Today’s Hot Stock Under Review: The Descartes Systems Group Inc (NASDAQ: DSGX)

The Descartes Systems Group Inc. (DSG.TO) (DSGX) declared its financial results for its fiscal 2019 second quarter (Q2FY19) ended July 31, 2018.

Q2FY19 Financial Results:

Key financial highlights for Q2FY19 included:

  • Revenues of $67.10M, up 17% from $57.30M in the second quarter of fiscal 2018 (Q2FY18) and contrast to $67.00M in the previous quarter (Q1FY19);
  • Revenues were comprised of services revenues of $59.70M (89% of total revenues), professional services and other revenues of $6.10M (9% of total revenues) and license revenues of $1.30M (2% of total revenues). Services revenues were up 21% from $49.30M in Q2FY18 and up 3% from $57.80M in Q1FY19;
  • Cash offered by operating activities of $18.20M, up 6% from $17.10M in Q2FY18 and down slightly from $18.90M in Q1FY19;
  • Income from operations of $10.10M, up 7% from $9.40M in Q2FY18 and up 3% from $9.80M in Q1FY19;
  • Net income of $8.50M, up 18% from $7.20M in Q2FY18 and up 21% from $7.00M in Q1FY19. Net income as a percentage of revenues was 13%, contrast to 13% in Q2FY18 and 10% in Q1FY19; Earnings per share on a diluted basis of $0.11, up 22% from $0.09 in Q2FY18 and up 22% from $0.09 in Q1FY19; and
  • Adjusted EBITDA of $22.80M, up 15% from $19.80M in Q2FY18 and up 3% from $22.10M in Q1FY19. Adjusted EBITDA as a percentage of revenues was 34%, contrast to 35% in Q2FY18 and 33% in Q1FY19.

Year-to-Date Financial Results:

Key financial highlights for Descartes’ six-month period ended July 31, 2018 (1HFY19) included:

  • Revenues of $134.10M, up 20% from $111.80M in the same period a year ago (1HFY18);
  • Revenues were comprised of services revenues of $117.50M (88% of total revenues), professional services and other revenues of $13.40M (10% of total revenues) and license revenues of $3.20M (2% of total revenues). Services revenues were up 22% from $96.10M in 1HFY18;
  • Cash offered by operating activities of $37.10M, up 10% from $33.60M in 1HFY18;
  • Income from operations of $19.90M, up 7% from $18.60M in 1HFY18;
  • Net income of $15.50M, up 11% from $14.00M in 1HFY18. Net income as a percentage of revenues was 12%, contrast to 13% in 1HFY18; Earnings per share on a diluted basis of $0.20, up 11% from $0.18 in 1HFY18; and
  • Adjusted EBITDA of $44.90M, up 16% from $38.80M in 1HFY18. Adjusted EBITDA as a percentage of revenues was 33%, contrast to 35% in 1HFY18.

Cash Position:

At July 31, 2018, Descartes had $34.10M in cash. Cash reduced $2.10M in Q2FY19 and $1.00M in 1HFY19 mainly because of credit facility repayments partially offset by cash offered from operations.

DSGX has a market value of $2.28B while its EPS was booked as $0.36 in the last 12 months. The stock has 78.52M shares outstanding. In the profitability analysis, the company has gross profit margin of 72.90% while net profit margin was 10.90%. Beta value of the company was 0.45; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.10.

Bobbie Collins

Bobbie Collins gives us an insight into the most recent news hitting the Technology Sector in Wall Street. He has been an independent financial adviser for over 10 years in the city and in recent years turned his experience in finance and passion for journalism into a full time role. He performs analysis of Companies and publicizes valuable information for shareholder community. Collins is an accomplished journalist who has a passion for travel. His desire to see the world has taken him to countries around the world and given him the opportunity to report for some of the top news organizations.

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