Enghouse Systems (ENGH) Q2 2024 earnings summary

Executive summary

• Q2 FY24 revenue reached $125.8M, up 10.9% year-over-year, with six-month revenue at $246.3M, up 12.0% year-over-year.

• Net income for Q2 was $20.0M, up 59.3% year-over-year; six-month net income was $38.1M, up 28.9%.

• Adjusted EBITDA for Q2 was $35.7M, up 18.3% year-over-year; six-month Adjusted EBITDA was $70.4M, up 12.7%.

• Record cash and cash equivalents of $263.8M at quarter end, with no external debt.

• Completed Mediasite acquisition and, post-quarter, SeaChange acquisition, expanding video and IPTV offerings and geographic reach.

Financial highlights

• SaaS and maintenance revenue for Q2 FY24 was $85.0M, up 18.6% year-over-year, now 67.5% of total revenue.

• Operating cash flow before working capital and tax was $38.6M in Q2 FY24, up 33.7% year-over-year.

• Operating cash flow for the quarter was $40.3M (up 115.3% year-over-year).

• Dividend per share increased to $0.26, payable August 30, 2024.

• Share repurchases executed during the quarter.

Outlook and guidance

• Focus on operational discipline, SaaS growth, and international expansion, especially in Europe and Japan.

• Expect further improvement in Mediasite integration and financial contribution in Q3.

• SeaChange acquisition to add to revenue and profitability starting Q3.

• Strategy targets dual growth via internal expansion and selective acquisitions of companies with $5M–$50M revenue and strong recurring revenue.

• Economic conditions viewed as favorable for acquisitions, especially among small-cap targets.