The Descartes Systems Group (DSG) Q1 2026 earnings summary

Executive summary

• Achieved strong double-digit annual growth in revenues and adjusted EBITDA, maintaining leadership in SaaS logistics with a high-recurring revenue model and global customer base across 160+ countries.

• Expanded transportation management portfolio through acquisitions, notably 3GTMS and MyCarrierPortal, enhancing fraud prevention and real-time visibility capabilities.

• Proactively reduced cost base by restructuring, impacting about 7% of workforce, to position for continued growth and flexibility amid global trade and economic uncertainty.

• Delivers profitable growth, strong free cash flow, and a proven 'Total Growth' model supported by disciplined M&A.

• Industry-leading solutions drive operational efficiency and environmental benefits for customers.

Financial highlights

• FY25 revenue reached $651M, up 14% year-over-year; Q1FY26 revenues were $168.7M, up 12% year-over-year, with services revenue at $156.6M, representing 93% of total revenue.

• Adjusted EBITDA for FY25 was $285M (44% margin); Q1FY26 adjusted EBITDA was $75.1M (45% margin), up 12% year-over-year.

• Net income for FY25 was $143M; Q1FY26 net income was $36.2M, up 4% year-over-year.

• Cash flow from operations was $219M in FY25 and $53.6M in Q1FY26, impacted by acquisition-related charges and bonus payments.

• Gross margin was 76% in Q1FY26, slightly down from 77% in Q1FY25.

Outlook and guidance

• Baseline Q2FY26 revenues estimated at $150.5M, with adjusted EBITDA of $58M (39% margin), expecting to operate in a 40%-45% adjusted EBITDA margin range.

• Annual cost savings from restructuring expected to be approximately $15M, with a $4M restructuring charge in Q2FY26.

• Tax rate for the year expected between 24%-28% of pre-tax income.

• Capital expenditures for the remainder of the year projected at $4-$5M.

• Management expects continued growth through recurring revenues and successful integration of recent acquisitions.