The Descartes Systems Group Inc. (NASDAQ:DSGX) Q4 2020 Earnings Conference Call March 4, 2020 5:00 PM ET Company Participants Scott Pagan - President & COO Ed Ryan - CEO Allan Brett - CFO Conference Call Participants Matt Pfau - William Blair Justin Long - Stephens Paul Treiber - RBC Capital Rob Salmon - Wolfe Research Robert Young - Canaccord Genuity Operator Welcome to the Quarterly Results Call. My name is Darrell, and I'll be your operator for today's call. At this time, all participants are in a listen ...

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $83 million, up 19% from $70 million in Q3 2019, with a foreign exchange headwind of approximately $1 million [51] - Adjusted EBITDA increased by 31% to $31.5 million, representing 38% of revenue compared to 34.3% in the same period last year [53] - Cash flow from operations was $27.5 million, or approximately 87% of adjusted EBITDA, up 43% from $19.2 million in Q3 2019 [54] Business Line Data and Key Metrics Changes - Services revenue increased by 19% to $72.6 million, consistent at 87% of total revenue [52] - License revenues slightly decreased to $1.5 million, maintaining just over 2% of sales [52] - Professional services and other revenue rose to $8.9 million, up from $7.3 million, consistent at 11% of revenue [52] Market Data and Key Metrics Changes - Europe has shown strong performance, with no significant negative impact from macroeconomic conditions reported [72] - The company continues to see growth opportunities in the e-commerce sector, particularly for small and medium-sized businesses [27][28] Company Strategy and Development Direction - The company focuses on delivering predictable results for customers, which in turn supports shareholder value [8] - Descartes aims to enhance its network-based approach to provide real-time connectivity across the supply chain, addressing the increasing demand for data and efficiency [20][21] - The strategy includes continued investment in acquisitions and expanding the capabilities of its logistics network [66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain a long-term growth rate of 10% to 15% in adjusted EBITDA, despite potential fluctuations [67] - The company is well-capitalized for acquisition opportunities, with a strong pipeline and access to additional capital [66][57] - Management noted that the integration of Visual Compliance has exceeded expectations, contributing positively to revenue and profitability [100] Other Important Information - The company has completed four acquisitions in FY 2020 and continues to seek additional opportunities in the logistics and supply chain sector [16][66] - The upcoming Evolution 2020 conference is highlighted as an opportunity for stakeholders to engage with the company [61] Q&A Session Summary Question: Impact of macro environment on performance - Management did not observe any negative impact from the macro environment, particularly in Europe, which continues to perform well [72] Question: Partnership with Microsoft on BI - The partnership aims to enhance data utilization for customers, allowing them to create custom reports and improve operational efficiency [73] Question: Sensitivity to peak season performance - A condensed peak season may increase pressure on customers, which could be beneficial for Descartes as it drives demand for their efficiency tools [75] Question: Confidence in long-term EBITDA growth - Management reaffirmed confidence in the 10% to 15% growth target, indicating stability in performance [77][78] Question: Acquisition pipeline dynamics - The company continues to see both large and small acquisition opportunities, focusing primarily on smaller tuck-in acquisitions [80] Question: Competitive landscape for Visual Compliance - Management believes they have a competitive offering in the market and are seeing positive growth and profitability from the integration [86] Question: Capacity matching market dynamics - The company is focused on providing data to logistics service providers rather than competing directly with them, aiming to enhance their operational efficiency [89]

Financial Data and Key Metrics Changes - Revenue for Q2 2020 was $80.5 million, up 20% from $67.1 million in Q2 2019 [11][36] - Adjusted EBITDA increased by 32% to $30.2 million, representing 37.5% of revenue compared to 34% in the same period last year [11][39] - Cash flow from operations was $26.9 million, or approximately 89% of adjusted EBITDA, up 48% from $18.2 million in Q2 2019 [12][40] - Net income was $8.6 million, or $0.10 per diluted share, slightly up from $8.5 million or $0.11 per diluted share in Q2 2019 [41] Business Line Data and Key Metrics Changes - Services revenue increased by 20% to $71.4 million, accounting for 89% of total revenue [37] - License revenue decreased slightly to $1.1 million, just over 1% of sales [37] - Professional service and other revenue rose to $8.0 million, up from $6.1 million in the same period last year [37] Market Data and Key Metrics Changes - The North American freight market is experiencing significant changes, with some carriers going out of business due to inability to adapt to rapid demand shifts [14][15] - The company is focusing on enhancing its Global Logistics Network to help supply chain participants operate efficiently [9][10] Company Strategy and Development Direction - The company continues to invest in acquisitions, having completed three in Q2: CORE, STEPcom, and BestTransport [13][19][23] - The strategy emphasizes building a trusted network for supply chain participants and enhancing technology solutions to improve operational efficiency [21][22] - The company aims for sustainable growth in adjusted EBITDA of 10% to 15%, with expectations of achieving mid to high 20s growth for the fiscal year due to recent acquisitions [55][56] Management's Comments on Operating Environment and Future Outlook - Management noted that global trade regulations are dynamic, creating both challenges and opportunities for agile companies [8][10] - The company is optimistic about its ability to leverage technology to help customers navigate complex market dynamics [9][10] - Management expressed confidence in the acquisition pipeline and the ability to deploy capital effectively for future growth [53][54] Other Important Information - The company raised $245 million through a public share offering, enhancing its capacity for further investments [13][43] - The balance sheet remains strong, with cash balances totaling $27.4 million and a net cash position of just under $5 million [42][45] Q&A Session Summary Question: Can you discuss the acquisition pipeline and the balance between reinvestment and acquisitions? - Management indicated that the market for acquisitions remains strong, but they are cautious about overpaying for targets [58][59] Question: What drove the impressive cash conversion rate this quarter? - The company noted that typical cash conversion rates range from 80% to 90%, with this quarter being at the higher end due to better collections [60][61] Question: How is MacroPoint gaining traction with shippers? - Management confirmed that while freight brokers are the primary customers, they are seeing increased interest from large shippers looking for tracking solutions [64][65] Question: What is the outlook for the e-commerce side of the business? - The company reported significant organic revenue growth driven by e-commerce solutions, indicating strong customer demand [69][70] Question: How is the company navigating trade volumes amid ongoing trade disputes? - Management stated that they have not seen a significant impact on their network, as shipments continue regardless of origin [73][74]

Descartes Systems Group, Inc. (NASDAQ:DSGX) Q4 2019 Earnings Conference Call March 6, 2019 5:00 PM ET Corporate Participants Scott Pagan - President and Chief Operating Officer Ed Ryan - Chief Executive Officer Allan Brett - Chief Financial Officer Conference Call Participants Phillip Huang - Barclays Paul Steep - Scotia Capital Deepak Kaushal - GMP Securities Paul Treiber - RBC Capital Markets Stephanie Price - CIBC Matt Pfau - William Blair David Hynes - Canaccord Steven Li - Raymond James Operator Welcom ...

Descartes Systems Group, Inc. (NASDAQ:DSGX) Acquisition of Visual Compliance/eCustoms Business Conference Call January 28, 2019 8:30 AM ET Company Participants Scott Pagan - President & COO Ed Ryan - CEO & Director Allan Brett - CFO Conference Call Participants Paul Steep - Scotia Capital Deepak Kaushal - GMP Securities David Hynes - Canaccord Steven Lee - Raymond James Phillip Huang - Barclays Operator Welcome to the Descartes Update. My name is Sylvia and I'll be your operator for today's call. [Operator ...