Thank you, operator. Hello, everyone.

I'm Dean Ridlon, Cognyte's Head of Investor Relations. Thank you for joining us today.

I'm here with Elad Sharon, Cognyte's CEO, and David Abadi, Cognyte's CFO. Before getting started, I would like to mention that accompanying our call today is a presentation.

If you'd like to view these slides in real time during the call, please visit the investor section of our website at cognyte.com. Click on upcoming events, then the webcast link for today's conference call.

I would also like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance.

Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call and, except as required by law, Cognyte assumes no obligation to update or revise them.

Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Cognyte's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F for the fiscal year ended January 31st, 2025, and other filings we make with the SEC.

The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods and among our peer companies that publish similar non-GAAP measures.

Please see today's presentation slides, our earnings release, and the investor section of our website at cognyte.com for a reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes.

The non-GAAP financial measures that the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Elad.

Hello, everyone, and thank you for joining us. Cognyte delivered another strong quarter in Q3 of fiscal 2026.

Revenue grew in the mid-teens, operating income grew significantly faster, cash flow from operations was strong, and the team continued to execute well. These results underscore the strength of our value proposition and the healthy demand for AI-powered investigative and decision intelligence solutions.

Momentum continues to build. We are raising our full-year guidance and are making strong progress towards achieving our targets for the fiscal year ending January 31st, 2028.

Let me walk you through the key drivers of the quarter. We executed with clarity and purpose, helping our customers make the world safer, and delivered meaningful customer wins across the law enforcement, national security, and military intelligence sectors.

In Q3, we secured several major deals and expansions. This included a $5 million follow-on subscription agreement with a tier-one military intelligence organization in EMEA, building on an earlier about $10 million perpetual award from this year.

This marks another important win in the military intelligence domain, reinforcing the momentum we have established with defense organizations. We also saw continued momentum with long-standing national intelligence customers, renewing and expanding multi-million-dollar contracts, reflecting the strength of our repeat business and the trust our existing customer base places in us.

While government customers typically procure through perpetual licenses, we continue to see strong patterns of reoccurring demand driven by capacity expansions, new functionality, new use cases, and coverage of additional units within agencies. This repeatability in our perpetual business has the potential to drive revenue durability, provide multi-year visibility, and support our long-term growth.

The US market continues to present a significant opportunity for us, and we continue to invest accordingly, expanding our partner ecosystem, strengthening our team, and increasing field activities. Our new partnership with LexisNexis Risk Solutions is progressing well, with deepening technical alignment, expanding joint engagements, and strengthening our traction with both federal and state and local stakeholders.

Over the past quarter, we participated in joint events and delivered structured solution training to their sales organization. This is one example of the multiple partnerships we are building to broaden our reach and grow our business in this region.

We continue to see increased interest from military intelligence organizations, including from several NATO countries, reflecting the growing relevance of our capabilities to multi-domain defense missions. At the same time, momentum across core law enforcement and national intelligence markets remains strong.

Recent industry events reinforced these trends with meaningful customer conversations and expanding engagement across all regions. Today's threat environment is more connected, fluid, and complex than ever.

Our customers face adversaries that cross borders, mandates, and jurisdictions, while the data needed to understand threats remains fragmented in silos. Our customers and we are increasingly seeing threat vectors evolve into hybrid and transnational scenarios.

Let me share what this actually looks like in the real world. First, a case involving sophisticated transnational criminal networks.

Opioids move across borders. Violent crime rises in major cities.

Unusual cryptocurrency flows are detected by financial intelligence units. On paper, these appear unrelated.

Border police focus on drugs, local police handle the violence, and financial intelligence units investigate the illicit finance. Each operates within its own mandate and its own systems.

When you correlate the signals, trafficking routes, communication metadata, financial flows, and travel patterns, it becomes clear: these activities are being conducted by the same criminal network. Another example, a case involving hybrid activity driven by state-backed actors.

Online personas insight social unrest. Protests turn violent in major cities.

A hospital is hit by ransomware. Again, these appear unrelated.

The intelligence agency tracks the online activity, public order units deal with the unrest, and cyber unit handles the hospital. Each operates within its own mandate and its own systems.

When you correlate the signals, cyber indicators, financial flows, travel patterns, online behaviors, it becomes clear: it is one coordinated campaign. The adversaries see the whole picture.

