Cover Page
Cover Page | 12 Months Ended |
Jan. 31, 2022shares | |
Entity Listings [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Jan. 31, 2022 |
Current Fiscal Year End Date | --01-31 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-39829 |
Entity Registrant Name | Cognyte Software Ltd. |
Entity Incorporation, State or Country Code | L3 |
Entity Address, Address Line One | 33 Maskit |
Entity Address, City or Town | Herzliya Pituach |
Entity Address, Postal Zip Code | 4673333 |
Entity Address, Country | IL |
Title of 12(b) Security | Ordinary Shares, no par value |
Trading Symbol | CGNT |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding (in shares) | 67,217,688 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001824814 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Business Contact | |
Entity Listings [Line Items] | |
Entity Address, Address Line One | 33 Maskit |
Entity Address, City or Town | Herzliya Pituach |
Entity Address, Postal Zip Code | 4673333 |
Entity Address, Country | IL |
Contact Personnel Name | David Abadi |
City Area Code | 972-9 |
Local Phone Number | 962-2300 |
Audit Information
Audit Information | 12 Months Ended |
Jan. 31, 2022 | |
Auditor [Line Items] | |
Auditor Name | Brightman Almagor Zohar & Co. |
Auditor Firm ID | 1197 |
Auditor Location | Tel Aviv, Israel |
Deloitte & Touche LLP | |
Auditor [Line Items] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Firm ID | 34 |
Auditor Location | New York, New York |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 152,590 | $ 78,570 |
Restricted cash and cash equivalents and restricted bank time deposits | 3,597 | 27,042 |
Short-term investments | 10,434 | 4,713 |
Accounts receivable, net of allowance for credit losses of $2.1 million and $4.6 million, respectively | 179,198 | 175,001 |
Contract assets, net | 27,908 | 20,317 |
Inventories | 14,366 | 14,542 |
Prepaid expenses and other current assets | 31,970 | 30,051 |
Total current assets | 420,063 | 350,236 |
Property and equipment, net | 30,839 | 37,595 |
Operating lease right-of-use assets | 25,031 | 32,126 |
Goodwill | 158,233 | 158,183 |
Intangible assets, net | 3,162 | 5,299 |
Deferred income taxes | 1,548 | 3,303 |
Other assets | 25,729 | 42,076 |
Total assets | 664,605 | 628,818 |
Current liabilities: | ||
Short term loan | 100,000 | 0 |
Accounts payable | 36,664 | 41,552 |
Accrued expenses and other current liabilities | 99,774 | 91,692 |
Contract liabilities | 83,158 | 127,012 |
Due to former parent | 0 | 38,772 |
Total current liabilities | 319,596 | 299,028 |
Long-term contract liabilities | 14,520 | 22,037 |
Deferred income taxes | 3,447 | 4,049 |
Operating lease liabilities | 17,179 | 24,135 |
Other liabilities | 10,774 | 9,198 |
Total liabilities | 365,516 | 358,447 |
Commitments and Contingencies | ||
Common stock, outstanding (in shares) | 67,217,688 | 65,773,335 |
Common stock, issued (in shares) | 67,217,688 | 65,773,335 |
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Stockholders' equity: | ||
Common stock - $0 par value; Authorized 300,000,000 shares. Issued and outstanding 67,217,688 and 65,773,335 at January 31, 2022 and January 31, 2021, respectively | $ 0 | $ 0 |
Additional paid-in capital | 316,706 | 0 |
Accumulated deficit | (14,890) | 0 |
Former net parent investment | 0 | 273,006 |
Accumulated other comprehensive loss | (16,679) | (15,505) |
Total Cognyte Software Ltd. stockholders' equity | 285,137 | 257,501 |
Noncontrolling interest | 13,952 | 12,870 |
Total stockholders’ equity | 299,089 | 270,371 |
Total liabilities and stockholders’ equity | $ 664,605 | $ 628,818 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | $ 2,110 | $ 4,559 | $ 4,085 | $ 2,911 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Revenue: | |||
Total revenue | $ 474,042 | $ 443,458 | $ 457,109 |
Cost of revenue: | |||
Amortization of acquired technology | 682 | 943 | 2,405 |
Total cost of revenue | 132,399 | 132,669 | 164,005 |
Gross profit | 341,643 | 310,789 | 293,104 |
Operating expenses: | |||
Research and development, net | 143,360 | 128,705 | 111,297 |
Selling, general and administrative | 185,867 | 162,590 | 153,901 |
Amortization of other acquired intangible assets | 1,455 | 1,218 | 593 |
Total operating expenses | 330,682 | 292,513 | 265,791 |
Operating income | 10,961 | 18,276 | 27,313 |
Other (expense) income, net: | |||
Interest income | 177 | 1,347 | 3,509 |
Interest expense | (196) | (185) | (481) |
Other (expenses) income, net | (2,681) | 5,286 | (404) |
Total other (expense) income, net | (2,700) | 6,448 | 2,624 |
Income before provision for income taxes | 8,261 | 24,724 | 29,937 |
Provision for income taxes | 18,517 | 4,414 | 2,567 |
Net (loss) income | (10,256) | 20,310 | 27,370 |
Net income attributable to noncontrolling interest | 4,634 | 6,107 | 7,179 |
Net (loss) income attributable to Cognyte Software Ltd. | $ (14,890) | $ 14,203 | $ 20,191 |
Net (loss) income per share attributable to Cognyte Software Ltd.: | |||
Basic (in dollars per share) | $ (0.22) | $ 0.22 | $ 0.31 |
Diluted (in dollars per share) | $ (0.22) | $ 0.22 | $ 0.31 |
Weighted-average shares outstanding: | |||
Basic (in shares) | 66,570 | 65,773 | 65,773 |
Diluted (in shares) | 66,570 | 65,773 | 65,773 |
Software | |||
Revenue: | |||
Total revenue | $ 209,988 | $ 187,236 | $ 201,487 |
Cost of revenue: | |||
Cost of revenue | 28,955 | 35,647 | 36,071 |
Software service | |||
Revenue: | |||
Total revenue | 201,563 | 190,013 | 171,866 |
Cost of revenue: | |||
Cost of revenue | 46,413 | 44,893 | 45,012 |
Professional service and other | |||
Revenue: | |||
Total revenue | 62,491 | 66,209 | 83,756 |
Cost of revenue: | |||
Cost of revenue | $ 56,349 | $ 51,186 | $ 80,517 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net (loss) income | $ (10,256) | $ 20,310 | $ 27,370 |
Other comprehensive loss, net of reclassification adjustments: | |||
Foreign currency translation adjustments | (219) | (1,233) | (1,876) |
Net (decrease) increase from foreign exchange contracts designated as hedges | (1,253) | (19) | 1,561 |
Benefit (provision) for income taxes on net (decrease) increase from foreign exchange contracts designated as hedges | 84 | (18) | (156) |
Other comprehensive loss | (1,388) | (1,270) | (471) |
Comprehensive (loss) income | (11,644) | 19,040 | 26,899 |
Comprehensive income attributable to noncontrolling interest | 4,420 | 6,419 | 7,169 |
Comprehensive (loss) income attributable to Cognyte Software Ltd. | $ (16,064) | $ 12,621 | $ 19,730 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance | Total Cognyte Software Ltd. Equity | Total Cognyte Software Ltd. EquityCumulative Effect, Period of Adoption, Adjustment | Total Cognyte Software Ltd. EquityCumulative Effect, Period of Adoption, Adjusted Balance | Common Stock | Common StockCumulative Effect, Period of Adoption, Adjusted Balance | Additional Paid-in Capital | Additional Paid-in CapitalCumulative Effect, Period of Adoption, Adjusted Balance | Treasury Stock | Treasury StockCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Deficit | Accumulated DeficitCumulative Effect, Period of Adoption, Adjusted Balance | Former Net Parent Investment | Former Net Parent InvestmentCumulative Effect, Period of Adoption, Adjustment | Former Net Parent InvestmentCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossCumulative Effect, Period of Adoption, Adjusted Balance | Non-controlling Interest | Non-controlling InterestCumulative Effect, Period of Adoption, Adjusted Balance |
Beginning balance at Jan. 31, 2019 | $ 475,318 | $ 467,607 | $ 0 | $ 0 | $ 0 | $ 0 | $ 481,069 | $ (13,462) | $ 7,711 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||
Accounting Standards Update [Extensible List] | Accounting Standards Update 2016-13 [Member] | ||||||||||||||||||||
Net income (loss) | $ 27,370 | 20,191 | 20,191 | 7,179 | |||||||||||||||||
Other comprehensive (loss) income | (471) | (461) | (461) | (10) | |||||||||||||||||
Dividends to noncontrolling interest | (4,253) | (4,253) | |||||||||||||||||||
Net transfers to parent | (42,793) | (42,793) | (42,793) | ||||||||||||||||||
Ending balance at Jan. 31, 2020 | 455,171 | $ (446) | $ 454,725 | 444,544 | $ (446) | $ 444,098 | 0 | $ 0 | 0 | $ 0 | 0 | $ 0 | 0 | $ 0 | 458,467 | $ (446) | $ 458,021 | (13,923) | $ (13,923) | 10,627 | $ 10,627 |
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||
Net income (loss) | 20,310 | 14,203 | 14,203 | 6,107 | |||||||||||||||||
Other comprehensive (loss) income | (1,270) | (1,582) | (1,582) | 312 | |||||||||||||||||
Dividends to noncontrolling interest | (4,176) | (4,176) | |||||||||||||||||||
Cash dividends declared payable to parent | (35,000) | (35,000) | (35,000) | ||||||||||||||||||
Net transfers to parent | (164,218) | (164,218) | (164,218) | ||||||||||||||||||
Ending balance at Jan. 31, 2021 | 270,371 | 257,501 | 0 | 0 | 0 | 0 | 273,006 | (15,505) | 12,870 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||
Spin-off from Verint | 9,558 | 9,558 | 9,558 | ||||||||||||||||||
Net income (loss) | (10,256) | (14,890) | (14,890) | 4,634 | |||||||||||||||||
Other comprehensive (loss) income | (1,388) | (1,174) | (1,174) | (214) | |||||||||||||||||
Reclassification of former net parent investment | 0 | 282,564 | (282,564) | ||||||||||||||||||
Share-based compensation activity | 34,323 | 34,323 | 34,142 | 181 | |||||||||||||||||
Repurchase of shares | (181) | (181) | (181) | ||||||||||||||||||
Dividends to noncontrolling interest | (3,338) | (3,338) | |||||||||||||||||||
Ending balance at Jan. 31, 2022 | $ 299,089 | $ 285,137 | $ 0 | $ 316,706 | $ 0 | $ (14,890) | $ 0 | $ (16,679) | $ 13,952 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (10,256) | $ 20,310 | $ 27,370 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 21,278 | 22,519 | 17,325 |
Allowance for credit losses | 432 | 1,850 | 1,355 |
Stock-based compensation, excluding cash-settled awards | 32,865 | 27,423 | 31,028 |
Provision (benefit) from deferred income taxes | 5,860 | (2,195) | 5,603 |
Non-cash (losses) gains on derivative financial instruments, net | (133) | 95 | (395) |
Change in fair value of contingent consideration for business combinations | (134) | (3,665) | (5,392) |
Other non-cash items, net | 766 | (2,964) | 1,747 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (5,718) | 1,496 | (24,140) |
Contract assets | (7,115) | 8,442 | 17,658 |
Inventories | (363) | (1,142) | (392) |
Prepaid expenses and other assets | 8,465 | 5,119 | 7,032 |
Accounts payable and accrued expenses | 4,885 | 8,668 | 1,307 |
Contract liabilities | (51,314) | (16,770) | 9,321 |
Other liabilities | 1,761 | 210 | (20,847) |
Other, net | 1,351 | 1,915 | (1,394) |
Net cash provided by operating activities | 2,630 | 71,311 | 67,186 |
Cash flows from investing activities: | |||
Cash paid for business combinations, including adjustments, net of cash acquired | 0 | 0 | (18,693) |
Purchases of property and equipment | (11,759) | (14,199) | (13,691) |
Purchases of short-term investments | (58,973) | (48,585) | (29,099) |
Maturities and sales of short-term investments | 52,978 | 51,174 | 53,527 |
Settlements of derivative financial instruments not designated as hedges | (138) | 213 | 212 |
Cash paid for capitalized software development costs | (6,033) | (5,132) | (7,638) |
Change in restricted bank time deposits, including long-term portion | 5,561 | 31,084 | (14,159) |
Other investing activities | 513 | 1,863 | 0 |
Net cash (used in) provided by investing activities | (17,851) | 16,418 | (29,541) |
Cash flows from financing activities: | |||
Net transfers to former parent | 0 | (189,047) | (72,057) |
Withdrawal from credit facility - presented as short term loan | 100,000 | 0 | 0 |
Dividend paid to former parent | (35,000) | 0 | 0 |
Repayments of parent borrowings | 0 | (7,025) | (6,000) |
Dividends paid to noncontrolling interest | (3,338) | (4,176) | (4,253) |
Payments of contingent consideration for business combinations (financing portion) | (2,738) | (4,877) | (3,419) |
Other financing activities | (181) | (492) | (244) |
Net cash provided by (used in) financing activities | 58,743 | (205,617) | (85,973) |
Foreign currency effects on cash, cash equivalents, restricted cash, and restricted cash equivalents | 41 | (864) | (985) |
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 43,563 | (118,752) | (49,313) |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period | 114,657 | 233,409 | 282,722 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | 158,220 | 114,657 | 233,409 |
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents at end of period: | |||
Cash and cash equivalents | 152,590 | 78,570 | 201,090 |
Restricted cash and cash equivalents included in restricted cash and cash equivalents and restricted bank time deposits | 3,486 | 25,904 | 24,513 |
Restricted cash and cash equivalents included in other assets | 2,144 | 10,183 | 7,806 |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents | $ 158,220 | $ 114,657 | $ 233,409 |
ORGANIZATION, OPERATIONS AND BA
ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION | 12 Months Ended |
Jan. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION | ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION Description of Business Cognyte Software Ltd. (the “Company”, “Cognyte”, “we”, “us” and “our”) is a global leader in investigative analytics software that empowers governments and enterprises with Actionable Intelligence for a Safer World™. Our open software is designed to help governments and enterprises accelerate and improve the effectiveness of investigations. Over 1,000 government and enterprise customers rely on Cognyte’s solutions to accelerate and conduct investigations and derive insights, with which they identify, neutralize, and tackle threats to national security, personal safety, business continuity and various forms of criminal activity. Our government customers consist of national, regional, and local government agencies in more than 100 countries around the world. Our enterprise customers consist of commercial customers and physical security customers. Basis of Presentation On February 1, 2021, the spin-off of Cognyte from Verint Systems Inc. (“Verint”) was completed. Prior to the spin-off, the Company had not published stand-alone financial statements. As a result, the Company's comparative combined financial statements as of January 31, 2021 and for the years ended January 31, 2021 and 2020 were derived (carved-out) from the consolidated financial statements and accounting records of Verint and have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). The preparation of the combined financial statements required management to make certain estimates and assumptions, either at the balance sheet date or during the year that affects the reported amounts of assets and liabilities as well as expenses. These combined financial statements include the assets and liabilities of the Verint subsidiaries that are attributable to the Company’s business and exclude the assets and liabilities of the Verint subsidiaries that are not attributable to the Company’s business. During the years ended January 31, 2021 and 2020, the Company functioned as part of the larger group of companies controlled by Verint. Accordingly, Verint performed certain corporate overhead functions for the Company. Therefore, certain corporate costs, including compensation costs for corporate employees supporting the Company, have been allocated from Verint. These allocated costs are for corporate functions including, but not limited to, senior management, legal, human resources, finance and accounting, treasury, information technology, internal audit and other shared services, which were not historically provided at the Company level. Where possible, these costs were specifically identified to the Company, with the remainder primarily allocated on the basis of revenue as a relevant measure. The combined financial statements do not necessarily include all the expenses that would have been incurred or held by the Company had it been a separate, stand-alone company, and we expect to incur additional expenses as a separate, stand-alone publicly-traded company. It is not practicable to estimate actual costs that would have been incurred had the Company been a separate stand-alone company during the years ended January 31, 2021 and 2020. Allocations for management costs and corporate support services provided to the Company totaled $97.3 million and $81.8 million for the years ended January 31, 2021 and 2020, respectively. The Company and Verint considered the allocations to be a reasonable reflection of the benefits received by the Company. See also Note 3, “Related Party Transactions with Verint” for further discussion. Unless noted otherwise, references to the consolidated financial statements and discussion in the notes to the consolidated financial statements also pertains to the combined, carve-out basis financial statements as of January 31, 2021 and for the years ended January 31, 2021 and 2020. The accompanying consolidated and combined financial statements include a joint venture in which we hold a 50% equity interest. The joint venture is a variable interest entity (“VIE”) in which we are the primary beneficiary as we have the power to direct the activities that are most significant to the VIE. The joint venture’s activities primarily include promoting transactions with end customers as well as negotiating their commercial terms, providing local technical support and interfacing with customers. The noncontrolling interest in the less than wholly owned subsidiary is reflected within equity in our consolidated balance sheets, but separately from our equity. Equity investments in companies in which we have less than a 20% ownership interest and cannot exercise significant influence, and which do not have readily determinable fair values, are accounted for at cost, adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer, less any impairment. COVID-19 Pandemic The COVID-19 pandemic has reached all of the regions in which we do business, and governmental authorities around the world have implemented numerous measures attempting to contain and mitigate the effects of the pandemic, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, and social distancing requirements. Companies around the world, including us, our customers, partners, and vendors, have implemented actions in response, including among others, office closings, site restrictions, and employee travel restrictions. Notwithstanding the loosening of these restrictions in certain countries in certain periods since the onset of the pandemic, the global spread of COVID-19 and actions taken in response have negatively affected us, our customers, partners, and vendors and caused significant economic and business disruption. We continue to monitor and assess the impact of the COVID-19 pandemic, including recommendations and orders issued by government and public health authorities in countries where we operate. We have seen an improvement in the business environment in 2021 after an initial downturn in early 2020; however, in 2021, our revenue was negatively impacted by delays and reduced spending attributed to the impact of the COVID-19 pandemic on our customers’ operational priorities and as a result of cost containment measures they have implemented. Due to the pandemic, we saw a reduction or delay in certain large customer contracts, particularly on-premises arrangements, and we have generally been unable to conduct face-to-face meetings with existing or prospective customers and partners, present in-person demonstrations of our solutions, or host or attend in-person trade shows and conferences. Limitations on access to the facilities of our customers have also impacted our ability to deliver some of our products, complete certain implementations, and provide in-person consulting and training services, negatively impacting our ability to recognize revenue. Furthermore, many of our customers are government agencies, and their budgets may have been and may continue to be stretched thin due to the efforts taken to combat the pandemic. If some of our government customers experience budget shortfalls, they may decide to forgo using our services. Our ability to predict how the pandemic will impact our results in future periods is limited, including the extent to which customers may delay or miss payments, customers may defer, reduce, or refrain from placing orders or renewing subscriptions or support arrangements, or to which travel restrictions and site access restrictions may remain necessary, particularly if the pandemic fails to abate for an extended period of time or worsens. Additionally, as a result of COVID-19’s impact on the global supply, we have experienced delays in supplier deliveries (including with respect to electronic components and other products on which the Company relies), extended lead times, and increased cost of freight, purchased materials and manufacturing labor costs. These disruptions, which are expected to continue into 2022, have delayed and are expected to continue to delay the timing of some customer orders and expected deliveries of our products. If the impacts of the supply chain disruptions are more severe than we expect, it could result in even longer lead times and further increased costs, all of which could materially adversely affect our business, financial condition and results of operations. In addition, governments may reduce their budgets or defer purchase decisions until supply chain disruptions subside. In light of the adverse impact of COVID-19 on global economic conditions and our revenue, along with the uncertainty associated with the extent and timing of a potential recovery, in 2020, we implemented certain cost-reduction actions of varying durations. Such actions included, but were not limited to, reducing our discretionary spending, decreasing capital expenditures, reconsidering the optimal uses of our cash and other capital resources, and reducing workforce-related costs. Based on the improved business environment and our financial performance during 2021, we have in many cases resumed investments and other spending; however, these actions may need to be reassessed depending on how the facts and circumstances surrounding the pandemic evolve and we continue to evaluate and may decide to implement further cost control strategies to help us mitigate the impact of the pandemic, if required. Any such actions may have an adverse impact on us, particularly if they remain in place for an extended period. War in Europe On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. The length and impact of the ongoing military conflict is highly unpredictable, and has led to and could continue creating market disruptions, including significant volatility in commodity prices, credit and capital markets, restrictions on international trade as well as supply chain interruptions. Russian military actions and the resulting sanctions could also adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets in the longer term, potentially making it more difficult for us to obtain additional funds. We are continuing to monitor the situation in Ukraine and assessing its potential impact on our business. While we do not trade with any Russian or Belarusian governmental agencies or with any of the entities which are subject to sanctions, any of the above-mentioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are currently impossible to predict, but could be substantial. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to revenue recognition over time, fair value of goodwill, realizability of deferred tax assets and tax uncertainties. In light of the currently unknown extent and duration of the COVID-19 pandemic, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply to certain of our significant accounting policies. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of January 31, 2022 and through the date of this report. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly liquid investments having an original maturity of three months or less. Restricted Cash and Cash Equivalents, and Restricted Bank Time Deposits Restricted cash and cash equivalents, and restricted bank time deposits are mainly pledged as collateral for performance guarantees. Investments Our investments generally consist of bank time deposits with remaining maturities in excess of 90 days at the time of purchase. We held no marketable debt securities at January 31, 2022 and 2021. Investments with maturities in excess of one year are included in other assets. Accounts Receivable, net Trade accounts receivable are comprised of invoiced amounts due from customers for which we have an unconditional right to collect and are not interest-bearing. Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, bank time deposits, short-term investments, accounts receivable, and contract assets. We invest our cash in bank accounts and bank time deposits. By policy, we seek to limit credit exposure on investments through diversification and by restricting our investments to highly rated securities. We grant credit terms to our customers in the ordinary course of business. Concentrations of credit risk with respect to accounts receivable and contract assets are generally limited due to the large number of customers comprising our customer base and their dispersion across different industries and geographic areas. We have both direct and indirect contracts with two governments outside the United States, that combined accounted for $80.1 million and $72.6 million of our aggregated accounts receivable and contract assets, at January 31, 2022 and 2021, respectively. We believe our contracts with these governments present insignificant credit risk. Allowance for Credit Losses We adopted Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments on February 1, 2020. ASU No. 2016-13 requires us to make judgments as to our ability to collect outstanding receivables and provide allowances for a portion of receivables over the lifetime of the receivables. Our allowance for credit losses is estimated based on an analysis of the aging of our accounts receivable and contract assets, historical write-offs, customer payment patterns, individual customer creditworthiness, current economic trends, reasonable and supportable forecasts of future economic conditions, and/or establishment of specific reserves for customers in adverse financial condition. We write-off an account receivable and charge it against its recorded allowance at the point when it is considered uncollectible. We assess the adequacy of the allowance for credit losses on a quarterly basis. The following table summarizes the activity in our credit losses for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Allowance for credit losses, beginning of year $ 4,559 $ 4,085 $ 2,911 Cumulative effect of adoption of ASU No. 2016-13 — 435 — Provisions charged to expense 342 1,840 1,355 Amounts written off (2,791) (1,922) (152) Other, including fluctuations in foreign exchange rates — 121 (29) Allowance for credit losses, end of year $ 2,110 $ 4,559 $ 4,085 Our estimated expected credit losses associated with contract assets were not material as historical write-offs have been insignificant. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the weighted-average method of inventory accounting. The valuation of our inventories requires us to make estimates regarding excess or obsolete inventories, including making estimates of the future demand for our products. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand, price, or technological developments could have a significant impact on the value of our inventory and reported operating results. Charges for excess and obsolete inventories are included within cost of revenue. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method based over the estimated useful lives of the assets. The vast majority of equipment, furniture and other is depreciated over periods ranging from three The cost of maintenance and repairs of property and equipment is charged to operations as incurred. When assets are retired or disposed of, the cost and accumulated depreciation or amortization thereon are removed from the consolidated balance sheet and any resulting gain or loss is recognized in the consolidated statement of operations. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the enterprise’s chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. We evaluated segment reporting in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting . We concluded that we operate in a single operating segment and a single reportable segment based on the operating results available and evaluated regularly by the CODM to make decisions about resource allocation and performance assessment. The CODM makes operational performance assessments and resource allocation decisions on a consolidated basis, inclusive of all of the Company’s products. Goodwill and Other Acquired Intangible Assets For business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill. We test goodwill for impairment at the reporting unit level on an annual basis as of November 1, or more frequently if changes in facts and circumstances indicate that impairment in the value of goodwill may exist. We operate as one reporting unit. In testing for goodwill impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we elect to bypass a qualitative assessment, or if our qualitative assessment indicates that goodwill impairment is more likely than not, we perform quantitative impairment testing. If our quantitative testing determines that the carrying value of the reporting unit exceeds its fair value, goodwill impairment is recognized in an amount equal to that excess, limited to the total goodwill allocated to our reporting unit. We utilize some or all of three primary approaches to assess the fair value of a reporting unit: (a) an income-based approach, using projected discounted cash flows, (b) a market-based approach, using valuation multiples of comparable companies, and (c) a transaction-based approach, using valuation multiples for recent acquisitions of similar businesses made in the marketplace. Our estimate of fair value of our reporting unit is based on a number of subjective factors, including: (a) appropriate consideration of valuation approaches (income approach, comparable public company approach, and comparable transaction approach), (b) estimates of future growth rates, (c) estimates of our future cost structure, (d) discount rates for our estimated cash flows, (e) selection of peer group companies for the public company and the market transaction approaches, (f) required levels of working capital, (g) assumed terminal value, and (h) time horizon of cash flow forecasts. Acquired identifiable intangible assets include identifiable acquired technologies, customer relationships, trade names, distribution networks, and non-competition agreements. We amortize the cost of finite-lived identifiable intangible assets over their estimated useful lives, which are periods of 7 years or less. Amortization is based on the pattern in which the economic benefits of the intangible asset are expected to be realized, which typically is on a straight-line basis. The fair values assigned to identifiable intangible assets acquired in business combinations are determined primarily by using the income approach, which discounts expected future cash flows attributable to these assets to present value using estimates and assumptions determined by management. The acquired identifiable finite-lived intangible assets are being amortized primarily on a straight-line basis, which we believe approximates the pattern in which the assets are utilized, over their estimated useful lives. Fair Value Measurements Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This fair value hierarchy consists of three levels of inputs that may be used to measure fair value: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity. We review the fair value hierarchy classification of our applicable assets and liabilities at each reporting period. Changes in the observability of valuation inputs may result in transfers within the fair value measurement hierarchy. Fair Values of Financial Instruments Our recorded amounts of cash and cash equivalents, restricted cash and cash equivalents, and restricted bank time deposits, accounts receivable, contract assets, contract liabilities, short term loan, investments, and accounts payable approximate fair value, due to the short-term nature of these instruments. We measure certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Derivative Financial Instruments The Company accounts for derivatives and hedging based on ASC 815, Derivatives and Hedging , which requires recognizing all derivatives on the balance sheet at fair value. If the derivatives meet the definition of a cash flow hedge and are so designated, depending on the nature of the hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. The ineffective portion of a derivative’s change in fair value, if any, is recognized in earnings, as well as gains and losses from a derivative’s change in fair value that are not designated as hedges. As part of our risk management strategy, when considered appropriate, we use derivative financial instruments including foreign currency forward contracts to hedge against certain foreign currency exposure. Our intent is to mitigate gains and losses caused by the underlying exposures with offsetting gains and losses on the derivative contracts. By policy, we do not enter into speculative positions with derivative instruments. To protect against the increase in value of expected foreign currency cash flows resulting mainly from salaries and related benefits paid in NIS during the year, the Company hedges portions of its anticipated payroll denominated in NIS for a period of one We also periodically utilize foreign currency forward contracts to manage exposures resulting from expected customer collections to be remitted in currencies other than the applicable functional currency, and exposures from cash, cash equivalents and short-term investments denominated in currencies other than the applicable functional currency. The counterparties to our derivative financial instruments consist of two major financial institutions. We regularly monitor the financial strength of these institutions. While the counterparties to these contracts expose us to credit-related losses in the event of a counterparty’s non-performance, the risk would be limited to the unrealized gains on such affected contracts. We do not anticipate any such losses. Revenue Recognition We account for revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which was adopted on February 1, 2018, using the modified retrospective transition method. For further discussion of our accounting policies related to revenue, see Note 4, “Revenue Recognition”. Cost of Revenue Our cost of revenue includes costs of materials, compensation and benefit costs for operations and service personnel, subcontractor costs, royalties and license fees related to third-party software included in our products and third-party SaaS providers, cloud infrastructure costs, depreciation of equipment used in operations and service, amortization of capitalized software development costs and certain purchased intangible assets, travel expenses associated with provision of installation, training, consulting and development services resources dedicated to project management and an allocation of overhead costs, such as facility, information technology, operations costs, and other overhead expenses. Costs that relate to materials and royalties are generally expensed upon shipment and costs related to travel, subcontractors, and personnel and related expenses are generally expensed as incurred in the period in which the personnel related services are performed. Refer to Note 4, “Revenue Recognition” under the heading “Costs to Obtain and Fulfill Contracts” for further details regarding customer contract costs. Research and Development, net With the exception of certain software development costs, all research and development costs are expensed as incurred, and consist primarily of personnel and consulting costs, travel, depreciation of research and development equipment, and related overhead and other costs associated with research and development activities. We receive non-refundable grants from the Israeli Innovation Authority (“IIA”) that fund a portion of our research and development expenditures. We currently only enter into non-royalty-bearing arrangements with the IIA which do not require us to pay royalties. Funds received from the IIA are recorded as a reduction to research and development expense. Royalties, to the extent paid, are recorded as part of our cost of revenue. We also periodically derive benefits from participation in certain government-sponsored programs in other jurisdictions, for the support of research and development activities conducted in those locations. Software Development Costs Costs incurred to acquire or develop software to be sold, leased or otherwise marketed are capitalized after technological feasibility is established, and continue to be capitalized through the general release of the related software product. Amortization of capitalized costs begins in the period in which the related product is available for general release to customers and is recorded on a straight-line basis, which approximates the pattern in which the economic benefits of the capitalized costs are expected to be realized, over the estimated economic lives of the related software products, generally over a period of four Internal-Use Software We capitalize costs associated with software that is acquired, internally developed or modified solely to meet our internal needs. Capitalization begins when the preliminary project stage has been completed and management with the relevant authority authorizes and commits to the funding of the project. These capitalized costs include external direct costs utilized in developing or obtaining the applications and expenses for employees who are directly associated with the development of the applications. Capitalization of such costs continues until the project is substantially complete and is ready for its intended purpose. Capitalized costs of computer software developed for internal use are generally amortized over estimated useful lives of four We capitalize integration and testing costs incurred from implementing cloud computing hosting arrangements that are service contracts at the application development stage. Capitalized costs are amortized on a straight-line basis over the term of each arrangement. Income Taxes Prior to the spin-off, the Company’s operations were included in the consolidated U.S. federal and certain state, local and foreign income tax returns filed by Verint. For the purposes of periods prior to the spin-off, the Company’s income tax provision was calculated using the separate return basis, as if the Company filed separate tax returns. Since the spin-off, certain changes in the tax balances are primarily attributable to tax carryforwards and other basis differences that existed on a separate return basis for the historical periods. Changes between the historical periods presented on a separate return basis were settled through the former net parent investment immediately prior to the spin-off. We account for income taxes under the asset and liability method which includes the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements. Under this approach, deferred taxes are recorded for the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus deferred taxes. Deferred taxes result from differences between the financial statement and tax bases of our assets and liabilities, and are adjusted for changes in tax rates and tax laws when changes are enacted. The effects of future changes in income tax laws or rates are not anticipated. We are subject to income taxes in Israel, the United States and numerous foreign jurisdictions. The calculation of our income tax provision involves the application of complex tax laws and requires significant judgment and estimates. We evaluate the realizability of our deferred tax assets for each jurisdiction in which we operate at each reporting date, and establish valuation allowances when it is more likely than not that all or a portion of our deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the same character and in the same jurisdiction. We consider all available positive and negative evidence in making this assessment, including, but not limited to, the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. In circumstances where there is sufficient negative evidence indicating that our deferred tax assets are not more-likely-than-not realizable, we establish a valuation allowance. We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate tax positions taken or expected to be taken in a tax return by assessing whether they are more-likely-than-not sustainable, based solely on their technical merits, upon examination and including resolution of any related appeals or litigation process. The second step is to measure the associated tax benefit of each position as the largest amount that we believe is more-likely-than-not realizable. Differences between the amount of tax benefits taken or expected to be taken in our income tax returns and the amount of tax benefits recognized in our financial statements represent our unrecognized income tax benefits, which we either record as a liability or as a reduction of deferred tax assets. Our policy is to include interest (expense and/or income) and penalties related to unrecognized income tax benefits as a component of the provision for income taxes. Functional Currencies and Foreign Currency Transaction Gains and Losses Our functional currency, and the functional currency of most of our subsidiaries, is the U.S. dollar, although we have some subsidiaries with functional currencies that are their local currency. Transactions denominated in currencies other than a functional currency are converted to the functional currency on the transaction date, and any resulting assets or liabilities are further remeasured at each reporting date and at settlement. Gains and losses recognized upon such remeasurements are included within other income (expense), net in the consolidated statements of operations. We recorded net foreign currency losses of $3.1 million, net foreign currency gains of $1.7 million and net foreign currency losses of $0.7 million for the years ended January 31, 2022, 2021, and 2020, respectively. For consolidated reporting purposes, in those instances where a subsidiary has a functional currency other than the U.S. dollar, revenue and expenses are translated into U.S. dollars using average exchange rates for the reporting period, while assets and liabilities are translated into U.S. dollars using period-end rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income or loss in the accompanying consolidated balance sheets. Stock-Based Compensation Certain Company employees participate in a stock-based compensation plan sponsored by Cognyte. Awards granted under the plan are based on Cognyte’s common shares and, as such, are included in Additional Paid in Capital. The Company accounts for share-based compensation under ASC 718, Compensation - Stock Compensation , which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statements of operations. The Company estimates forfeitures to be estimated at the time of grant, and revised if necessary in subsequent periods, if actual forfeitures differ from those estimates. The Company recognizes compensation expenses for the value of its awards, which vest in tranches based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. For performance-based share units, the Company recognizes compensation expenses for the value of such awards, if and when the Company concludes that it is probable that a performance condition will be achieved based on the accelerated attribution method over the requisite service period. The Company reassesses the probability of vesting at each reporting period for awards with performance conditions and adjusts compensation cost based on its probability assessment. Leases We determine if an arrangement is a lease at inception. Operating lease assets are presented as operating lease right-of-use (“ROU”) assets, and corresponding operating lease liabilities are presented within accrued expenses and other current liabilities (current portions), and as operating lease liabilities (long-term portions), on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the remaining lease payments over the lease term at commencement date. Our leases do not provide an implicit interest rate. We calculate the incremental borrowing rate to reflect the interest rate that we would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term, and consider our historical borrowing activities and market data in this determination. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which we account for as a single lease component. Some of our leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index updates are recorded as rent expense in the period incurred. We have elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of twelve months or less. The effect of short-term leases on our ROU assets and lease liabilities was not material. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, we do not have any related party leases. Legal Contingencies From time to time, the Company becomes involved in legal proceedings or is subject to claims arising in its ordinary course of business. Such matters are generally subject to many uncertainties and outcomes that are not predictable with certainty. The Company accrues for contingencies when the loss is probable, and it can reasonably estimate the amount of any such loss. Loss contingencies considered to be remote by the Company are generally not disclosed unless material. The respective legal fees are expensed as incurred. Business Combinations The Company accounts for business combinations in accordance with ASC 805, Business Combinations . ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over the purchase price is allocated to goodwill and any subsequent changes in estimated contingencies are recorded in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in changes in acquired income tax positions are recognized in earnings. Acquisition related costs are expensed to the consolidated statements of operations in the periods incurred. Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The guidance applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of this guidance does not have a material impact on the Company’s consolidated financial results of operations, financial position or cash flows. New Accounting Pronouncements Not Yet Effective In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU No. 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. ASU No. 2020-06 also eliminates the treasury stock method to calculate diluted earnings per share and requires the if-converted method. This new standard will be effective in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 . We are currently reviewing this standard but do not expect that it will have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which affects general principles within Topic 740, Income Taxes and is meant to simplify and reduce the cost of accounting for income taxes. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim reporting periods within annual reporting periods beginning after December 15, 2022. We do not expect that this standard will have a material impact on our consolidated financial statements. In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832) , which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021. We do not expect that this standard will have a material impact on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts wi |
RELATED PARTY TRANSACTIONS WITH
RELATED PARTY TRANSACTIONS WITH VERINT | 12 Months Ended |
Jan. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS WITH VERINT | RELATED PARTY TRANSACTIONS WITH VERINT In connection with the spin-off we entered into a Separation and Distribution Agreement with Verint related to the separation and distribution. In addition, we entered into several other agreements with Verint prior to completion of the spin-off to effect the separation and provide a framework for our relationship with Verint after the spin-off, including a Tax Matters Agreement, an Employee Matters Agreement, a limited duration Transition Services Agreement, an Intellectual Property Cross License Agreement, and a Trademark Cross License Agreement. In the year ended January 31, 2022, we incurred net expenses of $4.8 million in relation to these agreements with Verint. The combined financial statements of the comparative figures as of January 31, 2021 and for the years ended January 31, 2021 and 2020 were prepared on a carve-out basis and derived from the consolidated financial statements and accounting records of Verint. Verint provided certain services, such as but not limited to, senior management, legal, human resources, finance and accounting, treasury, information technology, internal audit and other shared services, on behalf of the Company. Where possible, these costs were specifically identified to the Company, with the remainder primarily allocated on the basis of revenue as a relevant measure. The Company and Verint both consider the allocations to be a reasonable reflection of the benefits received by the Company. During the years ended January 31, 2021, and 2020, the Company was allocated $97.3 million and $81.8 million, respectively, of corporate expenses incurred by Verint and such amounts are included in the consolidated statements of operations of the comparative figures of the years ended January 31, 2021, and 2020. As certain expenses reflected in the consolidated financial statements for these years include allocations of corporate expenses from Verint, these statements could differ from those that would have been prepared had the Company operated on a stand-alone basis. The components of the costs of services allocated to the Company for the years ended January 31, 2021 and 2020 are as follows: Year Ended January 31, (in thousands) 2021 2020 Software - cost of revenue $ 1,981 $ 1,871 Software service - cost of revenue 1,548 1,639 Professional service and other - cost of revenue 2,743 4,654 Research and development, net 21,783 19,139 Selling, general and administrative 69,210 54,452 Total allocated corporate expenses $ 97,265 $ 81,755 All significant internal transactions between the Company and Verint have been included in these consolidated financial statements and are considered to have been effectively settled or are expected to be settled for cash. The Company had related party payables, current of $3.8 million which is presented in due to former parent within the consolidated balance sheets as of January 31, 2021. The total net effect of the settlement of these internal transactions is reflected in the consolidated statements of cash flows as a financing activity and in the consolidated balance sheets as former net parent investment. On January 29, 2021, Cognyte Technologies Israel Ltd.’s board of directors declared a cash dividend (the “Dividend”) in the aggregate amount of $35.0 million payable to Verint, which was its sole holder of record of ordinary shares as of the January 29, 2021 record date for the Dividend. The Dividend was paid on April 13, 2021, following the board of director’s receipt and review of financial statements that met all the conditions set forth in Section 302(b) of the Companies Law and that satisfied the solvency test and profit test under the Companies Law required for distribution of the Dividend. The dividends payable to Verint of $35.0 million is presented in due to former parent within the consolidated balance sheets as of January 31, 2021. Certain legal entities of the Company had interest-bearing notes under contractual agreements to Verint. The purpose of these notes was to provide funds for certain working capital or other capital and operating requirements of the business. Net interest expense on these notes with Verint is recorded in interest expense in the consolidated statements of operations and was $0.2 million and $0.4 million for the years ended January 31, 2021, and 2020, respectively. These notes had fixed and variable interest rates of 2.1% fixed rate and 2.5% plus three-month average LIBOR variable rate, with maturities of the earliest of five years, or on demand, and four years, respectively. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Jan. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. When an arrangement contains multiple performance obligations, we account for individual performance obligations separately if they are distinct. We recognize revenue through the application of the following five steps: 1) Identify the contract(s) with a customer A contract with a customer exists when (i) we enter into an enforceable contract with the customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or in the case of a new customer, published credit and financial information pertaining to the customer. Our customary business practice is to enter into legally enforceable written contracts with our customers, which set forth the general terms and conditions between the parties. Typically, our customers also submit a purchase order to specify the different goods and services, and the associated prices. Multiple contracts with a single counterparty entered into at or near the same time are evaluated to determine if the contracts should be combined and accounted for as a single contract. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or services either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we must apply judgment to determine whether promised goods or services are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Generally, our contracts do not include non-distinct performance obligations, but certain contracts require design, development, or significant customization of our products to meet the customer’s specific requirements, in which case the products and services are combined into one distinct performance obligation. Additionally, our subscription license offerings provide customers with access to and the right to utilize ongoing support to ensure our software is continuously up-to-date with the latest cyber security capabilities. We consider our software subscription licenses and access to critical support to be a single performance obligation. 3) Determine the transaction price The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. We assess the timing of transfer of goods and services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less, which is the case in the majority of our customer contracts. The primary purpose of our invoicing terms is not to receive or provide financing from or to customers. Certain contracts may require an advance payment to encourage customer commitment to the project and protect us from early termination of the contract. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price, utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price, if we assessed that a significant future reversal of cumulative revenue under the contract will not occur. Typically, our contracts do not provide our customers with any right of return or refund, and we do not constrain the contract price as it is probable that there will not be a significant revenue reversal due to a return or refund. 4) Allocate the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct goods or services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, we must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. We allocate the variable amount to one or more distinct performance obligations but not all or to one or more distinct services that forms a part of a single performance obligation, when the payment terms of the variable amount relate solely to our efforts to satisfy that distinct performance obligation and it results in an allocation that is consistent with the overall allocation objective of ASU No. 2014-09. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative stand-alone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. We determine stand-alone selling price (“SSP”) based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions, including geographic or regional specific factors, competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligation. 5) Recognize revenue when (or as) the entity satisfies a performance obligation We satisfy performance obligations either over time or at a point in time depending on the nature of the underlying promise. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. In certain contracts that include customer substantive acceptance criteria, revenue is not recognized until we can objectively conclude that the product or service meets the agreed-upon specifications in the contract. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to our customers. Revenue is measured based on consideration specified in a contract with a customer, and excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer. Shipping and handling activities that are billed to the customer and occur after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of revenue. Historically, these expenses have not been material. Nature of Goods and Services We derive and report our revenue in three categories: (a) software revenue, including the sale of subscription (i.e., term-based) or perpetual licenses, and appliances that include software that is essential to the product’s functionality, (b) software service revenue, including support revenue and revenue from cloud-based software-as-a-service subscriptions (“SaaS”), and (c) professional service and other revenue, including revenue from installation and integration services, customer specific development work, resale of third-party hardware, and consulting and training services. Software revenue licenses either provide our customers a perpetual right to use our software or the right to use our software for only a fixed term, in most cases between a one of software licenses with other promised goods and services in order to maximize the use of observable inputs. Software SSP is established based on an appropriate discount from our established list price, taking into consideration whether there is certain stratification of the population with different pricing practices. Software service revenue is derived from cloud-based SaaS revenue and, providing technical support services, bug fixes and unspecified software updates to customers on a when-and-if-available basis. Each of these performance obligations provide benefit to the customer on a stand-alone basis and are distinct in the context of the contract. Each of these distinct performance obligations represent a stand ready obligation to provide service to a customer, which is concurrently delivered and has the same pattern of transfer to the customer, which is why we account for these support services as a single performance obligation. We recognize support services ratably over the contractual term, which typically is one year, and develop SSP for support services based on stand-alone renewal contracts. Our solutions are generally sold with warranties that typically range from 90 days to 3 years. These warranties do not represent an additional performance obligation as services beyond assuring that the software license and hardware comply with agreed-upon specifications are not provided. Professional service revenues primarily consist of fees for installation and integration, deployment and optimization services, as well as consulting and training, and are generally recognized over time as the customer simultaneously receives and consumes the benefits of the professional service as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time using an input method based on labor hours expended to date relative to the total labor hours expected to be required to satisfy the related performance obligation. Additionally, other revenues consist of the resale of third-party hardware including servers, laptops and communication equipment, and are recognized at a point in time generally upon shipment or delivery. We rarely sell professional services and third-party hardware on a stand-alone basis and as a result SSP is not directly observable and must be estimated. We apply the adjusted market assessment approach, considering both market conditions and entity specific factors such as assessment of historical data of bundled sales of professional services and resale of third-party hardware with other promised goods and services in order to maximize the use of observable inputs. Professional services SSP and resale of third-party hardware SSP is established based on an appropriate discount from our established list price, taking into consideration whether there is certain stratification of the population with different pricing practices. Certain contracts require us to significantly customize our software and these contracts are generally recognized over time as we perform because our performance does not create an asset with an alternative use and we have an enforceable right to payment plus a reasonable profit for performance completed to date. Revenue is recognized over time based on the extent of progress towards completion of the performance obligation. We use labor hours incurred to measure progress for these contracts because it best depicts the transfer of the asset to the customer. Under the labor hours incurred measure of progress, the extent of progress towards completion is measured based on the ratio of labor hours incurred to date to the total estimated labor hours at completion of the distinct performance obligation. Due to the nature of the work performed in these arrangements, the estimation of total labor hours at completion is complex, subject to many variables and requires significant judgment. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known. We use an appropriate discount from our established list price, taking into consideration whether there is certain stratification of the population with different pricing practices, to estimate the SSP of our significantly customized solutions. Disaggregation of Revenue The following table provides information about disaggregated revenue by the recurring or nonrecurring nature of revenue. 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: • Recurring revenue primarily consists of initial and renewal support, subscription software licenses, and cloud-based SaaS in certain transactions. • Nonrecurring revenue primarily consists of our perpetual licenses, appliances, custom development, installation and integration services, consulting and training, and the resale of third-party hardware. Year Ended January 31, (in thousands) 2022 2021 2020 Revenue by recurrence: Recurring revenue $ 230,969 $ 223,405 $ 192,578 Nonrecurring revenue 243,073 220,053 264,531 Total revenue $ 474,042 $ 443,458 $ 457,109 Contract Balances The following table provides information about accounts receivable, contract assets, and contract liabilities from contracts with customers: January 31, (in thousands) 2022 2021 Accounts receivable, net $ 179,198 $ 175,001 Contract assets, net $ 27,908 $ 20,317 Long-term contract assets, net (included in other assets) $ — $ 1,219 Contract liabilities $ 83,158 $ 127,012 Long-term contract liabilities $ 14,520 $ 22,037 We receive payments from customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for goods or services that we have transferred to a customer when that right is conditional on something other than the passage of time. The majority of our contract assets represent unbilled amounts related to arrangements where our right to consideration is subject to the contractually agreed upon billing schedule. We expect billing and collection of our contract assets to occur within the next twelve months and had no asset impairment related to contract assets in the period. During the years ended January 31, 2022 and 2021, we transferred $13.0 million and $19.0 million, respectively, to accounts receivable from contract assets recognized at the beginning of each period, as a result of the right to the transaction consideration becoming unconditional. We recognized $19.1 million and $11.4 million of contract assets during the years ended January 31, 2022 and 2021, respectively. There are two customers that accounted for a combined $80.1 million and $72.6 million of our aggregated accounts receivable and contract assets at January 31, 2022 and 2021, respectively. These amounts result from both direct and indirect contracts with governments outside of the U.S. which we believe present insignificant credit risk. Contract liabilities represent consideration received or consideration which is unconditionally due from customers prior to transferring goods or services to the customer under the terms of the contract. Revenue recognized during the years ended January 31, 2022 and 2021 from amounts included in contract liabilities at the beginning of each period was $107.2 million and $129.6 million, respectively. Remaining Performance Obligations Transaction price allocated to remaining performance obligations (“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, and the revenue recognition for certain projects 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. The following table provides information about our RPO: January 31, (in thousands) 2022 2021 RPO: Expected to be recognized within 1 year $ 300,212 $ 353,166 Expected to be recognized in more than 1 year 211,346 198,572 Total RPO $ 511,558 $ 551,738 Costs to Obtain and Fulfill Contracts We capitalize commissions paid to internal sales personnel and agent commissions that are incremental to obtaining customer contracts. We have determined that these commissions are in fact incremental and would not have occurred absent the customer contract. Our sales and agent commissions paid on annual renewals of support are commensurate with the commission paid on the initial contract. Capitalized sales and agent commissions are amortized over the period the goods or services are transferred to the customer to which the assets relate. Total capitalized costs to obtain contracts were $8.3 million as of January 31, 2022, of which $6.4 million is included in prepaid expenses and other current assets and $1.9 million is included in other assets on our consolidated balance sheet. Total capitalized costs to obtain contracts were $9.8 million as of January 31, 2021, of which $5.3 million is included in prepaid expenses and other current assets and $4.5 million is included in other assets on our consolidated balance sheet. During the years ended January 31, 2022, 2021, and 2020, we expensed $24.4 million, $23.8 million, and $28.2 million, respectively, of sales and agent commissions, which are included in selling, general and administrative expenses. We capitalize costs incurred to fulfill our contracts when the costs relate directly to the contract and are expected to generate resources that will be used to satisfy the performance obligation under the contract and are expected to be recovered through revenue generated under the contract. Costs to fulfill contracts are expensed to cost of revenue as we satisfy the related performance obligations. Total capitalized costs to fulfill contracts were $3.6 million as of January 31, 2022, of which $3.1 million is included in prepaid expenses and other current assets and $0.5 million is included in other assets on our consolidated balance sheet. Total capitalized costs to fulfill contracts were $6.5 million as of January 31, 2021, of which $4.5 million is included in prepaid expenses and other current assets and $2.0 million is included in other assets on our consolidated balance sheet. Deferred cost of revenue is classified in its entirety as current or long-term based on whether the related revenue will be recognized within twelve months of the origination date of the arrangement. The amounts capitalized primarily relate to prepaid third-party cloud costs. During the years ended January 31, 2022, 2021, and 2020, we amortized $7.8 million, $13.5 million, and $11.8 million, respectively, of contract fulfillment costs. |
SHORT TERM LOAN
SHORT TERM LOAN | 12 Months Ended |
Jan. 31, 2022 | |
Short-term Debt [Abstract] | |
SHORT TERM LOAN | SHORT TERM LOAN We entered into two revolving credit facilities effective upon the completion of the spin-off which are valid for three years until January 31, 2024 and which provide for a total of up to $100.0 million in borrowings. During December, 2021 we withdrew $100.0 million from the credit facilities which appears in our consolidated balance sheet as a short term loan. The entire outstanding $100.0 million balance of the credit facilities will have matured by the end of the first quarter of the financial year ending January 31, 2023. Interest rates on both facilities are based on LIBOR, plus a margin of 1.55% - 1.65%. The interest expense incurred on the amount withdrawn was $0.2 million for the year ended January 31, 2022. In addition, we are required to pay a commitment fee with respect to unused availability under the credit facilities at a rate of 0.4% per annum. The commitment fee incurred with respect to unused availability under the credit facilities was $0.4 million for the year ended January 31, 2022. Our obligations under the credit facilities are guaranteed by certain customary affirmative and restrictive covenants for credit facilities of this type. The credit facilities also contain the following financial covenants which are measured at the end of each quarter: 1. The consolidated equity shall not decrease below $200 million or below 30% of Cognyte’s total consolidated assets. 2. The ratio of Cognyte’s annual consolidated Funded Debt to EBITDA shall not exceed 3.5. 3. Cognyte shall maintain, on consolidated basis, an amount of unrestricted cash and cash equivalents (including short term investments) of at least $25 million . The limitations imposed by the covenants are subject to certain exceptions. The credit facility agreements provide for default events with corresponding grace periods that are customary for credit facilities of this nature. Upon a default event, all of our obligations owed under the credit facilities may be declared immediately due and payable, and the lenders’ commitments to provide loans under the credit facility agreements may be terminated. As at January 31, 2022 we met all the financial covenants. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Jan. 31, 2022 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS On December 18, 2019, we completed the acquisition of two software companies under common control, WebintPro Ltd. and Deep Analytics Ltd. (collectively “WebintPro”), focused on multi source intelligence and fusion analytics. The purchase price of $24.1 million consisted of (i) $18.8 million of combined cash paid at closing, funded by cash on hand, partially offset by $0.1 million of cash acquired, resulting in net cash consideration at closing of $18.7 million; and (ii) the $7.0 million fair value of the $7.3 million contingent consideration arrangement described below; offset by (iii) $1.8 million of other purchase price adjustments. We agreed to make potential additional cash payments to the respective former shareholders aggregating up to approximately $7.3 million, contingent upon the achievement of certain performance targets over periods extending through June 2021, the fair value of which was estimated to be $7.0 million at the acquisition date. The purchase price for WebintPro was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase prices recorded as goodwill. The fair value assigned to identifiable intangible assets acquired were determined primarily by using the income approach, which discounts expected future cash flows to present value using estimates and assumptions determined by management. Among the factors contributing to the recognition of goodwill as a component of the WebintPro purchase price allocation were synergies in products and technologies, and the addition of a skilled, assembled workforce. The $11.9 million of goodwill is not deductible for income tax purposes. Transaction and related costs directly related to the acquisition of WebintPro, consisting primarily of professional fees and integration expenses, totaled $0.4 million and $0.3 million for the years ended January 31, 2021 and 2020, respectively, and were expensed as incurred and are included in selling, general and administrative expenses. Revenue and net income attributable to WebintPro included in our consolidated statement of operations for the year ended January 31, 2020 was immaterial. The following table sets forth the components and the final allocation of the purchase price for our acquisition of WebintPro, including adjustments identified subsequent to the valuation date, none of which were material: (in thousands) Amount Components of Purchase Price: Cash $ 18,843 Fair value of contingent consideration 7,023 Other purchase price adjustments (1,761) Total purchase price $ 24,105 Allocation of Purchase Price: Net tangible assets (liabilities): Accounts receivable $ 2,160 Other current assets, including cash acquired 7,921 Other assets 2,757 Current and other liabilities (3,220) Contract liabilities—current and long-term (554) Deferred income taxes (1,342) Net tangible assets 7,722 Identifiable intangible assets: Customer relationships 1,452 Developed technology 1,360 Trademarks and trade names 367 Non-compete agreements 1,307 Total identifiable intangible assets 4,486 Goodwill 11,897 Total purchase price allocation $ 24,105 The acquired customer relationships, developed technology, trademarks and trade names, and non-compete agreements were assigned estimated useful lives of five years, five years, three years, and three years, respectively, the weighted average of which is approximately 4.4 years. The acquired identifiable intangible assets are being amortized on a straight-line basis, which we believe approximates the pattern in which the assets are utilized, over their estimated useful lives. Other Business Combination Information The acquisition date fair values of contingent consideration obligations associated with business combinations are estimated based on probability adjusted present values of the consideration expected to be transferred using significant inputs that are not observable in the market. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving the performance targets and discount rates consistent with the level of risk of achievement. At each reporting date, we revalue the contingent consideration obligations to their fair values and record increases and decreases in fair value within selling, general and administrative expenses in our consolidated statements of operations. Changes in the fair value of the contingent consideration obligations result from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. For the years ended January 31, 2022, 2021, and 2020, we recorded benefits of $0.2 million, $3.7 million, and $5.4 million, respectively, within selling, general and administrative expenses for changes in the fair values of contingent consideration obligations associated with business combinations. All remaining contingent consideration obligations associated with business combinations were fully paid during the financial year ended January 31, 2022. The remaining contingent consideration obligations associated with business combinations was $2.9 million at January 31, 2021, all of which was recorded within accrued expenses and other current liabilities. Payments of contingent consideration earned under these agreements were $2.7 million, $4.9 million, and $3.4 million for the years ended January 31, 2022, 2021, and 2020, respectively. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
Jan. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Acquisition-related intangible assets consisted of the following as of January 31, 2022 and 2021: January 31, 2022 (in thousands) Cost Accumulated Net Intangible assets with finite lives: Acquired technology $ 64,150 $ (62,909) $ 1,241 Customer relationships 4,166 (2,913) 1,253 Trade names 1,158 (876) 282 Distribution network 2,000 (2,000) — Non-competition agreements 1,307 (921) 386 Total intangible assets $ 72,781 $ (69,619) $ 3,162 January 31, 2021 (in thousands) Cost Accumulated Net Intangible assets with finite lives: Acquired technology $ 74,272 $ (72,349) $ 1,923 Customer relationships 4,837 (2,759) 2,078 Trade names 1,151 (676) 475 Distribution network 2,000 (2,000) — Non-competition agreements 1,307 (484) 823 Total intangible assets $ 83,567 $ (78,268) $ 5,299 Total amortization expense recorded for acquisition-related intangible assets was $2.1 million, $2.2 million and $3.0 million for the years ended January 31, 2022, 2021, and 2020, respectively. The reported amount of net acquisition-related intangible assets can fluctuate from the impact of changes in foreign currency exchange rates on intangible assets not denominated in U.S. dollars. Estimated future amortization expense on finite-lived acquisition-related intangible assets is as follows: (in thousands) Years Ending January 31, Amount 2023 $ 1,622 2024 $ 702 2025 $ 628 2026 $ 127 2027 $ 83 Total $ 3,162 No impairments of acquired intangible assets were recorded during the years ended January 31, 2022. We recorded $0.3 million of impairments for certain acquired technology assets, which is included within software cost of revenue and professional service and other cost of revenue of $0.2 million and $0.1 million, respectively, for the year ended January 31, 2021. No impairments of acquired intangible assets were recorded during the year ended January 31, 2020. Goodwill activity for the years ended January 31, 2022 and 2021 was as follows: (in thousands) Amount Year Ended January 31, 2021: Goodwill, gross, at February 1, 2020 $ 168,965 Accumulated impairment losses through February 1, 2020 (10,822) Goodwill, net, at February 1, 2020 158,143 Adjustments to prior period acquisition 300 Foreign currency translation (260) Goodwill, net, at January 31, 2021 $ 158,183 Year Ended January 31, 2022: Goodwill, gross, at January 31, 2021 $ 169,005 Accumulated impairment losses through January 31, 2021 (10,822) Goodwill, net, at January 31, 2021 158,183 Foreign currency translation 50 Goodwill, net, at January 31, 2022 $ 158,233 Balance at January 31, 2022: Goodwill, gross, at January 31, 2022 $ 169,055 Accumulated impairment losses through January 31, 2022 (10,822) Goodwill, net, at January 31, 2022 $ 158,233 No goodwill impairment was identified for the years ended January 31, 2022, 2021 and 2020. |
SUPPLEMENTAL CONSOLIDATED FINAN
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION | 12 Months Ended |
Jan. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION | SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION Consolidated Balance Sheets Inventories consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Raw materials $ 9,753 $ 7,521 Work-in-process 2,953 5,160 Finished goods 1,660 1,861 Total inventories $ 14,366 $ 14,542 Property and equipment, net consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Land and buildings $ 2,854 $ 2,854 Leasehold improvements 14,032 13,530 Software 26,281 37,204 Equipment, furniture and other 54,880 65,206 Total cost 98,047 118,794 Less: accumulated depreciation and amortization (67,208) (81,199) Total property and equipment, net $ 30,839 $ 37,595 The amounts in the table above as of January 31, 2021 have been revised to decrease previously presented equipment, furniture and other, and increase previously presented software by $14.4 million, respectively. This reclassification did not affect total property and equipment, net on our consolidated balance sheet as of January 31, 2021. Depreciation expense on property and equipment was $15.5 million, $16.9 million and $11.8 million in the years ended January 31, 2022, 2021, and 2020, respectively. Prepaid expenses and other current assets consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Prepaid expenses $ 22,653 $ 22,037 Deferred cost of revenue 3,096 4,570 Income tax receivables 5,464 1,379 Other 757 2,065 Total prepaid expenses and other current assets $ 31,970 $ 30,051 Other assets consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Long-term restricted cash and time deposits $ 2,488 $ 15,061 Capitalized software development costs, net 13,920 11,315 Deferred commissions 1,897 4,459 Long-term deferred cost of revenue 525 1,959 Long-term security deposits 716 1,393 Long-term contract assets, net — 1,219 Other 6,183 6,670 Total other assets $ 25,729 $ 42,076 Accrued expenses and other current liabilities consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Compensation and benefits $ 51,527 $ 44,801 Distributor and agent commissions 14,877 12,422 Operating lease obligations - current portion 7,409 7,085 Income taxes 6,585 4,275 Contingent consideration - current portion — 2,923 Taxes other than income taxes 2,962 2,559 Fair value of derivatives - current portion 801 678 Other 15,613 16,949 Total accrued expenses and other current liabilities $ 99,774 $ 91,692 Other liabilities consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Unrecognized tax benefits, including interest and penalties $ 8,604 $ 6,940 Obligations for severance compensation 2,145 2,054 Other 25 204 Total other liabilities $ 10,774 $ 9,198 Consolidated Statements of Operations Other income (expense), net consisted of the following for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Gains on investments, net $ 729 $ 3,769 $ — Foreign currency (losses) gains, net (3,140) 1,682 (728) Gains (Losses) on derivative financial instruments, net 133 (95) 395 Other expense, net (403) (70) (71) Total other (expense) income, net $ (2,681) $ 5,286 $ (404) Consolidated Statements of Cash Flows The following table provides supplemental information regarding our consolidated cash flows for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Cash paid for interest $ 470 $ 38 $ 23 Cash (refunds) payments of income taxes, net $ 8,232 $ 1,260 $ 9,622 Non-cash investing and financing transactions: Accrued cash dividends payable to parent $ — $ 35,000 $ — Accrued but unpaid purchases of property and equipment $ 1,166 $ 2,636 $ 3,399 Inventory transfers to property and equipment $ 537 $ 894 $ 825 Liabilities for contingent consideration in business combinations $ — $ — $ 7,023 Finance leases of property and equipment $ — $ — $ 3,117 Leasehold improvements funded by lease incentives $ — $ — $ 250 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Jan. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss includes items such as foreign currency translation adjustments and unrealized gains and losses on derivative financial instruments designated as hedges. Accumulated other comprehensive loss is presented as a separate line item in the equity section of our consolidated balance sheets. Accumulated other comprehensive loss items have no impact on our net income as presented in our consolidated statements of operations. The following table summarizes changes in the components of our accumulated other comprehensive loss for the years ended January 31, 2022, 2021, and 2020: (in thousands) Unrealized Gains (Losses) on Derivative Financial Instruments Designated as Hedges Foreign Currency Translation Adjustments Total Accumulated other comprehensive loss at February 1, 2019 (809) (12,653) (13,462) Other comprehensive income (loss) before reclassifications 1,755 (1,866) (111) Amounts reclassified out of accumulated other comprehensive loss 350 — 350 Net other comprehensive income (loss) 1,405 (1,866) (461) Accumulated other comprehensive income (loss) at January 31, 2020 596 (14,519) (13,923) Other comprehensive income (loss) before reclassifications 1,599 (1,545) 54 Amounts reclassified out of accumulated other comprehensive income (loss) 1,636 — 1,636 Net other comprehensive (loss) income (37) (1,545) (1,582) Accumulated other comprehensive income (loss) at January 31, 2021 $ 559 $ (16,064) $ (15,505) Other comprehensive income (loss) before reclassifications 1,229 (5) 1,224 Amounts reclassified out of accumulated other comprehensive income 2,398 — 2,398 Net other comprehensive (loss) income (1,169) (5) (1,174) Accumulated other comprehensive loss at January 31, 2022 $ (610) $ (16,069) $ (16,679) All amounts presented in the table above are net of income taxes, if applicable. The accumulated net income in foreign currency translation adjustments primarily reflect the weakening of the U.S. dollar against the Brazilian real, which has resulted in higher U.S. dollar-translated balances of Brazilian real. The amounts reclassified out of accumulated other comprehensive loss into the consolidated statements of operations, with presentation location, for the years ended January 31, 2022, 2021, and 2020, were as follows: Year Ended January 31, Financial Statement Location (in thousands) 2022 2021 2020 Unrealized gains (losses) on derivative financial instruments: Foreign currency forward contracts $ 6 $ 39 $ 54 Cost of software revenue 40 117 (42) Cost of software service revenue 225 92 61 Cost of professional service and other revenue 1,190 960 208 Research and development, net 853 674 108 Selling, general and administrative 2,314 1,882 389 Total, before income taxes 84 (246) (39) (Provision) benefit for income taxes $ 2,398 $ 1,636 $ 350 Total, net of income taxes |
