Supply chain software provider Descartes Systems Group cites growth among its customer base and their willingness to invest in new technology for its record Q3 revenue.
“We generally do well as our customers do well, and a large portion of our customer base is continuing to do well. Ocean carriers, trucking companies, air cargo providers, freight forwarders, non-vessel-operating common carriers, freight brokers, customs brokers, third-party logistics providers — these are boom times for logistics service providers across the board,” CEO Edward Ryan said Wednesday on Descartes’ earnings call.
The company reported a 4% increase in revenue from the previous quarter, up to $108.9 million from $104.6 million, and 24% Q3 year-over-year growth, up from $87.5 million.
Descartes (NASDAQ:DSGX) also reported net income of $25.5 million, up 92% from $13.3 million in Q3 of last year and an increase of 10% from the previous quarter. Earnings on a diluted basis were up 100% at 30 cents per share.
Operating expenses for Q3 did rise 24% year-over-year, but leadership pointed to Descartes’ aggressive acquisition strategy for the additional labor costs as the company acquired QuestaWeb, Portrix Logistics and GreenMile.
Related: Descartes continues customer-driven acquisition strategy with GreenMile purchase
The Canadian-based company does not plan on ending that acquisition strategy anytime soon, as Descartes has reported $171 million in cash, along with $350 million in a credit facility to continue acquiring companies into the new year.
“As always, we continue to be well-capitalized to allow us to consider all acquisition opportunities in our market consistent with our business plan,” said Allan Brett, Descartes’ CFO.
CEO Ryan said he anticipates adjusted earnings before interest, taxes, depreciation and amortization growing 10% to 15% annually through the company’s organic growth from global demand and its continued acquisition strategy.
“When we overperform, we expect to reinvest that back into our business. We focus on recurring revenues and establishing relationships with customers for life,” said Ryan.
Asked if Descartes expects less growth as life goes “back to normal” in the wake of the pandemic, Ryan said that in fact companies are becoming more interested in investing in supply chain improvements while customer demand remains high.
“I think some of the [capacity issues and demand] that are hitting us right now are going to continue long after that time. I think people have generally realized … that supply chain and logistics was a whole lot more important than they used to think it was,” said Ryan. “I don’t think that’s going to change just when this crisis goes away. … That concept’s here to stay.”
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