For the agencies, it's a significant challenge. Whether the threat is criminal, financial, terror, or hybrid, the root problem is always the same: the threat is unified, the data is not.

This is exactly where Cognyte creates the most value. We help the good guys close the gap by giving them a clearer picture of the threats they need to predict and prevent.

We help agencies eliminate the unknown by revealing the hidden connections adversaries rely on. Our AI-driven, multi-domain, multi-source, cross-jurisdiction decision intelligence platform fuses data across silos, uncovering hidden insights that allow agencies to resolve identities and relationships, detect hybrid behavior and criminal patterns, and enable faster, higher-confidence decisions.

While our platform can uncover insights across silos, its value begins inside each individual agency, unit, and mission. Every day, we power investigative, tactical, and analytical workflows for financial intelligence, border security, organized crime investigations, counterterror, and more.

This strong foundation inside each agency is ultimately what makes wider collaboration possible. I mentioned earlier, the threats are unified and data is not.

We operate in one of the most complex data environments in the world: massive volumes, high velocity, fragmented systems, and dozens of structured and unstructured formats. We see data differently, enabling agencies to analyze massive, diverse data sets that no human or point solution could process alone.

Our platform ingests, normalizes, enriches, and correlates all of it, creating a coherent, connected operational picture of actionable intelligence. This is why we continue to win.

Decision intelligence is becoming the foundation of modern investigations, and our technology leadership in this domain continues to be recognized. This quarter, we again received strong Gartner recognition for predictive analytics and intelligence platforms for improved decision-making.

All I have just discussed is reflected in our financial results. We delivered another quarter of profitable growth, with strong year-over-year gains across revenue and profitability.

Our financial leverage remains strong. With 13% top-line growth, we nearly tripled non-GAAP operating income year-over-year.

Given our performance and momentum, we are raising our full-year outlook for the fiscal year ending January 2026. We now expect revenue of approximately $400 million, which represents year-over-year growth of approximately 14%, and adjusted EBITDA of approximately $47 million, which represents year-over-year growth of approximately 60%.

As we look ahead, we see a future defined by opportunity. Demand for our capabilities is healthy and continues to grow, our AI-driven technology gives us a clear edge, and our team are executing with precision and purpose.

With the deep trust of our growing global customer base, we are excited about the future and well positioned for the road ahead. We remain committed to delivering sustained value for our customers, our partners, our employees, and our shareholders.

David, over to you.

Thank you, Elad, and hello, everyone. We continue to make strong progress and have exceeded our business expectations with the support of healthy demand and good visibility.

For the third quarter, revenue was $100.7 million, up 13.2% year-over-year, driven by ongoing demand for our software solutions. Software revenue was $41.9 million, an increase of $11.9 million or 39.6% year-over-year.

Software revenue is comprised of perpetual licenses, appliances, and some term-based subscription licenses. Software service revenue was $46.9 million, up $1.6 million from last year.

Software services revenue comes mainly from support contracts and, to a lesser extent, cloud-based SaaS subscriptions. Our total software revenue for the quarter, which is the sum of software and software services revenue, was approximately $88.7 million, a year-over-year increase of 17.9% and represented 88.1% of total revenue.

Professional service revenue in Q3 was $12 million, a decrease of $1.7 million over last year. We are on track to have professional service revenue be about 13% of total revenue on an annual basis.

Recurring revenue reached $47.5 million, representing 47.1% of total revenue. It's worth noting that recurring revenue, as reported in our GAAP financials, is driven primarily by support contracts and some term-based and SaaS subscription offerings, and enhances our visibility in both the near and long term.

As Elad discussed, the majority of our revenue continues to come from the sales of perpetual licenses with reoccurring behavior. Non-GAAP gross margin for the quarter was 73.1%, expanding by 297 basis points year-over-year, a meaningful achievement that reflects the continuing revenue growth and efficiencies related to COGS.

Throughout the year, gross profit has grown significantly faster than revenue, and this continued in the third quarter. Gross profit was $73.6 million, an increase of 18% year-over-year.

The sustained improvement in our gross profit demonstrates the willingness of our loyal global customers to pay a premium for our differentiated technology. As we grow, the meaningful operating leverage we have in our model is delivering steady, material year-over-year improvements in profitability.

