The Descartes Systems Group (DSG) investor relations material

Executive summary

• Achieved record quarterly and annual financial results, with FY26 revenue at $729M, up 12% year-over-year, and net income reaching $163.8M, up 14–15%, surpassing annual plans despite ongoing tariff and geopolitical uncertainties.

• High recurring services revenue profile, robust cash generation, and margin expansion supported profitable growth and free cash flow.

• Continued focus on recurring services, strategic investments in AI and e-commerce, and disciplined M&A, including the acquisition of OrderMine.

• Transition in CFO role from Allan Brett to Ed Gardner, with ongoing support for M&A activities.

• Solutions leverage technology, data, and AI to automate and optimize logistics and supply chain processes, creating significant competitive barriers.

Financial highlights

• FY26 revenue was $729M, up 12%; Q4 revenue reached $192.8M, up 15% year-over-year; services revenue $677.2M, up 15%.

• FY26 net income was $163.8M ($1.87/share), up 14–15%; Q4 net income was $45.6M, up 22% year-over-year.

• Adjusted EBITDA for FY26 was $329.5M–$330M (45–45.2% margin), up 15.7–16%; Q4 adjusted EBITDA was $88.7M (46% margin), up 18.3%.

• Gross margin improved to 77% for FY26 and 78% for Q4.

• Cash from operations was $266.2M for FY26 (up 21%) and $75.9M for Q4 (up 25%), with cash balance at $356–$356.5M and no debt.

Outlook and guidance

• Management expects continued growth, margin expansion, and robust cash generation, with operating cash flow conversion above 80% of adjusted EBITDA in FY 2027.

• Capital expenditures projected at $6–8M, mainly for IT equipment; amortization expense expected at $69.1M for FY 2027.

• Anticipate up to $9M in earn-out payments for acquisitions in FY 2027; tax rate guidance for FY 2027 is 24–28% of pre-tax income.

• Baseline Q1 FY 2027 revenues estimated at $164M, operating expenses at $99.5M, and adjusted EBITDA at $64.5M (39% margin); target adjusted EBITDA margin remains 40–45%.

• Management remains cautious about impacts from geopolitical events, tariffs, and economic conditions.