RESEARCH AND DEVELOPMENT, NET
RESEARCH AND DEVELOPMENT, NET | 12 Months Ended |
Jan. 31, 2022 | |
Research and Development [Abstract] | |
RESEARCH AND DEVELOPMENT, NET | RESEARCH AND DEVELOPMENT, NET Our gross research and development expenses for the years ended January 31, 2022, 2021, and 2020, were $143.7 million, $129.2 million and $112.7 million, respectively. Reimbursements from the IIA and other government grant programs amounted to $0.3 million, $0.5 million and $1.4 million, for the years ended January 31, 2022, 2021, and 2020, respectively, which were recorded as reductions of gross research and development expenses. We capitalize certain costs incurred to develop our commercial software products, and we then recognize those costs within cost of software revenue as the products are available for sale. Activity for our capitalized software development costs for the years ended January 31, 2022, 2021, and 2020, was as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Capitalized software development costs, net, beginning of year $ 11,315 $ 11,679 $ 6,076 Software development costs capitalized during the year 6,033 5,132 7,638 Amortization of capitalized software development costs (3,291) (3,072) (2,023) Write-offs of capitalized software development costs (142) (2,244) — Foreign currency translation and other 5 (180) (12) Capitalized software development costs, net, end of year $ 13,920 $ 11,315 $ 11,679 During the years ended January 31, 2022 and 2021 we recorded an impairment charge of 0.1 million and 2.2 million, respectively, in software cost of revenue, reflecting the write-off of previously capitalized software development costs that were deemed non-recoverable based on our expectations of future market conditions. There were no material impairments of such capitalized costs during the year ended January 31, 2020. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jan. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The components of income (loss) before provision for income taxes for the years ended January 31, 2022, 2021, and 2020 were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 U.S. $ (9,596) $ (8,665) $ (10,116) Non-U.S. 17,857 33,389 40,053 Total income before provision for income taxes $ 8,261 $ 24,724 $ 29,937 The provision for income taxes for the years ended January 31, 2022, 2021, and 2020 consisted of the following: Year Ended January 31, (in thousands) 2022 2021 2020 Current provision (benefit) for income taxes: U.S. Federal $ — $ (1,434) $ (884) U.S. State (11) (44) (164) Non-U.S. 12,668 8,087 (1,988) Total current provision (benefit) for income taxes 12,657 6,609 (3,036) Deferred provision (benefit) for income taxes: U.S. Federal (1,143) (910) 372 U.S. State 53 (200) 89 Non-U.S. 6,950 (1,085) 5,142 Total deferred provision (benefit) for income taxes 5,860 (2,195) 5,603 Total provision for income taxes $ 18,517 $ 4,414 $ 2,567 Although Cognyte is organized as an Israeli limited company, Verint obtained a U.S. Tax Ruling that Cognyte will be treated as a United States corporation for U.S. federal income tax purposes. The reconciliation of the U.S. federal statutory rate to our effective tax rate on income before provision for income taxes for the years ended January 31, 2022, 2021, and 2020 was as follows: Year Ended January 31, (dollars in thousands) 2022 2021 2020 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Income tax provision at the U.S. federal statutory rate $ 1,735 $ 5,192 $ 6,287 U.S. State income tax (benefit) provision 40 (226) (45) Non-U.S. tax rate differential 2,892 (2,836) 6,720 Tax incentives (2,671) (139) (1,292) Valuation allowances 12,731 31 (898) Non-deductible expenses/non-taxable income 255 (261) 1,677 Tax contingencies 2,056 1,184 (13,254) Stock based and other compensation 898 101 70 U.S. tax effects of non-U.S. operations 540 1,001 3,268 Other, net 41 367 34 Total provision for income taxes $ 18,517 $ 4,414 $ 2,567 Effective income tax rate 224.1 % 17.9 % 8.6 % Our operations in Israel have been granted “Approved Enterprise” (“AE”) status by the Investment Center of the Israeli Ministry of Industry, Trade and Labor, and “Beneficial Enterprise” (“BA”) (after the 2005 Amendment) which makes us eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959 (the “Investment Law”). Under the terms of the programs, income attributable to an “AE” or “BA” is exempt from income tax for a period of two years and is subject to a reduced income tax rate for the subsequent five to eight years, depending on the geographic location of the enterprise in Israel (generally 10% - 25%, depending on the percentage of non-Israeli investment in the company). Pursuant to Amendment 73 to the Investment Law adopted in 2017, a company located in the center of Israel which meets the conditions for Preferred Technological Enterprise (“PTE”), is subject to a 12% tax rate on the eligible income. Income not eligible for PTE benefits is taxed at the regular corporate income tax rate of 23%. We have examined the impact of Amendment 73 and the degree to which we will qualify as a PTE and have elected to adopt it to the extent we will generate taxable income as of January 31, 2021 onwards in which case we will enjoy reduced corporate tax rate of 12% on income that qualifies as “Preferred Technological Income”. In addition, certain operations in Cyprus qualify for favorable tax treatment under the Cypriot Intellectual Property Regime (“IP Regime”). This legislation exempts 80% of income and gains derived from patents, copyrights, and trademarks from taxation. These tax incentives decreased our effective tax rate by 32.3%, 0.6% and 4.3% for the years ended January 31, 2022, 2021, and 2020, respectively. Deferred tax assets and liabilities consisted of the following at January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Deferred tax assets: Loss carryforwards $ 11,506 $ 7,321 Accrued compensation 8,774 1,884 Accrued expenses 240 390 Operating lease liabilities 352 362 Exchange rate differences 343 344 Other, net 241 235 Total deferred tax assets 21,456 10,536 Deferred tax liabilities: Deferred cost of revenue (3,279) (3,831) Goodwill and other intangible assets (928) (874) Depreciation of property and equipment (217) (550) Operating lease right-of-use assets (355) (295) Total deferred tax liabilities (4,779) (5,550) Valuation allowance (18,576) (5,732) Net deferred tax liabilities $ (1,899) $ (746) Recorded as: Deferred tax assets $ 1,548 $ 3,303 Deferred tax liabilities (3,447) (4,049) Net deferred tax liabilities $ (1,899) $ (746) For the purposes of periods prior to the spin-off, the Company’s income tax provision was calculated using the separate return basis, as if the Company filed separate tax returns. Since the spin-off, certain changes in the deferred tax balances, particularly related to stock-based compensation items included in accrued compensation, are primarily attributable to basis differences that existed on a separate return basis for the historical periods. Changes between the historical periods presented on a separate return basis were settled through the former net parent investment immediately prior to the spin-off. We had NOL carryforwards of approximately $89.3 million as at January 31, 2022, of which $5.8 million related to U.S. carryforwards and $83.5 million related to non-U.S. carryforwards. We currently intend to continue to indefinitely reinvest the earnings of our non-U.S. subsidiaries to finance non-U.S. activities to the extent distributions would result in an incremental tax cost. We have not provided tax on the outside basis difference of non-U.S. subsidiaries nor have we provided for any additional withholding or other tax that may be applicable should a future distribution be made from any unremitted earnings of non-U.S. subsidiaries. Due to complexities in the laws of the non-U.S. jurisdictions and the assumptions that would have to be made, it is not practicable to estimate the total amount of income and withholding taxes that would have to be provided on such earnings. As required by the authoritative guidance on accounting for income taxes, we evaluate the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes guidance requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Management assesses positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation allowance. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended January 31, 2022 for our major operations in Israel. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of January 31, 2022, a valuation allowance of $12.7 million has been recorded against the deferred tax assets that we do not believe are more likely than not to be realized in the foreseeable future. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. We have recorded valuation allowances in the amount of $18.6 million and $5.7 million at January 31, 2022 and 2021, respectively. Activity in the recorded valuation allowance consisted of the following for the years ended January 31, 2022 and 2021: Year Ended January 31, (in thousands) 2022 2021 Valuation allowance, beginning of year $ (5,732) $ (5,701) Income tax (provision) benefit (12,731) (31) Spin-off from Verint (113) — Valuation allowance, end of year $ (18,576) $ (5,732) In accordance with the authoritative guidance on accounting for uncertainty in income taxes, differences between the amount of tax benefits taken or expected to be taken in our income tax returns and the amount of tax benefits recognized in our financial statements, determined by applying the prescribed methodologies of accounting for uncertainty in income taxes, represent our unrecognized income tax benefits, which we either record as a liability or as a reduction of deferred tax assets. For the years ended January 31, 2022, 2021, and 2020 the aggregate changes in the balance of gross unrecognized tax benefits were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Gross unrecognized tax benefits, beginning of year $ 9,872 $ 8,742 $ 24,755 Increases related to tax positions taken during the current year 1,828 2,919 1,889 Increases as a result of business combinations — — 286 Increases related to tax positions taken during prior years — 18 — Increases (decreases) related to foreign currency exchange rates 256 272 1,073 Reductions for spin-off from Verint (1,439) — — Reductions for tax positions of prior years — (537) (13,623) Reductions for settlements with tax authorities — — (4,133) Lapses of statutes of limitations — (1,542) (1,505) Gross unrecognized tax benefits, end of year $ 10,517 $ 9,872 $ 8,742 As of January 31, 2022, we had $10.5 million of unrecognized tax benefits, all of which, if recognized, would impact the effective income tax rate in future periods. We recorded $0.4 million, $(0.1) million and $1.8 million of net tax (expense) benefit for interest and penalties related to uncertain tax positions in our provision for income taxes for the years ended January 31, 2022, 2021, and 2020, respectively. Accrued liabilities for interest and penalties were $0.9 million and $1.0 million at January 31, 2022 and 2021, respectively. Interest and penalties (expense and/or benefit) are recorded as a component of the provision for income taxes in the consolidated financial statements. Our income tax returns are subject to ongoing tax examinations in several jurisdictions in which we operate. In Israel, we are no longer subject to income tax examination for years prior to January 31, 2018. In the U.S., our federal returns are no longer subject to income tax examination for years prior to January 31, 2019. We regularly assess the adequacy of our provisions for income tax contingencies. As a result, we may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of expiration. We believe that it is reasonably possible that the total amount of unrecognized tax benefits at January 31, 2022 could decrease by approximately $1.4 million in the next twelve months as a result of settlement of certain tax audits or lapses of statutes of limitation. Such decreases may involve the payment of additional taxes, the adjustment of certain deferred taxes including the need for additional valuation allowances and the recognition of tax benefits. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jan. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis Our assets and liabilities measured at fair value on a recurring basis consisted of the following as of January 31, 2022 and 2021: January 31, 2022 Fair Value Hierarchy Category (in thousands) Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts $ — $ 140 $ — Total assets $ — $ 140 $ — Liabilities: Foreign currency forward contracts $ — $ 801 $ — Total liabilities $ — $ 801 $ — January 31, 2021 Fair Value Hierarchy Category (in thousands) Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts $ — $ 998 $ — Total assets $ — $ 998 $ — Liabilities: Foreign currency forward contracts $ — $ 678 $ — Contingent consideration - business combinations — — 2,923 Total liabilities $ — $ 678 $ 2,923 The following table presents the changes in the estimated fair values of our liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the years ended January 31, 2022 and 2021: Year Ended January 31, (in thousands) 2022 2021 Fair value measurement, beginning of year $ 2,923 $ 11,509 Changes in fair values, recorded in operating expenses (185) (3,665) Payments of contingent consideration (2,738) (4,921) Fair value measurement at end of year $ — $ 2,923 Our estimated liability for contingent consideration represents potential payments of additional consideration for business combinations, payable if certain defined performance goals are achieved. Changes in fair value of contingent consideration are recorded in the consolidated statements of operations within selling, general and administrative expenses. There were no transfers between levels of the fair value measurement hierarchy during the years ended January 31, 2022 and 2021. Fair Value Measurements Foreign Currency Forward Contracts - The estimated fair value of foreign currency forward contracts is based on quotes received from the counterparties thereto. These quotes are reviewed for reasonableness by discounting the future estimated cash flows under the contracts, considering the terms and maturities of the contracts and market foreign currency exchange rates using readily observable market prices for similar contracts. Contingent Consideration Asset or Liability—Business Combinations - The fair value of the contingent consideration related to business combinations is estimated using a probability-adjusted discounted cash flow model. These fair value measurements are based on significant inputs not observable in the market. The key internally developed assumptions used in these models are discount rates and the probabilities assigned to the milestones to be achieved. We remeasure the fair value of the contingent consideration at each reporting period, and any changes in fair value resulting from either the passage of time or events occurring after the acquisition date, such as changes in discount rates, or in the expectations of achieving the performance targets, are recorded within selling, general, and administrative expenses. Increases or decreases in discount rates would have inverse impacts on the related fair value measurements, while favorable or unfavorable changes in expectations of achieving performance targets would result in corresponding increases or decreases in the related fair value measurements. We utilized a discount rate of 0.4% in our calculations of the estimated fair values of our contingent consideration liabilities as of January 31, 2021. All of our outstanding contingent consideration liabilities were fully settled during the year ended January 31, 2022. Other Financial Instruments The carrying amounts of accounts receivable, short-term investments, contract assets, accounts payable, and accrued liabilities and other current liabilities approximate fair value due to their short maturities. Assets and Liabilities Not Measured at Fair Value on a Recurring Basis In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets, operating lease ROU assets, and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s fair value. These assets are recorded at fair value only when an impairment charge is recognized. Further details regarding our regular impairment reviews appear in Note 2, “Summary of Significant Accounting Policies”. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Jan. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Our primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk when deemed appropriate. We enter into these contracts in the normal course of business to mitigate risks and not for speculative purposes. Foreign Currency Forward Contracts Under our risk management strategy, we periodically use foreign currency forward contracts to manage our short-term exposures to fluctuations in operational cash flows resulting from changes in foreign currency exchange rates. These cash flow exposures result from portions of our forecasted operating expenses, primarily compensation and related expenses, which are transacted in currencies other than the U.S. dollar, most notably the New Israeli Shekel. We also periodically utilize foreign currency forward contracts to manage exposures resulting from forecasted customer collections to be remitted in currencies other than the applicable functional currency, and exposures from cash, cash equivalents and short-term investments denominated in currencies other than the applicable functional currency. These foreign currency forward contracts generally have maturities of no longer than twelve months, although occasionally we will execute a contract that extends beyond twelve months, depending upon the nature of the underlying risk. We held outstanding foreign currency forward contracts with notional amounts of $96.2 million and $54.8 million as of January 31, 2022 and 2021, respectively. Fair Values of Derivative Financial Instruments The fair values of our derivative financial instruments and their classifications in our consolidated balance sheets as of January 31, 2022 and 2021 were as follows: January 31, (in thousands) Balance Sheet Classification 2022 2021 Derivative assets: Foreign currency forward contracts: Designated as cash flow hedges Prepaid expenses and other current assets $ 125 $ 998 Not designated as hedging instruments Prepaid expenses and other current assets 15 — Total derivative assets $ 140 $ 998 Derivative liabilities: Foreign currency forward contracts: Designated as cash flow hedges Accrued expenses and other current liabilities $ 736 $ 355 Not designated as hedging instruments Accrued expenses and other current liabilities 65 323 Total derivative liabilities $ 801 $ 678 Derivative Financial Instruments in Cash Flow Hedging Relationships The effects of derivative financial instruments designated as cash flow hedges on accumulated other comprehensive loss (“AOCL”) and on the consolidated statement of operations for the years ended January 31, 2022, 2021, and 2020, were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Net gains recognized in AOCL: Foreign currency forward contracts $ 1,169 $ 1,863 $ 1,950 Net gains reclassified from AOCL to the consolidated statements of operations: Foreign currency forward contracts $ 2,314 $ 1,882 $ 389 For information regarding the line item locations of the net losses on derivative financial instruments reclassified out of AOCL into the consolidated statements of operations, see Note 9, “Accumulated Other Comprehensive Loss.” Effective with our February 1, 2018 adoption of ASU No. 2017-12, ineffectiveness of cash flow hedges is no longer recognized. All of the foreign currency forward contracts underlying the $0.6 million of net unrealized gains recorded in our accumulated other comprehensive loss at January 31, 2022 mature within twelve months, and therefore we expect all such gains to be reclassified into earnings within the next twelve months. Derivative Financial Instruments Not Designated as Hedging Instruments Losses (gains) recognized on derivative financial instruments not designated as hedging instruments in our consolidated statements of operations for the years ended January 31, 2022, 2021, and 2020, were as follows: Classification in Consolidated Statements of Operations Year Ended January 31, (in thousands) 2022 2021 2020 Foreign currency forward contracts Other income (expense), net $ 134 $ (95) $ 395 |
STOCK-BASED COMPENSATION AND OT
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS | 12 Months Ended |
Jan. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS | STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS Stock-Based Compensation Expense We recognized stock-based compensation expense in the following line items on the consolidated statements of operations for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Component of income before provision for income taxes: Cost of revenue - software $ 229 $ 734 $ 642 Cost of revenue - software service 1,160 441 636 Cost of revenue - professional service and other 2,535 952 1,641 Research and development, net 7,792 5,621 6,298 Selling, general and administrative 21,320 19,794 21,816 Total stock-based compensation expense 33,036 27,542 31,033 Income tax benefits related to stock-based compensation (before consideration of valuation allowances) 4,196 4,347 4,400 Total stock-based compensation, net of taxes $ 28,840 $ 23,195 $ 26,633 The compensation expenses presented for the years ended of January 31, 2021 and 2020 represent stock-based compensation expenses attributable to Cognyte based on the awards and terms previously granted under Verint’s stock-based compensation plans to Cognyte employees and an allocation of Verint’s corporate and shared functional employee stock-based compensation expenses. The Cognyte employees’ stock-based compensation expenses were specifically identified whereas Verint’s corporate and shared functional employees’ stock-based compensation expenses were specifically identified to the extent possible with the remainder allocated on the basis of revenue. As of January 31, 2022, there was approximately $29.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 1.33 years. The following table summarizes stock-based compensation expense by type of award for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Restricted stock units and restricted stock awards $ 31,825 $ 23,423 $ 23,413 Stock bonus program and bonus share program 1,040 4,000 7,615 Total equity-settled awards 32,865 27,423 31,028 Phantom stock units (cash-settled awards) 171 119 5 Total stock-based compensation expense $ 33,036 $ 27,542 $ 31,033 Awards under Cognyte’s stock bonus and bonus share programs are accounted for as liability-classified awards, because the obligations are based predominantly on fixed monetary amounts that are generally known at inception of the obligation, to be settled with a variable number of shares of Cognyte common stock. Stock-Based Awards Granted by Cognyte and Verint Cognyte periodically awards RSUs to directors, officers, and other employees. The fair value of these awards is equivalent to the market value of Cognyte’s common stock on the grant date. RSUs are not shares of Cognyte common stock and do not have any of the rights or privileges thereof, including voting or dividend rights. On the applicable vesting date, the holder of an RSU becomes entitled to a share of Cognyte common stock. RSUs are subject to certain restrictions and forfeiture provisions prior to vesting. Cognyte periodically awards PSUs to executive officers that vest upon the achievement of specified performance goals. The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures. Verint also periodically awards RSUs to directors, officers, and other employees, and PSUs to executive officers. All of the expenses recognized in the years ended January 31, 2021 and 2020 and some of the expenses recognized in the year ended January 31, 2022 relate to awards that were initially granted by Verint before the spin-off. Once a performance vesting condition has been defined and communicated, and the requisite service period has begun, the Company recognizes compensation expenses for the value of such awards, if and when the Company concludes that it is probable that a performance condition will be achieved based on the straight-line attribution method over the requisite service period. The Company reassesses the probability of vesting at each reporting period for awards with performance conditions and adjusts its compensation expenses based on its probability assessment. RSUs that are expected to be settled with cash payments upon vesting, if any, are reflected as liabilities on our consolidated balance sheets. Such RSUs were insignificant at January 31, 2022, 2021, and 2020. The following table (“Award Activity Table”) summarizes activity for RSUs and PSUs to Company personnel that reduce available plan capacity under the plans for the year ended January 31, 2022: Year Ended January 31, 2022 (in thousands, except grant date fair values) Shares or Units Weighted-Average Grant-Date Fair Value Opening balance 2,149 $ 22.92 Granted 1,416 $ 25.60 Released (1,452) $ 23.36 Forfeited (212) $ 24.34 Closing balance 1,901 $ 24.42 The opening balance of the outstanding shares for the year ended January 31, 2022 reflects the adjusted shares based on an adjustment ratio of approximately 2.52 as a result of the spin-off from Verint on February 1, 2022. This opening balance also reflects the fact that the closing balance of shares as at January 31, 2021 was determined based on an allocation of Verint shares to Cognyte. The weighted average fair value at grant date of the opening balance reflects the impact of a modification at the date of the spin-off. Other Benefit Plans 401(k) Plan and Other Retirement Plans We maintain a 401(k) Plan for our full-time employees in the United States. The plan allows eligible employees who attain the age of 21 beginning with the first of the month following their date of hire to elect to contribute up to 60% of their annual compensation, subject to the prescribed maximum amount. We match employee contributions at a rate of 50%, up to a maximum annual matched contribution of $2,000 per employee. Employee contributions are always fully vested, while our matching contributions for each year vest on the last day of the calendar year provided the employee remains employed with us on that day. Our matching contribution expenses for our 401(k) Plan were $0.1 million, $0.2 million and $0.2 million for the years ended January 31, 2022, 2021, and 2020, respectively. We provide retirement benefits for non-U.S. employees as required by local laws or to a greater extent as we deem appropriate through plans that function similar to 401(k) plans. Funding requirements for programs required by local laws are determined on an individual country and plan basis and are subject to local country practices and market circumstances. Severance Pay We are obligated to make severance payments for the benefit of certain employees of Israel and our foreign subsidiaries. Severance payments made to Israeli employees are considered significant compared to all other subsidiaries with severance payment arrangements. Under Israeli law, we are obligated to make severance payments to certain employees of our Israeli subsidiaries, subject to certain conditions. In most cases, our liability for these severance payments is fully provided for by regular deposits to funds administered by insurance providers and by an accrual for the amount of our liability which has not yet been deposited. Severance expenses for our Israeli employees for the years ended January 31, 2022, 2021, and 2020 were $9.0 million, $7.5 million and $7.3 million, respectively. |