Once again, non-GAAP operating income and adjusted EBITDA both grew significantly faster than revenue. In Q3, we generated $9 million of non-GAAP operating income, nearly triple the $3.4 million generated in Q3 last year.

Adjusted EBITDA for the third quarter was $11.9 million, 81.4% higher than the $6.6 million generated last Q3. Put another way, we converted approximately $12 million in incremental revenue into approximately $5.3 million in incremental adjusted EBITDA, reflecting the operational leverage we have in our business model.

Q3 non-GAAP operating expenses were $64.6 million, aligned with our expectations. The global macroeconomic environment led to a weakening of the US dollar against the Israeli shekel and several other currencies, resulting in revaluation expenses of $1.9 million.

Turning to tax, Q3 tax expenses were relatively higher due to increased pre-tax income, our global tax structure, and regional revenue mix. However, this does not affect our full-year tax outlook or annual guidance.

We continue to expect our annual non-GAAP tax expenses to be about $11 million. Non-GAAP net income for the quarter was about $2 million, resulting in non-GAAP EPS of 3 cents.

GAAP net loss for Q3 was $3.4 million compared to a loss of $2.6 million in Q3 last year. The higher loss this quarter was primarily driven by increased tax expenses and FX impacts, as I discussed earlier.

Our Q3 GAAP EPS loss was 7 cents. Looking at our results for the first three quarters of the year, our revenue was $293.8 million, up 14.7% year-over-year, and our non-GAAP gross profit grew even faster at 17.2% year-over-year.

This performance highlights the operating leverage we have in our model, which continues to drive meaningful year-over-year improvements in profitability. Our GAAP operating income for the first three quarters of this year was $8.1 million versus an operating loss of $5.8 million during the same period last year.

Non-GAAP operating income was $24.6 million, up nearly three times from the $9.7 million generated during the same period last fiscal year. Our adjusted EBITDA for the first nine months of this fiscal year was $33.2 million compared to $19.9 million in the same period last year, representing an increase of 67.2%.

Non-GAAP EPS was 18 cents in the first nine months of this fiscal year compared to 4 cents in the same period last year. Turning to our balance sheet, our short- and long-term contract liabilities, commonly referred to as deferred revenue, remained robust at about $117.9 million at the end of Q3.

During Q3, we had strong cash flow from operations of $25 million and had free cash flow of $23.2 million. For the first nine months of fiscal 2026, we had cash flow from operations of $20.4 million and free cash flow of $11.9 million.

During Q3, we continued to execute our share repurchase program, which the board approved in July 2025, repurchasing approximately 152,000 ordinary shares for a total of about $1.3 million. During the quarter, we further strengthened our cash position, which increased to $106.6 million with no debt, reflecting disciplined working capital management.

Turning to capital allocation, we maintain sufficient working capital to run the business. Above this operating baseline, we regularly evaluate where we can deploy excess cash, including making targeted acquisitions that strengthen our strategic position and returning capital to shareholders.

Now, let me walk you through our execution against some of our key performance indicators. RPO, or remaining performance obligations, represents contracted revenue to be recognized in future periods.

RPO is expected to continue to fluctuate, as it is influenced by factors such as deal cycles, seasonality, deployment timelines, contract length, and renewal timing. It is worth noting that the cancellable portion of subscription deals is excluded from RPO.

At the end of Q3, total RPO was $576.6 million versus $567.6 million at the same period last year. Total RPO is the sum of deferred revenue of $117.9 million and backlog of $458.7 million.

Short-term RPO at the end of Q3 increased to $358.9 million, which we believe provides solid visibility into revenue over the next 12 months. These healthy RPO levels validate the strength and resilience of our business.

Q3 billings were $107.7 million, an increase of 2.9% versus the same period last year. We remain focused on driving strong results.

Given the strong foundation we have built and the momentum of the business, we are raising our outlook for this fiscal year. We now expect revenue of $400 million, plus or minus 1%, which represents approximately 14% year-over-year growth at the midpoint of the range.

We expect total software revenue to be approximately 87% of total revenue, aligned with our strategic goals. Annual non-GAAP gross margin to be 72.3%, reflecting an improvement of 130 basis points over the last fiscal year.

