Descartes Posts Better-than-Expected Q1 Results, Profit Soars 67%

Descartes (DSG) is a technology company based in Canada that provides on-demand, software-as-a-service solutions to businesses. The company reported higher profits and revenues in its first quarter.

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Revenues came in at $98.8 million for the quarter ended April 30, an increase of 18%, beating the consensus estimate of $92.2 million. The increase in revenues is mainly attributable to higher services revenues, which were up 19% to $88.3 million year-on-year.

Meanwhile, net income amounted to $18.4 million ($0.21 per diluted share) in Q1 2022, compared to $11 million ($0.13 per diluted share) in Q1 2021. Analysts were expecting EPS of $0.17 per share.

Adjusted EBITDA totaled $41.5 million in the first quarter of the year, up 26% in the prior-year quarter. As a percentage of revenue, Adjusted EBITDA was 42%, an improvement compared to 39% in the same period a year ago.

Descartes’ CEO Edward J. Ryan said, “Our customers face complex multi-party, multi-process supply chain and logistics challenges. This is even more so in recent times where our customers have faced rapid changes in supply, demand and trade regulations. Our Global Logistics Network is designed for these complex scenarios, helping shippers, carriers, customs authorities and logistics services providers connect and collaborate to execute the full lifecycle of shipments. We continue to innovate to help our customers prepare for tomorrow’s challenges, and we continue to add more solutions and trading partners to our network. As a result, our customers have trusted us with more of their business.”

The company ended the quarter with $138.1 million in cash. (See Descartes stock analysis on TipRanks)

A few days ago, RBC Capital analyst Paul Treiber maintained a Buy rating on DSG and set a $70.00 (C$84.25), for 19.6% upside potential.

Overall, consensus on the Street is that DSG is a Moderate Buy based on 5 Buys and 2 Holds. The average analyst price target of C$82.01 implies 16.4% upside potential to current levels. Shares have fallen 6% over the past year.