LEASES
LEASES | 12 Months Ended |
Jan. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES We have entered into operating leases primarily for corporate offices, research and development facilities, and automobiles. Our leases have remaining lease terms of 1 year to 6 years. During the year ended January 31, 2021, we purchased the infrastructure equipment historically recorded as finance leases and capitalized the purchased assets to property and equipment, net. We do not have any finance leases as of January 31, 2022 and 2021. The components of lease expenses for the years ended January 31, 2022 and 2021 were as follows: Year Ended January 31, (in thousands) 2022 2021 Operating lease expenses $ 9,552 $ 11,133 Finance lease expenses: Amortization of right-of-use assets — 84 Interest on lease liabilities — 102 Total finance lease expenses — 186 Variable lease expenses 5,566 3,349 Short-term lease expenses 213 34 Total lease expenses $ 15,331 $ 14,702 During the year ended January 31, 2022 and 2021, we decided to exit certain leased offices primarily due to our workforce operating under remote work environments in certain locations due to COVID-19, resulting in accelerated operating lease expenses of $0.8 million and $0.7 million, respectively. Other information related to leases was as follows: Year Ended January 31, (dollars in thousands) 2022 2021 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,733 $ 8,822 Operating cash flows from finance leases $ — $ 102 Financing cash flows from finance leases $ — $ 492 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 3,756 $ 5,869 Weighted average remaining lease terms Operating leases 4 years 6 years Weighted average discount rates Operating leases 4.8 % 4.8 % Maturities of lease liabilities as of January 31, 2022 were as follows: January 31, 2022 (in thousands) Operating Leases Year Ending January 31, 2023 $ 8,411 2024 7,673 2025 6,718 2026 4,267 2027 335 Thereafter 5 Total future minimum lease payments 27,409 Less imputed interest (2,821) Total $ 24,588 Reported as of January 31, 2022: Accrued expenses and other current liabilities $ 7,409 Operating lease liabilities 17,179 Total $ 24,588 |
LEASES | LEASES We have entered into operating leases primarily for corporate offices, research and development facilities, and automobiles. Our leases have remaining lease terms of 1 year to 6 years. During the year ended January 31, 2021, we purchased the infrastructure equipment historically recorded as finance leases and capitalized the purchased assets to property and equipment, net. We do not have any finance leases as of January 31, 2022 and 2021. The components of lease expenses for the years ended January 31, 2022 and 2021 were as follows: Year Ended January 31, (in thousands) 2022 2021 Operating lease expenses $ 9,552 $ 11,133 Finance lease expenses: Amortization of right-of-use assets — 84 Interest on lease liabilities — 102 Total finance lease expenses — 186 Variable lease expenses 5,566 3,349 Short-term lease expenses 213 34 Total lease expenses $ 15,331 $ 14,702 During the year ended January 31, 2022 and 2021, we decided to exit certain leased offices primarily due to our workforce operating under remote work environments in certain locations due to COVID-19, resulting in accelerated operating lease expenses of $0.8 million and $0.7 million, respectively. Other information related to leases was as follows: Year Ended January 31, (dollars in thousands) 2022 2021 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,733 $ 8,822 Operating cash flows from finance leases $ — $ 102 Financing cash flows from finance leases $ — $ 492 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 3,756 $ 5,869 Weighted average remaining lease terms Operating leases 4 years 6 years Weighted average discount rates Operating leases 4.8 % 4.8 % Maturities of lease liabilities as of January 31, 2022 were as follows: January 31, 2022 (in thousands) Operating Leases Year Ending January 31, 2023 $ 8,411 2024 7,673 2025 6,718 2026 4,267 2027 335 Thereafter 5 Total future minimum lease payments 27,409 Less imputed interest (2,821) Total $ 24,588 Reported as of January 31, 2022: Accrued expenses and other current liabilities $ 7,409 Operating lease liabilities 17,179 Total $ 24,588 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jan. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Unconditional Purchase Obligations In the ordinary course of business, we enter into certain unconditional purchase obligations, which are agreements to purchase goods or services that are enforceable, legally binding, and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on current needs and are typically fulfilled by our vendors within a relatively short time horizon. As of January 31, 2022, our unconditional purchase obligations totaled approximately $71.4 million. Licenses and Royalties We license certain technology and pay royalties under such licenses and other agreements entered into in connection with research and development activities. As discussed in Note 2, “Summary of Significant Accounting Policies”, we receive non-refundable grants from the IIA that fund a portion of our research and development expenditures. The Israeli law under which the IIA grants are made limits our ability to manufacture products, or transfer technologies, developed using these grants outside of Israel. If we were to seek approval to manufacture products, or transfer technologies, developed using these grants outside of Israel, we could be subject to royalty requirements or be required to pay certain redemption fees. If we were to violate these restrictions, we could be required to refund any grants previously received, together with interest and penalties, and may be subject to criminal penalties. Off-Balance Sheet Risk In the normal course of business, we provide certain customers with financial performance guarantees, which are generally backed by bank guarantees and, in certain cases, by standby letters of credit. In general, we would only be liable for the amounts of these guarantees in the event that our nonperformance permits termination of the related contract by our customer, which we believe is remote. At January 31, 2022, we had approximately $43.0 million of outstanding bank guarantees and letters of credit relating primarily to these performance guarantees. As of January 31, 2022, we believe we were in compliance with our performance obligations under all contracts for which there is a financial performance guarantee, and the ultimate liability, if any, incurred in connection with these guarantees will not have a material adverse effect on our consolidated results of operations, financial position, or cash flows. Our historical non-compliance with our performance obligations has been insignificant. In addition the Company provided bank guarantees in the amount $3.9 million related to its offices in Israel and exports transaction towards the Israeli Chamber of Commerce. Indemnifications In the normal course of business, we provide indemnifications of varying scopes to customers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations. To the extent permitted under Israeli law or other applicable law, we indemnify our directors, officers, employees, and agents against claims they may become subject to by virtue of serving in such capacities for us. We also have contractual indemnification agreements with our directors, officers, and certain senior executives. The maximum amount of future payments we could be required to make under these indemnification arrangements and agreements is potentially unlimited; however, we have insurance coverage that limits our exposure and enables us to recover a portion of any future amounts paid. We are not able to estimate the fair value of these indemnification arrangements and agreements in excess of applicable insurance coverage, if any. Under the Separation and Distribution Agreement we entered into with Verint in connection with the spin-off, the parties have agreed to certain other indemnification arrangements with respect to litigation claims and liabilities allocated in the spin-off. Our liabilities in this regard are reflected on our historical Consolidated Balance Sheets as of January 31, 2022 and 2021. In connection with the spin-off, we entered into a tax matters agreement (the “Tax Matters Agreement”) with Verint under which we and Verint each agreed to share the obligation to pay any taxes as shown on tax returns filed by Verint (or any member of its group), on one hand, and us (or any member of our group), on the other hand, such that we will be primarily responsible for any taxes related to, or arising in connection with Cognyte, and Verint will be responsible for any taxes related to, or arising in connection with, the remaining business of Verint, regardless of which party prepares and files any such tax return and whether such taxes arise prior to or after the spin-off. We and Verint agreed to indemnify each other under the Tax Matters Agreement for certain actions or inactions that cause the distribution of our stock to fail to qualify as tax-free for U.S. federal income and Israeli tax purposes. If the distribution fails to qualify as tax-free due to no fault of either Verint or us, Verint and we will jointly be responsible for any resulting tax. Under the terms of the Tax Matters Agreement, we and Verint agree generally to cooperate in preparing and filing tax returns and will retain and make available tax records to the other party. Contests with taxing authorities are generally controlled by whichever of us or Verint bears the potential liability for the contested tax. However, with respect to certain income tax returns of Verint group, Verint has an exclusive right to control any contest with taxing authorities regarding tax liabilities in connection with such income tax returns, even if we are allocated all or a portion of such taxes under the terms of the Tax Matters Agreement. If any tax contest relates to a failure of the spin-off to qualify as tax-free due to the fault of Verint or us, then the party at fault will control such tax contest. As we believe it is unlikely that we will incur obligations under the Tax Matters Agreement related to the tax-free treatment of the spin-off, we have not recorded such liabilities in our Consolidated Balance Sheet as of January 31, 2022. Legal Proceedings In March 2009, one of our former employees, Ms. Orit Deutsch, commenced legal actions in Israel against our primary Israeli subsidiary, Cognyte Technologies Israel Ltd. (“Cognyte IL”) (Case Number 4186/09) and against our former affiliate Comverse Technology, Inc. (“CTI”) (Case Number 1335/09). Also in March 2009, a former employee of Comverse Limited (CTI’s primary Israeli subsidiary at the time), Ms. Roni Katriel, commenced similar legal actions in Israel against Comverse Limited (Case Number 3444/09). In these actions, the plaintiffs generally sought to certify class action suits against the defendants on behalf of current and former employees of Cognyte IL and Comverse Limited who had been granted stock options in Verint and/or CTI and who were allegedly damaged as a result of a suspension on option exercises during an extended filing delay period that is discussed in Verint’s and CTI’s historical public filings. On June 7, 2012, the Tel Aviv District Court, where the cases had been filed or transferred, allowed the plaintiffs to consolidate and amend their complaints against the three defendants: Cognyte IL, CTI, and Comverse Limited. On October 31, 2012, CTI distributed of all of the outstanding shares of common stock of Comverse, Inc., its principal operating subsidiary and parent company of Comverse Limited, to CTI’s shareholders (the “Comverse Share Distribution”). In the period leading up to the Comverse Share Distribution, CTI either sold or transferred substantially all of its business operations and assets (other than its equity ownership interests in Verint and in its then-subsidiary, Comverse, Inc.) to Comverse, Inc. or to unaffiliated third parties. As the result of these transactions, Comverse, Inc. became an independent company and ceased to be affiliated with CTI, and CTI ceased to have any material assets other than its equity interests in Verint. Prior to the completion of the Comverse Share Distribution, the plaintiffs sought to compel CTI to set aside up to $150.0 million in assets to secure any future judgment, but the District Court did not rule on this motion. In February 2017, Mavenir Inc. became successor-in-interest to Comverse, Inc. On February 4, 2013, Verint acquired the remaining CTI shell company in a merger transaction (the “CTI Merger”). As a result of the CTI Merger, Verint assumed certain rights and liabilities of CTI, including any liability of CTI arising out of the foregoing legal actions. However, under the terms of a Distribution Agreement entered into in connection with the Comverse Share Distribution, Verint, as successor to CTI, is entitled to indemnification from Comverse, Inc. (now Mavenir) for any losses Verint may suffer in its capacity as successor to CTI related to the foregoing legal actions. Under the Separation and Distribution Agreement we have entered into with Verint in connection with the spin-off, we agreed to indemnify Verint for our share of any losses Verint may suffer related to the foregoing legal actions either in its capacity as successor to CTI to the extent not indemnified by Mavenir or due to its former ownership of us and Cognyte IL. Following an unsuccessful mediation process, on August 28, 2016, the District Court (i) denied the plaintiffs’ motion to certify the suit as a class action with respect to all claims relating to Verint stock options and (ii) approved the plaintiffs’ motion to certify the suit as a class action with respect to claims of current or former employees of Comverse Limited (now part of Mavenir) or of Cognyte IL who held unexercised CTI stock options at the time CTI suspended option exercises. The court also ruled that the merits of the case would be evaluated under New York law. As a result of this ruling (which excluded claims related to Verint stock options from the case), one of the original plaintiffs in the case, Ms. Deutsch, was replaced by a new representative plaintiff, Mr. David Vaaknin. CTI appealed portions of the District Court’s ruling to the Israeli Supreme Court. On August 8, 2017, the Israeli Supreme Court partially allowed CTI’s appeal and ordered the case to be returned to the District Court to determine whether a cause of action exists under New York law based on the parties’ expert opinions. Following two unsuccessful rounds of mediation in mid to late 2018 and in mid-2019, the proceedings resumed. On April 16, 2020, the District Court accepted plaintiffs’ application to amend the motion to certify a class action and set deadlines for filing amended pleadings by the parties. CTI submitted a motion to appeal the District Court’s decision to the Supreme Court, as well as a motion to stay the proceedings in the District Court pending the resolution of the appeal. On July 6, 2020, the Supreme Court granted the motion for a stay. On July 27, 2020, the plaintiffs filed their response on the merits of the motion for leave to appeal. On December 15, 2021, the Supreme court rejected CTI’s motion to appeal and the procedure in the district court resumed. On February 27, 2022, CTI filed its response to the amendment motion for class certification. On April 4, 2022, a pre-trial hearing was held at the District Court, and the court has scheduled dates for the continuation of the proceedings. In January 2017, a legal action was commenced by Mr. Elad Barkan and KeySee Software Ltd. against Cognyte, Verint and Rontal Engineering Applications (2001) Ltd. (a subsidiary of Cognyte) in the Israel Central District Court alleging infringement of an Israeli patent titled “Cryptanalysis Method and System”, copyright infringement, misappropriation of trade secrets, and breach of contract. The remedies sought under such claim include compensation for damages, claim for accounts, and a permanent injunction seeking to prevent the continued alleged infringement of the patent. The defendants filed a statement of defense rejecting any and all allegations under such claim. We further filed a motion to dismiss the claim in limine. The motion to dismiss is still pending and awaiting a decision by the judge. In parallel, the parties are engaged in mediation, and in connection therewith, the Company increased its accrual to $6.2 million as of January 31, 2022 with respect to the foregoing proceeding. From time to time we or our subsidiaries may be involved in legal proceedings and/or litigation arising in the ordinary course of our business. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any current claims will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. |
GEOGRAPHIC AND SIGNIFICANT CUST
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION | 12 Months Ended |
Jan. 31, 2022 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION | GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION Geographic Information Revenue by major geographic region is based on the location of our contracting subsidiary, which often differ from the geographic location of the customer. The information below summarizes revenue by major geographic region for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 EMEA: Israel $ 328,371 $ 274,113 $ 277,605 Germany 63,258 86,834 77,540 Other 14,127 18,727 22,775 Total EMEA 405,756 379,674 377,920 Americas: United States 37,726 44,746 53,354 Other 17,869 7,134 10,359 Total Americas 55,595 51,880 63,713 APAC 12,691 11,904 15,476 Total revenue $ 474,042 $ 443,458 $ 457,109 Our long-lived assets primarily consist of net property and equipment, operating lease ROU assets, goodwill and other intangible assets. We believe that our tangible long-lived assets, which consist of our net property and equipment, are exposed to greater geographic area risks and uncertainties than intangible assets and long-term cost deferrals, because these tangible assets are difficult to move and are relatively illiquid. Property and equipment, net by geographic area consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Israel $ 24,510 $ 31,104 United States 538 902 Other countries 5,791 5,589 Total property and equipment, net $ 30,839 $ 37,595 Significant Customers The Company’s largest customers accounted for the following percentage of total revenue: Year Ended January 31, 2022 2021 2020 Customer A 14.8 % 16.9 % 15.6 % Customer B 8.4 % 14.1 % 12.9 % In making this determination of significant customers, we define a customer as an organization from which we have recognized revenue in a reporting period. In situations where a governmental organization acts on behalf of multiple agencies or departments, we treat that organization as the customer for reporting purposes notwithstanding that each of the underlying agencies or departments is generally making its own independent purchasing decisions. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Jan. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table summarizes the calculation of basic and diluted net income per ordinary share attributable to Cognyte for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands except share and per share data) 2022 2021 2020 Net (loss) income $ (10,256) $ 20,310 $ 27,370 Net income attributable to noncontrolling interest 4,634 6,107 7,179 Net (loss) income attributable to Cognyte of Verint Systems Inc. $ (14,890) $ 14,203 $ 20,191 Ordinary shares outstanding: Basic shares 66,570 65,773 65,773 Effective of dilutive shares — — — Diluted shares 66,570 65,773 65,773 Net (loss) income per share attributable to Cognyte Software Ltd.: Basic $ (0.22) $ 0.22 $ 0.31 Diluted $ (0.22) $ 0.22 $ 0.31 For the year ended January 31, 2022 we had 603 thousand potentially dilutive shares. On February 1, 2021, the date of consummation of the spin-off, 65,773,335 of the Company’s ordinary shares, no par value, were distributed to Verint shareholders of record as of the January 25, 2021 record date. This share amount is being utilized for the calculation of basic earnings per share (“EPS”) for all periods presented before the spin-off. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to revenue recognition over time, fair value of goodwill, realizability of deferred tax assets and tax uncertainties. In light of the currently unknown extent and duration of the COVID-19 pandemic, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply to certain of our significant accounting policies. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of January 31, 2022 and through the date of this report. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly liquid investments having an original maturity of three months or less. |
Restricted Cash and Cash Equivalents, and Restricted Bank Time Deposits | Restricted Cash and Cash Equivalents, and Restricted Bank Time Deposits Restricted cash and cash equivalents, and restricted bank time deposits are mainly pledged as collateral for performance guarantees. |
Investments | Investments Our investments generally consist of bank time deposits with remaining maturities in excess of 90 days at the time of purchase. We held no marketable debt securities at January 31, 2022 and 2021. Investments with maturities in excess of one year are included in other assets. |
Accounts Receivable, net | Accounts Receivable, netTrade accounts receivable are comprised of invoiced amounts due from customers for which we have an unconditional right to collect and are not interest-bearing. Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, bank time deposits, short-term investments, accounts receivable, and contract assets. We invest our cash in bank accounts and bank time deposits. By policy, we seek to limit credit exposure on investments through diversification and by restricting our investments to highly rated securities. |
Allowance for Credit Losses | Allowance for Credit Losses We adopted Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments on February 1, 2020. ASU No. 2016-13 requires us to make judgments as to our ability to collect outstanding receivables and provide allowances for a portion of receivables over the lifetime of the receivables. Our allowance for credit losses is estimated based on an analysis of the aging of our accounts receivable and contract assets, historical write-offs, customer payment patterns, individual customer creditworthiness, current economic trends, reasonable and supportable forecasts of future economic conditions, and/or establishment of specific reserves for customers in adverse financial condition. We write-off an account receivable and charge it against its recorded allowance at the point when it is considered uncollectible. We assess the adequacy of the allowance for credit losses on a quarterly basis. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined using the weighted-average method of inventory accounting. The valuation of our inventories requires us to make estimates regarding excess or obsolete inventories, including making estimates of the future demand for our products. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand, price, or technological developments could have a significant impact on the value of our inventory and reported operating results. Charges for excess and obsolete inventories are included within cost of revenue. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method based over the estimated useful lives of the assets. The vast majority of equipment, furniture and other is depreciated over periods ranging from three The cost of maintenance and repairs of property and equipment is charged to operations as incurred. When assets are retired or disposed of, the cost and accumulated depreciation or amortization thereon are removed from the consolidated balance sheet and any resulting gain or loss is recognized in the consolidated statement of operations. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the enterprise’s chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. We evaluated segment reporting in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting . We concluded that we operate in a single operating segment and a single reportable segment based on the operating results available and evaluated regularly by the CODM to make decisions about resource allocation and performance assessment. The CODM makes operational performance assessments and resource allocation decisions on a consolidated basis, inclusive of all of the Company’s products. |
Goodwill and Other Acquired Intangible Assets | Goodwill and Other Acquired Intangible Assets For business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill. We test goodwill for impairment at the reporting unit level on an annual basis as of November 1, or more frequently if changes in facts and circumstances indicate that impairment in the value of goodwill may exist. We operate as one reporting unit. In testing for goodwill impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we elect to bypass a qualitative assessment, or if our qualitative assessment indicates that goodwill impairment is more likely than not, we perform quantitative impairment testing. If our quantitative testing determines that the carrying value of the reporting unit exceeds its fair value, goodwill impairment is recognized in an amount equal to that excess, limited to the total goodwill allocated to our reporting unit. We utilize some or all of three primary approaches to assess the fair value of a reporting unit: (a) an income-based approach, using projected discounted cash flows, (b) a market-based approach, using valuation multiples of comparable companies, and (c) a transaction-based approach, using valuation multiples for recent acquisitions of similar businesses made in the marketplace. Our estimate of fair value of our reporting unit is based on a number of subjective factors, including: (a) appropriate consideration of valuation approaches (income approach, comparable public company approach, and comparable transaction approach), (b) estimates of future growth rates, (c) estimates of our future cost structure, (d) discount rates for our estimated cash flows, (e) selection of peer group companies for the public company and the market transaction approaches, (f) required levels of working capital, (g) assumed terminal value, and (h) time horizon of cash flow forecasts. Acquired identifiable intangible assets include identifiable acquired technologies, customer relationships, trade names, distribution networks, and non-competition agreements. We amortize the cost of finite-lived identifiable intangible assets over their estimated useful lives, which are periods of 7 years or less. Amortization is based on the pattern in which the economic benefits of the intangible asset are expected to be realized, which typically is on a straight-line basis. The fair values assigned to identifiable intangible assets acquired in business combinations are determined primarily by using the income approach, which discounts expected future cash flows attributable to these assets to present value using estimates and assumptions determined by management. The acquired identifiable finite-lived intangible assets are being amortized primarily on a straight-line basis, which we believe approximates the pattern in which the assets are utilized, over their estimated useful lives. |
