Company Overview - Descartes Systems (NASDAQ: DSGX) is highlighted as a significant company in the tech-oriented investment landscape, with a focus on innovation and potential growth opportunities [1]. Analyst Background - The analyst has over three years of experience as a tech-oriented buy-side analyst at a major bank, managing U.S. equity portfolios with over $700 million in assets under management, indicating a strong background in financial markets [1]. Investment Philosophy - The investment approach emphasizes identifying future leaders in the market and making insights accessible to investors, aiming to demystify disruptive companies [1].

The Descartes Systems Group Inc. (DSGX) recently deepened its partnership with Europe-based IDS to streamline operations, save costs and bolster customer experience. IDS, which has expertise in non-asset transport management and fourth-party logistics, is leveraging Descartes’ premium Transportation Management System (“TMS”) to deliver value to shippers and carriers while meeting the demands of modern supply chain management and compliance.A key component of Descartes’ TMS is its ability to generate consoli ...

Descartes Systems (DSGX) reported third-quarter fiscal 2025 non-GAAP earnings per share (EPS) of 42 cents, which missed the Zacks Consensus Estimate of 44 cents. The bottom line, however, expanded 35% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Revenues in the quarter totaled $168.8 million, beating the Zacks Consensus Estimate by 3.5%. The top line jumped 17% year over year. The company, known for its robust Global Logistics Network, continues to make strides in ...

