte finanzielle Leistung: Drei aufeinanderfolgende Quartale mit einem Umsatz- und bereinigten EBITDA-Wachstum im Jahresvergleich, zunehmenden Bruttomargen und starken RPOs.
2. Aktienaufwertung: Über 50 % seit Shanks' Ernennung zum Vorsitzenden, was die Marktbenchmarks übertrifft.
3. Verstärkte Governance: Einrichtung eines Strategieausschusses, Ernennung neuer unabhängiger Direktoren und verbesserte Offenlegung.
4. Aktionärseinbindung: Proaktive Kontaktaufnahme mit den wichtigsten institutionellen Aktionären, die etwa 60 % der ausstehenden Aktien vertreten.
Der Vorstand betont die Bedeutung einer Führung, die ein globales Marktverständnis und Fachwissen in der Softwarebranche hat, um das kontinuierliche Wachstum und die Expansion von Cognyte voranzutreiben.
- Three consecutive quarters of year-over-year Revenue and Adjusted EBITDA growth
- Expanding Gross Margins and strong short- and long-term remaining performance obligations (RPOs)
- Stock appreciation of over 50% since Earl Shanks' appointment as Chairman
- Raised guidance for FY 2025, projecting continued growth
- Appointment of three new independent directors with relevant experience
- Enhanced disclosures regarding financial performance and corporate governance practices
- None.
Insights
Cognyte's recent operational improvements and financial performance are noteworthy. The company has reported three consecutive quarters of year-over-year revenue and Adjusted EBITDA growth, along with expanding gross margins. This trend suggests a positive trajectory for the company's financial health. The stock appreciation of over
However, it's important to note that the company's projections for continued growth in FY 2025 and raised guidance should be viewed cautiously, as they are forward-looking statements. The focus on improving operating leverage to enhance profitability and cash flow is a positive sign, but investors should monitor the actual execution of these plans in the coming quarters.
The emphasis on performance-based compensation for the CEO aligns with shareholder interests, which is generally viewed favorably by the market. Overall, while the financial improvements are promising, investors should remain vigilant about the company's ability to sustain this growth trajectory in a competitive global market.
Cognyte's recent corporate governance enhancements demonstrate a commitment to addressing shareholder concerns and improving transparency. Key positive changes include:
- Establishment of a Strategy Committee
- Appointment of an independent Chairman with significant public company experience
- Addition of three new independent directors with relevant expertise
- Enhanced disclosures on financial performance and corporate governance practices
These actions align with best practices in corporate governance and suggest a responsive Board. However, the ongoing proxy contest with Value Base Fund highlights potential areas of shareholder dissatisfaction. The Board's rejection of Value Base's nominee without considering potential compromise solutions could be seen as overly defensive.
While the company's efforts to engage with shareholders are commendable, the effectiveness of these engagements in addressing all shareholder concerns remains to be seen. Investors should closely monitor the outcome of the upcoming Annual Meeting and any subsequent changes in Board composition or strategy to gauge the company's commitment to shareholder interests and long-term value creation.
Cognyte's focus on leveraging its reputation for best-of-breed technological solutions in the investigative analytics software market is a sound strategy. The company's ability to generate strong short- and long-term remaining performance obligations (RPOs) suggests a healthy pipeline and customer retention, which are critical in the software industry.
However, the competitive landscape in the global security and intelligence software market is intense and rapidly evolving. Cognyte's success will depend on its ability to continuously innovate and adapt to changing customer needs and technological advancements. The company's emphasis on innovation and expansion is positive, but investors should look for concrete examples of product developments or market share gains to validate this strategy.
The Board's establishment of a Strategy Committee to work with management on growth opportunities is a step in the right direction. However, the lack of specific details about these opportunities in the shareholder letter leaves room for uncertainty. As the company pursues global expansion, investors should monitor its ability to scale operations efficiently and maintain its technological edge in diverse markets.
Board Comments on Value Base’s Campaign to Replace Cognyte’s Chairman or its CEO Without Offering Any Recommendations for Business or Governance Improvement
Urges Shareholders to Vote “FOR” Cognyte’s Two Candidates, Both of Whom Have Been Instrumental in Driving the Company’s Business Improvement Efforts
HERZLIYA,
In the letter to shareholders, Cognyte’s Board highlights the Company’s recent operational advancements, improved financial performance, refreshed Board composition and commitment to ongoing enhancement of corporate governance and financial disclosure.
The full text of the letter follows:
Dear Fellow Shareholders:
This year’s Annual Meeting of Shareholders (the “Annual Meeting”) of Cognyte Software Ltd. (“Cognyte” or the “Company”) will be held on September 4, 2024, and is particularly important. At this year’s Annual Meeting, shareholders will have the opportunity to vote to reelect two of Cognyte’s key leaders: the Company’s independent Chairman, Earl Shanks, and its CEO, Elad Sharon, both of whom have been instrumental in driving the Company’s strategy and business improvement.
