The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX)
announced its financial results for its fiscal 2025 first quarter
(
Q1FY25). All financial results referenced are in
United States (
US) currency and, unless otherwise
indicated, are determined in accordance with US Generally Accepted
Accounting Principles (
GAAP).
"Global trade is complex and constantly evolving. Supply chains
and logistics operations continue to be impacted by a myriad of
factors, including military conflicts, disruptions to trade routes,
government sanctions, and material changes to taxes and tariffs,"
said Edward J. Ryan, Descartes' CEO. "Our technology solutions are
designed to help shippers, carriers and logistics services
providers manage this dynamic complexity. We remain focused on
delivering valued services to all supply chain participants and
making meaningful investments that will help our customers manage
their immediate and future supply chain and logistics
challenges.”
Q1FY25 Financial Results As described in more
detail below, key financial highlights for Descartes’ Q1FY25
included:
- Revenues of $151.3 million, up 11% from $136.6 million in the
first quarter of fiscal 2024 (Q1FY24) and up 2% from $148.2 million
in the previous quarter (Q4FY24);
- Revenues were comprised of services revenues of $137.8 million
(91% of total revenues), professional services and other revenues
of $13.0 million (9% of total revenues) and license revenues of
$0.5 million (less than 1% of total revenues). Services revenues
were up 11% from $124.1 million in Q1FY24 and up 2% from $135.7
million in Q4FY24;
- Cash provided by operating activities of $63.7 million, up 30%
from $48.9 million in Q1FY24 and up 25% from $50.8 million in
Q4FY24; Cash provided by operating activities was negatively
impacted by nil, nil and $12.6 million in Q1FY25, Q1FY24 and
Q4FY24, respectively, related to contingent consideration payments
due to better-than-expected performance from recent
acquisitions;
- Income from operations of $42.4 million, up 16% from $36.5
million in Q1FY24 and up 15% from $37.0 million in Q4FY24;
- Net income of $34.7 million, up 18% from $29.4 million in
Q1FY24 and up 9% from $31.8 million in Q4FY24. Net income as a
percentage of revenues was 23%, compared to 22% in Q1FY24 and 21%
in Q4FY24;
- Earnings per share on a diluted basis of $0.40, up 18% from
$0.34 in Q1FY24 and up 8% from $0.37 in Q4FY24; and
- Adjusted EBITDA of $67.0 million, up 16% from $57.7 million in
Q1FY24 and up 2% from $65.7 million in Q4FY24. Adjusted EBITDA as a
percentage of revenues was 44%, compared to 42% in Q1FY24 and 44%
in Q4FY24.
Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues
are non-GAAP financial measures provided as a complement to
financial results presented in accordance with GAAP. We define
Adjusted EBITDA as earnings before interest, taxes, depreciation,
amortization, stock-based compensation (for which we include
related fees and taxes) and other charges (for which we include
restructuring charges, acquisition-related expenses, and contingent
consideration incurred due to better-than-expected performance from
acquisitions). These items are considered by management to be
outside Descartes' ongoing operational results. We define Adjusted
EBITDA as a percentage of revenues as the quotient, expressed as a
percentage, from dividing Adjusted EBITDA for a period by revenues
for the corresponding period. A reconciliation of Adjusted EBITDA
and Adjusted EBITDA as a percentage of revenues to net income
determined in accordance with GAAP is provided later in this
release.