[Management's Discussion and Analysis of Financial Condition and Results of Operations](index=3&type=section&id=MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides an in-depth analysis of the company's financial performance, liquidity, and capital resources, along with key trends and risk factors [Overview](index=5&type=section&id=OVERVIEW) Descartes delivers cloud-based logistics and supply chain management solutions through its Global Logistics Network and modular applications, recently expanding through key acquisitions - The company's core business is providing modular, software-as-a-service (SaaS) and data solutions to manage logistics processes, including routing, tracking, customs filing, and global trade data analysis[9](index=9&type=chunk) - The Logistics Technology Platform is built on the Global Logistics Network (GLN), which manages the flow of data and documents for inventory, assets, and people in motion across multiple transportation modes[14](index=14&type=chunk) Fiscal 2025 Acquisitions | Acquisition | Business Focus | Purchase Price (net of cash) | | :--- | :--- | :--- | | OCR Services, Inc. | Global trade compliance solutions | ~$82.8 million | | Aerospace Software Developments (ASD) | Global trade compliance solutions | ~$62.5 million | | BoxTop Technologies Limited | Shipment management solutions | ~$12.1 million | [Consolidated Operations](index=9&type=section&id=CONSOLIDATED%20OPERATIONS) Q2 FY2025 saw total revenues increase to **$163.4 million** and net income rise to **$34.7 million**, driven by acquisitions and organic growth, with services as the primary revenue source Q2 FY2025 vs Q2 FY2024 Financial Highlights (in millions) | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $163.4 | $143.4 | +14.0% | | Gross Margin | $122.9 | $108.4 | +13.4% | | Income from Operations | $45.9 | $36.8 | +24.7% | | Net Income | $34.7 | $28.1 | +23.5% | | Diluted EPS | $0.40 | $0.32 | +25.0% | - The increase in Q2 FY2025 revenue was primarily driven by a **$8.2 million** contribution from the 2025 acquisitions (OCR, ASD, BoxTop) and **$7.5 million** from organic growth with new and existing customers, particularly in global trade intelligence, routing, and transportation management solutions[19](index=19&type=chunk) Revenue by Type - Q2 FY2025 (in millions) | Revenue Type | Amount | % of Total | | :--- | :--- | :--- | | Services | $146.2 | 89% | | Professional services and other | $15.8 | 10% | | License | $1.4 | 1% | Revenue by Geography - Q2 FY2025 (in millions) | Geography | Amount | % of Total | | :--- | :--- | :--- | | United States | $109.6 | 67% | | EMEA | $38.4 | 24% | | Canada | $10.4 | 6% | | Asia Pacific | $5.0 | 3% | [Quarterly Operating Results](index=17&type=section&id=QUARTERLY%20OPERATING%20RESULTS) The company achieved consistent sequential revenue growth over eight quarters, with Q2 FY2025 revenues reaching **$163.4 million** due to acquisitions and organic expansion Quarterly Revenue Trend (in millions) | Quarter | Revenue | | :--- | :--- | | Q3 FY2023 | $121.5 | | Q4 FY2023 | $125.1 | | Q1 FY2024 | $136.6 | | Q2 FY2024 | $143.4 | | Q3 FY2024 | $144.7 | | Q4 FY2024 | $148.2 | | Q1 FY2025 | $151.3 | | Q2 FY2025 | $163.4 | - Revenue growth in Q2 FY2025 compared to Q1 FY2025 was driven by a **$6.1 million** incremental contribution from the OCR, ASD, and BoxTop acquisitions, and **$3.1 million** from new and existing customers[48](index=48&type=chunk) - The company notes minor seasonal trends, with historically lower shipment volumes in Q1, increased ocean services revenue in Q2, peak volumes in Q3, and holiday-impacted transaction numbers in Q4[47](index=47&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash decreased to **$252.7 million** by July 31, 2024, primarily due to acquisitions, while the company maintains a **$350.0 million** undrawn revolving credit facility and strong operating cash flow - Cash balance decreased by **$68.3 million** in the first half of fiscal 2025, mainly due to **$153.7 million** used for the acquisitions of OCR, ASD, and BoxTop, partially offset by **$98.4 million** in cash generated from operations[49](index=49&type=chunk)[57](index=57&type=chunk)[60](index=60&type=chunk) - The company maintains a **$350.0 million** revolving credit facility, expandable to **$500.0 million**, which was fully available as of July 31, 2024[50](index=50&type=chunk)[51](index=51&type=chunk) Summary of Cash Flows - First Half FY2025 vs FY2024 (in millions) | Cash Flow Activity | H1 FY2025 | H1 FY2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $98.4 | $100.9 | | Cash used in Investing Activities | ($157.1) | ($146.1) | | Cash used in Financing Activities | ($8.5) | ($5.2) | | **Net Change in Cash** | **($68.3)** | **($49.0)** | [Commitments, Contingencies and Guarantees](index=21&type=section&id=COMMITMENTS,%20CONTINGENCIES%20AND%20GUARANTEES) The company's commitments include **$7.9 million** in operating lease obligations and potential contingent consideration of up to **$41.5 million** for acquisitions, with equity derivative contracts hedging DSU and CRSU plans Operating Lease Obligations (in millions) | Period | Amount | | :--- | :--- | | Less than 1 year | $3.3 | | 1-3 years | $3.5 | | 4-5 years | $1.0 | | More than 5 years | $0.1 | | **Total** | **$7.9** | - Up to **$41.5 million** in contingent consideration may be payable for the Supply Vision and GroundCloud acquisitions if certain revenue targets are met. The fair value of this liability is accrued at **$1.5 million** as of July 31, 2024[68](index=68&type=chunk) - The company has entered into equity