Adjusted EBITDA of $47 million at the midpoint, representing about 60% year-over-year growth. This increased outlook for revenue, profitability, and our continuing execution is expected to generate non-GAAP diluted EPS of 24 cents at the midpoint of the revenue range.

We remain confident in our ability to generate $45 million of operating cash flow in FY26. We are very pleased with our consistent execution and the progress we are making towards achieving our targets for the fiscal year ending January 31, 2028: revenue of about $500 million, gross margin of approximately 73%, adjusted EBITDA margin of greater than 20%.

In closing, Q3 was another quarter of strong performance for Cognyte. We delivered meaningful revenue growth, expanded margins, and generated robust cash flow, all while continuing to invest in innovation.

We believe we are delivering against all our growth pillars: increasing wallet share with existing high-value customers, adding new logos, and further expanding our market reach in the US. The combination of installed base expansion, strong contracted backlog, and execution of our growth strategy gives us confidence in our ability to generate sustained profitable growth.

We believe we are well positioned to deliver on our commitments and create long-term value for shareholders. Thank you for your continued support.

We will now open the call for questions.

Great. Hey guys, this is Matt Calitri over at Needham.

Thanks for taking our questions. When I look at some of the large deal announcements, year-to-date you've announced customer wins totaling over $65 million in ACV.

Can you help break down how much of this amount is currently impacting RPO and revenue?

Hi, Matt. This is Elad.

Actually, what is in the RPO is the software license part. I'm checking whether you want to understand how we convert it to revenues.

What is exactly the question is?

I'm just trying to understand when you announce these deals, how it works from signing to deployment and along that, how long usually elapses there, and also how does that flow through RPO and then start to be recognized in revenue, just from a timing perspective.

Okay. Usually when we talk about large deals, the sales cycle takes a few quarters, between two, three to five, four quarters.

If it's very significant deals, it takes a little bit longer. When it comes to the backlog conversion to revenue, it depends on the size of the deal.

If it's a relatively small deal and the customer is ready, it could take a few months. If the deal is a larger deal and requires customer preparations and environment integration, it may take a few quarters.

When a deal is landed, it's immediately on the RPO. If the scheduled timing to convert to revenue is within the next 12 months, it will land also in the cRPO.

If we believe that portions of the deal are scheduled beyond 12 months, you will see that in the RPO, but not in the cRPO, the relevant portion, of course. That's usually how it works.

Got it. That's

Maybe to add on that—

Oh, sorry.

Maybe to add on that, take consideration that when you have a deal with the subscription, only the non-cancellable element is included in the RPO.

Understood. Very very helpful.

Thank you, guys. Then what portion of the license deals are being recognized upfront, and how does that impact recognition in revenue versus RPO?

We have multiple type of revenue recognition. In certain cases, we recognize over percentage of time, meaning like like that we recognize the the deal on percentage of completion, sorry.

Or it could be upon delivery, or it upon SAT, which is acceptance criteria. It's really depends in the in the contract with the customers.

If you want to look, you can see that when we share the cRPO, it's based on the planning that when we believe that delivery will take place and we will be able to recognize revenue. That we take that in consideration in our planning, and this is the reason that we are sharing the cRPO to give you an idea what will happen in the next 12 months.

You can see that we have a lot of wins and everything is covered under RPO. We take that as a total number and we have a very strong visibility, and that gives us the ability to plan efficiently, and that also allows us—you can see that our margin is even improving because we are able to deploy deploy in a more efficient way, and that gives us also some benefits.

Awesome. Turning to US federal, what are overall conversations like there?

How did they change during the government shutdown we just went through, and have they picked up since it ended?

Maybe I'll give an overview about where we are in the US. Agencies in the US face similar problems that other agencies are facing and that we're serving worldwide, we see that the demand drivers and the needs are very similar to other territories.

For that reason, we also believe that our technology is an excellent fit to the USA needs. We discussed in previous calls that we started with state and local, we were able to acquire new customers, we got also follow-on orders, and already have a lot of confidence from customer that there is a very good fit.

In terms of the federal LEA agencies, first of all, we started later, and then the shutdown came. Of course, shutdown disrupted the engagement for certain amount of time.