The following table summarizes Descartes' results in the
categories specified below over the past 5 fiscal quarters
(unaudited; dollar amounts, other than per share amounts, in
millions):
| |
Q1FY25 |
|
Q4FY24 |
|
Q3FY24 |
|
Q2FY24 |
|
Q1FY24 |
|
| Revenues |
151.3 |
|
148.2 |
|
144.7 |
|
143.4 |
|
136.6 |
|
| Services revenues |
137.8 |
|
135.7 |
|
130.4 |
|
130.7 |
|
124.1 |
|
| Gross margin |
77 |
% |
76 |
% |
76 |
% |
76 |
% |
76 |
% |
| Cash provided by operating
activities |
63.7 |
|
50.8 |
|
56.1 |
|
52.0 |
|
48.9 |
|
| Income from operations |
42.4 |
|
37.0 |
|
32.4 |
|
36.8 |
|
36.5 |
|
| Net income |
34.7 |
|
31.8 |
|
26.6 |
|
28.1 |
|
29.4 |
|
| Net income as a % of
revenues |
23 |
% |
21 |
% |
18 |
% |
20 |
% |
22 |
% |
| Earnings per diluted share |
0.40 |
|
0.37 |
|
0.31 |
|
0.32 |
|
0.34 |
|
| Adjusted EBITDA |
67.0 |
|
65.7 |
|
63.5 |
|
60.6 |
|
57.7 |
|
| Adjusted EBITDA as a % of
revenues |
44 |
% |
44 |
% |
44 |
% |
42 |
% |
42 |
% |
Cash PositionAt April 30, 2024, Descartes had
$238.9 million in cash. Cash decreased by $82.1 million in Q1FY25.
The table set forth below provides a summary of cash flows for
Q1FY25 in millions of dollars:
| |
|
Q1FY25 |
|
|
Cash provided by operating activities |
63.7 |
|
|
Additions to property and equipment |
(1.8 |
) |
|
Acquisitions of subsidiaries, net of cash acquired |
(140.0 |
) |
|
Issuances of common shares, net of issuance costs |
4.2 |
|
|
Payment of withholding taxes on net share settlements |
(6.7 |
) |
|
Effect of foreign exchange rate on cash |
(1.5 |
) |
|
Net change in cash |
(82.1 |
) |
|
Cash, beginning of period |
321.0 |
|
|
Cash, end of period |
238.9 |
|
Acquisition of OCROn March 28, 2024, Descartes
acquired OCR Services, Inc. (“OCR”), a leading provider of global
trade compliance solutions and content. The purchase price for the
acquisition was approximately $82.8 million, net of cash acquired,
which was funded from cash on hand.
Acquisition of ASDOn April 22, 2024, Descartes
acquired Aerospace Software Developments (“ASD”), a leading
provider of customs and regulatory compliance solutions. The
purchase price for the acquisition was approximately $62.5 million
(EUR 58.7 million), net of cash acquired, which was substantially
paid at closing from cash on hand with the remaining $5.1 million
expected to be paid by the end of Descartes’ fiscal 2025 fourth
quarter.
Conference CallMembers of Descartes' executive
management team will host a conference call to discuss the
company's financial results at 5:30 p.m. ET on Wednesday, May 29.
Designated numbers are +1 289 514 5100 for North America and +1 800
717 1738 for international, using conference ID 99482.
The company will simultaneously conduct an audio webcast on the
Descartes website at
www.descartes.com/descartes/investor-relations. Phone conference
dial-in or webcast login is required approximately 10 minutes
beforehand.
Replays of the conference call will be available until June 6,
2024, by dialing +1 289 819 1325 or Toll-Free for North America
using +1 888 660 6264 with Playback Passcode: 99482#. An archived
replay of the webcast will be available at
www.descartes.com/descartes/investor-relations.
About Descartes
Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in
providing on-demand, software-as-a-service solutions focused on
improving the productivity, security and sustainability of
logistics-intensive businesses. Customers use our modular,
software-as-a-service solutions to route, track and help improve
the safety, performance and compliance of delivery resources; plan,
allocate and execute shipments; rate, audit and pay transportation
invoices; access global trade data; file customs and security
documents for imports and exports; and complete numerous other
logistics processes by participating in the world’s largest,
collaborative multimodal logistics community. Our headquarters are
in Waterloo, Ontario, Canada and we have offices and partners
around the world. Learn more at www.descartes.com, and connect
with us on LinkedIn and X (Twitter).
