Descartes reports record results in Q3 of FY 2024

Supply chain software provider Descartes reported record financial results for its 2024 fiscal third quarter, ended Oct. 31.

The Canada-based company reported revenue of $145 million, which was an all-time high and up 19% year over year (y/y). The result included the acquisitions of final-mile solutions providers GroundCloud and Localz. Excluding the acquisitions, revenue growth was 9%.

CEO Ed Ryan told analysts on a Tuesday evening call that while volumes were lower the declines weren’t as bad as expected and that its recent acquisitions are producing ahead of plan. He also said demand for its real-time visibility platform, which has the capability to track more loads than its competitors, is proving to be a positive catalyst.

Descartes (NASDAQ: DSGX) reported adjusted earnings before interest, taxes, depreciation and amortization of $64 million, which was 17% higher y/y and above management’s long-term guidance growth range of 10% to 15%.

Earnings per share of 31 cents was 3 cents light of the consensus estimate but flat y/y.

The company guided to fiscal fourth-quarter revenue of $127 million with adjusted EBITDA of $48 million.

Descartes generated operating cash flow of $56 million in the quarter, which was 10% higher y/y. It ended the period with $280 million in cash, which was $52 million higher sequentially. It said it will use its cash and a $350 million credit facility to pursue acquisitions.

“We like the environment we’re in right now,” Ryan said. “More companies are coming up for sale … with a more reasonable expectation on valuation, and that’s creating an environment where we think we’re in very good position to get more deals done in the future.”

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