Cognyte reeling after being dropped by Norway sovereign wealth fund
Cognyte reeling after being dropped by Norway sovereign wealth fund
The Norwegian fund said that its ethics council found that several states that are customers of Cognyte’s surveillance products and services "have been accused of extremely serious human rights violations"
Companies like Cognyte were the stuff of dreams for law enforcement agencies in the world that followed the September 11 attacks. The Homeland Security Act enacted in the U.S. in 2002 saw the blossoming of surveillance technologies, with numerous Israeli companies entering the sector.
So much has changed since though, especially from a reputation standpoint. Even though law enforcement agencies still covet the solutions provided by Israeli companies in the sector, using them has become complicated due to the growing realization that they violate basic human rights.
The sector became associated with offensive cyber and Israeli company Nice was one of the first to recognize this, selling its activity in the field to Elbit. Verint also understood the problems this activity presented and last March it spun off its surveillance and analytics department into a new company named Cognyte.
However, within a few months, Meta announced that it was removing accounts connected to Cognyte as it believed they were being used to track human rights activists, journalists, and others. Cognyte has over 1,000 clients in 100 countries, many of them belonging to government branches. Cognyte has admitted that it sells its products to regimes known for human rights violations. Earlier this year it shut down its offensive cyber subsidiary ACE Labs.
That wasn’t enough to convince Norway's sovereign wealth fund to retain its holdings in the company. The fund said earlier this month that its ethics council found that several states that are customers of Cognyte’s surveillance products and services "have been accused of extremely serious human rights violations." The statement did not name any state.
The announcement by the Norwegian fund could have hardly come at a worse time for Cognyte, which presented disappointing results in its most recent quarterly report and has also laid off 5% of its workforce. Cognyte’s annual revenue has fallen from a record $500 million to $238 million, with the company registering a loss of $82 million in 2022, as of its last report.
Even though Cognyte was given a valuation of $2 billion when it was spun off from Verint, it has seen its market cap plummet since March 2021, falling to $187 million as of Friday after losing over 90% of its value.
