Record Revenues and Income from Operations
WATERLOO, Ontario and ATLANTA, March 06, 2024 (GLOBE NEWSWIRE) — The Descartes Systems Group Inc. (TSX:DSG) (NASDAQ:DSGX) announced its financial results for its fiscal 2024 fourth quarter (Q4FY24) and year (FY24) ended January 31, 2024. 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 continues to be impacted by military conflicts, disruptions to major shipping routes and a growing list of sanctions from various governments around the world,” said Edward J. Ryan, Descartes’ CEO. “Our Global Logistics Network is designed to help shippers, carriers and logistics services providers adapt their supply chains to efficiently manage the lifecycle of shipments in this increasingly dynamic landscape. As a result, our customers are trusting us with more of their business which puts us in a strong financial position to continue to invest in our business.”
FY24 Financial Results
As described in more detail below, key financial highlights for Descartes’ FY24 included:
Revenues of $572.9 million, up 18% from $486.0 million in the same period a year ago (FY23);
Revenues were comprised of services revenues of $520.9 million (91% of total revenues), professional services and other revenues of $46.7 million (8% of total revenues) and license revenues of $5.3 million (1% of total revenues). Services revenues were up 20% from $435.7 million in FY23;
Cash provided by operating activities of $207.7 million, up 8% from $192.4 million in FY23. Cash provided by operating activities was negatively impacted by $12.6 million in FY24 and $5.6 million FY23 related to contingent consideration payments due to better-than-expected performance from recent acquisitions;
Income from operations of $142.8 million, up 10% from $130.4 million in FY23;
Net income of $115.9 million, up 13% from $102.2 million in FY23. Net income as a percentage of revenues was 20%, compared to 21% in FY23;
Earnings per share on a diluted basis of $1.34, up 14% from $1.18 in FY23; and
Adjusted EBITDA of $247.5 million, up 15% from $215.2 million in FY23. Adjusted EBITDA as a percentage of revenues was 43%, compared to 44% in FY23.
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 FY24 and FY23 (dollar amounts in millions):
FY24
FY23
Revenues
572.9
486.0
Services revenues
520.9
435.7
Gross margin
76%
77%
Cash provided by operating activities
207.7
192.4
Income from operations
142.8
130.4
Net income
115.9
102.2
Net income as a % of revenues
20%
21%
Earnings per diluted share
1.34
1.18
Adjusted EBITDA
247.5
215.2
Adjusted EBITDA as a % of revenues
43%
44%
Q4FY24 Financial Results
As described in more detail below, key financial highlights for Q4FY24 included:
Revenues of $148.2 million, up 18% from $125.1 million in the fourth quarter of fiscal 2023 (Q4FY23) and up 2% from $144.7 million in the previous quarter (Q3FY24);
Revenues were comprised of services revenues of $135.7 million (92% of total revenues), professional services and other revenues of $11.1 million (7% of total revenues) and license revenues of $1.4 million (1% of total revenues). Services revenues were up 20% from $113.4 million in Q4FY23 and up 4% from $130.4 million in Q3FY24;
Cash provided by operating activities of $50.8 million, consistent with $50.6 million in Q4FY23 and down from $56.1 million in Q3FY24. Cash provided by operating activities was negatively impacted by $12.6 million in Q4FY24 related to contingent consideration payments due to better-than-expected performance from recent acquisitions;
Income from operations of $37.0 million, up 10% from $33.6 million in Q4FY23 and up 14% from $32.4 million in Q3FY24;
Net income of $31.8 million, up 7% from $29.8 million in Q4FY23 and up 20% from $26.6 million in Q3FY24. Net income as a percentage of revenues was 21%, compared to 24% in Q4FY23 and 18% in Q3FY24;
Earnings per share on a diluted basis of $0.37, up 9% from $0.34 in Q4FY24 and up 19% from $0.31 in Q3FY24; and
Adjusted EBITDA of $65.7 million, up 19% from $55.4 million in Q4FY23 and up 3% from $63.5 million in Q3FY24. Adjusted EBITDA as a percentage of revenues was 44%, consistent with Q4FY23 and Q3FY24.
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):
Q4
FY24
Q3
FY24
Q2
FY24
Q1
FY24
Q4
FY23
Revenues
148.2
144.7
143.4
136.6
125.1
Services revenues
135.7
130.4
130.7
124.1
113.4
Gross margin
76%
76%
76%
76%
77%
Cash provided by operating activities
50.8
56.1
52.0
48.9
50.6
Income from operations
37.0
32.4
36.8
36.5
33.6
Net income
31.8
26.6
28.1
29.4
29.8
Net income as a % of revenues
21%
18%
20%
22%
24%
Earnings per diluted share
0.37
0.31
0.32
0.34
0.34
Adjusted EBITDA
65.7
63.5
60.6
57.7
55.4
Adjusted EBITDA as a % of revenues
44%
44%
42%
42%
44%
Cash Position
At January 31, 2024, Descartes had $321.0 million in cash. Cash increased by $41.4 million in Q4FY24 and $44.6 million in FY24. The table set forth below provides a summary of cash flows for Q4FY24 and FY24 in millions of dollars:
Q4FY24
FY24
Cash provided by operating activities
50.8
207.7
Additions to property and equipment
(0.7)
(5.6)
Acquisitions of subsidiaries, net of cash acquired
–
(142.7)
Issuances of common shares, net of issuance costs
2.8
9.3
Payment of withholding taxes on net share settlements
–
(4.9)
Payment of contingent consideration
(12.8)
(19.1)
Effect of foreign exchange rate on cash
1.3
(0.1)
Net change in cash
41.4
44.6
Cash, beginning of period
279.6
276.4
Cash, end of period
321.0
321.0
Conference Call
Descartes’ executive management team will hold a conference call to discuss the company’s financial results at 5:30 p.m. ET on Wednesday, March 6. Designated numbers are +1 416 764 8658 or +1 888 886 7786 for North America Toll-Free, using Passcode 26517286#.
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 March 13, 2024, by dialling +1 416 764 8692 or Toll-Free for North America using +1 877 674 7070 with Playback Passcode: 517286#. 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) 746-2969
investor@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 …