Fair Value Measurements | Fair Value Measurements Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This fair value hierarchy consists of three levels of inputs that may be used to measure fair value: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments Our recorded amounts of cash and cash equivalents, restricted cash and cash equivalents, and restricted bank time deposits, accounts receivable, contract assets, contract liabilities, short term loan, investments, and accounts payable approximate fair value, due to the short-term nature of these instruments. We measure certain financial assets and liabilities at fair value based on |
Derivative Financial Instruments | Derivative Financial Instruments The Company accounts for derivatives and hedging based on ASC 815, Derivatives and Hedging , which requires recognizing all derivatives on the balance sheet at fair value. If the derivatives meet the definition of a cash flow hedge and are so designated, depending on the nature of the hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. The ineffective portion of a derivative’s change in fair value, if any, is recognized in earnings, as well as gains and losses from a derivative’s change in fair value that are not designated as hedges. As part of our risk management strategy, when considered appropriate, we use derivative financial instruments including foreign currency forward contracts to hedge against certain foreign currency exposure. Our intent is to mitigate gains and losses caused by the underlying exposures with offsetting gains and losses on the derivative contracts. By policy, we do not enter into speculative positions with derivative instruments. To protect against the increase in value of expected foreign currency cash flows resulting mainly from salaries and related benefits paid in NIS during the year, the Company hedges portions of its anticipated payroll denominated in NIS for a period of one We also periodically utilize foreign currency forward contracts to manage exposures resulting from expected customer collections to be remitted in currencies other than the applicable functional currency, and exposures from cash, cash equivalents and short-term investments denominated in currencies other than the applicable functional currency. The counterparties to our derivative financial instruments consist of two major financial institutions. We regularly monitor the financial strength of these institutions. While the counterparties to these contracts expose us to credit-related losses in the event of a counterparty’s non-performance, the risk would be limited to the unrealized gains on such affected contracts. We do not anticipate any such losses. |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which was adopted on February 1, 2018, using the modified retrospective transition method. For further discussion of our accounting policies related to revenue, see Note 4, “Revenue Recognition”. |
Cost of Revenue | Cost of Revenue Our cost of revenue includes costs of materials, compensation and benefit costs for operations and service personnel, subcontractor costs, royalties and license fees related to third-party software included in our products and third-party SaaS providers, cloud infrastructure costs, depreciation of equipment used in operations and service, amortization of capitalized software development costs and certain purchased intangible assets, travel expenses associated with provision of installation, training, consulting and development services resources dedicated to project management and an allocation of overhead costs, such as facility, information technology, operations costs, and other overhead expenses. Costs that relate to materials and royalties are generally expensed upon shipment and costs related to travel, subcontractors, and personnel and related expenses are generally expensed as incurred in the period in which the personnel related services are performed. Refer to Note 4, “Revenue Recognition” under the heading “Costs to Obtain and Fulfill Contracts” for further details regarding customer contract costs. |
Research and Development, net | Research and Development, net With the exception of certain software development costs, all research and development costs are expensed as incurred, and consist primarily of personnel and consulting costs, travel, depreciation of research and development equipment, and related overhead and other costs associated with research and development activities. We receive non-refundable grants from the Israeli Innovation Authority (“IIA”) that fund a portion of our research and development expenditures. We currently only enter into non-royalty-bearing arrangements with the IIA which do not require us to pay royalties. Funds received from the IIA are recorded as a reduction to research and development expense. Royalties, to the extent paid, are recorded as part of our cost of revenue. We also periodically derive benefits from participation in certain government-sponsored programs in other jurisdictions, for the support of research and development activities conducted in those locations. |
Software Development Costs | Software Development Costs Costs incurred to acquire or develop software to be sold, leased or otherwise marketed are capitalized after technological feasibility is established, and continue to be capitalized through the general release of the related software product. Amortization of capitalized costs begins in the period in which the related product is available for general release to customers and is recorded on a straight-line basis, which approximates the pattern in which the economic benefits of the capitalized costs are expected to be realized, over the estimated economic lives of the related software products, generally over a period of four |
Internal-Use Software | Internal-Use Software We capitalize costs associated with software that is acquired, internally developed or modified solely to meet our internal needs. Capitalization begins when the preliminary project stage has been completed and management with the relevant authority authorizes and commits to the funding of the project. These capitalized costs include external direct costs utilized in developing or obtaining the applications and expenses for employees who are directly associated with the development of the applications. Capitalization of such costs continues until the project is substantially complete and is ready for its intended purpose. Capitalized costs of computer software developed for internal use are generally amortized over estimated useful lives of four |
Income Taxes | Income Taxes Prior to the spin-off, the Company’s operations were included in the consolidated U.S. federal and certain state, local and foreign income tax returns filed by Verint. For the purposes of periods prior to the spin-off, the Company’s income tax provision was calculated using the separate return basis, as if the Company filed separate tax returns. Since the spin-off, certain changes in the tax balances are primarily attributable to tax carryforwards and other basis differences that existed on a separate return basis for the historical periods. Changes between the historical periods presented on a separate return basis were settled through the former net parent investment immediately prior to the spin-off. We account for income taxes under the asset and liability method which includes the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements. Under this approach, deferred taxes are recorded for the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus deferred taxes. Deferred taxes result from differences between the financial statement and tax bases of our assets and liabilities, and are adjusted for changes in tax rates and tax laws when changes are enacted. The effects of future changes in income tax laws or rates are not anticipated. We are subject to income taxes in Israel, the United States and numerous foreign jurisdictions. The calculation of our income tax provision involves the application of complex tax laws and requires significant judgment and estimates. We evaluate the realizability of our deferred tax assets for each jurisdiction in which we operate at each reporting date, and establish valuation allowances when it is more likely than not that all or a portion of our deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the same character and in the same jurisdiction. We consider all available positive and negative evidence in making this assessment, including, but not limited to, the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. In circumstances where there is sufficient negative evidence indicating that our deferred tax assets are not more-likely-than-not realizable, we establish a valuation allowance. |
Functional Currencies and Foreign Currency Transaction Gains and Losses | Functional Currencies and Foreign Currency Transaction Gains and Losses Our functional currency, and the functional currency of most of our subsidiaries, is the U.S. dollar, although we have some subsidiaries with functional currencies that are their local currency. Transactions denominated in currencies other than a functional currency are converted to the functional currency on the transaction date, and any resulting assets or liabilities are further remeasured at each reporting date and at settlement. Gains and losses recognized upon such remeasurements are included within other income (expense), net in the consolidated statements of operations. We recorded net foreign currency losses of $3.1 million, net foreign currency gains of $1.7 million and net foreign currency losses of $0.7 million for the years ended January 31, 2022, 2021, and 2020, respectively. For consolidated reporting purposes, in those instances where a subsidiary has a functional currency other than the U.S. dollar, revenue and expenses are translated into U.S. dollars using average exchange rates for the reporting period, while assets and liabilities are translated into U.S. dollars using period-end rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income or loss in the accompanying consolidated balance sheets. |
Stock-Based Compensation | Stock-Based Compensation Certain Company employees participate in a stock-based compensation plan sponsored by Cognyte. Awards granted under the plan are based on Cognyte’s common shares and, as such, are included in Additional Paid in Capital. The Company accounts for share-based compensation under ASC 718, Compensation - Stock Compensation , which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statements of operations. The Company estimates forfeitures to be estimated at the time of grant, and revised if necessary in subsequent periods, if actual forfeitures differ from those estimates. The Company recognizes compensation expenses for the value of its awards, which vest in tranches based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. For performance-based share units, the Company recognizes compensation expenses for the value of such awards, if and when the Company concludes that it is probable that a performance condition will be achieved based on the accelerated attribution method over the requisite service period. The Company reassesses the probability of vesting at each reporting period for awards with performance conditions and adjusts compensation cost based on its probability assessment. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating lease assets are presented as operating lease right-of-use (“ROU”) assets, and corresponding operating lease liabilities are presented within accrued expenses and other current liabilities (current portions), and as operating lease liabilities (long-term portions), on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the remaining lease payments over the lease term at commencement date. Our leases do not provide an implicit interest rate. We calculate the incremental borrowing rate to reflect the interest rate that we would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term, and consider our historical borrowing activities and market data in this determination. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. |
Legal Contingencies | Legal Contingencies From time to time, the Company becomes involved in legal proceedings or is subject to claims arising in its ordinary course of business. Such matters are generally subject to many uncertainties and outcomes that are not predictable with certainty. The Company accrues for contingencies when the loss is probable, and it can reasonably estimate the amount of any such loss. Loss contingencies considered to be remote by the Company are generally not disclosed unless material. The respective legal fees are expensed as incurred. |
Business Combinations | Business Combinations The Company accounts for business combinations in accordance with ASC 805, Business Combinations . ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over the purchase price is allocated to goodwill and any subsequent changes in estimated contingencies are recorded in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in changes in acquired income tax positions are recognized in earnings. Acquisition related costs are expensed to the consolidated statements of operations in the periods incurred. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The guidance applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of this guidance does not have a material impact on the Company’s consolidated financial results of operations, financial position or cash flows. New Accounting Pronouncements Not Yet Effective In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU No. 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. ASU No. 2020-06 also eliminates the treasury stock method to calculate diluted earnings per share and requires the if-converted method. This new standard will be effective in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 . We are currently reviewing this standard but do not expect that it will have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which affects general principles within Topic 740, Income Taxes and is meant to simplify and reduce the cost of accounting for income taxes. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim reporting periods within annual reporting periods beginning after December 15, 2022. We do not expect that this standard will have a material impact on our consolidated financial statements. In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832) , which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021. We do not expect that this standard will have a material impact on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers . The guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Allowance for Doubtful Accounts | The following table summarizes the activity in our credit losses for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Allowance for credit losses, beginning of year $ 4,559 $ 4,085 $ 2,911 Cumulative effect of adoption of ASU No. 2016-13 — 435 — Provisions charged to expense 342 1,840 1,355 Amounts written off (2,791) (1,922) (152) Other, including fluctuations in foreign exchange rates — 121 (29) Allowance for credit losses, end of year $ 2,110 $ 4,559 $ 4,085 |
RELATED PARTY TRANSACTIONS WI_2
RELATED PARTY TRANSACTIONS WITH VERINT (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Components of Costs of Services | The components of the costs of services allocated to the Company for the years ended January 31, 2021 and 2020 are as follows: Year Ended January 31, (in thousands) 2021 2020 Software - cost of revenue $ 1,981 $ 1,871 Software service - cost of revenue 1,548 1,639 Professional service and other - cost of revenue 2,743 4,654 Research and development, net 21,783 19,139 Selling, general and administrative 69,210 54,452 Total allocated corporate expenses $ 97,265 $ 81,755 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Year Ended January 31, (in thousands) 2022 2021 2020 Revenue by recurrence: Recurring revenue $ 230,969 $ 223,405 $ 192,578 Nonrecurring revenue 243,073 220,053 264,531 Total revenue $ 474,042 $ 443,458 $ 457,109 |
Schedule of Contract Balances | The following table provides information about accounts receivable, contract assets, and contract liabilities from contracts with customers: January 31, (in thousands) 2022 2021 Accounts receivable, net $ 179,198 $ 175,001 Contract assets, net $ 27,908 $ 20,317 Long-term contract assets, net (included in other assets) $ — $ 1,219 Contract liabilities $ 83,158 $ 127,012 Long-term contract liabilities $ 14,520 $ 22,037 |
Schedule of Remaining Performance Obligation | The following table provides information about our RPO: January 31, (in thousands) 2022 2021 RPO: Expected to be recognized within 1 year $ 300,212 $ 353,166 Expected to be recognized in more than 1 year 211,346 198,572 Total RPO $ 511,558 $ 551,738 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation | The following table sets forth the components and the final allocation of the purchase price for our acquisition of WebintPro, including adjustments identified subsequent to the valuation date, none of which were material: (in thousands) Amount Components of Purchase Price: Cash $ 18,843 Fair value of contingent consideration 7,023 Other purchase price adjustments (1,761) Total purchase price $ 24,105 Allocation of Purchase Price: Net tangible assets (liabilities): Accounts receivable $ 2,160 Other current assets, including cash acquired 7,921 Other assets 2,757 Current and other liabilities (3,220) Contract liabilities—current and long-term (554) Deferred income taxes (1,342) Net tangible assets 7,722 Identifiable intangible assets: Customer relationships 1,452 Developed technology 1,360 Trademarks and trade names 367 Non-compete agreements 1,307 Total identifiable intangible assets 4,486 Goodwill 11,897 Total purchase price allocation $ 24,105 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Finite-Lived Intangible Assets | Acquisition-related intangible assets consisted of the following as of January 31, 2022 and 2021: January 31, 2022 (in thousands) Cost Accumulated Net Intangible assets with finite lives: Acquired technology $ 64,150 $ (62,909) $ 1,241 Customer relationships 4,166 (2,913) 1,253 Trade names 1,158 (876) 282 Distribution network 2,000 (2,000) — Non-competition agreements 1,307 (921) 386 Total intangible assets $ 72,781 $ (69,619) $ 3,162 January 31, 2021 (in thousands) Cost Accumulated Net Intangible assets with finite lives: Acquired technology $ 74,272 $ (72,349) $ 1,923 Customer relationships 4,837 (2,759) 2,078 Trade names 1,151 (676) 475 Distribution network 2,000 (2,000) — Non-competition agreements 1,307 (484) 823 Total intangible assets $ 83,567 $ (78,268) $ 5,299 |
Schedule of Estimated Future Amortization Expense on Acquired Intangibles | Estimated future amortization expense on finite-lived acquisition-related intangible assets is as follows: (in thousands) Years Ending January 31, Amount 2023 $ 1,622 2024 $ 702 2025 $ 628 2026 $ 127 2027 $ 83 Total $ 3,162 |
Schedule of Goodwill Activity | Goodwill activity for the years ended January 31, 2022 and 2021 was as follows: (in thousands) Amount Year Ended January 31, 2021: Goodwill, gross, at February 1, 2020 $ 168,965 Accumulated impairment losses through February 1, 2020 (10,822) Goodwill, net, at February 1, 2020 158,143 Adjustments to prior period acquisition 300 Foreign currency translation (260) Goodwill, net, at January 31, 2021 $ 158,183 Year Ended January 31, 2022: Goodwill, gross, at January 31, 2021 $ 169,005 Accumulated impairment losses through January 31, 2021 (10,822) Goodwill, net, at January 31, 2021 158,183 Foreign currency translation 50 Goodwill, net, at January 31, 2022 $ 158,233 Balance at January 31, 2022: Goodwill, gross, at January 31, 2022 $ 169,055 Accumulated impairment losses through January 31, 2022 (10,822) Goodwill, net, at January 31, 2022 $ 158,233 |
SUPPLEMENTAL CONSOLIDATED FIN_2
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Raw materials $ 9,753 $ 7,521 Work-in-process 2,953 5,160 Finished goods 1,660 1,861 Total inventories $ 14,366 $ 14,542 |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Land and buildings $ 2,854 $ 2,854 Leasehold improvements 14,032 13,530 Software 26,281 37,204 Equipment, furniture and other 54,880 65,206 Total cost 98,047 118,794 Less: accumulated depreciation and amortization (67,208) (81,199) Total property and equipment, net $ 30,839 $ 37,595 |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Prepaid expenses $ 22,653 $ 22,037 Deferred cost of revenue 3,096 4,570 Income tax receivables 5,464 1,379 Other 757 2,065 Total prepaid expenses and other current assets $ 31,970 $ 30,051 |
Schedule of Other Assets | Other assets consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Long-term restricted cash and time deposits $ 2,488 $ 15,061 Capitalized software development costs, net 13,920 11,315 Deferred commissions 1,897 4,459 Long-term deferred cost of revenue 525 1,959 Long-term security deposits 716 1,393 Long-term contract assets, net — 1,219 Other 6,183 6,670 Total other assets $ 25,729 $ 42,076 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Compensation and benefits $ 51,527 $ 44,801 Distributor and agent commissions 14,877 12,422 Operating lease obligations - current portion 7,409 7,085 Income taxes 6,585 4,275 Contingent consideration - current portion — 2,923 Taxes other than income taxes 2,962 2,559 Fair value of derivatives - current portion 801 678 Other 15,613 16,949 Total accrued expenses and other current liabilities $ 99,774 $ 91,692 |
Schedule of Other Liabilities | Other liabilities consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Unrecognized tax benefits, including interest and penalties $ 8,604 $ 6,940 Obligations for severance compensation 2,145 2,054 Other 25 204 Total other liabilities $ 10,774 $ 9,198 |
Schedule of Other (Expense) Income, Net | Other income (expense), net consisted of the following for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Gains on investments, net $ 729 $ 3,769 $ — Foreign currency (losses) gains, net (3,140) 1,682 (728) Gains (Losses) on derivative financial instruments, net 133 (95) 395 Other expense, net (403) (70) (71) Total other (expense) income, net $ (2,681) $ 5,286 $ (404) |
Schedule of Supplemental Information Regarding Consolidated Cash Flows | The following table provides supplemental information regarding our consolidated cash flows for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Cash paid for interest $ 470 $ 38 $ 23 Cash (refunds) payments of income taxes, net $ 8,232 $ 1,260 $ 9,622 Non-cash investing and financing transactions: Accrued cash dividends payable to parent $ — $ 35,000 $ — Accrued but unpaid purchases of property and equipment $ 1,166 $ 2,636 $ 3,399 Inventory transfers to property and equipment $ 537 $ 894 $ 825 Liabilities for contingent consideration in business combinations $ — $ — $ 7,023 Finance leases of property and equipment $ — $ — $ 3,117 Leasehold improvements funded by lease incentives $ — $ — $ 250 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Summary of Components of Accumulated Other Comprehensive Loss | The following table summarizes changes in the components of our accumulated other comprehensive loss for the years ended January 31, 2022, 2021, and 2020: (in thousands) Unrealized Gains (Losses) on Derivative Financial Instruments Designated as Hedges Foreign Currency Translation Adjustments Total Accumulated other comprehensive loss at February 1, 2019 (809) (12,653) (13,462) Other comprehensive income (loss) before reclassifications 1,755 (1,866) (111) Amounts reclassified out of accumulated other comprehensive loss 350 — 350 Net other comprehensive income (loss) 1,405 (1,866) (461) Accumulated other comprehensive income (loss) at January 31, 2020 596 (14,519) (13,923) Other comprehensive income (loss) before reclassifications 1,599 (1,545) 54 Amounts reclassified out of accumulated other comprehensive income (loss) 1,636 — 1,636 Net other comprehensive (loss) income (37) (1,545) (1,582) Accumulated other comprehensive income (loss) at January 31, 2021 $ 559 $ (16,064) $ (15,505) Other comprehensive income (loss) before reclassifications 1,229 (5) 1,224 Amounts reclassified out of accumulated other comprehensive income 2,398 — 2,398 Net other comprehensive (loss) income (1,169) (5) (1,174) Accumulated other comprehensive loss at January 31, 2022 $ (610) $ (16,069) $ (16,679) |
Schedule of Amounts Reclassified Out of Accumulated Other Comprehensive Loss | The amounts reclassified out of accumulated other comprehensive loss into the consolidated statements of operations, with presentation location, for the years ended January 31, 2022, 2021, and 2020, were as follows: Year Ended January 31, Financial Statement Location (in thousands) 2022 2021 2020 Unrealized gains (losses) on derivative financial instruments: Foreign currency forward contracts $ 6 $ 39 $ 54 Cost of software revenue 40 117 (42) Cost of software service revenue 225 92 61 Cost of professional service and other revenue 1,190 960 208 Research and development, net 853 674 108 Selling, general and administrative 2,314 1,882 389 Total, before income taxes 84 (246) (39) (Provision) benefit for income taxes $ 2,398 $ 1,636 $ 350 Total, net of income taxes |
RESEARCH AND DEVELOPMENT, NET (
RESEARCH AND DEVELOPMENT, NET (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Research and Development [Abstract] | |
Schedule of Activity for Capitalized Software Development Costs | Activity for our capitalized software development costs for the years ended January 31, 2022, 2021, and 2020, was as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Capitalized software development costs, net, beginning of year $ 11,315 $ 11,679 $ 6,076 Software development costs capitalized during the year 6,033 5,132 7,638 Amortization of capitalized software development costs (3,291) (3,072) (2,023) Write-offs of capitalized software development costs (142) (2,244) — Foreign currency translation and other 5 (180) (12) Capitalized software development costs, net, end of year $ 13,920 $ 11,315 $ 11,679 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income (Loss) Before Provision for Income Taxes | The components of income (loss) before provision for income taxes for the years ended January 31, 2022, 2021, and 2020 were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 U.S. $ (9,596) $ (8,665) $ (10,116) Non-U.S. 17,857 33,389 40,053 Total income before provision for income taxes $ 8,261 $ 24,724 $ 29,937 |
Schedule of Provision for Income Taxes | The provision for income taxes for the years ended January 31, 2022, 2021, and 2020 consisted of the following: Year Ended January 31, (in thousands) 2022 2021 2020 Current provision (benefit) for income taxes: U.S. Federal $ — $ (1,434) $ (884) U.S. State (11) (44) (164) Non-U.S. 12,668 8,087 (1,988) Total current provision (benefit) for income taxes 12,657 6,609 (3,036) Deferred provision (benefit) for income taxes: U.S. Federal (1,143) (910) 372 U.S. State 53 (200) 89 Non-U.S. 6,950 (1,085) 5,142 Total deferred provision (benefit) for income taxes 5,860 (2,195) 5,603 Total provision for income taxes $ 18,517 $ 4,414 $ 2,567 |