In our proxy statement, you will find important information highlighting the Company’s strategy, governance and recent progress, all of which have been driven by our leadership team and Board of Directors. We encourage you to read these materials carefully and vote today using the instructions on the enclosed proxy card.
Cognyte’s Board of Directors and Management Are Executing on a Strategy that Is Delivering Results for Shareholders
The execution of Cognyte’s current innovation and expansion strategy, led by CEO Elad Sharon, is working. We are leveraging our reputation for best-of-breed technological solutions with customers around the world and improving our competitive position.
Over the last year, these actions have returned Cognyte to growth, delivering sustained and expanding profitability, and strengthening our capital structure. The Company has generated three consecutive quarters of year-over-year Revenue and Adjusted EBITDA1 growth while expanding Gross Margins. Our prospects for continued growth are evident in our strong short- and long-term remaining performance obligations (RPOs). And, in fact, we are projecting continued growth in FY 2025 and recently raised our guidance for the year, reflecting our confidence in our business and execution.
Importantly, shareholders returns have improved. Cognyte’s stock has appreciated by more than
In a relatively short period of time, the Cognyte Board and management team have taken decisive actions to stabilize the business and improve the Company’s financial performance, putting Cognyte on the right path. The Board expects fiscal 2025 to be a year of continued growth and improved operating leverage, enabling improved profitability and cash flow.
Cognyte Has Actively Sought, Received and Addressed Shareholder Feedback
Our Board believes that effective corporate governance includes regular, constructive dialogue with shareholders.
Over the past year, the Board and executive team have expanded our shareholder outreach program to improve corporate transparency and gather direct shareholder feedback. In 2023 and 2024, we proactively reached out to our top 20 institutional shareholders (and many others), representing approximately
We have engaged in extensive dialogue with our shareholders on topics ranging from business strategy, corporate governance, executive compensation, communications and disclosures, and other important topics.
Based on the feedback we received during these discussions, the Board has refined and advanced the Company’s strategy, refreshed its own composition and leadership, and improved transparency and disclosures. For example, the Board:
- Established a Strategy Committee to work closely with management to identify and evaluate opportunities to accelerate Cognyte’s growth;
-
Appointed Earl Shanks, an accomplished former CFO of three multi-billion-dollar
U.S. public companies with global operations, as independent Chairman;
- Added three new independent directors – Avi Cohen, Sarit Sagiv and Ron Shvili – all of whom possess highly relevant experience and valuable skills, with subject matter expertise in capital markets, financial reporting, governance and the security analytics market;
- Accepted the retirement of two of our directors, whose departure helped to facilitate the addition of new directors without the board’s size becoming unwieldy;
- Enhanced disclosures regarding the Company’s financial performance, including, for example, disclosures regarding new customer wins and recurring revenue, and corporate governance practices and policies, adding, for example, a skills matrix to our proxy statement to highlight the diverse skills and backgrounds of our directors and clarifying the Board’s responsibilities, practices and role in overseeing the Company’s management and strategy; and
- Enhanced disclosures to provide additional detail regarding the Board’s approach to and philosophy for compensation of executive officers, including disclosure of the peer group we use as a benchmark and the criteria used in determining performance-based compensation. Our enhanced disclosures make clear that our compensation is predominantly at-risk, based on performance against key financial metrics that support long-term growth and profitability, and aligned with the interests of our shareholders.
This Year’s Annual Meeting
At this year’s Annual Meeting, Cognyte is nominating two candidates to the Board, both of whom serve in key leadership positions at the Company and both of whom possess skills and expertise critical to our strategy: Earl Shanks and Elad Sharon. We are also seeking the approval of our CEO’s updated compensation plan, which reflects our pay-for-performance culture and the continued evolution of the plan.
Mr. Shanks, the independent Chairman of Cognyte’s Board, has significant
Mr. Sharon, Cognyte’s CEO, has significant experience in the intelligence and security industry, having previously served in senior operating, product development and R&D roles at Verint’s Cyber Intelligence Solutions business before being appointed President of that business in 2016. He leads our management team in executing our strategy.
Despite the Company’s recent progress and the critical role played by each of the Company’s nominees for the Board, one of our shareholders, Value Base Fund (“Value Base”), is demanding a seat on the Board and has nominated one of its investment managers, Tal Yaacobi, to replace Mr. Shanks or Mr. Sharon on the Board.
