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DSGX's Q3 Earnings Lag, Sales Up Y/Y on Organic Growth & Acquisitions
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Descartes Systems (DSGX - Free Report) 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 ZacksEarnings 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 addressing the complexities of global trade and logistics. It recorded organic growth of 10% in the fiscal third quarter. DSGX also enhanced its solution portfolio with five acquisitions settled in 2024, including MCP and Sellercloud, in the reported quarter.
In addition, GroundCloud business brought in extra hardware revenues from rolling out artificial intelligence (AI) cameras, following a FedEx mandate for their contractors, adding roughly $3.5 million of low-margin hardware revenues.
As of Nov. 1, 2024, assuming foreign exchange rates of 72 cents to the Canadian dollar, $1.09 to the euro currency and $1.29 to the pound, DSGX forecasts baseline revenues and operating expenses for the fourth quarter of fiscal 2025 to be roughly $144.5 million and $89.5 million, respectively. Baseline adjusted EBITDA is expected at approximately $55 million.
The Descartes Systems Group Inc. Price, Consensus and EPS Surprise
Services revenues (contributed 89% of total revenues) in the reported quarter amounted to $149.7 million, up 15% year over year.
License revenues (2% of total revenues) were $3.5 million, which climbed 133.3% year over year.
Professional services and other revenues (9%) were up 22% year over year to $15.6 million.
Other Details
The gross margin for the quarter under review was 74.4% compared with 76.3% in the prior-year period. Management expects the drop to be temporary and due to low-margin hardware sales from the GroundCloud business.
Total operating expenses increased nearly 14% year over year, mainly due to costs from five acquisitions finalized in 2024, along with higher costs from adding staff and increased marketing, including expenses for the successful innovation forums and customer events in the fiscal third quarter.
Income from operations was up 41.3% year over year to $45.8 million.
Cash Flow & Liquidity
In the quarter under review, DSGX generated $60.1 million of cash from operating activities compared with $56.1 million in the prior-year quarter.
As of Oct. 31, 2024, the company had $181.3 million in cash, down from $252.6 million as of July 31, 2024. Cash decreased mainly because of the $133 million spent on the MCP and Sellercloud acquisitions during the quarter.
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of $1.87 per share, which beat the Zacks Consensus Estimate by 4.5% and jumped 18.4% year over year. The bottom line also surpassed the company’s guided range of $1.73-$1.83.
Shares of NTAP gained 37.4% in the past year.
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.
Shares of WDC surged 53.3% in the past year.
Woodward, Inc. (WWD - Free Report) reported fourth-quarter fiscal 2024 adjusted net earnings per share of $1.41, which jumped 6% year over year and beat the Zacks Consensus Estimate by 15.6%.
Shares of WWD have gained 33% in the past year.
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DSGX's Q3 Earnings Lag, Sales Up Y/Y on Organic Growth & Acquisitions
Descartes Systems (DSGX - Free Report) 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 addressing the complexities of global trade and logistics. It recorded organic growth of 10% in the fiscal third quarter. DSGX also enhanced its solution portfolio with five acquisitions settled in 2024, including MCP and Sellercloud, in the reported quarter.
In addition, GroundCloud business brought in extra hardware revenues from rolling out artificial intelligence (AI) cameras, following a FedEx mandate for their contractors, adding roughly $3.5 million of low-margin hardware revenues.
As of Nov. 1, 2024, assuming foreign exchange rates of 72 cents to the Canadian dollar, $1.09 to the euro currency and $1.29 to the pound, DSGX forecasts baseline revenues and operating expenses for the fourth quarter of fiscal 2025 to be roughly $144.5 million and $89.5 million, respectively. Baseline adjusted EBITDA is expected at approximately $55 million.
The Descartes Systems Group Inc. Price, Consensus and EPS Surprise
The Descartes Systems Group Inc. price-consensus-eps-surprise-chart | The Descartes Systems Group Inc. Quote
Segmental Details
Services revenues (contributed 89% of total revenues) in the reported quarter amounted to $149.7 million, up 15% year over year.
License revenues (2% of total revenues) were $3.5 million, which climbed 133.3% year over year.
Professional services and other revenues (9%) were up 22% year over year to $15.6 million.
Other Details
The gross margin for the quarter under review was 74.4% compared with 76.3% in the prior-year period. Management expects the drop to be temporary and due to low-margin hardware sales from the GroundCloud business.
Total operating expenses increased nearly 14% year over year, mainly due to costs from five acquisitions finalized in 2024, along with higher costs from adding staff and increased marketing, including expenses for the successful innovation forums and customer events in the fiscal third quarter.
Income from operations was up 41.3% year over year to $45.8 million.
Cash Flow & Liquidity
In the quarter under review, DSGX generated $60.1 million of cash from operating activities compared with $56.1 million in the prior-year quarter.
As of Oct. 31, 2024, the company had $181.3 million in cash, down from $252.6 million as of July 31, 2024. Cash decreased mainly because of the $133 million spent on the MCP and Sellercloud acquisitions during the quarter.
DSGX’s Zacks Rank
DSGX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of $1.87 per share, which beat the Zacks Consensus Estimate by 4.5% and jumped 18.4% year over year. The bottom line also surpassed the company’s guided range of $1.73-$1.83.
Shares of NTAP gained 37.4% in the past year.
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.
Shares of WDC surged 53.3% in the past year.
Woodward, Inc. (WWD - Free Report) reported fourth-quarter fiscal 2024 adjusted net earnings per share of $1.41, which jumped 6% year over year and beat the Zacks Consensus Estimate by 15.6%.
Shares of WWD have gained 33% in the past year.