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Descartes (DSGX) Q3 Earnings And Revenues Top Estimates

·3-min read

The Descartes Systems Group Inc DSGX reported third-quarter fiscal 2022 earnings of 30 cents per share, which surpassed the Zacks Consensus Estimate by 30.4% and increased 100% on a year-over-year basis.

Revenues of $108.9 million increased 24% year over year, topping the Zacks Consensus Estimate by 2.4%. The upside was driven by increasing contribution from acquisitions as well as new and existing customers.

In the past year, the stock has surged 30.5% compared with the industry’s rally of 42.9% on a year-to-date basis.

The Descartes Systems Group Inc. Price, Consensus and EPS Surprise

The Descartes Systems Group Inc. Price, Consensus and EPS Surprise
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

Top-Line Details

Services revenues of $97.2 million (89% of total revenues) were up 25% on a year-over-year basis.

Professional services and other revenues of $10.3 million (10%) increased 11% from the prior-year quarter’s levels.

Licensed revenues came in at $1.4 million, contributing approximately 1% to total revenues.

Operating Details

Gross margin was 76%, which expanded 200 basis points (bps) from the year-ago quarter’s levels.

The company reported adjusted EBITDA of $48.2 million, up 32.4% year over year. Adjusted EBITDA, as a percentage of revenues, stood at 44%, up 200 bps from the year-ago quarter’s levels.

Operating expenses increased 24% on a year-over-year basis in the fiscal third quarter.

Operating income increased 47.9% year over year to $27.8 million. Operating margin expanded 400 bps to 25.5%.

Balance Sheet & Cash Flow

Descartes exited the quarter ending Oct 31, 2021, with $171.1 million in cash compared with $128.4 million as of Jul 31, 2021.

The company generated net cash from operations of $43.3 million during the reported quarter compared with $46.4 million in the prior quarter and $33.1 million reported in the year-ago quarter.

For the nine months ended Oct 31, 2021, the company reported cash from operating activities of $130.6 million compared with $94.8 million reported for the nine months ended Oct 31, 2020.

Zacks Rank and Stock to Consider

Descartes currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the broader technology space are Arrow Electronics ARW, Alphabet GOOGL and Monolithic Power Systems MPWR.

While Alphabet and Arrow Electronics sport a Zacks Rank #1 (Strong Buy), Monolithic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow Electronics’ shares have gained 27.6% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 27.4%.

Alphabet’s shares have surged 54.9% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25.8%.

Monolithic’s shares have rallied 71.3% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25%.


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