We have engaged constructively with Value Base several times over the past few months to understand their perspectives and concerns and explore any insightful suggestions they may have to enhance Cognyte’s strategy, or to improve value. To date, however, Value Base has not offered any meaningful recommendations. Instead, we were told that Mr. Yaacobi’s American education, brief experience as an associate with a consulting firm, and knowledge of accounting would enhance our Board. But, there is no evidence to suggest Mr. Yaacobi can help support our global expansion efforts, nor has he provided any concrete suggestions for improving our strategy, operations, governance or disclosure.
Cognyte’s Nominees Are Best Positioned to Continue to Drive the Company Forward
To deliver on Cognyte’s full potential, the Company needs Board and executive leadership that has a deep understanding of global market opportunities and that is focused on global expansion rather than localizing the business. In addition, we need leaders that understand the Company’s current strengths (and challenges), customers, technology, people, assets and opportunities, along with software industry expertise.
The Cognyte Board and management team fully reflect these important attributes, and are comprised of engaged, diverse and dynamic leaders, whose skillsets are closely aligned with the key drivers of our business. Mr. Shanks and Mr. Sharon are central to Cognyte’s continuing business improvement and are dedicated to enhancing value for all shareholders. They know our business, and our customers, competitors, employees and shareholders, well. Removing either of them to elect Mr. Yaacobi, would substantially weaken the Board and threaten the Company’s recent progress and global ambitions.
The CEO compensation plan has been designed to align Mr. Sharon’s interests and incentives with those of our shareholders. The plan reflects feedback we have received from shareholders and practices that are common in our market.
To ensure Cognyte’s strong momentum and progress continues, the Board urges shareholders to support the current strategy and Board. Please vote “FOR” Earl Shanks and Elad Sharon and “AGAINST” the election of Tal Yaacobi, and “FOR” the proposal to approve the amendments to our CEO’s compensation plan, using the instructions on the enclosed proxy card.
Sincerely,
The Cognyte Software Ltd. Board of Directors
Shareholders can find out more about the 2024 Annual Meeting by visiting the Cognyte investor relations website at https://www.cognyte.com/investors/
If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Saratoga, at (888) 368-0379 or (212) 257-1311 or by email at info@saratogaproxy.com |
Advisors
Spotlight Advisors is serving as financial advisor, Paul Hastings LLP and Meitar are serving as legal advisors, Saratoga Proxy Consulting, LLC is serving as proxy advisor and FNK IR is serving as communications advisor to Cognyte Software.
About Cognyte Software Ltd.
Cognyte Software Ltd. is a global leader in investigative analytics software that empowers a variety of government and other organizations with Actionable Intelligence for a Safer World™. Our open interface software is designed to help customers accelerate and improve the effectiveness of investigations and decision-making. Hundreds of customers rely on our solutions to accelerate and conduct investigations and derive insights, with which they identify, neutralize and tackle threats to national security and address different forms of criminal and terror activities. Learn more at www.cognyte.com.
Cautionary Statement Regarding Forward-Looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are identified by use of the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “should,” “views,” and similar expressions.
Any forward-looking statements contained herein are based on current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including, but not limited to, the impact and contributions of the slate of director nominees Cognyte has nominated, the projected growth of Cognyte’s business, and Cognyte’s ability to achieve its financial and business plans, goals and objectives and drive shareholder value, including with respect to its ability to successfully implement its strategy, and other risk factors discussed from time to time in Cognyte’s filings with the SEC, including those factors discussed under the caption “Risk Factors” in its most recent annual report on Form 20-F, filed with the Securities and Exchange Commission (“SEC”) on April 9, 2024, as amended on April 19, 2024 and in subsequent reports filed with or furnished to the SEC. Cognyte assumes no obligation and does not intend to update these forward-looking statements, except as required by law, to reflect events or circumstances occurring after today’s date.
Endnotes:
__________________
1 This letter includes certain financial measures not prepared in accordance with generally accepted accounting principles (“GAAP”), such as adjusted EBITDA. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to Cognyte’s Notice and Proxy Statement for the Fiscal 2025 Annual Meeting of Shareholders.
2 Source: FactSet. Data as of August 8, 2024. “Peers” refer to the companies disclosed in Cognyte’s Notice and Proxy Statement for the Fiscal 2025 Annual Meeting of Shareholders and include AvePoint, BigCommerce Holdings, C3.ai, Cellebrite DI, Consensus Cloud Solutions, Domo, Enfusion, Everbridge, Kaltura, MeridianLink, Rapid7, Rimini Street, Riskified, SecureWorks, SimilarWeb, WalkMe and Zuora. Peer data refers to median.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240812335856/en/
Investor Relations:
Rob Fink
FNK IR on behalf of Cognyte Software
cgnt@fnkir.com
Source: Cognyte Software Ltd.
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