Mr. Edward Ryan reports

DESCARTES ANNOUNCES FISCAL 2025 FIRST QUARTER FINANCIAL RESULTS

The Descartes Systems Group Inc. has released its financial results for its fiscal 2025 first quarter (Q1 FY (fiscal year) 2025). All financial results referenced are in U.S. currency and, unless otherwise indicated, are determined in accordance with U.S. generally accepted accounting principles (GAAP).

"Global trade is complex and constantly evolving. Supply chains and logistics operations continue to be impacted by a myriad of factors, including military conflicts, disruptions to trade routes, government sanctions, and material changes to taxes and tariffs," said Edward J. Ryan, Descartes's chief executive officer. "Our technology solutions are designed to help shippers, carriers and logistics services providers manage this dynamic complexity. We remain focused on delivering valued services to all supply chain participants and making meaningful investments that will help our customers manage their immediate and future supply chain and logistics challenges."

Q1 FY 2025 financial results

As described in more detail below, key financial highlights for Descartes's Q1 FY 2025 included:

• Revenues of $151.3-million, up 11 per cent from $136.6-million in the first quarter of fiscal 2024 (Q1 FY 2024) and up 2 per cent from $148.2-million in the previous quarter (Q4 FY 2024);
• Revenues comprised services revenues of $137.8-million (91 per cent of total revenues), professional services and other revenues of $13.0-million (9 per cent of total revenues), and licence revenues of $500,000 (less than 1 per cent of total revenues). Services revenues were up 11 per cent from $124.1-million in Q1 FY 2024 and up 2 per cent from $135.7-million in Q4 FY 2024;
• Cash provided by operating activities of $63.7-million, up 30 per cent from $48.9-million in Q1 FY 2024 and up 25 per cent from $50.8-million in Q4 FY 2024; cash provided by operating activities was negatively impacted by nil, nil and $12.6-million in Q1 FY 2025, Q1 FY 2024 and Q4 FY 2024, respectively, related to contingent consideration payments due to better-than-expected performance from recent acquisitions;
• Income from operations of $42.4-million, up 16 per cent from $36.5-million in Q1 FY 2024 and up 15 per cent from $37.0-million in Q4 FY 2024;
• Net income of $34.7-million, up 18 per cent from $29.4-million in Q1 FY 2024 and up 9 per cent from $31.8-million in Q4 FY 2024. Net income as a percentage of revenues was 23 per cent, compared with 22 per cent in Q1 FY 2024 and 21 per cent in Q4 FY 2024;
• Earnings per share on a diluted basis of 40 cents, up 18 per cent from 34 cents in Q1 FY 2024 and up 8 per cent from 37 cents in Q4 FY 2024;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $67.0-million, up 16 per cent from $57.7-million in Q1 FY 2024 and up 2 per cent from $65.7-million in Q4 FY 2024. Adjusted EBITDA as a percentage of revenues was 44 per cent, compared with 42 per cent in Q1 FY 2024 and 44 per cent in Q4 FY 2024.

Adjusted EBITDA and adjusted EBITDA as a percentage of revenues are non-GAAP financial measures provided as a complement to financial results presented in accordance with GAAP. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation (for which it includes related fees and taxes) and other charges (for which it includes restructuring charges, acquisition-related expenses and contingent consideration incurred due to better-than-expected performance from acquisitions). These items are considered by management to be outside Descartes's continuing operational results. The company defines adjusted EBITDA as a percentage of revenues as the quotient, expressed as a percentage, from dividing adjusted EBITDA for a period by revenues for the corresponding period. A reconciliation of adjusted EBITDA and adjusted EBITDA as a percentage of revenues to net income determined in accordance with GAAP is provided later in this news release.

An attached table summarizes Descartes's results in the categories specified over the past five fiscal quarters (unaudited; dollar amounts, other than per-share amounts, in millions).

Cash position

At April 30, 2024, Descartes had $238.9-million in cash. Cash decreased by $82.1-million in Q1 FY 2025. An attached table provides a summary of cash flows for Q1 FY 2025 -- in millions of dollars.

Acquisition of OCR Services Inc.

On March 28, 2024, Descartes acquired OCR, a leading provider of global trade compliance solutions and content. The purchase price for the acquisition was approximately $82.8-million, net of cash acquired, which was financed from cash on hand.

Acquisition of Aerospace Software Developments (ASD)

On April 22, 2024, Descartes acquired ASD, a leading provider of customs and regulatory compliance solutions. The purchase price for the acquisition was approximately $62.5-million (58.7 million euros), net of cash acquired, which was substantially paid at closing from cash on hand with the remaining $5.1-million expected to be paid by the end of Descartes's fiscal 2025 fourth quarter.

Conference call

Members of Descartes's executive management team will host a conference call to discuss the company's financial results at 5:30 p.m. ET on Wednesday, May 29. Designated numbers are 1-289-514-5100 for North America and 1-800-717-1738 for international, using conference ID 99482.

The company will simultaneously conduct an audio webcast on the Descartes website. Phone conference dial-in or webcast log-in is required approximately 10 minutes beforehand.

Replays of the conference call will be available until June 6, 2024, by dialling 1-289-819-1325 or toll-free for North America using 1-888-660-6264, with playback passcode 99482 followed by the pound key. An archived replay of the webcast will be available on the company's website.

About The Descartes Systems Group Inc.

Descartes is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, security and sustainability of logistics-intensive businesses. Customers use the company's modular, software-as-a-service solutions to route, track, and help improve the safety, performance and compliance of delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world's largest, collaborative multimodal logistics community. Descartes's headquarters is in Waterloo, Ont., Canada, and the company has offices and partners around the world.

Reconciliation of non-GAAP financial measures -- adjusted EBITDA and adjusted EBITDA as a percentage of revenues

An attached table reconciles adjusted EBITDA and adjusted EBITDA as a percentage of revenues to net income reported in the company's unaudited consolidated statements of operations for Q1 FY 2025, Q4 FY 2024, Q3 FY 2024, Q2 FY 2024 and Q1 FY 2024, which Descartes believes is the most directly comparable GAAP measure.

We seek Safe Harbor.