derivative contracts to substantially offset its cash exposure to fluctuations in its stock price related to its DSU and CRSU plans[65](index=65&type=chunk) [Outstanding Share Data](index=22&type=section&id=OUTSTANDING%20SHARE%20DATA) As of September 4, 2024, Descartes had **85,480,625** common shares outstanding, along with **1.6 million** stock options, **1.0 million** PSUs, and **0.5 million** RSUs Share and Equity Award Data (as of Sept 4, 2024) | Security Type | Outstanding | | :--- | :--- | | Common Shares | 85,480,625 | | Stock Options | 1,618,941 | | Performance Share Units (PSUs) | 1,014,961 | | Restricted Share Units (RSUs) | 492,110 | [Application of Critical Accounting Policies and Estimates](index=23&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) The company's critical accounting policies and estimates, including revenue recognition and asset impairment, remain consistent with its fiscal 2024 Annual Report - The significant accounting policies are unchanged from the Company's 2024 Annual Report[76](index=76&type=chunk) - Critical accounting estimates include revenue recognition, impairment of goodwill and long-lived assets, stock-based compensation, income taxes, and business combinations[76](index=76&type=chunk) [Change in / Initial Adoption of Accounting Policies](index=23&type=section&id=CHANGE%20IN%20%2F%20INITIAL%20ADOPTION%20OF%20ACCOUNTING%20POLICIES) Descartes will adopt new segment reporting and income tax disclosure standards in fiscal 2025 and 2026, with no material impact anticipated on financial results - The company will adopt ASU 2023-07 (Segment Reporting) in Q4 fiscal 2025 and ASU 2023-09 (Income Tax Disclosures) in Q4 fiscal 2026. Neither is expected to have a material impact[77](index=77&type=chunk)[78](index=78&type=chunk) [Controls and Procedures](index=24&type=section&id=CONTROLS%20AND%20PROCEDURES) No material changes were made to the company's internal control over financial reporting during the second quarter of fiscal 2025 - No material changes were made to the Company's internal control over financial reporting during the quarter ended July 31, 2024[78](index=78&type=chunk) [Trends / Business Outlook](index=24&type=section&id=TRENDS%20%2F%20BUSINESS%20OUTLOOK) The company anticipates continued global shipping uncertainty, projecting Q3 FY2025 baseline revenues of **~$141.0 million** and maintaining a focus on services revenue Q3 FY2025 Baseline Calibration (as of Aug 1, 2024) | Metric | Estimated Amount | | :--- | :--- | | Baseline Revenues | ~$141.0 million | | Baseline Operating Expenses | ~$87.5 million | | **Baseline Calibration** | **~$53.5 million** | - The company expects its focus to remain on generating services revenues, which accounted for **89%** of total revenues in Q2 FY2025[85](index=85&type=chunk) - Anticipated capital expenditures for the remainder of fiscal 2025 are approximately **$2.0 to $3.0 million**, primarily for network and security infrastructure[91](index=91&type=chunk) - The company expects an effective tax rate of between **25% to 30%** for the remainder of fiscal 2025[96](index=96&type=chunk) [Certain Factors That May Affect Future Results](index=28&type=section&id=CERTAIN%20FACTORS%20THAT%20MAY%20AFFECT%20FUTURE%20RESULTS) Key risks impacting future results include system failures, economic conditions, acquisition integration challenges, trade regulation changes, and freight movement disruptions [System or network failures, information security breaches or other cyber-security threats](index=28&type=section&id=System%20or%20network%20failures,%20information%20security%20breaches%20or%20other%20cyber-security%20threats) IT network disruptions or cybersecurity breaches could lead to service unavailability, data compromise, reputational damage, and revenue loss - The company relies on IT networks and systems, and any disruption could prevent customers from receiving products, potentially for an extended period[100](index=100&type=chunk) [General economic conditions](index=29&type=section&id=General%20economic%20conditions) Customer demand is vulnerable to adverse economic conditions, inflation, interest rate hikes, and geopolitical events, which can reduce spending - Decreased capital and operational spending by customers, caused by economic uncertainty or geopolitical events, could materially harm demand for the company's products[104](index=104&type=chunk) [Acquisition and Integration Risks](index=30&type=section&id=Acquisition%20and%20Integration%20Risks) Challenges in identifying and integrating acquisitions may lead to customer or personnel loss and failure to achieve anticipated transaction benefits - Risks associated with acquisitions include difficulties in integration, loss of customers and key personnel from the acquired business, and the potential for valuation assumptions to be erroneous[107](index=107&type=chunk)[109](index=109&type=chunk) [Disruptions in the movement of freight](index=31&type=section&id=Disruptions%20in%20the%20movement%20of%20freight) The company's revenue is highly dependent on freight movement, which can be adversely affected by disruptions from labor disputes, weather, or political instability - Since the company generates transaction revenues from freight movement, any disruptions due to labor disputes, weather, or political instability will negatively impact traffic volume and revenues[113](index=113&type=chunk) [Condensed Consolidated Financial Statements](index=42&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the company's financial position, operating results, comprehensive income, shareholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=42&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased to **$1.57 billion** by July 31, 2024, driven by acquisitions, with total liabilities at **$253.7 million** and shareholders' equity at **$1.31 billion** Key Balance Sheet Items (in thousands) | Account | July 31, 2024 | January 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $252,653 | $320,952 | | Intangible Assets, Net | $303,871 | $251,047 | | Goodwill | $849,991 | $760,413 | | **Total Assets** | **$1,565,420** | **$1,474,285** | | **Liabilities & Equity** | | | | Deferred Revenue (Current) | $103,701 | $84,513 | | Total Liabilities | $253,656 | $236,251 | | Total Shareholders' Equity | $1,311,764 | $1,238,034 | [Condensed Consolidated Statements of Operations](index=43&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 FY2025, revenues reached **$163.4 million** and net income was **$34.7 million**, representing significant year-over-year growth Statement of Operations Highlights - Three Months Ended July 31 (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $163,425 | $143,393 | | Gross Margin | $122,877 | $108,419 | | Income from Operations | $45,846 | $36,830 | | Net Income | $34,681 | $28,116 | | Diluted EPS | $0.40 | $0.32 | [Condensed Consolidated Statements of Comprehensive Income](index=44&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Comprehensive income for Q2 FY2025 was **$36.4 million**, comprising **$34.7 million** in net income and a **$1.7 million** positive foreign currency translation adjustment Comprehensive Income - Three Months Ended July 31 (in thousands) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Net Income | $34,681 | $28,116 | | Other comprehensive income (loss) | $1,734 | $8,435 | | **Comprehensive Income** | **$36,415** | **$36,551** | [Condensed Consolidated Statements of Shareholders' Equity](index=45&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) Shareholders' equity increased to **$1.31 billion** by July 31, 2024, driven by **$69.3 million** in net income and stock option exercises - Shareholders' equity grew to **$1,311.8 million** at July 31, 2024, from **$1,238.0 million** at January 31, 2024. Key drivers were net income (**$69.3 million**) and proceeds from share exercises (**$10.7 million**), offset by other comprehensive loss (**$5.7 million**)[160](index=160&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=46&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash decreased by **$68.3 million** in the first half of FY2025, with **$98.4 million** generated from operations largely offset by **$157.1 million** used in investing activities Cash Flow Summary - Six Months Ended July 31 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by operating activities | $98,401 | $100,866 | | Cash used in investing activities | ($157,055) | ($146,083) | | Cash used in financing activities | ($8,492) | ($5,224) | | **Net (decrease) in cash** | **($68,299)** | **($48,976)** | [Notes to Condensed Consolidated Financial Statements](index=47&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 3 – Acquisitions](index=48&type=section&id=Note%203%20%E2%80%93%20Acquisitions) In fiscal 2025, Descartes completed three acquisitions totaling approximately **$157.4 million**, contributing **$10.2 million** in revenue and **$1.7 million** in net income in the first half Fiscal 2025 Acquisitions Summary | Company Acquired | Description | Purchase Price (net of cash) | | :--- | :--- | :--- | | OCR Services, Inc. | Global trade compliance solutions | ~$82.8 million | | Aerospace Software Developments (ASD) | Global trade compliance solutions | ~$62.5 million | | BoxTop Technologies Limited | Shipment management solutions | ~$12.1 million | [Note 16 - Stock-Based Compensation Plans](index=59&type=section&id=Note%2016%20-%20Stock-Based%20Compensation%20Plans) Stock-based compensation expense for Q2 FY2025 was **$5.5 million**, with significant unrecognized costs for outstanding stock options, PSUs, and RSUs Stock-Based Compensation Expense (in millions) | Period | Q2 FY2025 | Q2 FY2024 | H1 FY2025 | H1 FY2024 | | :--- | :--- | :--- | :--- | :--- | | Expense | $5.5 | $4.5 | $9.3 | $7.4 | - As of July 31, 2024, unrecognized compensation costs were **$13.8 million** for stock options, **$15.7 million** for PSUs, and **$8.0 million** for RSUs[216](index=216&type=chunk)[222](index=222&type=chunk)[225](index=225&type=chunk) [Note 21 - Segmented Information](index=64&type=section&id=Note%2021%20-%20Segmented%20Information) Descartes operates as a single segment, with the United States contributing **67%** of revenue and services revenue accounting for **90%** of total revenue in the first half of FY2025 - The company operates in one reportable business segment: providing logistics technology solutions[237](index=237&type=chunk) Revenue Breakdown - Six Months Ended July 31, 2024 | Breakdown | Category | Revenue (millions) | % of Total | | :--- | :--- | :--- | :--- | | **By Geography** | United States | $211.2 | 67% | | | EMEA | $73.6 | 23% | | | Canada | $20.4 | 7% | | | Asia Pacific | $9.7 | 3% | | **By Type** | Services | $284.1 | 90% | | | Professional services & other | $28.8 | 9% | | | License | $1.9 | 1% | [Corporate Information](index=66&type=section&id=CORPORATE%20INFORMATION) This section provides details regarding the company's stock listings and other general corporate information - Descartes' common stock trades on the Toronto Stock Exchange (TSX) under the symbol 'DSG' and on The Nasdaq Stock Market under the symbol 'DSGX'[241](index=241&type=chunk)