Having said that, it doesn't change the fact that those agencies are facing challenges, need technology, and for that reason, I believe that they'll come back to the table. Some of the federal customers that we were engaging with already came to us after the shutdown relief and asked to resume discussions.

I can also tell you in the US that regardless of the shutdown, we continue to do lots of efforts in order to expand our market access and brand awareness. We enhanced sales and marketing activities, we participated in relevant industry conferences that I shared in previous calls, example is NATIA.

We are expanding our partners network, we signed with LexisNexis in Q3. We have a lot of activities running with federal agencies in the US.

If I have to summarize it, I really believe our US opportunity is significant, and it's not a matter of if, it's a matter of when. We'll continue to be very focused on this territory and continue to invest, and I believe the fruit will come.

Great to hear. Then last one for me.

I believe you'd said in the prepared remarks that you've delivered structured training to LexisNexis. Are they ready to start selling now, or where are you at in that training process?

With LexisNexis, we signed last quarter. The partnership is focused on helping with access expansion to the state and local and federal LEAs.

We conducted trainings to their sales force, but we also had joint meetings and events with LexisNexis team. We are educating them, some of their sales force are already ready to go to customers and discuss our offerings, and in certain cases, we go together.

The progress is very good, and I believe it will progress very fast.

Awesome to hear. Thanks so much.

Thank you.

Thanks, Matt.

Our next question comes from the line of Taz Koujalgi with Roth Capital. Your line is now open.

Hi,

thanks. Hey, guys, thanks for taking my question.

I just want to follow up on the US market. I know you're this is very early for you guys in terms of the US entering the US market, but just a little bit of color on how the US market differs from other parts of the world in terms of competitive landscape and who you guys see in bake-offs.

When you look at the US US deals in the US market, what does the competitive landscape look like? Who do you guys normally see in these in those scenarios versus other parts of the world?

The challenges are similar. In the US market, we've started with operational units within law enforcement agencies, first state and local and now also federal, and that's the market we're focusing on.

The competitive landscape is a little bit different, but with similar technologies. Actually, operational units are using similar solutions globally, but in the US, we do see L3Harris, for example, and Octasic as companies that are focused in the US territory.

Got it. Very helpful.

Then maybe for David. David, can you comment on the contract duration this quarter?

If I look at the mix of RPO versus cRPO, looks like the duration probably went down year-over-year slightly. Maybe just clarify if that was the case and what do you think about the contract duration trends going forward?

If you look at the overall RPO is very strong, short term and long term. Both of them give us the confidence that we will continue to grow over time.

If you look at the cRPO, it grew year-over-year, I would say, in about 10% year-over-year growth. Given what we see from demand perspective and how deals are flow, we're very comfortable with this RPO.

Got it. Just a few more for me.

Strong numbers for me, guys, overall this quarter. Looks very good.

If you look at the professional services line, the PS line, I think it was a little bit lighter versus last quarter. Any comment on if deployments were pushed out or anything that kind of helps us understand why that services line seems a little bit lighter than what it was last quarter?

Actually, when we started the year, actually we mentioned that professional services will be around 13% of total revenue. This is what we saw that

Thank you. Unfortunately, there was a problem with the line, I will repeat my answer from the beginning because I don't really know where we stopped.

So No, no, no. David, you mentioned that you gave us a guide of 13% of full-year revenues would be services, right.

That's where I guess we got cut off.

I will just remind everyone what, practically, is the professional services. Professional services, it could be deployment services, it could be some development work, training, or hardware selling.

We actually deliver it because that's creating a faster adaptation by the customer and also allow us to bring to the table faster, I would say, the cross-sell and the upsell. Overall, the fluctuation within professional services between quarters is mainly related to revenue recognition criteria.

Actually, I'm very pleased from where we are. We are aligned with our target to be 13% of total revenue on professional services.

I think that you also asked about software and software services. You can see that first, overall software revenue, which is the combination of total of software and software services, grew by 18%.

If you look at the way that we acquire customers, most of the customers are, once we acquire them, they are staying with us for a long period. Usually, they acquire perpetual licenses with support contracts, this is, I would say, the majority of them.

If you think about it, it's a reoccurring in nature behavior, meaning that the customer continue to buy with you on a regular basis. We do have certain cases that a customer do an upgrade of existing license, which was under support, and it's moved to be a software.