Descartes Investor Contact Laurie
McCauley
(519) 746-2969investor@descartes.com
Cautionary Statement Regarding Forward-Looking
Statements
This release may contain forward-looking information within the
meaning of applicable securities laws ("forward-looking
statements") that relates to Descartes' expectations concerning
future revenues and earnings, and our projections for any future
reductions in expenses or growth in margins and generation of cash;
our assessment of the potential impact of geopolitical events, such
as the ongoing conflict between Russia and Ukraine (the
“Russia-Ukraine Conflict”), and between Israel and Hamas
(“Israel-Hamas Conflict”), or other potentially catastrophic
events, such as the COVID-19 virus (the "Pandemic") on our
business, results of operations and financial condition; continued
growth and acquisitions including our assessment of any increased
opportunity for our products and services as a result of trends in
the logistics and supply chain industries; rate of profitable
growth and Adjusted EBITDA margin operating range; demand for
Descartes' solutions; growth of Descartes' Global Logistics Network
(“GLN”); customer buying patterns; customer expectations of
Descartes; development of the GLN and the benefits thereof to
customers; and other matters. These forward-looking statements are
based on certain assumptions including the following: global
shipment volumes continuing at levels generally consistent with
those experienced historically; the Russia-Ukraine Conflict,
Israel-Hamas Conflict and the Pandemic not having a material
negative impact on shipment volumes or on the demand for the
products and services of Descartes by its customers and the ability
of those customers to continue to pay for those products and
services; countries continuing to implement and enforce existing
and additional customs and security regulations relating to the
provision of electronic information for imports and exports;
countries continuing to implement and enforce existing and
additional trade restrictions and sanctioned party lists with
respect to doing business with certain countries, organizations,
entities and individuals; Descartes' continued operation of a
secure and reliable business network; the stability of general
economic and market conditions, currency exchange rates, and
interest rates; equity and debt markets continuing to provide
Descartes with access to capital; Descartes' continued ability to
identify and source attractive and executable business combination
opportunities; Descartes' ability to develop solutions that keep
pace with the continuing changes in technology, and our continued
compliance with third party intellectual property rights. These
assumptions may prove to be inaccurate. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or
achievements of Descartes, or developments in Descartes' business
or industry, to differ materially from the anticipated results,
performance or achievements or developments expressed or implied by
such forward-looking statements. Such factors include, but are not
limited to, Descartes' ability to successfully identify and execute
on acquisitions and to integrate acquired businesses and assets,
and to predict expenses associated with and revenues from
acquisitions; the impact of network failures, information security
breaches or other cyber-security threats; disruptions in the
movement of freight and a decline in shipment volumes including as
a result of contagious illness outbreaks; a deterioration of
general economic conditions or instability in the financial markets
accompanied by a decrease in spending by our customers; the ability
to attract and retain key personnel and the ability to manage the
departure of key personnel and the transition of our executive
management team; changes in trade or transportation regulations
that currently require customers to use services such as those
offered by Descartes; changes in customer behaviour and
expectations; Descartes’ ability to successfully design and develop
enhancements to our products and solutions; departures of key
customers; the impact of foreign currency exchange rates;
Descartes' ability to retain or obtain sufficient capital in
addition to its debt facility to execute on its business strategy,
including its acquisition strategy; disruptions in the movement of
freight; the potential for future goodwill or intangible asset
impairment as a result of other-than-temporary decreases in
Descartes' market capitalization; and other factors and assumptions
discussed in the section entitled, "Certain Factors That May Affect
Future Results" in documents filed with the Securities and Exchange
Commission, the Ontario Securities Commission and other securities
commissions across Canada, including Descartes' most recently filed
Management's Discussion and Analysis. If any such risks actually
occur, they could materially adversely affect our business,
financial condition or results of operations. In that case, the
trading price of our common shares could decline, perhaps
materially. Readers are cautioned not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date made. Forward-looking statements are provided for the purpose
of providing information about management's current expectations
and plans relating to the future. Readers are cautioned that such
information may not be appropriate for other purposes. We do not
undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in our expectations or any change in events,
conditions or circumstances on which any such statement is based,
except as required by law.