The Descartes Systems Group Inc. (NASDAQ:DSGX) Q3 2025 Earnings Conference Call December 3, 2024 5:30 PM ET Scott Pagan Thank you, and good afternoon, everyone. Joining me remotely on the call today are Ed Ryan, CEO; and Allan Brett, CFO. And I trust that everyone has received a copy of our financial results press release that was issued earlier this afternoon. Company Participants Scott Pagan - President and Chief Operating Officer Ed Ryan - Chief Executive Officer Allan Brett - Chief Financial Officer Con ...

For the quarter ended October 2024, Descartes Systems (DSGX) reported revenue of $168.76 million, up 16.6% over the same period last year. EPS came in at $0.42, compared to $0.31 in the year-ago quarter.The reported revenue represents a surprise of +3.54% over the Zacks Consensus Estimate of $162.98 million. With the consensus EPS estimate being $0.44, the EPS surprise was -4.55%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to dete ...

Descartes Systems (DSGX) came out with quarterly earnings of $0.42 per share, missing the Zacks Consensus Estimate of $0.44 per share. This compares to earnings of $0.31 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -4.55%. A quarter ago, it was expected that this logistics provider would post earnings of $0.43 per share when it actually produced earnings of $0.40, delivering a surprise of -6.98%.Over the last four quarters, ...

Record Revenues as Global Logistics Network ExpandsWATERLOO, Ontario and ATLANTA, Dec. 03, 2024 (GLOBE NEWSWIRE) -- The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) announced its financial results for its fiscal 2025 third quarter (Q3FY25). 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).“Our business has grown organically while we've added complementary solutions ...

ATLANTA and LONDON, Dec. 02, 2024 (GLOBE NEWSWIRE) -- Descartes Systems Group (Nasdaq:DSGX) (TSX:DSG), the global leader in uniting logistics-intensive businesses in commerce, released findings from its 2024 Supply Chain Intelligence Report: Escalating Challenges for Global Supply Chain Leaders survey, which examined the most significant global trade challenges facing logistics and supply chain leaders today. The study showed that 48% of respondents identified rising tariffs and trade barriers as their top ...

ATLANTA, Nov. 18, 2024 (GLOBE NEWSWIRE) -- Descartes Systems Group (Nasdaq:DSGX) (TSX:DSG), the global leader in uniting logistics-intensive businesses in commerce, announced that Michigan-based Automated Logistics Systems is using Descartes’ foreign trade zone (FTZ) solution to help its customers accelerate customs clearance and lower costs for imports into the U.S. by deferring the payment of many duties. “With our warehouse in Jackson, Michigan already established as an FTZ, we wanted to make customs com ...