Schedule of Effective Tax Rate Reconciliation | The reconciliation of the U.S. federal statutory rate to our effective tax rate on income before provision for income taxes for the years ended January 31, 2022, 2021, and 2020 was as follows: Year Ended January 31, (dollars in thousands) 2022 2021 2020 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Income tax provision at the U.S. federal statutory rate $ 1,735 $ 5,192 $ 6,287 U.S. State income tax (benefit) provision 40 (226) (45) Non-U.S. tax rate differential 2,892 (2,836) 6,720 Tax incentives (2,671) (139) (1,292) Valuation allowances 12,731 31 (898) Non-deductible expenses/non-taxable income 255 (261) 1,677 Tax contingencies 2,056 1,184 (13,254) Stock based and other compensation 898 101 70 U.S. tax effects of non-U.S. operations 540 1,001 3,268 Other, net 41 367 34 Total provision for income taxes $ 18,517 $ 4,414 $ 2,567 Effective income tax rate 224.1 % 17.9 % 8.6 % |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities consisted of the following at January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Deferred tax assets: Loss carryforwards $ 11,506 $ 7,321 Accrued compensation 8,774 1,884 Accrued expenses 240 390 Operating lease liabilities 352 362 Exchange rate differences 343 344 Other, net 241 235 Total deferred tax assets 21,456 10,536 Deferred tax liabilities: Deferred cost of revenue (3,279) (3,831) Goodwill and other intangible assets (928) (874) Depreciation of property and equipment (217) (550) Operating lease right-of-use assets (355) (295) Total deferred tax liabilities (4,779) (5,550) Valuation allowance (18,576) (5,732) Net deferred tax liabilities $ (1,899) $ (746) Recorded as: Deferred tax assets $ 1,548 $ 3,303 Deferred tax liabilities (3,447) (4,049) Net deferred tax liabilities $ (1,899) $ (746) |
Schedule of Valuation Allowance | Activity in the recorded valuation allowance consisted of the following for the years ended January 31, 2022 and 2021: Year Ended January 31, (in thousands) 2022 2021 Valuation allowance, beginning of year $ (5,732) $ (5,701) Income tax (provision) benefit (12,731) (31) Spin-off from Verint (113) — Valuation allowance, end of year $ (18,576) $ (5,732) |
Schedule of Unrecognized Tax Benefits | For the years ended January 31, 2022, 2021, and 2020 the aggregate changes in the balance of gross unrecognized tax benefits were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Gross unrecognized tax benefits, beginning of year $ 9,872 $ 8,742 $ 24,755 Increases related to tax positions taken during the current year 1,828 2,919 1,889 Increases as a result of business combinations — — 286 Increases related to tax positions taken during prior years — 18 — Increases (decreases) related to foreign currency exchange rates 256 272 1,073 Reductions for spin-off from Verint (1,439) — — Reductions for tax positions of prior years — (537) (13,623) Reductions for settlements with tax authorities — — (4,133) Lapses of statutes of limitations — (1,542) (1,505) Gross unrecognized tax benefits, end of year $ 10,517 $ 9,872 $ 8,742 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | Our assets and liabilities measured at fair value on a recurring basis consisted of the following as of January 31, 2022 and 2021: January 31, 2022 Fair Value Hierarchy Category (in thousands) Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts $ — $ 140 $ — Total assets $ — $ 140 $ — Liabilities: Foreign currency forward contracts $ — $ 801 $ — Total liabilities $ — $ 801 $ — January 31, 2021 Fair Value Hierarchy Category (in thousands) Level 1 Level 2 Level 3 Assets: Foreign currency forward contracts $ — $ 998 $ — Total assets $ — $ 998 $ — Liabilities: Foreign currency forward contracts $ — $ 678 $ — Contingent consideration - business combinations — — 2,923 Total liabilities $ — $ 678 $ 2,923 |
Schedule of Changes in the Estimated Fair Value using Significant Unobservable Inputs | The following table presents the changes in the estimated fair values of our liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the years ended January 31, 2022 and 2021: Year Ended January 31, (in thousands) 2022 2021 Fair value measurement, beginning of year $ 2,923 $ 11,509 Changes in fair values, recorded in operating expenses (185) (3,665) Payments of contingent consideration (2,738) (4,921) Fair value measurement at end of year $ — $ 2,923 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Derivatives | The fair values of our derivative financial instruments and their classifications in our consolidated balance sheets as of January 31, 2022 and 2021 were as follows: January 31, (in thousands) Balance Sheet Classification 2022 2021 Derivative assets: Foreign currency forward contracts: Designated as cash flow hedges Prepaid expenses and other current assets $ 125 $ 998 Not designated as hedging instruments Prepaid expenses and other current assets 15 — Total derivative assets $ 140 $ 998 Derivative liabilities: Foreign currency forward contracts: Designated as cash flow hedges Accrued expenses and other current liabilities $ 736 $ 355 Not designated as hedging instruments Accrued expenses and other current liabilities 65 323 Total derivative liabilities $ 801 $ 678 |
Schedule of the Effects of Derivatives Designated as Cash Flow Hedges | The effects of derivative financial instruments designated as cash flow hedges on accumulated other comprehensive loss (“AOCL”) and on the consolidated statement of operations for the years ended January 31, 2022, 2021, and 2020, were as follows: Year Ended January 31, (in thousands) 2022 2021 2020 Net gains recognized in AOCL: Foreign currency forward contracts $ 1,169 $ 1,863 $ 1,950 Net gains reclassified from AOCL to the consolidated statements of operations: Foreign currency forward contracts $ 2,314 $ 1,882 $ 389 For information regarding the line item locations of the net losses on derivative financial instruments reclassified out of AOCL into the consolidated statements of operations, see Note 9, “Accumulated Other Comprehensive Loss.” |
Schedule of Derivatives Not Designated as Hedging Instruments | Losses (gains) recognized on derivative financial instruments not designated as hedging instruments in our consolidated statements of operations for the years ended January 31, 2022, 2021, and 2020, were as follows: Classification in Consolidated Statements of Operations Year Ended January 31, (in thousands) 2022 2021 2020 Foreign currency forward contracts Other income (expense), net $ 134 $ (95) $ 395 |
STOCK-BASED COMPENSATION AND _2
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Recognized Stock-based Compensation Expense | We recognized stock-based compensation expense in the following line items on the consolidated statements of operations for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Component of income before provision for income taxes: Cost of revenue - software $ 229 $ 734 $ 642 Cost of revenue - software service 1,160 441 636 Cost of revenue - professional service and other 2,535 952 1,641 Research and development, net 7,792 5,621 6,298 Selling, general and administrative 21,320 19,794 21,816 Total stock-based compensation expense 33,036 27,542 31,033 Income tax benefits related to stock-based compensation (before consideration of valuation allowances) 4,196 4,347 4,400 Total stock-based compensation, net of taxes $ 28,840 $ 23,195 $ 26,633 |
Summary of Stock-based Compensation Expense by Type of Award | The following table summarizes stock-based compensation expense by type of award for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 Restricted stock units and restricted stock awards $ 31,825 $ 23,423 $ 23,413 Stock bonus program and bonus share program 1,040 4,000 7,615 Total equity-settled awards 32,865 27,423 31,028 Phantom stock units (cash-settled awards) 171 119 5 Total stock-based compensation expense $ 33,036 $ 27,542 $ 31,033 |
Summary of Stock Awards Activity | The following table (“Award Activity Table”) summarizes activity for RSUs and PSUs to Company personnel that reduce available plan capacity under the plans for the year ended January 31, 2022: Year Ended January 31, 2022 (in thousands, except grant date fair values) Shares or Units Weighted-Average Grant-Date Fair Value Opening balance 2,149 $ 22.92 Granted 1,416 $ 25.60 Released (1,452) $ 23.36 Forfeited (212) $ 24.34 Closing balance 1,901 $ 24.42 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Leases [Abstract] | |
Schedule of Components of Lease Expenses | The components of lease expenses for the years ended January 31, 2022 and 2021 were as follows: Year Ended January 31, (in thousands) 2022 2021 Operating lease expenses $ 9,552 $ 11,133 Finance lease expenses: Amortization of right-of-use assets — 84 Interest on lease liabilities — 102 Total finance lease expenses — 186 Variable lease expenses 5,566 3,349 Short-term lease expenses 213 34 Total lease expenses $ 15,331 $ 14,702 |
Schedule of Supplemental Cash Flow Information Related to Leases | Other information related to leases was as follows: Year Ended January 31, (dollars in thousands) 2022 2021 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,733 $ 8,822 Operating cash flows from finance leases $ — $ 102 Financing cash flows from finance leases $ — $ 492 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 3,756 $ 5,869 Weighted average remaining lease terms Operating leases 4 years 6 years Weighted average discount rates Operating leases 4.8 % 4.8 % |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities as of January 31, 2022 were as follows: January 31, 2022 (in thousands) Operating Leases Year Ending January 31, 2023 $ 8,411 2024 7,673 2025 6,718 2026 4,267 2027 335 Thereafter 5 Total future minimum lease payments 27,409 Less imputed interest (2,821) Total $ 24,588 Reported as of January 31, 2022: Accrued expenses and other current liabilities $ 7,409 Operating lease liabilities 17,179 Total $ 24,588 |
GEOGRAPHIC AND SIGNIFICANT CU_2
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Region | The information below summarizes revenue by major geographic region for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands) 2022 2021 2020 EMEA: Israel $ 328,371 $ 274,113 $ 277,605 Germany 63,258 86,834 77,540 Other 14,127 18,727 22,775 Total EMEA 405,756 379,674 377,920 Americas: United States 37,726 44,746 53,354 Other 17,869 7,134 10,359 Total Americas 55,595 51,880 63,713 APAC 12,691 11,904 15,476 Total revenue $ 474,042 $ 443,458 $ 457,109 |
Schedule of Long-lived Assets by Region | Property and equipment, net by geographic area consisted of the following as of January 31, 2022 and 2021: January 31, (in thousands) 2022 2021 Israel $ 24,510 $ 31,104 United States 538 902 Other countries 5,791 5,589 Total property and equipment, net $ 30,839 $ 37,595 |
Schedule of Major Customers | The Company’s largest customers accounted for the following percentage of total revenue: Year Ended January 31, 2022 2021 2020 Customer A 14.8 % 16.9 % 15.6 % Customer B 8.4 % 14.1 % 12.9 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Jan. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Net Income per Common Share | The following table summarizes the calculation of basic and diluted net income per ordinary share attributable to Cognyte for the years ended January 31, 2022, 2021, and 2020: Year Ended January 31, (in thousands except share and per share data) 2022 2021 2020 Net (loss) income $ (10,256) $ 20,310 $ 27,370 Net income attributable to noncontrolling interest 4,634 6,107 7,179 Net (loss) income attributable to Cognyte of Verint Systems Inc. $ (14,890) $ 14,203 $ 20,191 Ordinary shares outstanding: Basic shares 66,570 65,773 65,773 Effective of dilutive shares — — — Diluted shares 66,570 65,773 65,773 Net (loss) income per share attributable to Cognyte Software Ltd.: Basic $ (0.22) $ 0.22 $ 0.31 Diluted $ (0.22) $ 0.22 $ 0.31 |
ORGANIZATION, OPERATIONS AND _2
ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION (Details) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022countrycustomer | Jan. 31, 2021USD ($) | Jan. 31, 2020USD ($) | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Number of customers | customer | 1,000 | ||
Number of countries | country | 100 | ||
Former Parent | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Allocation of management costs and corporate support services | $ | $ 97,265 | $ 81,755 | |
Joint venture, variable interest entity in which entity is primary beneficiary | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Equity interest in a joint venture | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments (Details) - USD ($) | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Accounting Policies [Abstract] | ||
Minimum maturity period of short term investments in time deposits | 90 days | |
Marketable debt securities | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations of Credit Risk (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Concentration Risk [Line Items] | ||
Accounts receivable, net | $ 179,198 | $ 175,001 |
Governments outside the United States | ||
Concentration Risk [Line Items] | ||
Accounts receivable, net | $ 80,100 | $ 72,600 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses, beginning of year | $ 4,559 | $ 4,085 | $ 2,911 |
Provisions charged to expense | 342 | 1,840 | 1,355 |
Amounts written off | (2,791) | (1,922) | (152) |
Other, including fluctuations in foreign exchange rates | 0 | 121 | (29) |
Allowance for credit losses, end of year | 2,110 | 4,559 | $ 4,085 |
Accounting Standards Update [Extensible List] | Accounting Standards Update 2016-13 [Member] | ||
Cumulative Effect, Period of Adoption, Adjustment | |||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses, beginning of year | $ 0 | 435 | $ 0 |
Allowance for credit losses, end of year | $ 0 | $ 435 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | 12 Months Ended |
Jan. 31, 2022 | |
Equipment, furniture and other | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 3 years |
Equipment, furniture and other | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 5 years |
Software | |
Property, Plant and Equipment | |
Estimated useful lives | 4 years |
Buildings | |
Property, Plant and Equipment | |
Estimated useful lives | 25 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 12 Months Ended |
Jan. 31, 2022segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Acquired Intangible Assets (Details) | 12 Months Ended |
Jan. 31, 2022reportingUnit | |
Finite-Lived Intangible Assets [Line Items] | |
Number of reporting units | 1 |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives of finite-lived intangible assets | 7 years |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Financial Instruments (Details) | 12 Months Ended |
Jan. 31, 2022financial_institutions | |
Derivative [Line Items] | |
Number of financial institutions that are counterparties to derivative instruments | 2 |
Minimum | Foreign currency forward contracts | Cash flow hedging | |
Derivative [Line Items] | |
Derivative, maturity | 1 month |
Maximum | Foreign currency forward contracts | Cash flow hedging | |
Derivative [Line Items] | |
Derivative, maturity | 12 months |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Software Development Costs and Internal-Use Software (Details) | 12 Months Ended |
Jan. 31, 2022 | |
Minimum | Software Development Costs | |
Software Development Costs | |
Estimated useful lives | 4 years |
Minimum | Internal-Use Software | |
Software Development Costs | |
Estimated useful lives | 4 years |
Maximum | Software Development Costs | |
Software Development Costs | |
Estimated useful lives | 6 years |
Maximum | Internal-Use Software | |
Software Development Costs | |
Estimated useful lives | 5 years |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Functional Currencies and Foreign Currency Transaction Gains and Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Accounting Policies [Abstract] | |||
Foreign currency (losses) gains, net | $ 3,140 | $ (1,682) | $ 728 |
RELATED PARTY TRANSACTIONS WI_3
RELATED PARTY TRANSACTIONS WITH VERINT - Narrative (Details) - USD ($) $ in Thousands | Jan. 29, 2021 | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 |
Related Party Transaction [Line Items] | ||||
Interest expense | $ 196 | $ 185 | $ 481 | |
Former Parent | ||||
Related Party Transaction [Line Items] | ||||
Net expenses | $ 4,800 | |||
Allocation of management costs and corporate support services | 97,265 | 81,755 | ||
Accounts payable, related parties | 3,800 | |||
Dividends declared | $ 35,000 | |||
Dividends payable | 35,000 | |||
Interest expense | $ 200 | $ 400 | ||
Former Parent | Related Party Fixed Rate Notes | ||||
Related Party Transaction [Line Items] | ||||
Debt instrument, interest rate | 2.10% | |||
Debt instrument, term | 5 years | |||
Former Parent | Related Party Variable Rate Notes | ||||
Related Party Transaction [Line Items] | ||||
Debt instrument, term | 4 years | |||
Former Parent | Related Party Variable Rate Notes | London Interbank Offered Rate (LIBOR) | ||||
Related Party Transaction [Line Items] | ||||
Basis spread on variable rate | 2.50% |
RELATED PARTY TRANSACTIONS WI_4
RELATED PARTY TRANSACTIONS WITH VERINT - Schedule of Components of Costs of Services (Details) - Former Parent - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2021 | Jan. 31, 2020 | |
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | $ 97,265 | $ 81,755 |
Research and development, net | ||
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | 21,783 | 19,139 |
Selling, general and administrative | ||
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | 69,210 | 54,452 |
Software | Cost of revenue | ||
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | 1,981 | 1,871 |
Software service | Cost of revenue | ||
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | 1,548 | 1,639 |
Professional service and other | Cost of revenue | ||
Related Party Transaction [Line Items] | ||
Allocation of management costs and corporate support services | $ 2,743 | $ 4,654 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) | 12 Months Ended | ||
Jan. 31, 2022USD ($)customer | Jan. 31, 2021USD ($) | Jan. 31, 2020USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Software maintenance, period | 1 year | ||
Capitalized contract cost, impairment loss | $ 0 | ||
Amount reclassified to accounts receivable from contract asset | 13,000,000 | $ 19,000,000 | |
Contract assets recognized in current period | 19,100,000 | 11,400,000 | |
Accounts receivable, net | 179,198,000 | 175,001,000 | |
Current period revenue recognized from beginning balance of contract liabilities | $ 107,200,000 | 129,600,000 | |
Governments outside the United States | |||
Disaggregation of Revenue [Line Items] | |||
Number of customers outside the United States | customer | 2 | ||
Accounts receivable, net | $ 80,100,000 | 72,600,000 | |
Sales Commission | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | 8,300,000 | 9,800,000 | |
Capitalized contract cost, amortization | 24,400,000 | 23,800,000 | $ 28,200,000 |
Sales Commission | Prepaid expenses and other current assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | 6,400,000 | 5,300,000 | |
Sales Commission | Other assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | 1,900,000 | 4,500,000 | |
Costs to Fulfill | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | 3,600,000 | 6,500,000 | |
Capitalized contract cost, amortization | 7,800,000 | 13,500,000 | $ 11,800,000 |
Costs to Fulfill | Prepaid expenses and other current assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | 3,100,000 | 4,500,000 | |
Costs to Fulfill | Other assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, net | $ 500,000 | $ 2,000,000 | |
Minimum | |||
Disaggregation of Revenue [Line Items] | |||
Unbundled contracts renewal term | 1 year | ||
Warranty period | 90 days | ||
Maximum | |||
Disaggregation of Revenue [Line Items] | |||
Unbundled contracts renewal term | 3 years | ||
Warranty period | 3 years |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 474,042 | $ 443,458 | $ 457,109 |
Recurring revenue | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 230,969 | 223,405 | 192,578 |
Nonrecurring revenue | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 243,073 | $ 220,053 | $ 264,531 |
REVENUE RECOGNITION - Schedul_2
REVENUE RECOGNITION - Schedule of Contract Balances (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 179,198 | $ 175,001 |
Contract assets, net | 27,908 | 20,317 |
Long-term contract assets, net (included in other assets) | 0 | 1,219 |
Contract liabilities | 83,158 | 127,012 |
Long-term contract liabilities | $ 14,520 | $ 22,037 |
REVENUE RECOGNITION - Schedul_3
REVENUE RECOGNITION - Schedule of Remaining Performance Obligation (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance obligation | $ 511,558 | $ 551,738 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-02-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance obligation | $ 353,166 | |
Revenue performance obligation, period | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-02-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance obligation | $ 300,212 | $ 198,572 |
Revenue performance obligation, period | 1 year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance obligation | $ 211,346 | |
Revenue performance obligation, period | 1 year |
SHORT TERM LOAN (Details)
SHORT TERM LOAN (Details) - Revolving Credit Facility - Line of Credit | Feb. 01, 2021USD ($)facility | Jan. 31, 2022USD ($) | Dec. 31, 2021USD ($) |
Debt Securities, Available-for-sale [Line Items] | |||
Number of credit facilities | facility | 2 | ||
Debt instrument, term | 3 years | ||
Maximum borrowing capacity | $ 100,000,000 | ||
Long-term line of credit | $ 100,000,000 | ||
Interest expense | $ 200,000 | ||
Commitment fee, percentage | 0.40% | ||
Unused borrowing capacity, fee | $ 400,000 | ||
Covenant, consolidated equity, minimum amount | $ 200,000,000 | ||
Covenant, consolidated equity, minimum percentage of total consolidated assets | 30.00% | ||
Covenant, funded debt to EBITDA, minimum ratio | 3.5 | ||
Covenant, unrestricted cash and cash equivalents, minimum amount | $ 25,000,000 | ||
Minimum | London Interbank Offered Rate (LIBOR) | |||
Debt Securities, Available-for-sale [Line Items] | |||
Basis spread on variable rate | 1.55% | ||
Maximum | London Interbank Offered Rate (LIBOR) | |||
Debt Securities, Available-for-sale [Line Items] | |||
Basis spread on variable rate | 1.65% |
BUSINESS COMBINATIONS - Narrati
BUSINESS COMBINATIONS - Narrative (Details) $ in Thousands | Dec. 18, 2019USD ($)acquistion | Jan. 31, 2022USD ($) | Jan. 31, 2021USD ($) | Jan. 31, 2020USD ($) |
Business Acquisition | ||||
Payments to acquire businesses, net of cash acquired | $ 0 | $ 0 | $ 18,693 | |
Goodwill | 158,233 | 158,183 | 158,143 | |
Change in fair value of contingent consideration for business combinations | (134) | (3,665) | (5,392) | |
Business acquisition, contingent consideration, liability, fair value | 2,900 | |||
Payments of contingent consideration for business combinations | 2,738 | 4,877 | 3,419 | |
Selling, general and administrative | ||||
Business Acquisition | ||||
Change in fair value of contingent consideration for business combinations | (200) | (3,700) | $ (5,400) | |
WebintPro | ||||
Business Acquisition | ||||
Number of businesses acquired | acquistion | 2 | |||
Total purchase price | $ 24,105 | |||
Payments to acquire businesses | 18,843 | |||
Cash acquired from acquisition | 100 | |||
Payments to acquire businesses, net of cash acquired | 18,700 | |||
Fair value of contingent consideration | 7,023 | |||
Contingent consideration | 7,300 | |||
Other purchase price adjustments | (1,761) | |||
Goodwill | $ 11,897 | |||
Transaction and related costs | $ 400 | $ 300 | ||
Weighted-average estimated useful life of all finite-lived identifiable intangible assets | 4 years 4 months 24 days | |||
WebintPro | Customer relationships | ||||
Business Acquisition | ||||
Estimated useful lives of finite-lived intangible assets | 5 years | |||
WebintPro | Developed technology | ||||
Business Acquisition | ||||
Estimated useful lives of finite-lived intangible assets | 5 years | |||
WebintPro | Trademarks and trade names | ||||
Business Acquisition | ||||
Estimated useful lives of finite-lived intangible assets | 3 years | |||
WebintPro | Non-competition agreements | ||||
Business Acquisition | ||||
Estimated useful lives of finite-lived intangible assets | 3 years |
BUSINESS COMBINATIONS - Schedul
BUSINESS COMBINATIONS - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Dec. 18, 2019 | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 |
Net tangible assets (liabilities): | ||||
Goodwill | $ 158,233 | $ 158,183 | $ 158,143 | |
WebintPro | ||||
Components of Purchase Price: | ||||
Cash | $ 18,843 | |||
Fair value of contingent consideration | 7,023 | |||
Other purchase price adjustments | (1,761) | |||
Total purchase price | 24,105 | |||
Net tangible assets (liabilities): | ||||
Accounts receivable | 2,160 | |||
Other current assets, including cash acquired | 7,921 | |||
Other assets | 2,757 | |||
Current and other liabilities | (3,220) | |||
Contract liabilities—current and long-term | (554) | |||
Deferred income taxes | (1,342) | |||
Net tangible assets | 7,722 | |||
Total identifiable intangible assets | 4,486 | |||
Goodwill | 11,897 | |||
Total purchase price allocation | 24,105 | |||
Customer relationships | WebintPro | ||||
Net tangible assets (liabilities): | ||||
Total identifiable intangible assets | 1,452 | |||
Developed technology | WebintPro | ||||
Net tangible assets (liabilities): | ||||
Total identifiable intangible assets | 1,360 | |||
Trademarks and trade names | WebintPro | ||||
Net tangible assets (liabilities): | ||||
Total identifiable intangible assets | 367 | |||
Non-competition agreements | WebintPro | ||||
Net tangible assets (liabilities): | ||||
Total identifiable intangible assets | $ 1,307 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Schedule of Acquired Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 72,781 | $ 83,567 |
Accumulated Amortization | (69,619) | (78,268) |
Net | 3,162 | 5,299 |
Acquired technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 64,150 | 74,272 |
Accumulated Amortization | (62,909) | (72,349) |
Net | 1,241 | 1,923 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,166 | 4,837 |
Accumulated Amortization | (2,913) | (2,759) |
Net | 1,253 | 2,078 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,158 | 1,151 |
Accumulated Amortization | (876) | (676) |
Net | 282 | 475 |
Distribution network | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,000 | 2,000 |
Accumulated Amortization | (2,000) | (2,000) |
Net | 0 | 0 |
Non-competition agreements | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,307 | 1,307 |
Accumulated Amortization | (921) | (484) |
Net | $ 386 | $ 823 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expenses | $ 2,100,000 | $ 2,200,000 | $ 3,000,000 |
Impairment of intangible assets, finite-lived | 0 | 0 | |
Impairments of goodwill | $ 0 | 0 | $ 0 |
Acquired technology | Cost of revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets, finite-lived | 300,000 | ||
Acquired technology | Cost of revenue | Software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets, finite-lived | 200,000 | ||
Acquired technology | Cost of revenue | Professional service and other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets, finite-lived | $ 100,000 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Schedule of Estimated Future Amortization Expense on Acquired Intangibles (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Intangible Assets - Future Amortization [Abstract] | ||
2023 | $ 1,622 | |
2024 | 702 | |
2025 | 628 | |
2026 | 127 | |
2027 | 83 | |
Net | $ 3,162 | $ 5,299 |
INTANGIBLE ASSETS AND GOODWIL_5
INTANGIBLE ASSETS AND GOODWILL - Schedule of Goodwill Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | $ 169,005 | $ 168,965 |
Accumulated impairment losses, beginning balance | (10,822) | (10,822) |
Goodwill, net, beginning balance | 158,183 | 158,143 |
Adjustments to prior period acquisition | 300 | |
Foreign currency translation | 50 | (260) |
Goodwill, gross, ending balance | 169,055 | 169,005 |
Accumulated impairment losses, ending balance | (10,822) | (10,822) |
Goodwill, net, ending balance | $ 158,233 | $ 158,183 |
SUPPLEMENTAL CONSOLIDATED FIN_3
