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BusinessCanadaCompany earningsFinanceNewsSupply Chains

Descartes Systems posts strong Q4 as CEO signals more M&A

Supply chain software provider’s profits jump over 50% on record revenue

Supply chain software provider Descartes Systems Group (NASDAQ:DSGX) reported record revenue and a 51% jump in profits in the fourth quarter as the Canada-based company signaled it will continue to pursue acquisitions. 

Descartes, which reports in U.S. dollars, had net income of $17.2 million or an adjusted 20 cents per diluted share, on $93.4 million in revenue. Net income jumped by 51% and revenue 11% compared to a year earlier. 

The result handily beat analysts’ expectations of 16 cents per share on $89.5 million of revenue, according to Yahoo Finance

CEO Edward Ryan welcomed the results and noted that demand for its products remains strong as companies continue to see the need to improve visibility and functionality during the pandemic.

“In the last couple of quarters, we sold more stuff than we’ve ever sold before,” Ryan told financial analysts during a conference call. 

The quarter capped a strong year for Descartes. It recorded $52.1 million in net income, up 41% from a year ago, outpacing the 7% increase in revenue, which hit $348.7 million.

Descartes has improved its margins, in part, amid a global restructuring effort to curb costs. It announced the move in May in the early days of the pandemic. 

Descartes to pursue more acquisitions, CEO says

Ryan voiced confidence about Descartes’ continued organic growth but said the company will continue to pursue acquisitions in the supply chain technology space. 

On Monday, the company announced it had acquired New Jersey-based QuestaWeb for $36 million. The deal adds a web-based platform to automate processes for logistics providers and importers in foreign trade zones.

“We saw a high-quality business with a lot of opportunity to grow,” Ryan said. 

Descartes has largely focused on smaller acquisitions that enhance its large portfolio of software products that touch just about every transportation mode in the supply chain. In November, the company acquired ShipTrack for $19.1 million upfront, with an additional $19.1 million payout if performance targets are hit. ShipTrack enhanced Descartes’ offerings for e-commerce and medical logistics providers.

Click for more FreightWaves articles by Nate Tabak
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Nate Tabak, Border and North America Correspondent

Nate Tabak is a Toronto-based journalist and producer who covers cybersecurity and cross-border trucking and logistics for FreightWaves. He spent seven years reporting stories in the Balkans and Eastern Europe as a reporter, producer and editor based in Kosovo. He previously worked at newspapers in the San Francisco Bay Area, including the San Jose Mercury News. He graduated from UC Berkeley, where he studied the history of American policing. Contact Nate at ntabak@freightwaves.com.

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