Descartes Systems DSGX reported second-quarter fiscal 2025 non-GAAP earnings per share (EPS) of 40 cents, which missed the Zacks Consensus Estimate of 43 cents. The bottom line, however, expanded 25% year over year.
Revenues in the quarter totaled $163.4 million, beating the Zacks Consensus Estimate by 2.8%. The top line jumped 14% year over year. Synergies stemming from the acquisition of BoxTop Technologies during the quarter, along with OCR and Thyme ASD buyouts settled in the fiscal first quarter, drove the top-line performance. Also, the organic revenue growth of 9% from new and existing customers during the quarter propelled top-line expansion.
As of Aug. 1, 2024, assuming foreign exchange rates of 72 cents to the Canadian dollar, $1.08 to the euro currency and $1.28 to the pound, DSGX forecasts baseline revenues and operating expenses for the third quarter of fiscal 2025 to be roughly $141 million and $87.5 million, respectively. Baseline adjusted EBITDA is expected at approximately $53.5 million. It continues to project an adjusted EBITDA operating margin range of 40-45%.
Following the announcement, shares were down 2.99% in the after-market trading on Sept., 4.
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% to total revenues) in the reported quarter amounted to $146.2 million, up 12% year over year. The uptick was driven by an increasing customer base.
License revenues (1% of total revenues) were $1.4 million, on par with the prior-year quarter figure.
Professional services and other revenues (10%) were up 39.8% year over year to $15.8 million, driven by unexpected low-margin hardware sales of $2.5 million in the GroundCloud business.
Other Details
The gross margin for the quarter under review was 75% compared with 76% in the prior-year period, owing to the low-margin hardware sales in the GroundCloud business.
Total operating expenses increased nearly 11% year over year due to the BoxTop and OCR buyouts.
Income from operations was up 25% year over year to $45.9 million.
Cash Flow & Liquidity
In the quarter under review, DSGX generated $34.7 million of cash from operating activities compared with $52 million in the prior-year quarter. The decline was due to the payment of $25 million in contingent acquisition consideration for previously completed deals, which was not accrued at the time of acquisition.
As of July 31, 2024, the company had $252.6 million in cash, up from $238.9 million as of April 30, 2024, due to strong cash flow performance.
DSGX’s Zacks Rank
DSGX currently has a Zacks Rank #3 (Hold).
Performance of Other Companies
BlackBerry’s BB first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of BB have lost 59.1% in the past year.
Badger Meter, Inc BMI reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 20.6% in the past year.
SAP SE SAP reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
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