The Descartes Systems Group (DSG) investor relations material

Executive summary

• Achieved record quarterly financial results in Q2FY27, with revenues, profits, cash flow, and margins at all-time highs, driven by strong demand for global trade intelligence, e-commerce, transportation management, and fleet performance solutions, and supported by AI investments.

• Completed significant acquisitions of Tai and Extensiv, expanding broker TMS and 3PL warehouse management capabilities, and furthering AI and data integration strategies.

Financial highlights

• Q2FY27 revenue reached $201.1 million, up 12% year-over-year and 4% sequentially; services revenue grew 13% to $188.6 million, representing 94% of total revenue.

• Net income for Q2FY27 was $50 million, up 32% year-over-year and 3% sequentially; adjusted EBITDA was $94.4 million (47% margin), up 18% year-over-year.

• Operating cash flow was $81.3 million, up 28% year-over-year, with cash balances at $401 million and no debt at quarter-end.

• Six-month (1HFY27) revenues totaled $394.7 million, up 13% year-over-year; net income was $98.5 million, up 33%.

• Gross margin improved to 78% from 77% in Q2 last year.

Outlook and guidance

• Baseline Q3 revenues estimated at $181 million, with baseline adjusted EBITDA at $69.5 million (38% margin), reflecting early integration of recent acquisitions.

• Target adjusted EBITDA margin range maintained at 40%-45%, with ongoing monitoring for potential upward adjustment.

• Expect continued strong operating cash flow conversion above 80% of adjusted EBITDA, barring unusual events.

• Anticipate $2M-$4M in additional capital expenditures for the year, mainly for IT equipment.

• Income tax rate expected in the 25%-30% range for the remainder of fiscal 2027.