Descartes Announces Fiscal 2027 Second Quarter Financial Results

10 hours ago 4

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(US dollars in millions)	1HFY27	1HFY26
Net income, as reported on Consolidated Statements of Operations	98.5	74.3
Adjustments to reconcile to Adjusted EBITDA:
Interest expense	0.5	0.5
Investment income	(6.3)	(3.5)
Income tax expense	35.3	23.1
Depreciation expense	3.1	2.9
Amortization of intangible assets	35.4	39.6
Stock-based compensation and related taxes	15.3	9.8
Other charges	2.3	8.6
Adjusted EBITDA	184.1	155.3

Revenues	394.7	348.6
Net income as % of revenues	25%	21%
Adjusted EBITDA as % of revenues	47%	45%

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

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	July 31,	January 31,
	2026	2026
ASSETS
CURRENT ASSETS
Cash	401,057	356,526
Accounts receivable (net)
Trade	63,463	64,771
Other	25,698	26,453
Prepaid expenses and other	33,638	34,317
	523,856	482,067
OTHER LONG-TERM ASSETS	27,839	27,346
PROPERTY AND EQUIPMENT, NET	14,049	13,507
RIGHT-OF-USE ASSETS	7,442	8,173
DEFERRED INCOME TAXES	6,129	6,720
INTANGIBLE ASSETS, NET	336,959	332,069
GOODWILL	1,042,635	1,025,783
	1,958,909	1,895,665
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	16,428	20,852
Accrued liabilities	109,535	73,881
Lease obligations	3,329	3,471
Income taxes payable	6,419	7,133
Deferred revenue	123,874	117,887
	259,585	223,224
LEASE OBLIGATIONS	4,213	4,892
DEFERRED REVENUE	751	1,175
INCOME TAXES PAYABLE	6,685	6,019
DEFERRED INCOME TAXES	41,085	41,443
	312,319	276,753

SHAREHOLDERS’ EQUITY
Common shares – unlimited shares authorized; Shares issued and outstanding totaled 85,548,553 at July 31, 2026 (January 31, 2026 – 86,022,028)	592,930	590,734
Additional paid-in capital	516,560	509,190
Accumulated other comprehensive loss	(20,067)	(7,987)
Retained earnings	557,167	526,975
	1,646,590	1,618,912
	1,958,909	1,895,665

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The Descartes Systems Group Inc.
Condensed Consolidated Statements of Operations
(US dollars in thousands, except per share and weighted average share amounts; US GAAP; Unaudited)

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	Three Months Ended				Six Months Ended
	July 31,		July 31,		July 31,		July 31,
	2026		2025		2026		2025

REVENUES	201,108		179,815		394,729		348,554
COST OF REVENUES (exclusive of amortization presented separately below)	44,398		41,588		87,844		81,335
GROSS MARGIN	156,710		138,227		306,885		267,219
EXPENSES
Sales and marketing	24,338		20,522		47,590		39,372
Research and development	28,286		26,752		55,684		51,821
General and administrative	19,284		17,147		37,939		33,459
Other charges	1,259		5,119		2,334		8,568
Amortization of intangible assets	18,072		20,504		35,336		39,618
	91,239		90,044		178,883		172,838
INCOME FROM OPERATIONS	65,471		48,183		128,002		94,381
INTEREST EXPENSE	(240	)	(243	)	(476	)	(479	)
INVESTMENT INCOME	3,322		1,550		6,309		3,512
INCOME BEFORE INCOME TAXES	68,553		49,490		133,835		97,414
INCOME TAX EXPENSE
Current	18,462		5,674		35,028		17,925
Deferred	62		5,796		302		5,225
	18,524		11,470		35,330		23,150
NET INCOME	50,029		38,020		98,505		74,264
EARNINGS PER SHARE
Basic	0.58		0.44		1.15		0.87
Diluted	0.57		0.43		1.13		0.85
WEIGHTED AVERAGE SHARES OUTSTANDING (thousands)
Basic	85,701		85,833		85,857		85,756
Diluted	87,060		87,590		87,216		87,588

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

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	Three Months Ended				Six Months Ended
	July 31,		July 31,		July 31,		July 31,
	2026		2025		2026		2025
OPERATING ACTIVITIES
Net income	50,029		38,020		98,505		74,264
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	1,586		1,501		3,073		2,951
Amortization of intangible assets	18,072		20,504		35,336		39,618
Stock-based compensation expense	7,772		4,453		14,769		8,819
Other non-cash operating activities	(56	)	162		93		128
Deferred tax expense	62		5,796		302		5,225
Changes in operating assets and liabilities	3,797		(7,100	)	4,328		(14,066	)
Cash provided by operating activities	81,262		63,336		156,406		116,939
INVESTING ACTIVITIES
Additions to property and equipment	(1,990	)	(1,240	)	(4,570	)	(3,102	)
Acquisition of subsidiaries, net of cash acquired	(29,451	)	(2,277	)	(59,174	)	(114,604	)
Cash used in investing activities	(31,441	)	(3,517	)	(63,744	)	(117,706	)
FINANCING ACTIVITIES
Payment of debt issuance costs	–		–		–		(38	)
Repurchase of common shares for cash, including purchasing costs	(24,330	)	–		(45,110	)	–
Issuance of common shares for cash, net of issuance costs	329		4,808		3,837		8,366
Payment of withholding taxes on net share settlements	–		–		(4,538	)	(6,487	)
Payment of contingent consideration	–		(1,170	)	–		(1,170	)
Cash provided by (used in) financing activities	(24,001	)	3,638		(45,811	)	671
Effect of foreign exchange rate changes on cash	(1,741	)	764		(2,320	)	4,590
Increase in cash	24,079		64,221		44,531		4,494
Cash, beginning of period	376,978		176,411		356,526		236,138
Cash, end of period	401,057		240,632		401,057		240,632