Reconciliation of Non-GAAP Financial Measures - Adjusted
EBITDA and Adjusted EBITDA as a percentage of revenues
We prepare and release quarterly unaudited and annual audited
financial statements prepared in accordance with GAAP. We also
disclose and discuss certain non-GAAP financial information, used
to evaluate our performance, in this and other earnings releases
and investor conference calls as a complement to results provided
in accordance with GAAP. We believe that current shareholders and
potential investors in our company use non-GAAP financial measures,
such as Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues, in making investment decisions about our company and
measuring our operational results.
The term “Adjusted EBITDA” refers to a financial measure that we
define as earnings before certain charges that management considers
to be non-operating expenses and which consist of interest, taxes,
depreciation, amortization, stock-based compensation (for which we
include related fees and taxes) and other charges (for which we
include restructuring charges, acquisition-related expenses, and
contingent consideration incurred due to better-than-expected
performance from acquisitions). Adjusted EBITDA as a percentage of
revenues divides Adjusted EBITDA for a period by the revenues for
the corresponding period and expresses the quotient as a
percentage.
Management considers these non-operating expenses to be outside
the scope of Descartes’ ongoing operations and the related expenses
are not used by management to measure operations. Accordingly,
these expenses are excluded from Adjusted EBITDA, which we
reference to both measure our operations and as a basis of
comparison of our operations from period-to-period. Management
believes that investors and financial analysts measure our business
on the same basis, and we are providing the Adjusted EBITDA
financial metric to assist in this evaluation and to provide a
higher level of transparency into how we measure our own business.
However, Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues are non-GAAP financial measures and may not be comparable
to similarly titled measures reported by other companies. Adjusted
EBITDA and Adjusted EBITDA as a percentage of revenues should not
be construed as a substitute for net income determined in
accordance with GAAP or other non-GAAP measures that may be used by
other companies, such as EBITDA. The use of Adjusted EBITDA and
Adjusted EBITDA as a percentage of revenues does have limitations.
In particular, we have completed four acquisitions since the
beginning of fiscal 2024 and may complete additional acquisitions
in the future that will result in acquisition-related expenses and
restructuring charges. As these acquisition-related expenses and
restructuring charges may continue as we pursue our consolidation
strategy, some investors may consider these charges and expenses as
a recurring part of operations rather than expenses that are not
part of operations.
The table below reconciles Adjusted EBITDA and Adjusted EBITDA
as a percentage of revenues to net income reported in our unaudited
Consolidated Statements of Operations for Q1FY25, Q4FY24, Q3FY24,
Q2FY24, and Q1FY24, which we believe is the most directly
comparable GAAP measure.
