Descartes Announces Fiscal 2023 Second Quarter Financial

Record Revenues and Income from Operations

WATERLOO, Ontario, Sept. 07, 2022 (GLOBE NEWSWIRE) — The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) introduced its monetary outcomes for its fiscal 2023 second quarter (Q2FY23). All monetary outcomes referenced are in United States (US) forex and, until in any other case indicated, are decided in accordance with US Generally Accepted Accounting Principles (GAAP).

“Descartes had a very successful quarter helping customers navigate the complexities of global supply chains and logistics,” stated Edward J. Ryan, Descartes’ CEO. “Geopolitical events, energy supplies and costs, and economic uncertainty have combined to present novel challenges for supply chain participants to manage. Our Global Logistics Network (GLN) is designed to help these shippers, carriers and logistics services providers connect and collaborate to plan and execute shipments in an efficient and sustainable manner. We’re pleased that we’ve been able to help so many existing and new customers improve their businesses and supply chains.”

Q2FY23 Financial Results

As described in additional element under, key monetary highlights for Descartes’ Q2FY23 included:

• Revenues of $123.0 million, up 18% from $104.6 million within the second quarter of fiscal 2022 (Q2FY22) and up 6% from $116.4 million within the earlier quarter (Q1FY23);
• Revenues had been comprised of providers revenues of $109.4 million (89% of complete revenues), skilled providers and different revenues of $10.3 million (8% of complete revenues) and license revenues of $3.3 million (3% of complete revenues). Services revenues had been up 17% from $93.5 million in Q2FY22 and up 6% from $102.8 million in Q1FY23;
• Cash supplied by working actions of $46.4 million, according to $46.4 million in Q2FY22 and up 5% from $44.4 million in Q1FY23. In Q2FY23, Descartes paid $10.5 million in contingent consideration in respect of beforehand accomplished acquisitions of which $5.3 million was accounted for as money utilized in working actions in Q2FY23;
• Income from operations of $31.5 million, up 21% from $26.1 million in Q2FY22 and up 3% from $30.6 million in Q1FY23;
• Net revenue of $22.9 million, down from $23.2 million in Q2FY22 and down from $23.1 million in Q1FY23. Net revenue as a share of income was 19%, in comparison with 22% in Q2FY22 and 20% in Q1FY23;
• Earnings per share on a diluted foundation of $0.27, according to $0.27 in each Q2FY22 and Q1FY23, respectively; and
• Adjusted EBITDA of $54.0 million, up 18% from $45.9 million in Q2FY22 and up 5% from $51.2 million in Q1FY23. Adjusted EBITDA as a share of revenues was 44%, according to 44% in each Q2FY22 and Q1FY23, respectively.

Adjusted EBITDA and Adjusted EBITDA as a share of revenues are non-GAAP monetary measures supplied as a complement to monetary outcomes offered in accordance with GAAP. We outline Adjusted EBITDA as earnings earlier than curiosity, taxes, depreciation, amortization, stock-based compensation (for which we embrace associated charges and taxes) and different expenses (for which we embrace restructuring expenses and acquisition-related bills). These objects are thought-about by administration to be outdoors Descartes’ ongoing operational outcomes. We outline Adjusted EBITDA as a share of revenues because the quotient, expressed as a share, from dividing Adjusted EBITDA for a interval by revenues for the corresponding interval. A reconciliation of Adjusted EBITDA and Adjusted EBITDA as a share of revenues to internet revenue decided in accordance with GAAP is supplied later on this launch.

The following desk summarizes Descartes’ ends in the classes specified under over the previous 5 fiscal quarters (unaudited; greenback quantities, aside from per share quantities, in tens of millions):

Year-to-Date Financial Results

As described in additional element under, key monetary highlights for Descartes’ six-month interval ended July 31, 2022 (1HFY23) included:

• Revenues of $239.4 million, up 18% from $203.4 million in the identical interval a yr in the past (1HFY22);
• Revenues had been comprised of providers revenues of $212.2 million (89% of complete revenues), skilled providers and different revenues of $21.6 million (9% of complete revenues) and license revenues of $5.6 million (2% of complete revenues). Services revenues had been up 17% from $181.8 million in 1HFY22;
• Cash supplied by working actions of $90.8 million, up 4% from $87.3 million in 1HFY22. In 1HFY23, Descartes paid $10.5 million in contingent consideration in respect of beforehand accomplished acquisitions of which $5.3 million was accounted for as money utilized in working actions in 1HFY23;
• Income from operations of $62.1 million, up 25% from $49.5 million in 1HFY22;
• Net revenue of $46.0 million, up 11% from $41.6 million in 1HFY22. Net revenue as a share of revenues was 19%, in comparison with 20% in 1HFY22;
• Earnings per share on a diluted foundation of $0.53, up 10% from $0.48 in 1HFY22; and
• Adjusted EBITDA of $105.2 million, up 20% from $87.4 million in 1HFY22. Adjusted EBITDA as a share of revenues was 44%, in comparison with 43% in 1HFY22.

The following desk summarizes Descartes’ ends in the classes specified under over 1HFY23 and 1HFY22 (unaudited, greenback quantities in tens of millions):

Cash Position

At July 31, 2022, Descartes had $189.0 million in money. Cash decreased by $22.8 million in Q2FY23 and decreased $24.4 million in 1HFY23. The desk set forth under gives a abstract of money flows for Q2FY23 and 1HFY23 in tens of millions of {dollars}:

Acquisition of XPS

On June 3, 2022, Descartes acquired all the shares of XPS Technologies, LLC (“XPS”), a supplier of ecommerce multi-carrier parcel transport options. The buy worth for the acquisition was roughly $61.1 million, internet of money acquired, which was funded from money available, plus potential performance-based contingent consideration of as much as $75.0 million primarily based on XPS attaining revenue-based targets over the primary two years post-acquisition.

Normal-course issuer bid (NCIB)

On June 7, 2022, Descartes introduced a NCIB, commencing June 10, 2022, to buy as much as roughly 7.4 million widespread shares within the open marketplace for cancellation. Under the NCIB, Descartes is permitted to repurchase for cancellation, at its discretion on or earlier than June 9, 2023, as much as 10% of the “public float” (calculated in accordance with the foundations of the TSX) of Descartes’ issued and excellent widespread shares. Any purchases underneath the NCIB shall be topic to the phrases and limitations relevant to such NCIB, and shall be made by means of the amenities of the TSX, Nasdaq, different designated exchanges and/or various Canadian buying and selling methods, or by such different means as could also be permitted by the Ontario Securities Commission or different relevant Canadian Securities Administrators. No widespread shares have but been bought pursuant to the NCIB.

Short-form base shelf prospectus
On July 15, 2022, we filed the 2022 Base Shelf Prospectus, permitting us to supply and challenge a limiteless amount of the next securities through the 25-month interval following thereafter: (i) widespread shares; (ii) most popular shares; (iii) senior or subordinated unsecured debt securities; (iv) subscription receipts; (v) warrants; and (vi) securities comprised of greater than one of many aforementioned widespread shares, most popular shares, debt securities, subscription receipts and/ or warrants provided collectively as a unit. These securities could also be provided individually or collectively, in separate sequence, in quantities, at costs and on phrases to be set forth in a number of shelf prospectus dietary supplements. No securities have but been bought pursuant to the 2022 Base Shelf Prospectus.

Conference Call
Members of Descartes’ government administration group will host a convention name to debate the corporate’s monetary outcomes at 5:30 p.m. ET on Wednesday, September 7. Designated numbers are +1 866 455 3403 for North America and +1 647 484 8332 for worldwide, utilizing Passcode 96484241#.

The firm will concurrently conduct an audio webcast on the Descartes web site at www.descartes.com/descartes/investor-relations. Phone convention dial-in or webcast log-in is required roughly 10 minutes beforehand.

Replays of the convention name shall be out there till September 14, 2022, on the following handle: https://onlinexperiences.com/Launch/QReg/ShowUUID=363B9D23-BDC9-437F-8BDC-42CA9C002737&LangLocaleID=1033 utilizing Passcode: EV00136656. An archived replay of the webcast shall be out there at www.descartes.com/descartes/investor-relations.