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Condensed Financial Information Disclosure [Abstract] | ||
Raw materials | $ 9,753 | $ 7,521 |
Work-in-process | 2,953 | 5,160 |
Finished goods | 1,660 | 1,861 |
Total inventories | $ 14,366 | $ 14,542 |
SUPPLEMENTAL CONSOLIDATED FIN_4
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Property, Plant and Equipment | ||
Total cost | $ 98,047 | $ 118,794 |
Less: accumulated depreciation and amortization | (67,208) | (81,199) |
Total property and equipment, net | 30,839 | 37,595 |
Land and buildings | ||
Property, Plant and Equipment | ||
Total cost | 2,854 | 2,854 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Total cost | 14,032 | 13,530 |
Software | ||
Property, Plant and Equipment | ||
Total cost | 26,281 | 37,204 |
Equipment, furniture and other | ||
Property, Plant and Equipment | ||
Total cost | $ 54,880 | $ 65,206 |
SUPPLEMENTAL CONSOLIDATED FIN_5
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 98,047 | $ 118,794 | |
Depreciation expense on property and equipment | 15,500 | 16,900 | $ 11,800 |
Software | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 26,281 | 37,204 | |
Equipment, furniture and other | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 54,880 | 65,206 | |
Revision of Prior Period, Reclassification, Adjustment | Software | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 14,400 | ||
Revision of Prior Period, Reclassification, Adjustment | Equipment, furniture and other | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ (14,400) |
SUPPLEMENTAL CONSOLIDATED FIN_6
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Condensed Financial Information Disclosure [Abstract] | ||
Prepaid expenses | $ 22,653 | $ 22,037 |
Deferred cost of revenue | 3,096 | 4,570 |
Income tax receivables | 5,464 | 1,379 |
Other | 757 | 2,065 |
Total prepaid expenses and other current assets | $ 31,970 | $ 30,051 |
SUPPLEMENTAL CONSOLIDATED FIN_7
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 |
Condensed Financial Information Disclosure [Abstract] | ||||
Long-term restricted cash and time deposits | $ 2,488 | $ 15,061 | ||
Capitalized software development costs, net | 13,920 | 11,315 | $ 11,679 | $ 6,076 |
Deferred commissions | 1,897 | 4,459 | ||
Long-term deferred cost of revenue | 525 | 1,959 | ||
Long-term security deposits | 716 | 1,393 | ||
Long-term contract assets, net | 0 | 1,219 | ||
Other | 6,183 | 6,670 | ||
Total other assets | $ 25,729 | $ 42,076 |
SUPPLEMENTAL CONSOLIDATED FIN_8
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Condensed Financial Information Disclosure [Abstract] | ||
Compensation and benefits | $ 51,527 | $ 44,801 |
Distributor and agent commissions | 14,877 | 12,422 |
Operating lease obligations - current portion | 7,409 | 7,085 |
Income taxes | 6,585 | 4,275 |
Contingent consideration - current portion | 0 | 2,923 |
Taxes other than income taxes | 2,962 | 2,559 |
Fair value of derivatives - current portion | 801 | 678 |
Other | 15,613 | 16,949 |
Total accrued expenses and other current liabilities | $ 99,774 | $ 91,692 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total accrued expenses and other current liabilities | Total accrued expenses and other current liabilities |
SUPPLEMENTAL CONSOLIDATED FIN_9
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Condensed Financial Information Disclosure [Abstract] | ||
Unrecognized tax benefits, including interest and penalties | $ 8,604 | $ 6,940 |
Obligations for severance compensation | 2,145 | 2,054 |
Other | 25 | 204 |
Total other liabilities | $ 10,774 | $ 9,198 |
SUPPLEMENTAL CONSOLIDATED FI_10
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Other (Expense) Income, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |||
Gains on investments, net | $ 729 | $ 3,769 | $ 0 |
Foreign currency (losses) gains, net | (3,140) | 1,682 | (728) |
Gains (Losses) on derivative financial instruments, net | 133 | (95) | 395 |
Other expense, net | (403) | (70) | (71) |
Total other (expense) income, net | $ (2,681) | $ 5,286 | $ (404) |
SUPPLEMENTAL CONSOLIDATED FI_11
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION - Schedule of Supplemental Information Regarding Consolidated Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |||
Cash paid for interest | $ 470 | $ 38 | $ 23 |
Cash (refunds) payments of income taxes, net | 8,232 | 1,260 | 9,622 |
Non-cash investing and financing transactions: | |||
Accrued cash dividends payable to parent | 0 | 35,000 | 0 |
Accrued but unpaid purchases of property and equipment | 1,166 | 2,636 | 3,399 |
Inventory transfers to property and equipment | 537 | 894 | 825 |
Liabilities for contingent consideration in business combinations | 0 | 0 | 7,023 |
Finance leases of property and equipment | 0 | 0 | 3,117 |
Leasehold improvements funded by lease incentives | $ 0 | $ 0 | $ 250 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary of Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 270,371 | $ 455,171 | $ 475,318 |
Other comprehensive loss | (1,388) | (1,270) | (471) |
Ending balance | 299,089 | 270,371 | 455,171 |
Accumulated Other Comprehensive Loss | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (15,505) | (13,923) | (13,462) |
Other comprehensive income (loss) before reclassifications | 1,224 | 54 | (111) |
Amounts reclassified out of accumulated other comprehensive income (loss) | 2,398 | 1,636 | 350 |
Other comprehensive loss | (1,174) | (1,582) | (461) |
Ending balance | (16,679) | (15,505) | (13,923) |
Unrealized Gains (Losses) on Derivative Financial Instruments Designated as Hedges | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 559 | 596 | (809) |
Other comprehensive income (loss) before reclassifications | 1,229 | 1,599 | 1,755 |
Amounts reclassified out of accumulated other comprehensive income (loss) | 2,398 | 1,636 | 350 |
Other comprehensive loss | (1,169) | (37) | 1,405 |
Ending balance | (610) | 559 | 596 |
Foreign Currency Translation Adjustments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (16,064) | (14,519) | (12,653) |
Other comprehensive income (loss) before reclassifications | (5) | (1,545) | (1,866) |
Amounts reclassified out of accumulated other comprehensive income (loss) | 0 | 0 | 0 |
Other comprehensive loss | (5) | (1,545) | (1,866) |
Ending balance | $ (16,069) | $ (16,064) | $ (14,519) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Amounts Reclassified Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Class of Stock [Line Items] | |||
Research and development, net | $ 143,360 | $ 128,705 | $ 111,297 |
Selling, general and administrative | 185,867 | 162,590 | 153,901 |
Total, before income taxes | (8,261) | (24,724) | (29,937) |
(Provision) benefit for income taxes | 18,517 | 4,414 | 2,567 |
Total, net of income taxes | 10,256 | (20,310) | (27,370) |
Software | |||
Class of Stock [Line Items] | |||
Cost of revenue | 28,955 | 35,647 | 36,071 |
Software service | |||
Class of Stock [Line Items] | |||
Cost of revenue | 46,413 | 44,893 | 45,012 |
Professional service and other | |||
Class of Stock [Line Items] | |||
Cost of revenue | 56,349 | 51,186 | 80,517 |
Foreign currency forward contracts | Reclassification out of Accumulated Other Comprehensive Income | |||
Class of Stock [Line Items] | |||
Research and development, net | 1,190 | 960 | 208 |
Selling, general and administrative | 853 | 674 | 108 |
Total, before income taxes | 2,314 | 1,882 | 389 |
(Provision) benefit for income taxes | 84 | (246) | (39) |
Total, net of income taxes | 2,398 | 1,636 | 350 |
Foreign currency forward contracts | Software | Reclassification out of Accumulated Other Comprehensive Income | |||
Class of Stock [Line Items] | |||
Cost of revenue | 6 | 39 | 54 |
Foreign currency forward contracts | Software service | Reclassification out of Accumulated Other Comprehensive Income | |||
Class of Stock [Line Items] | |||
Cost of revenue | 40 | 117 | (42) |
Foreign currency forward contracts | Professional service and other | Reclassification out of Accumulated Other Comprehensive Income | |||
Class of Stock [Line Items] | |||
Cost of revenue | $ 225 | $ 92 | $ 61 |
RESEARCH AND DEVELOPMENT, NET -
RESEARCH AND DEVELOPMENT, NET - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Research and Development Expense [Abstract] | |||
Gross research and development expenses | $ 143,700,000 | $ 129,200,000 | $ 112,700,000 |
Reimbursements from the IIA and other government grant programs | 300,000 | 500,000 | 1,400,000 |
Capitalized computer software, impairments | $ 142,000 | $ 2,244,000 | $ 0 |
RESEARCH AND DEVELOPMENT, NET_2
RESEARCH AND DEVELOPMENT, NET - Schedule of Activity for Capitalized Software Development Costs (Details) - USD ($) | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Movement in Capitalized Computer Software, Net [Roll Forward] | |||
Capitalized software development costs, net, beginning of year | $ 11,315,000 | $ 11,679,000 | $ 6,076,000 |
Software development costs capitalized during the year | 6,033,000 | 5,132,000 | 7,638,000 |
Amortization of capitalized software development costs | (3,291,000) | (3,072,000) | (2,023,000) |
Write-offs of capitalized software development costs | (142,000) | (2,244,000) | 0 |
Foreign currency translation and other | 5,000 | (180,000) | (12,000) |
Capitalized software development costs, net, end of year | $ 13,920,000 | $ 11,315,000 | $ 11,679,000 |
INCOME TAXES - Schedule of Comp
INCOME TAXES - Schedule of Components of Income (Loss) Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest [Abstract] | |||
U.S. | $ (9,596) | $ (8,665) | $ (10,116) |
Non-U.S. | 17,857 | 33,389 | 40,053 |
Income before provision for income taxes | $ 8,261 | $ 24,724 | $ 29,937 |
INCOME TAXES - Schedule of Prov
INCOME TAXES - Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Current provision (benefit) for income taxes: | |||
U.S. Federal | $ 0 | $ (1,434) | $ (884) |
U.S. State | (11) | (44) | (164) |
Non-U.S. | 12,668 | 8,087 | (1,988) |
Total current provision (benefit) for income taxes | 12,657 | 6,609 | (3,036) |
Deferred provision (benefit) for income taxes: | |||
U.S. Federal | (1,143) | (910) | 372 |
U.S. State | 53 | (200) | 89 |
Non-U.S. | 6,950 | (1,085) | 5,142 |
Total deferred provision (benefit) for income taxes | 5,860 | (2,195) | 5,603 |
Total provision for income taxes | $ 18,517 | $ 4,414 | $ 2,567 |
INCOME TAXES - Schedule of Effe
INCOME TAXES - Schedule of Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% |
Income tax provision at the U.S. federal statutory rate | $ 1,735 | $ 5,192 | $ 6,287 |
U.S. State income tax (benefit) provision | 40 | (226) | (45) |
Non-U.S. tax rate differential | 2,892 | (2,836) | 6,720 |
Tax incentives | (2,671) | (139) | (1,292) |
Valuation allowances | 12,731 | 31 | (898) |
Non-deductible expenses/non-taxable income | 255 | (261) | 1,677 |
Tax contingencies | 2,056 | 1,184 | (13,254) |
Stock based and other compensation | 898 | 101 | 70 |
U.S. tax effects of non-U.S. operations | 540 | 1,001 | 3,268 |
Other, net | 41 | 367 | 34 |
Total provision for income taxes | $ 18,517 | $ 4,414 | $ 2,567 |
Effective income tax rate | 224.10% | 17.90% | 8.60% |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Deferred tax assets: | ||
Loss carryforwards | $ 11,506 | $ 7,321 |
Accrued compensation | 8,774 | 1,884 |
Accrued expenses | 240 | 390 |
Operating lease liabilities | 352 | 362 |
Exchange rate differences | 343 | 344 |
Other, net | 241 | 235 |
Total deferred tax assets | 21,456 | 10,536 |
Deferred tax liabilities: | ||
Deferred cost of revenue | (3,279) | (3,831) |
Goodwill and other intangible assets | (928) | (874) |
Depreciation of property and equipment | (217) | (550) |
Operating lease right-of-use assets | (355) | (295) |
Total deferred tax liabilities | (4,779) | (5,550) |
Valuation allowance | (18,576) | (5,732) |
Net deferred tax liabilities | (1,899) | (746) |
Recorded as: | ||
Deferred tax assets | 1,548 | 3,303 |
Deferred tax liabilities | (3,447) | (4,049) |
Net deferred tax liabilities | $ (1,899) | $ (746) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | ||||
Percentage decrease in effective tax rate for tax incentives | 32.30% | 0.60% | 4.30% | |
Operating loss carryforwards | $ 89,300 | |||
Period of cumulative losses incurred | 3 years | |||
Deferred tax assets, valuation allowance recognised | $ 12,700 | |||
Deferred tax assets, valuation allowance | 18,576 | $ 5,732 | ||
Unrecognized tax benefits | 10,517 | 9,872 | $ 8,742 | $ 24,755 |
Unrecognized tax benefits, income tax penalties and interest expense | 400 | (100) | $ 1,800 | |
Unrecognized tax benefits, income tax penalties and interest accrued | 900 | $ 1,000 | ||
Decrease in unrecognized tax benefits is reasonably possible | 1,400 | |||
Domestic Tax Authority | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 5,800 | |||
Non-U.S. | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | $ 83,500 |
INCOME TAXES - Schedule of Valu
INCOME TAXES - Schedule of Valuation Allowance (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Recorded valuation allowance | ||
Valuation allowance, beginning of year | $ (5,732) | $ (5,701) |
Income tax (provision) benefit | (12,731) | (31) |
Spin-off from Verint | (113) | 0 |
Valuation allowance, end of year | $ (18,576) | $ (5,732) |
INCOME TAXES - Schedule of Unre
INCOME TAXES - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Changes in the balance of gross unrecognized tax benefits | |||
Gross unrecognized tax benefits, beginning of year | $ 9,872 | $ 8,742 | $ 24,755 |
Increases related to tax positions taken during the current year | 1,828 | 2,919 | 1,889 |
Increases as a result of business combinations | 0 | 0 | 286 |
Increases related to tax positions taken during prior years | 0 | 18 | 0 |
Increases (decreases) related to foreign currency exchange rates | 256 | 272 | 1,073 |
Reductions for spin-off from Verint | (1,439) | 0 | 0 |
Reductions for tax positions of prior years | 0 | (537) | (13,623) |
Reductions for settlements with tax authorities | 0 | 0 | (4,133) |
Lapses of statutes of limitations | 0 | (1,542) | (1,505) |
Gross unrecognized tax benefits, end of year | $ 10,517 | $ 9,872 | $ 8,742 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Liabilities: | ||
Contingent consideration - business combinations | $ 2,900 | |
Recurring | Level 1 | ||
Assets: | ||
Foreign currency forward contracts | 0 | $ 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Contingent consideration - business combinations | 0 | |
Total liabilities | 0 | 0 |
Recurring | Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 140 | 998 |
Total assets | 140 | 998 |
Liabilities: | ||
Foreign currency forward contracts | 801 | 678 |
Contingent consideration - business combinations | 0 | |
Total liabilities | 801 | 678 |
Recurring | Level 3 | ||
Assets: | ||
Foreign currency forward contracts | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Contingent consideration - business combinations | 2,923 | |
Total liabilities | $ 0 | $ 2,923 |
FAIR VALUE MEASUREMENTS - Sch_2
FAIR VALUE MEASUREMENTS - Schedule of Changes in the Estimated Fair Value using Significant Unobservable Inputs (Details) - Liability for contingent consideration - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Changes in the estimated fair value of liability for contingent consideration measured using significant unobservable inputs (Level 3) | ||
Fair value measurement, beginning of year | $ 2,923 | $ 11,509 |
Changes in fair values, recorded in operating expenses | (185) | (3,665) |
Payments of contingent consideration | (2,738) | (4,921) |
Fair value measurement at end of year | $ 0 | $ 2,923 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) $ in Millions | 12 Months Ended | |
Jan. 31, 2022USD ($) | Jan. 31, 2021USD ($) | |
Liability for contingent consideration measured using significant unobservable inputs (Level 3) | ||
Noncontrolling equity investment in privately-held companies without readily determinable fair values | $ 5.2 | $ 4.7 |
Noncontrolling equity investment in privately-held companies without readily determinable fair values, remeasured to fair value | 4.4 | 4 |
Unrealized gain on noncontrolling equity investment | 0.7 | 3.2 |
Realized gain on partial sale of equity investment | $ 0.1 | $ 0.6 |
Level 3 | Measurement Input, Discount Rate | Valuation Technique, Discounted Cash Flow | ||
Liability for contingent consideration measured using significant unobservable inputs (Level 3) | ||
Contingent consideration, liability, measurement input | 0.004 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions | Jan. 31, 2022 | Jan. 31, 2021 |
Derivative [Line Items] | ||
Gains recorded in accumulated other comprehensive loss expected to be reclassified into earnings within the next twelve months | $ 0.6 | |
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 96.2 | $ 54.8 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Fair Values of Derivatives (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Fair Values of Derivative Financial Instruments | ||
Derivative assets | $ 140 | $ 998 |
Derivative liabilities | 801 | 678 |
Foreign currency forward contracts | Prepaid expenses and other current assets | Designated as cash flow hedges | ||
Fair Values of Derivative Financial Instruments | ||
Derivative assets | 125 | 998 |
Foreign currency forward contracts | Prepaid expenses and other current assets | Not designated as hedging instruments | ||
Fair Values of Derivative Financial Instruments | ||
Derivative assets | 15 | 0 |
Foreign currency forward contracts | Accrued expenses and other current liabilities | Designated as cash flow hedges | ||
Fair Values of Derivative Financial Instruments | ||
Derivative liabilities | 736 | 355 |
Foreign currency forward contracts | Accrued expenses and other current liabilities | Not designated as hedging instruments | ||
Fair Values of Derivative Financial Instruments | ||
Derivative liabilities | $ 65 | $ 323 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of the Effects of Derivatives Designated as Cash Flow Hedges (Details) - Foreign currency forward contracts - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Net gains recognized in AOCL | $ 1,169 | $ 1,863 | $ 1,950 |
Net gains reclassified from AOCL into the combined statements of operations | $ 2,314 | $ 1,882 | $ 389 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Gains (Losses) on derivative financial instruments, net | $ 133 | $ (95) | $ 395 |
Foreign currency forward contracts | Not designated as hedging instruments | Other income (expense), net | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Gains (Losses) on derivative financial instruments, net | $ 134 | $ (95) | $ 395 |
STOCK-BASED COMPENSATION AND _3
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS - Schedule of Recognized Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | $ 33,036 | $ 27,542 | $ 31,033 |
Income tax benefits related to stock-based compensation (before consideration of valuation allowances) | 4,196 | 4,347 | 4,400 |
Total stock-based compensation, net of taxes | 28,840 | 23,195 | 26,633 |
Cost of revenue | Software | |||
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | 229 | 734 | 642 |
Cost of revenue | Software service | |||
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | 1,160 | 441 | 636 |
Cost of revenue | Professional service and other | |||
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | 2,535 | 952 | 1,641 |
Research and development, net | |||
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | 7,792 | 5,621 | 6,298 |
Selling, general and administrative | |||
Stock-Based Compensation Plans | |||
Total stock-based compensation expense | $ 21,320 | $ 19,794 | $ 21,816 |
STOCK-BASED COMPENSATION AND _4
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS - Summary of Stock-based Compensation Expense by Type of Award (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Stock-based compensation expense | |||
Total stock-based compensation expense | $ 33,036 | $ 27,542 | $ 31,033 |
Total equity-settled awards | |||
Stock-based compensation expense | |||
Total stock-based compensation expense | 32,865 | 27,423 | 31,028 |
Restricted stock units and restricted stock awards | |||
Stock-based compensation expense | |||
Total stock-based compensation expense | 31,825 | 23,423 | 23,413 |
Stock bonus program and bonus share program | |||
Stock-based compensation expense | |||
Total stock-based compensation expense | 1,040 | 4,000 | 7,615 |
Phantom stock units (cash-settled awards) | |||
Stock-based compensation expense | |||
Total stock-based compensation expense | $ 171 | $ 119 | $ 5 |
STOCK-BASED COMPENSATION AND _5
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS - Summary of Stock Awards Activity (Details) shares in Thousands | 12 Months Ended |
Jan. 31, 2022$ / sharesshares | |
Shares or Units | |
Beginning balance (in shares) | shares | 2,149 |
Granted (in shares) | shares | 1,416 |
Released (in shares) | shares | (1,452) |
Forfeited (in shares) | shares | (212) |
Ending balance (in shares) | shares | 1,901 |
Weighted-Average Grant-Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 22.92 |
Granted (in dollars per share) | $ / shares | 25.60 |
Released (in dollars per share) | $ / shares | 23.36 |
Forfeited (in dollars per share) | $ / shares | 24.34 |
Ending balance (in dollars per share) | $ / shares | $ 24.42 |
STOCK-BASED COMPENSATION AND _6
STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS - Narrative (Details) | 12 Months Ended | |||
Jan. 31, 2022USD ($) | Jan. 31, 2021USD ($) | Jan. 31, 2020USD ($) | Feb. 01, 2021 | |
Share-based Payment Arrangement [Abstract] | ||||
Unrecognized share-based compensation cost | $ 29,900,000 | |||
Expected period for recognition | 1 year 3 months 29 days | |||
Spin-off adjustment, conversion ratio | 2.52 | |||
Employee contribution limit as a percentage of compensation | 60.00% | |||
Company's matching contribution as a percentage of employee's annual compensation | 50.00% | |||
Defined contribution plan employer matching contribution per employee maximum amount | $ 2,000 | |||
Matching contribution expense | 100,000 | $ 200,000 | $ 200,000 | |
Severance expenses | $ 9,000,000 | $ 7,500,000 | $ 7,300,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Accelerated operating lease expenses | $ 0.8 | $ 0.7 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, remaining lease term | 1 year | |
Lessee, finance lease, remaining lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, remaining lease term | 6 years | |
Lessee, finance lease, remaining lease term | 6 years |
LEASES - Schedule of Components
LEASES - Schedule of Components of Lease Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expenses | $ 9,552 | $ 11,133 |
Finance lease expenses: | ||
Amortization of right-of-use assets | 0 | 84 |
Interest on lease liabilities | 0 | 102 |
Total finance lease expenses | 0 | 186 |
Variable lease expenses | 5,566 | 3,349 |
Short-term lease expenses | 213 | 34 |
Total lease expenses | $ 15,331 | $ 14,702 |
LEASES - Schedule of Supplement
LEASES - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 8,733 | $ 8,822 |
Operating cash flows from finance leases | 0 | 102 |
Financing cash flows from finance leases | 0 | 492 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | $ 3,756 | $ 5,869 |
Weighted average remaining lease terms | ||
Operating leases | 4 years | 6 years |
Weighted average discount rates | ||
Operating leases | 4.80% | 4.80% |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2022 | Jan. 31, 2021 |
Operating Leases | ||
2023 | $ 8,411 | |
2024 | 7,673 | |
2025 | 6,718 | |
2026 | 4,267 | |
2027 | 335 | |
Thereafter | 5 | |
Total future minimum lease payments | 27,409 | |
Less imputed interest | (2,821) | |
Total | $ 24,588 | |
Operating Leases | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities | $ 7,409 | $ 7,085 |
Operating lease liabilities | 17,179 | $ 24,135 |
Total | $ 24,588 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jun. 07, 2012defendant | Mar. 31, 2009plaintiff | Jun. 30, 2019mediation | Oct. 30, 2012USD ($) | Jan. 31, 2022USD ($) |
Loss Contingencies [Line Items] | |||||
Unconditional purchase obligations | $ 71.4 | ||||
Off-balance sheet bank guarantees and letters of credit | 43 | ||||
Offices and Export Transaction | |||||
Loss Contingencies [Line Items] | |||||
Off-balance sheet bank guarantees and letters of credit | 3.9 | ||||
Pending Litigation | Unfavorable Regulatory Action | |||||
Loss Contingencies [Line Items] | |||||
Number of defendants | defendant | 3 | ||||
Number of unsuccessful rounds of mediation | mediation | 2 | ||||
Loss contingency accrual | $ 6.2 | ||||
Pending Litigation | Unfavorable Regulatory Action | Cognyte Technologies Israel Ltd | |||||
Loss Contingencies [Line Items] | |||||
Assets plaintiffs sought to compel to set aside to secure future judgment | $ 150 | ||||
Case Numbers 4186/09 and 1335/09 | Pending Litigation | Unfavorable Regulatory Action | |||||
Loss Contingencies [Line Items] | |||||
Number of plaintiffs | plaintiff | 1 | ||||
Case Number 3444/09 | Pending Litigation | Unfavorable Regulatory Action | |||||
Loss Contingencies [Line Items] | |||||
Number of plaintiffs | plaintiff | 1 |
GEOGRAPHIC AND SIGNIFICANT CU_3
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION - Schedule of Revenue and Long-lived Assets by Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | $ 474,042 | $ 443,458 | $ 457,109 |
Total property and equipment, net | 30,839 | 37,595 | |
Total EMEA | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 405,756 | 379,674 | 377,920 |
Israel | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 328,371 | 274,113 | 277,605 |
Total property and equipment, net | 24,510 | 31,104 | |
Germany | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 63,258 | 86,834 | 77,540 |
Other | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 14,127 | 18,727 | 22,775 |
Total Americas | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 55,595 | 51,880 | 63,713 |
United States | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 37,726 | 44,746 | 53,354 |
Total property and equipment, net | 538 | 902 | |
Other | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 17,869 | 7,134 | 10,359 |
APAC | |||
Revenues from External Customers and Long-Lived Assets | |||
Total revenue | 12,691 | 11,904 | $ 15,476 |
Other countries | |||
Revenues from External Customers and Long-Lived Assets | |||
Total property and equipment, net | $ 5,791 | $ 5,589 |
GEOGRAPHIC AND SIGNIFICANT CU_4
GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION - Schedule of Major Customers (Details) - Revenue Benchmark - Customer Concentration Risk | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Customer A | |||
Revenue, Major Customer | |||
Concentration risk, percentage | 14.80% | 16.90% | 15.60% |
Customer B | |||
Revenue, Major Customer | |||
Concentration risk, percentage | 8.40% | 14.10% | 12.90% |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - $ / shares | 12 Months Ended | ||
Jan. 31, 2022 | Feb. 01, 2021 | Jan. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | |||
Potentially dilutive shares (in shares) | 603,000 | ||
Common stock, outstanding (in shares) | 67,217,688 | 65,773,335 | |
Common stock, par value (in dollars per share) | $ 0 | $ 0 | $ 0 |
Spinoff | |||
Restructuring Cost and Reserve [Line Items] | |||
Common stock, outstanding (in shares) | 65,773,335 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Calculation of Basic and Diluted Net Income per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |||
Net (loss) income | $ (10,256) | $ 20,310 | $ 27,370 |
Net income attributable to noncontrolling interest | 4,634 | 6,107 | 7,179 |
Net (loss) income attributable to Cognyte Software Ltd. | $ (14,890) | $ 14,203 | $ 20,191 |
Ordinary shares outstanding: | |||
Basic shares (in shares) | 66,570 | 65,773 | 65,773 |
Effective of dilutive shares (in shares) | 0 | 0 | 0 |
Diluted shares (in shares) | 66,570 | 65,773 | 65,773 |
Net (loss) income per share attributable to Cognyte Software Ltd.: | |||
Basic (in dollars per share) | $ (0.22) | $ 0.22 | $ 0.31 |
Diluted (in dollars per share) | $ (0.22) | $ 0.22 | $ 0.31 |