|
|
Q1FY25 |
Q4FY24 |
Q3FY24 |
Q2FY24 |
Q1FY24 |
| Net income, as
reported on Consolidated Statements of Operations |
34.7 |
|
31.8 |
|
26.6 |
|
28.1 |
|
29.4 |
|
| Adjustments to reconcile to
Adjusted EBITDA: |
|
|
|
|
|
|
Interest expense |
0.3 |
|
0.3 |
|
0.3 |
|
0.3 |
|
0.3 |
|
|
Investment income |
(4.1 |
) |
(3.4 |
) |
(2.7 |
) |
(2.0 |
) |
(1.6 |
) |
|
Income tax expense |
11.5 |
|
8.3 |
|
8.2 |
|
10.4 |
|
8.4 |
|
|
Depreciation expense |
1.4 |
|
1.4 |
|
1.5 |
|
1.4 |
|
1.3 |
|
|
Amortization of intangible assets |
15.0 |
|
15.1 |
|
15.3 |
|
15.5 |
|
14.7 |
|
|
Stock-based compensation and related taxes |
4.3 |
|
4.7 |
|
4.6 |
|
4.4 |
|
3.3 |
|
|
Other charges |
3.9 |
|
7.5 |
|
9.7 |
|
2.5 |
|
1.9 |
|
|
Adjusted EBITDA |
67.0 |
|
65.7 |
|
63.5 |
|
60.6 |
|
57.7 |
|
|
|
|
|
|
|
|
|
Revenues |
151.3 |
|
148.2 |
|
144.7 |
|
143.4 |
|
136.6 |
|
| Net income as % of
revenues |
23 |
% |
21 |
% |
18 |
% |
20 |
% |
22 |
% |
|
Adjusted EBITDA as % of revenues |
44 |
% |
44 |
% |
44 |
% |
42 |
% |
42 |
% |
| The
Descartes Systems Group Inc.Condensed Consolidated
Balance Sheets(US dollars in thousands; US GAAP;
Unaudited) |
| |
April 30, |
|
January 31, |
|
|
|
2024 |
|
2024 |
|
|
ASSETS |
|
|
| CURRENT ASSETS |
|
|
|
Cash |
238,922 |
|
320,952 |
|
|
Accounts receivable (net) |
|
|
|
Trade |
53,861 |
|
51,569 |
|
|
Other |
11,782 |
|
12,193 |
|
|
Prepaid expenses and other |
37,097 |
|
33,468 |
|
|
|
341,662 |
|
418,182 |
|
| OTHER LONG-TERM
ASSETS |
25,218 |
|
24,737 |
|
| PROPERTY AND
EQUIPMENT, NET |
11,630 |
|
11,552 |
|
| RIGHT-OF-USE
ASSETS |
6,763 |
|
6,257 |
|
| DEFERRED INCOME
TAXES |
2,262 |
|
2,097 |
|
| INTANGIBLE ASSETS,
NET |
323,406 |
|
251,047 |
|
| GOODWILL |
832,290 |
|
760,413 |
|
| |
1,543,231 |
|
1,474,285 |
|
| LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
|
| CURRENT
LIABILITIES |
|
|
|
Accounts payable |
|
19,068 |
|
17,484 |
|
Accrued liabilities |
|
100,527 |
|
91,824 |
|
Lease obligations |
|
3,110 |
|
3,075 |
|
Income taxes payable |
|
9,685 |
|
6,734 |
|
Deferred revenue |
|
96,290 |
|
84,513 |
|
|
228,680 |
|
203,630 |
|
| LONG-TERM DEBT |
- |
|
- |
|
| LEASE
OBLIGATIONS |
4,300 |
|
3,903 |
|
| DEFERRED REVENUE |
1,765 |
|
1,464 |
|
| INCOME TAXES
PAYABLE |
4,761 |
|
6,153 |
|
| DEFERRED INCOME
TAXES |
37,167 |
|
21,101 |
|
| |
276,673 |
|
236,251 |
|
| |
|
|
| SHAREHOLDERS’
EQUITY |
|
|
| Common shares –
unlimited shares authorized; Shares issued and outstanding totaled
85,390,142 at April 30, 2024 (January 31, 2024 – 85,183,455) |
557,741 |
|
551,164 |
|
| Additional paid-in
capital |
489,378 |
|
494,701 |
|
| Accumulated other
comprehensive income (loss) |
(35,983 |
) |
(28,586 |
) |
| Retained
earnings |
255,422 |
|
220,755 |
|
|
|
1,266,558 |
|
1,238,034 |
|
|
|
1,543,231 |
|
1,474,285 |
|
|
The Descartes Systems Group
Inc.Consolidated Statements of
Operations(US dollars in thousands, except per