From our perspective, the right metrics to look at the business is the total software, which combines the software and the software services. When you look at that, you can see that it's also growing very very good.

Got it. Very helpful.

One last one for me, David. I know you gave us a guide for the full revenue for the year, but if you can give us some more details or some more color on how to think about that mix between software, software services, and PS.

Because I know if I look at Q4 of last year, I think we had a big jump in software revenue. I think Q3 to Q4, there was a big jump seasonally in software revenue.

I just want to make sure that we don't end up mismodeling the different line items for revenue. Maybe if you can, some more color or some more clarity on how to think about the mix of the revenue between software, software services, and PS.

Let me start with a general comment. You can see that the software revenue grew this quarter significantly, almost 40% versus previous period.

We are very pleased with the way that software revenue grew. As I mentioned, our view is that we need to look at the total software revenue, which means combination of the software and the software services.

To give you some color, I believe that it will be 87% of the total revenue. If you look at our guidance, you can say that out of the $400 million, 87% will come from the software and the software services.

Got it. Very helpful.

Thank you.

Awesome. Thank you very much for taking our question.

This is Charlie for Peter at Evercore. Just a quick one from me.

This quarter we obviously saw very impressive margin outperformance, both on gross margin and operating margin. I know you guys have provided a gross margin target of 73% by FY28, which you guys have already achieved this quarter.

Could you please just help us to maybe just break down the primary drivers of the margin outperformance, and also how should we think about the gross margin expansion trajectory from here? Also any updated color on the adjusted EBITDA margin as well?

Thank you.

Thank you. Actually, we are very pleased with our 73% gross margin this quarter.

As you can see, there is different dynamics that taking place over quarters. There is a fluctuation between the quarters, but if you look at overall, you see that the trend is in the right direction, and we are getting to the 73% already in this quarter, and we guided for this year to be at 72.3%, which is almost 130 basis points higher than the last year.

What we do see within our mix, few things that taking place. Overall, when you look at the software, which is the software and the software services, we are above 80% of gross margin.

If you look at the professional services, we also improving the professional services. Actually, Q3 was above 20%, but again, I don't think that it's stable.

I would say that if you think about it on an annual basis, it should be on the high mid-teens. What the dynamic behind it, it's first, customers are willing to pay premium prices for our solution.

We have very strong solution based on our advanced analytics, which customers are willing to pay a premium prices, and we talked about it a lot, that we are not fighting or competing with pricing. We are investing a lot on R&D because we believe that once you acquire a customer and you provide a customer with premium solution and address in their evolving needs, they will continue to stay with you and willing to pay the right level of pricing.

It's all about the value, and that drive incremental gross margin. Also there is some efficiencies that taking place with our COGS, mainly related to our capability to improve cost structure, if it's the fact that we are applying AI capability within the organization that also drive better profitability.

Overall, it's driven by the value we provide to our customer. About adjusted EBITDA, we are guiding for this year to be $47 million, it's almost 60%, 6-0 percent.

I think it's talk about the leverage. When you think about us as a company, look at our financial over the last few years, we are on a regular basis deliver leverage in our model.

We believe in profitable growth, we structure the business in a way that while we are growing, we drive more profitability, and I'm very pleased that we're able to drive it to the bottom line and to create value to shareholders. This is what we're trying to do, this is what we are delivering, and I believe that we will continue to do so.

Thank you very much. Maybe just to follow up on the adjusted EBITDA margin.

Based on your guidance, you're basically projected to achieve around 12% adjusted EBITDA margin by fiscal '26, and you guys have provided a 20%, greater than 20% target for fiscal '28. Should we think about the 80 800 basis points expansion from here as more linear, like 400 basis points in '27 and maybe 47 400 basis points in '28?

Is that the correct way to think about it?

Actually, I think we shared the target for FY28 in April, and we are very pleased with where we are getting. We are progressing towards our target.

Obviously, it will be a gradual improvement over time. We are not in position now to give the plan for the next year, but it would be over time gradual improvement.

Awesome. Sounds good.

Thank you very much.

Thank you, Shannon, and thank you, everyone, for joining us on today's call. Please feel free to reach out to me should you have any questions, and we look forward to speaking with you again next quarter.

Thank you, all.