About Descartes

Descartes (Nasdaq:DSGX) (TSX:DSG) is the worldwide chief in offering on-demand, software-as-a-service options targeted on enhancing the productiveness, efficiency and safety of logistics-intensive companies. Customers use our modular, software-as-a-service options to route, schedule, observe and measure supply sources; plan, allocate and execute shipments; fee, audit and pay transportation invoices; entry world commerce information; file customs and safety paperwork for imports and exports; and full quite a few different logistics processes by collaborating on this planet’s largest, collaborative multimodal logistics group. Our headquarters are in Waterloo, Ontario, Canada and we’ve got places of work and companions all over the world. Learn extra at www.descartes.com, and join with us on LinkedIn and Twitter. 

Descartes Investor Contact:
Laurie McCauley +1-519-746-6114 x202358
[email protected]

Safe Harbor Statement
This launch could comprise forward-looking info inside the that means of relevant securities legal guidelines (“forward-looking statements”) that pertains to Descartes’ expectations regarding future revenues and earnings, and our projections for any future reductions in bills or progress in margins and era of money; our evaluation of the present and future potential impression of the struggle in Ukraine and the COVID-19 pandemic on our business, outcomes of operations and monetary situation; continued progress and acquisitions together with our evaluation of any elevated alternative for our services on account of tendencies within the logistics and provide chain industries; fee of worthwhile progress; demand for Descartes’ options; progress of Descartes’ Global Logistics Network (“GLN”); buyer shopping for patterns; buyer expectations of Descartes; growth of the GLN and the advantages thereof to prospects; and different issues. These forward-looking statements are primarily based on sure assumptions together with the next: world cargo volumes persevering with at ranges usually according to these skilled traditionally; the present struggle in Ukraine and the COVID-19 pandemic not having a fabric adverse impression on cargo volumes or on the demand for the services of Descartes by its prospects and the flexibility of these prospects to proceed to pay for these services; international locations persevering with to implement and implement current and extra customs and safety rules regarding the supply of digital info for imports and exports; international locations persevering with to implement and implement current and extra commerce restrictions and sanctioned occasion lists with respect to doing business with sure international locations, organizations, entities and people; Descartes’ continued operation of a safe and dependable business community; the soundness of common financial and market circumstances, forex trade charges, and rates of interest; fairness and debt markets persevering with to offer Descartes with entry to capital; Descartes’ continued skill to establish and supply enticing and executable business mixture alternatives; Descartes’ skill to develop options that preserve tempo with the persevering with adjustments in expertise, and our continued compliance with third occasion mental property rights. These assumptions could show to be inaccurate. Such forward-looking statements contain identified and unknown dangers, uncertainties and different elements which will trigger the precise outcomes, efficiency or achievements of Descartes, or developments in Descartes’ business or business, to vary materially from the anticipated outcomes, efficiency or achievements or developments expressed or implied by such forward-looking statements. Such elements embrace, however should not restricted to, Descartes’ skill to efficiently establish and execute on acquisitions and to combine acquired companies and belongings, and to foretell bills related to and revenues from acquisitions; the impression of community failures, info safety breaches or different cyber-security threats; disruptions within the motion of freight and a decline in cargo volumes together with on account of contagious sickness outbreaks; a deterioration of common financial circumstances or instability within the monetary markets accompanied by a lower in spending by our prospects; the flexibility to draw and retain key personnel and the flexibility to handle the departure of key personnel and the transition of our government administration group; adjustments in commerce or transportation rules that at the moment require prospects to make use of providers equivalent to these provided by Descartes; adjustments in buyer behaviour and expectations; Descartes’ skill to efficiently design and develop enhancements to our merchandise and options; departures of key prospects; the impression of overseas forex trade charges; Descartes’ skill to retain or acquire enough capital along with its debt facility to execute on its business technique, together with its acquisition technique; disruptions within the motion of freight; the potential for future goodwill or intangible asset impairment on account of other-than-temporary decreases in Descartes’ market capitalization; and different elements and assumptions mentioned within the part entitled, “Certain Factors That May Affect Future Results” in paperwork filed with the Securities and Exchange Commission, the Ontario Securities Commission and different securities commissions throughout Canada, together with Descartes’ most not too long ago filed Management’s Discussion and Analysis. If any such dangers truly happen, they may materially adversely have an effect on our business, monetary situation or outcomes of operations. In that case, the buying and selling worth of our widespread shares might decline, maybe materially. Readers are cautioned to not place undue reliance upon any such forward-looking statements, which communicate solely as of the date made. Forward-looking statements are supplied for the aim of offering details about administration’s present expectations and plans regarding the longer term. Readers are cautioned that such info might not be acceptable for different functions. We don’t undertake or settle for any obligation or endeavor to launch publicly any updates or revisions to any forward-looking statements to replicate any change in our expectations or any change in occasions, circumstances or circumstances on which any such assertion is predicated, besides as required by legislation.

Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA and Adjusted EBITDA as a share of revenues

We put together and launch quarterly unaudited and annual audited monetary statements ready in accordance with GAAP. We additionally disclose and focus on sure non-GAAP monetary info, used to guage our efficiency, on this and different earnings releases and investor convention calls as a complement to outcomes supplied in accordance with GAAP. We consider that present shareholders and potential buyers in our firm use non-GAAP monetary measures, equivalent to Adjusted EBITDA and Adjusted EBITDA as a share of revenues, in making funding selections about our firm and measuring our operational outcomes.

The time period “Adjusted EBITDA” refers to a monetary measure that we outline as earnings earlier than sure expenses that administration considers to be non-operating bills and which encompass curiosity, taxes, depreciation, amortization, stock-based compensation (for which we embrace associated charges and taxes) and different expenses (for which we embrace restructuring expenses and acquisition-related bills). Adjusted EBITDA as a share of revenues divides Adjusted EBITDA for a interval by the revenues for the corresponding interval and expresses the quotient as a share.

Management considers these non-operating bills to be outdoors the scope of Descartes’ ongoing operations and the associated bills should not utilized by administration to measure operations. Accordingly, these bills are excluded from Adjusted EBITDA, which we reference to each measure our operations and as a foundation of comparability of our operations from period-to-period. Management believes that buyers and monetary analysts measure our business on the identical foundation, and we’re offering the Adjusted EBITDA monetary metric to help on this analysis and to offer the next stage of transparency into how we measure our personal business. However, Adjusted EBITDA and Adjusted EBITDA as a share of revenues are non-GAAP monetary measures and might not be akin to equally titled measures reported by different firms. Adjusted EBITDA and Adjusted EBITDA as a share of revenues shouldn’t be construed as an alternative to internet revenue decided in accordance with GAAP or different non-GAAP measures that could be utilized by different firms, equivalent to EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a share of revenues does have limitations. In explicit, we’ve got accomplished six acquisitions because the starting of fiscal 2022 and will full extra acquisitions sooner or later that may end in acquisition-related bills and restructuring expenses. As these acquisition-related bills and restructuring expenses could proceed as we pursue our consolidation technique, some buyers could take into account these expenses and bills as a recurring a part of operations quite than bills that aren’t a part of operations.

The desk under reconciles Adjusted EBITDA and Adjusted EBITDA as a share of revenues to internet revenue reported in our unaudited Consolidated Statements of Operations for Q2FY23, Q1FY23, Q4FY22, Q3FY22, and Q2FY22, which we consider is essentially the most instantly comparable GAAP measure.

The desk under reconciles Adjusted EBITDA and Adjusted EBITDA as a share of revenues to internet revenue reported in our unaudited Consolidated Statements of Operations for 1HFY23 and 1HFY22, which we consider is essentially the most instantly comparable GAAP measure.

The Descartes Systems Group Inc.
Condensed Consolidated Balance Sheets
(US {dollars} in hundreds; US GAAP; Unaudited)
        

The Descartes Systems Group Inc.
Consolidated Statements of Operations
(US {dollars} in hundreds, besides per share and weighted common share quantities; US GAAP; Unaudited)

The Descartes Systems Group Inc.
Condensed Consolidated Statements of Cash Flows
(US {dollars} in hundreds; US GAAP; Unaudited)