share and weighted average share amounts; US GAAP; Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
April 30, |
|
April 30, |
|
|
|
|
|
|
2024 |
|
2023 |
|
| |
|
|
|
|
|
|
REVENUES |
|
151,348 |
|
136,614 |
|
| COST OF
REVENUES |
|
35,413 |
|
32,885 |
|
| GROSS
MARGIN |
|
115,935 |
|
103,729 |
|
|
EXPENSES |
|
|
|
|
Sales and marketing |
17,471 |
|
17,053 |
|
|
Research and development |
|
22,191 |
|
20,067 |
|
|
General and administrative |
|
14,948 |
|
13,444 |
|
|
Other charges |
|
3,918 |
|
1,933 |
|
|
Amortization of intangible assets |
|
15,024 |
|
14,674 |
|
|
|
|
|
|
73,552 |
|
67,171 |
|
| INCOME FROM
OPERATIONS |
|
42,383 |
|
36,558 |
|
| INTEREST
EXPENSE |
|
(273 |
) |
(337 |
) |
| INVESTMENT
INCOME |
|
4,059 |
|
1,561 |
|
| INCOME BEFORE INCOME
TAXES |
46,169 |
|
37,782 |
|
| INCOME TAX
EXPENSE (RECOVERY) |
|
|
|
|
Current |
|
12,318 |
|
7,621 |
|
|
Deferred |
|
(816 |
) |
808 |
|
|
|
|
|
|
11,502 |
|
8,429 |
|
| NET INCOME |
|
|
|
34,667 |
|
29,353 |
|
| EARNINGS PER
SHARE |
|
|
|
Basic |
0.41 |
|
0.35 |
|
|
Diluted |
|
0.40 |
|
0.34 |
|
| WEIGHTED
AVERAGE SHARES OUTSTANDING (thousands) |
|
|
|
|
Basic |
|
85,274 |
|
84,949 |
|
|
Diluted |
|
87,116 |
|
86,746 |
|
|
The Descartes Systems Group
Inc.Condensed Consolidated Statements of Cash
Flows(US dollars in thousands; US GAAP;
Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
April 30, |
|
April 30, |
|
|
|
|
|
2024 |
|
2023 |
|
| OPERATING
ACTIVITIES |
|
|
| Net income |
34,667 |
|
29,353 |
|
| Adjustments to
reconcile net income to cash provided by operating activities: |
|
|
|
Depreciation |
1,358 |
|
1,265 |
|
|
Amortization of intangible assets |
15,024 |
|
14,674 |
|
|
Stock-based compensation expense |
3,769 |
|
2,919 |
|
|
Other non-cash operating activities |
96 |
|
220 |
|
|
Deferred tax (recovery) expense |
(816 |
) |
808 |
|
|
Changes in operating assets and liabilities |
9,643 |
|
(384 |
) |
| Cash provided by
operating activities |
63,741 |
|
48,855 |
|
| INVESTING
ACTIVITIES |
|
|
|
Additions to property and equipment |
(1,764 |
) |
(1,203 |
) |
|
Acquisition of subsidiaries, net of cash acquired |
(139,973 |
) |
(142,700 |
) |
| Cash used in
investing activities |
(141,737 |
) |
(143,903 |
) |
| FINANCING
ACTIVITIES |
|
|
|
|
|
Payment of debt issuance costs |
(38 |
) |
(39 |
) |
|
Issuance of common shares for cash, net of issuance costs |
4,231 |
|
5,455 |
|
|
Payment of withholding taxes on net share settlements |
(6,745 |
) |
(4,886 |
) |
| Cash provided by
(used in) financing activities |
(2,552 |
) |
530 |
|
| Effect of foreign
exchange rate changes on cash |
(1,482 |
) |
320 |
|
| Decrease in
cash |
(82,030 |
) |
(94,198 |
) |
| Cash,
beginning of period |
320,952 |
|
276,385 |
|
| Cash, end of
period |
238,922 |
|
182,187 |
|
Descartes Systems (TSX:DSG)
過去 株価チャート
から 10 2024 まで 11 2024
Descartes Systems (TSX:DSG)
過去 株価チャート
から 11 2023 まで 11 2024
